North Carolinians spend a greater share of their money on health care costs than the national average.

A new report shows that in 2018, North Carolinians paid almost 14% of the state’s median income on employer-sponsored health plan premiums and deductibles, up from around 11% in 2008. For comparison, in 2008, the average American spent just under 8% of median income on premiums and deductibles. By 2018, that rose to 11.5%.

About half of Americans get health insurance through their employers, according to the report published by The Commonwealth Fund, a nonprofit research institute. Using federal data from a survey of over 40,000 American employers, the researchers concluded that premiums and deductibles have grown faster than income, which means they’re taking a higher percentage of family incomes.

The data did not consider copays, which means that people are likely spending even more of their income on health care costs. “Health care and health insurance coverage are essential to  people’s well-being and financial security,” said David Blumenthal, president of the Commonwealth Fund. “And yet employer health care coverage is leaving millions of families exposed to high and potentially unaffordable costs.”

Next year, the penalty for not having health insurance will be $0, effectively eliminating the individual mandate created by the Affordable Care Act. Not only do high premiums keep people from choosing insurance, but high deductibles can keep even insured folks from using health care, said the report authors.

When deductibles add up to 5% or more of a family’s income, the Commonwealth Fund calls those families underinsured. Underinsured families are the norm in 18 states, including North Carolina, where average deductibles are $3,325, or 5.7 percent of median income. Many families fall into the “family coverage glitch.”

For single-person policies, employees qualify for marketplace subsidies if they spend more than 9.86 percent of their income on premiums. But that doesn’t work for family plans: in NC, families spend an average of 10.25 percent of their income on premiums but don’t get the subsidies. “If people are facing premium costs that high, at which point do they decide to not continue having insurance?” Collins asked.  “At what point does it become a matter of public policy to think about addressing that affordability issue?”

North Carolina is one of 14 states which has not expanded Medicaid, which would allow people who don’t qualify for Medicaid, but who earn less than 138 percent of the poverty level ($35,535 for a family of four), to pay little or no premiums for Medicaid coverage rather than buying their plans on the marketplace.

All the costs that go into the Commonwealth Fund calculations are increasing: deductibles, premiums paid by employers and how much employees spend toward those premiums. In 2008, about 71 percent of employer-sponsored insurance plans included deductibles; by 2018 that number was 87 percent.

Employers with fewer than 50 employees use insurer-offered plans that meet mandates from  Affordable Care Act, explained Hughes Waren Jr. of the North Carolina Association of Health Underwriters. For example, the federal out-of-pocket limits for family plans are rising to $16,400 in 2020 versus $12,600 in 2014. “Larger employers have greater control of trying to keep their benefit plan the same as it was the year prior,” said Waren, who has worked with businesses with 10 employees to those with more than 700 employees. “In the groups that are over 50, over 100, you don’t see much of their out-of-pocket limit or deductibles changing much over the last five, six years.”

Part of the problem is that employers aren’t motivated to lower employee contributions, the report said. David Radley, a co-author, used Massachusetts, with an average 26 percent employee contribution toward premiums, as an example. In that state, employers compete for employees by offering more generous benefits. “The biggest source of increased costs in our health care system right now seems to be the increasing prices that are charged by providers of care to commercial insurers and that are passed on to employers,” Radley said.

Waren, who has worked in health insurance since 1997, doesn’t think that North Carolina employers are passing the buck to employees, and attributes the higher percentage here to lower median income: $58,038 in 2018 versus a national average of $64,202.

“The issue, in my opinion, is not the insurance premium. The issue is the cost of care,” Waren said, referencing hospital mergers causing higher prices. “The higher the hospital costs are, the [more] insurance companies have to adjust their base for plans to cover the cost of those rates.”

Since many large employers are so scattered, they can’t negotiate lower prices, Radley said, citing Walmart, the nation’s largest employer, as an example. “When they go to the local hospital and say, ‘Give us a better price,’ the local hospital says, ‘No thanks.’ They can live without that segment of the population,” Radley said. “And if that’s true for Walmart, it’s true for everybody.”

Comments