Report: Families Are Spending More Of Their Incomes On Health Care

Dec 1, 2019

A new report shows many working American families are spending more and more of their income on health care.


The Commonwealth Fund report "Trends in Employer Health Care Coverage, 2008–2018: Higher Costs for Workers and Their Families" finds health insurance premium costs and deductibles have been growing faster than median income in all states over the last decade.

Commonwealth Fund president David Blumenthal says that as the 2020 campaign season progresses, health care is clearly a top concern.   "Health care and health insurance coverage are essential to people's well-being and financial security, and yet employer health care coverage is leaving millions of families exposed to high and potentially unaffordable costs. Ensuring that everyone can afford their health care will require policy fixes and systemwide efforts to get to the heart of the health care cost problem."

Sara Collins co-authored the report for the non-profit. She says it is based on the latest data from the insurance component of the Federal Medical Expenditure Panel Survey. 

The report shows the most cost-burdened families live in southern states where median incomes are lower on average.

"The reason we wanted to look at people's insurance costs relative to income is that research indicates that these costs have consequences. People with low and moderate income may go without insurance if it competes with other expenses like housing or food. And high deductibles may lead people to skip needed healthcare or not fill prescriptions. What we found is that average annual growth and the combined cost of employees’ contributions to premiums and deductibles outpaced growth and US median income between 2008 and 2018 in every state. This means that premium contributions and deductibles and employer plans took up a growing share of people's incomes over that time period. Those costs together accounted for 11 and a half percent of median median household income by 2018. From 7.8 percent a decade earlier," Collins said.

The report shows nationwide, the average deductible for a middle-income family amounted to 4.7 percent of income in 2018 — up from 2.7 percent in 2008. Collins points out that The Commonwealth Fund defines "underinsured" as having a deductible equivalent to 5 percent or more of income, an amount exceeded in many Southern states.  

"Democratic presidential candidates have proposed a range of options to improve insurance affordability and lower health care costs, which are the key driver of premiums. Some proposals will build on the Affordable Care Act and provide people and employer plans with an action to enroll in a public plan like Medicare. Others proposed to replace the Affordable Care Act and all private insurance including employer coverage with a public plan like Medicare and eliminate all premiums and car sharing. Republican reform Party ideas are less well developed at this point but tend to favor replacing the Affordable Care Act with market oriented approaches and more state control over insurance markets and the Medicaid program. We are starting to hear more from candidates and likely voters on health care affordability issues in the coming year," she said.

The report noted that the average annual employee premium contribution for single coverage trends higher across Northeastern states, with New York, Vermont, Massachusetts and Connecticut well above the $1,427 U.S. average. Massachusetts ranks highest at $1,903.

You can read the entire report here.