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Costs for some key health insurance components have slowed for workers in recent years. While the deceleration is a positive trend, many workers likely still find current prices unaffordable, experts said.
“Yes, it’s slowed,” said Carolyn McClanahan, a physician and certified financial planner, and founder of Life Planning Partners in Jacksonville, Florida. “But it’s already egregious for the average person.”
Employer-sponsored health plans have many moving parts that can affect workers’ wallets. For example, workers get premiums deducted from each paycheck. Visiting the doctor generally comes with cost-sharing, like co-payments, deductibles and out-of-pocket maximums.
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The rise in worker premiums has somewhat mitigated.
Workers pay $1,401 in total premiums in 2023, up 18% 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 dynamic is more pronounced for deductibles and out-of-pocket maximums.
A deductible is the annual sum a consumer must pay out of pocket before a health insurer starts to pay for services.
Single workers have a $1,735 average deductible in 2023, according to KFF. (This cost is for employer-sponsored health plans and assumes consumers receive in-network care.)
The average deductible has grown by 10.3% in the past five years, up from $1,573 in 2018. However, that rate has slowed significantly relative to the recent past: Deductibles rose by 38.6% from 2013 to 2018, and by 54.4% from 2008 to 2013, for example, according to KFF data.
Prior to 2018, deductibles “were taking off,” said Matthew Rae, associate director of KFF’s health-care marketplace program and co-author of its annual health benefits survey.
How out-of-pocket maximums have changed
The dynamic is similar for out-of-pocket maximums, the annual limit on a worker’s cost-sharing for the year. After hitting this limit, insurers can’t ask for more co-pays, co-insurance or deductibles, for example.
The out-of-pocket maximum is “what really matters for people who spend a lot” on health care, Rae said.
In 2023, 13% of single workers have an out-of-pocket maximum of less than $2,000, while 21% of these workers have one above $6,000, KFF said. That’s hardly changed in the past five years.
However, the dynamic changed a lot during the prior five-year period. In 2013, 29% of workers had an out-of-pocket maximum below $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 from 2013 to 2018, and the share with a high limit jumped fivefold.
After years of both the maximum and deductibles increasing rapidly, “that’s not the story anymore,” Rae said.
Strong labor market is a big factor
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A reduction in the growth of worker cost-sharing requirements is largely attributable to a strong labor market in recent years, Rae said. That has led employers to make their health plans more competitive to attract and retain staff. But it’s unclear how long that strength will last; indeed, it’s been cooling in recent months.
However, consumers shouldn’t necessarily “throw up [their] hands and celebrate,” Rae added. Families with multiple dependents trying to meet an annual deductible may be enough to put middle class households in debt, he said.
One in four employers report being highly concerned about the affordability of cost-sharing within their health plans, according to KFF.
And while cost-sharing costs may have slowed, insurers may be tweaking certain aspects of health plans that make them relatively less valuable to consumers — by narrowing a plan’s roster of in-network providers, for example, said McClanahan, a member of CNBC’s Advisor Council.
How to keep costs down
Choosing the most cost-effective health plan for you generally comes down to picking “only the plan you need,” McClanahan said.
In other words, a plan with comprehensive coverage but high monthly premiums may not be the best choice for someone who doesn’t get frequent medical care.
For example, an HMO plan will generally be best for consumers who don’t have significant health problems and rarely go to the doctor, she said. Find a good primary care doctor and ask what network the doctor is on for HMOs so you can get the doctor you want, she recommended.
Of course, most employees only get a few choices during open-enrollment season, 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 efficient option may be electing one plan for the whole family, or putting a spouse and kids on one plan and the remaining spouse on the other, she said.