As health insurance premiums and out-of-pocket obligations increase, so does the number of Americans who are “functionally uninsured”

The average premium for a family health insurance policy through an employer has increased 43% over the past 10 years, from $15,745 in 2012 to $22,463 this year. 

That’s according to the Kaiser Family Foundation, which conducts annual surveys to arrive at the cost of employer-sponsored coverage. This year’s survey was released last Thursday.

I highlighted the word “average” because half of U.S. families and their employers–especially small businesses, with 50 employees or fewer–paid more than that. Often considerably more. 

And that’s not all the bad news: Not only do Americans pay more and more every year for health insurance, but they are also now paying significantly more out-of-their own pockets before their coverage kicks in than they did 10 years ago. 61% more, in fact. 

As it does every year, KFF leads its report with changes in premiums. You have to go deeper into the report to find the other distressing, family-budget-busting news: despite paying more for coverage, year in and year out, the value of employer-sponsored coverage diminishes every year because of hikes in out-of-pocket obligations. 

Twenty years ago when I was in the insurance business, relatively few people were enrolled in high-deductible plans. That began to change around 2005 when Cigna, where I worked, and other big insurers embarked on what would be a massive forced migration of their customers to what was euphemistically referred to back then as “consumer-driven health plans” or CDHPs. It would prove to be a highly profitable strategy for Big Insurance–and a very costly one for the rest of us. As Kaiser Health News reported in June, 100 million of us now have medical debt, thanks primarily to ever-growing out-of-pocket obligations.

ALL ABOARD A SINKING SHIP: Our employers were quick to buy the propaganda insurers were selling. They were told that CDHPs would enable them to save big on the cost of offering subsidized coverage to their workers and dependents. That really hasn’t panned out, despite the fact that, according to KFF’s researchers, 88% of workers in an individual plan now have a general annual deductible that must be met before most services are paid for by the plan. 

Premiums have increased every year, often substantially, although the increase between 2021 and 2022 was more modest than in most previous years. For 2023, employers are getting rate increases that are significantly higher than last year, in the double digits for some employers. “This could be the calm before the storm, '' KFF President and CEO Drew Altman said in a news release, “as recent inflation suggests that larger increases are imminent.”

No wonder almost 90% of even the nation’s largest employers said in a survey last year that the cost of providing coverage to their workers would become unsustainable in the coming five to ten years.

Likely hardest hit next year, though, will be small businesses, which employ almost half of America’s workers. The cost of a family policy at a small business this year was nearly $400 more than the cost of a similar policy at a large employer. 

And there is this: 31% of covered workers at small firms are in a plan where they must contribute more than half of the premium for family coverage, compared to 7% of covered workers at large firms. And those small business employees pay more on average out of their own pockets before their health plan will begin paying. 

As KFF noted:

The average deductible for covered workers is much higher at small firms than at large firms ($2,543 vs. $1,493). Among workers with single coverage and a deductible, the average deductible amount has increased by 17% over the last five years and 61% over the last 10 years. 

And that’s not all the financial pain, by a long shot:

Regardless of the deductible, most covered workers also pay a portion of the cost when they visit an in-network physician. Many covered workers face a copayment (a fixed dollar amount) when they visit a doctor, although some workers instead have coinsurance requirements (a percentage of the covered amount)...Most workers also face additional cost sharing for a hospital admission or outpatient surgery. 

Increasingly, small employers are no longer offering coverage to their workers. That’s because they can’t afford the premiums anymore. In 2022, KFF reported, just slightly more than half (51%) of all U.S. firms offered some form of health benefits, down from 59% in 2021. 

THE FICTION OF HEALTHCARE COVERAGE (Forbes’ words, not mine.)

High premiums and unrelenting rate hikes have already priced half of our employers out of the health insurance game. For them, unsustainable is not five to 10 years out. It is now. And for employers that are still offering coverage, their workers are picking up more and more of the cost of the premiums at the same time that their out-of-pocket obligations have grown so large that many of those workers are, as Forbes reported in July, “functionally uninsured.” 

Meanwhile, health insurers are posting record profits. Employers and policymakers: now might be a good time to start paying attention and doing something meaningful about the TOTAL cost of health insurance. It’s NOT just the premiums. Your employees and constituents with insurance are going broke. The status quo most certainly is not sustainable for them.