According to new data from the Kaiser Family Foundation (KFF)'s 25th Employer Health Benefits Survey, the cost of employer-sponsored health insurance in the US has increased significantly. As of July 2023, the average annual premium for individual coverage reached $8,435, while family coverage averaged $23,968. These figures represent a 7% increase for both types of coverage compared to the previous year.

Not only are premiums soaring, but workers are also shouldering a larger share of the costs. In 1999, workers contributed $318, or 14.4% of the average annual premium for individual coverage. Fast forward to 2023, and worker contributions have risen to $1,401 out of the $8,435 total, accounting for 16.6% of the overall premium.

Andrea Ducas, Vice President of Health Policy at the Center for American Progress, expressed concern about the growing strain on employees and employers. She stated that the escalating cost of health insurance makes it increasingly challenging for both parties to afford coverage, calling the situation "untenable."

The affordability of healthcare remains a pressing issue in the United States. Findings from an October 2023 survey conducted by the Commonwealth Fund revealed that 38% of US adults delayed or skipped healthcare and prescription drugs due to financial constraints, including 54% of individuals with employer-sponsored coverage.

Matthew Rae, Associate Director of the healthcare marketplace project at KFF, highlighted the impact of cost-sharing provisions within employer-sponsored health plans, particularly for low-wage workers. These provisions often raise concerns about affordability and hinder individuals' ability to utilize their health insurance effectively.

Factors contributing to the rising premiums include healthcare utilization rates and the cost of care. Rae speculated that a surge in healthcare service utilization, delayed during the pandemic, as well as the introduction of expensive new treatments, may be driving up costs. Additionally, the consolidation of healthcare markets and providers' ability to command higher prices are contributing factors.

The tight labor market also plays a role in escalating premium expenses. Employers are keen on offering attractive benefits packages to secure talented employees, leading to higher premiums. Rae emphasized the importance of the labor market in shaping healthcare offerings, noting that employers are becoming more selective when considering benefit cuts.

While premiums continue to rise, the growth in deductible costs, the amount individuals must pay for covered healthcare services before their insurance kicks in, has slowed in recent years. The average deductible for single coverage in 2023 was $1,735, which is only 10% higher than five years ago. This slower growth in deductibles may reflect employers' concerns about the affordability of higher out-of-pocket costs, particularly among lower-wage workers.

According to the KFF survey, 90% of US workers now have a deductible, compared to 55% in 2006. This indicates the increasing complexity of cost-sharing arrangements over the years. Employers recognize this concern, with 25% of those with 50 or more employees believing their workers have a "high" level of concern about cost-sharing affordability.

Andrea Ducas stressed the urgent need to address the rising cost of care, as health insurance has become increasingly unaffordable for people to use, while employers face growing challenges in providing coverage. Finding solutions to bring down healthcare costs is crucial for the well-being of both workers and businesses.