Premiums are higher and outcomes are declining. It’s time to stand up and say, ‘Enough.’
You’ve done the head shake at the grocery store checkout. Nearly $5 for a gallon of milk, almost as much for a carton of eggs, and $6 for an 8-pack of sparkling water that cost $4 several months ago when it used to include 12 cans. Then there’s housing, utilities, transportation, gas, clothing, education — the list goes on.
We're paying more for less.
The same is true for healthcare. Premiums have never been so expensive or increased at such a sharp rate. The Kaiser Family Foundation (KFF) just released its 2023 Benchmark Employer Survey announcing annual family premiums for employer coverage have risen 7% to $24,000 in 2023.
On average, workers this year contribute $6,575 annually toward the cost of family premiums, up nearly $500 from 2022. Employers pay the rest. For individuals, the 2023 average healthcare premium increased to $8,500 per year. Plus, during the past five years, premiums rose 22%, in line with wages (27%) and inflation (21%). Let’s remember this expense covers only the cost of having a level of financial protection, if an illness develops.
In a release, KFF President and CEO Drew Altman said: “Rising employer healthcare premiums have resumed their nasty ways, a reminder that while the nation has made great progress expanding coverage, people continue to struggle with medical bills, and overall, the nation has no strategy on health costs.”
Family premiums are the highest they’ve been in the last 10 years, while workers’ earnings are less than the percentage of overall inflation, which is 5.8%. In a Health Action Council survey of employer members, we asked what percentage of your full-time workforce would be considered low wage with an annual salary of $30,000 or less. The results are equally concerning given the burden of inflation, with 91.5% indicating that up to 30% of their workforce earns this salary, and 8.5% identifying up to 60% of employees as low wage.
Why do healthcare costs continue to rise at a painful rate? Experts point to a myriad of factors, including more expensive technology, medical providers being paid for quantity not quality, an unhealthier U.S. population, and lack of information about medical care and its costs.
That leaves us to where we are today: Paying more for declining health and worsening healthcare outcomes.
Case in point: A study by the Commonwealth Fund reported that people in the United States experience the worst health outcomes overall of any high-income nation. We’re more likely to die younger and from avoidable causes than residents of peer countries.
Healthcare costs are not solely responsible but play into the equation. Let’s crunch some more numbers that shine a light on why we’re not accessing care to improve outcomes.
According to the U.S. Bureau of Labor Statistics, the median weekly income including overtime, commission, and tips for fulltime workers in America was $1,041 in Q2 2022. If that rate persists, it averages to $54,132 annually with a take-home pay of $40,442, based on California tax rates or $41,102 based on Ohio tax rates. Accounting for the average employer contribution to healthcare premiums, employees with family plans pay about $6,500 per year. That is 15% of their salaries. The White House announced its 2024 high-deductible health plan out-of-pocket maximum: $8,050 for individuals and $16,100 for families. Healthcare premiums plus personal income to pay for care up to the out-of-pocket limits adds up to about $24,000, which is more than half of a worker’s annual income.
Having more than 50% of a workers’ annual income earmarked for healthcare is a financially crippling reality. What about the other expenses required to live?
What is the solution — where do we start?
About five years ago, Health Action Council hosted Jeffrey Bauer, author of Upgrading Leadership’s Crystal Ball, at our annual conference. At the time, healthcare premiums represented 17% of the country’s gross domestic product (GDP). Now, it is 18% of GDP. Bauer maintained that while we can’t decrease the healthcare premium cost, we can keep it constant. We should take steps to be sure healthcare premiums do not swell and work to keep the cost static.
This is a strategic, smart starting point. And, we can analyze global data points and pinpoint focus areas that could help level those costs. But first, employers must decide to take on a serious responsibility to call the healthcare system into check. As employers, we must be the consumer voice for healthcare. We’re making the healthcare purchase decisions — and we need to advocate for change.
About Health Action Council
Health Action Council is a not-for-profit 501(c)(6) organization representing mid-and large-size employers that enhance human and economic health through thought leadership, innovative services, and collaboration. It provides value to its members by facilitating projects that improve the quality and moderate the cost of healthcare purchased by its members for their employees, dependents, and retirees. Health Action Council also collaborates with key stakeholders – health plans, physicians, hospitals, and the pharmaceutical industry – to improve the quality and efficiency of healthcare in the community.