Our scorecard ranks each state’s health care system based on how well it provides quality, affordable, and equitable care. Read the report to see your country’s position.
Small Business Health Insurance Costs 2020
More than a decade after the passage of the Affordable Care Act (ACA), employer health insurance remains the backbone of health insurance in the United States, and more than half of Americans under age 65 pini – covers approximately 163 million people.
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Among those without work-related insurance coverage, fewer were insured than during the previous recession. That’s because the ACA’s marketplace subsidies and expansion of Medicaid eligibility provided a safety net for those who couldn’t access another employer’s plan or COBRA.
A major challenge for many employees and their families is their ability to pay their premiums and the cost protection provided by their employer’s health plan, including deductibles. We focused on middle-income people participating in employer plans and examined the latest data from the Federal Health Care Expenditure Survey, which has an insurance component, to answer these questions.
Over the past decade, premiums and deductible contributions to employer plans have accounted for an increasing share of employee income. These costs accounted for 11.6 percent of median household income in the United States in 2020, up from 9.1 percent in 2010 (Table 1).
In 2020, the share of employee bonus costs was 6.9% of the average income. That’s up from 5.8 percent in 2010, though the share has barely changed since 2017.
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The average deduction for middle-income families was 4.7 percent of their income. In 2010, this share was 3.3 percent.
Premiums and deductibles were 10 percent or more of median household income in 37 states in 2020, up from 10 states in 2010 (Table 1). In Mississippi and New Mexico, workers in the middle of the income distribution experienced the highest potential costs relative to income (19.0% and 18.1%, respectively).
Combined, the average total cost of premiums and potential deductibles for individual and family insurance policies rose to $8,070 in 2020 (Table 2). That ranged from $528 in Hawaii to over $9,000 in Florida, Kansas, Missouri, South Dakota and Texas.
In 2020, US workers with employer-provided insurance were responsible for paying about 21 percent of their total private insurance premiums (Table 3). It averaged $1,532 nationally and ranged from $852 in Hawaii to $1,895 in South Carolina (Table 4a).
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Workers with family subscriptions pay slightly more of their premium: 29 percent on average (Table 3). But in four states (Florida, Louisiana, Mississippi and Nevada) workers were responsible for 37 percent or more of their families’ premiums. These percentages averaged $5,978 and ranged from $4,610 in Washington to $7,674 in Florida (Table 4b).
Contributions were more than 8.5 percent of median income in Florida, Louisiana, Mississippi, Nevada, New Mexico, Oklahoma, South Carolina and Texas. In Mississippi, the increase was 12.7 percent (Table 1). In 2010, Mississippi was the only state where middle-income households spent a large portion of their income on employer contributions.
Employees at low-wage companies contributed a larger share of total premiums to cover the average family, and therefore a larger dollar amount on average, than employees at high-wage companies. This difference was also evident for single coverage (data not shown). Although small business employees contribute more household contributions on average than large business employees, other studies show that this pattern is evident in both small and large companies.
While many employees pay higher premiums relative to their earnings, they also face higher deductibles. Research shows that high deductibles can be a financial barrier to care and keep those with low incomes from getting the services they need.
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In 2020, the average deductible for single policies was $1,945 and $2,517 in Montana (Table 5).
The Commonwealth Fund tracks the proportion of people who have uninsured health coverage, meaning their plan does not adequately protect against high out-of-pocket costs and deductibles, excluding premiums.
Deducting 5 percent or more of household income is one of our minimum measures to avoid being uninsured.
In nearly half of the states, people in the middle of the income distribution had median deductibles that left them uninsured in 2020. In 2010, workers in only one state faced an average deduction that met this threshold.
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In 2020, the highest median discount on median income was 7.4 percent in New Mexico (Table 1).
The increase in the cost of employer health insurance is due to the increase in health care costs. From 2015 to 2019, per-person spending on employer plans rose about 22 percent, outpacing inflation and economic growth, according to new data from the Institute for Health Care Spending.
Prices paid by health care providers and pharmaceutical companies were the main driver, accounting for nearly two-thirds of the total cost increase.
These high prices are the main reason why the amount employees pay for their premiums and deductibles increases over time. As incomes do not keep pace, health insurance takes up an increasing portion of the family budget. Worse, employees are offered salary incentives for company benefits, which often cover health care costs.
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These costs add to the financial burden faced by American families. Housing and food accounted for 34 percent of median household income in 2020.
For families with children under the age of five, the average cost of child care in 2017 was 13 percent of family income.
Health care costs prevent families from getting timely medical care and threaten their financial security. In a 2020 Commonwealth Fund survey, more than a third of adults with commercial insurance plans with deductibles of $1,000 or more said they did not need medical care because of the cost.
More than 40 percent of adults with deductibles of this size reported problems paying medical bills or paying off medical debt.
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In fact, problems with medical bills and debt have become inherent in our health care system. The media is awash with stories of patients receiving strange unsecured bills.
The article states that 17.8 percent of people in the United States have filed medical debt with a collection agency, with the highest debt burden associated with people living in southern states and poor zip codes.
Medical debt also has an indirect financial impact. Of those with employer-sponsored insurance who had trouble paying medical bills or medical debt, 40 percent said their credit scores were lower because of their medical bills, and 40 percent had trouble paying the bills. took out credit card debt and 35 percent used them the most. or to pay off all their savings.
The ACA’s subsidies for marketplace plans and the expansion of Medicaid eligibility provided an important safety net for those whose employer health insurance plans were expensive or canceled. The Reconstruction and Improvement Act, now under consideration in Congress, would make the most sweeping improvements to the ACA since it was passed in 2010. These include significant increases in marketplace premium benefits and a new no-contribution marketplace coverage option for Medicaid-eligible adults who do not have access to Medicaid in their states. In addition, the bill would help more people with non-employer-purchased plans take advantage of marketplace benefits. Additional actions to expand and improve health insurance adequacy for US workers may include:
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The cost pressure of commercial insurance in the United States is a persistent problem that undermines the economic well-being of Americans. With the Better Recovery Act, Congress is showing how to build on the Affordable Care Act to cover the remaining uninsured and make health care more affordable. But Congress can do more to reduce deductibles and out-of-pocket costs when people get Medicare. At the same time, policymakers, insurers, employers, health care providers, and drug manufacturers must work together to combat high health care costs, which are a major part of the increasing cost pressures for many working families.
This data feed analyzes country-by-country trends in health insurance premiums and private-sector employer discounts for the under-65 population between 2010 and 2020.
Data on total insurance costs, employee premiums, and deductibles from the insurance component of the Medicare Expenditure Panel Survey (MEPS-IC) are from the Federal Agency for Healthcare Research and Quality’s annual employer taken from the survey. MEPS-IC is administered in workshops. Facilities in many places represent a workplace rather than a business that employs people. Workplace organizations are selected annually from the U.S. Census Bureau’s Trade Register – a confidential list of such organizations in the United States. Once selected, facilities will be contacted by email and phone to establish a contact person with information about the health insurance coverage offered.
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