Skyrocketing worker health costs have slowed, but they are already ‘glaring,’ advisor says

Costs for some key elements of health insurance have slowed for workers in recent years. Although this slowdown is a positive trend, many workers likely still find current prices unaffordable, experts say.

“Yes, it’s slowed down,” said Carolyn McClanahan, a physician and certified financial planner, and founder of Life Planning Partners in Jacksonville, Florida. “But it’s already obvious to the average person.”

Employer-sponsored health plans have many moving parts that can affect workers’ wallets. For example, workers see bonuses deducted from each paycheck. Visiting the doctor usually comes with cost-sharing, such as co-pays, deductibles, and out-of-pocket maximums.

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The rise in worker premiums has eased somewhat.

Workers pay $1,401 in total premiums in 2023, an 18% increase from 2018, according to KFF, a nonprofit health care data provider. They increased by an equivalent amount from 2013 to 2018, but had swelled by 39% from 2008 to 2013.

The dynamics are more pronounced for deductibles and maximum out-of-pocket expenses.

A deductible is the annual amount a consumer must pay out-of-pocket before a health insurer begins paying for services.

Single workers have an average deductible of $1,735 in 2023, according to KFF. (This cost is for employer-sponsored health plans and assumes consumers receive in-network care.)

The average deductible has increased 10.3% over the past five years, up from $1,573 in 2018. However, this rate has slowed significantly compared to the recent past: deductibles increased 38.6% from 2013 to 2018 and 54.4% from 2008 to 2018. 2013 for example, according to KFF data.

Before 2018, franchises were “taking off,” said Matthew Rae, associate director of KFF’s healthcare market program and co-author of its annual health benefits survey.

The dynamic is similar for maximum expenses, that is, a worker’s annual cost-sharing limit for the year. Once this limit is reached, insurers can no longer charge additional co-pays, coinsurance or deductibles, for example.

The maximum amount you have to pay is “what really matters to people who spend a lot” on health care, Rae said.

In 2023, 13% of single workers have a maximum payable of less than $2,000, while 21% of these workers have a maximum payable of more than $6,000, KFF reported. This has hardly changed over the past five years.

However, the dynamics have changed significantly over the previous five years. In 2013, 29% of workers had a maximum payable of less than $2,000, while only 4% had one of $6,000 or more, according to KFF. In other words, the share of people with a relatively low limit was halved between 2013 and 2018, and the share of people with a high limit increased fivefold.

After years of rapidly increasing maximums and deductibles, “that’s no longer the case,” Rae said.

A reduction in growth in cost-sharing requirements for workers is largely attributable to the strong labor market in recent years, Rae said. This has led employers to make their health plans more competitive to attract and retain staff. But we don’t know how long this force will last; in fact, the situation has cooled in recent months.

However, consumers should not necessarily “throw up” [their] hands and celebrate,” Rae added. Families with multiple dependents trying to meet an annual deductible can be enough to send middle-class households into debt, he said.

According to KFF, one in four employers say they are very concerned about the affordability of cost sharing within their health plans.

And while cost-sharing costs may have slowed, insurers may be tweaking aspects of health plans that make them relatively less valuable to consumers by, for example, reducing the list of in-network providers. a plan, said McClanahan, a member of CNBC’s advisory board. .

Choosing the most cost-effective health plan for you usually comes down to choosing “only the plan you need,” McClanahan said.

In other words, a plan offering comprehensive coverage but high monthly premiums may not be the best choice for someone who doesn’t receive frequent medical care.

For example, an HMO plan will generally be better for consumers who don’t have significant health problems and who rarely go to the doctor, she said. Find a good primary care doctor and ask what network they’re in for HMOs so you can find the doctor you want, she recommended.

Of course, most employees only have a few choices during the open enrollment period, so there’s not much they can do on an individual level, McClanahan said. At the family level, however, there may be other variables: if both spouses work, the most effective option may be to choose a plan for the whole family, or to place one spouse and their children in a plan and the rest of the spouses in the other. said.