Catalyst for Payment Reform

The Unsustainability of Health Care Costs- Something’s Got to Give

The Unsustainability of Health Care Costs- Something’s Got to Give

At the risk of sounding like a broken record, once again Kaiser Family Foundation’s 2018 annual survey of employers demonstrated how health care costs in the United States continue to rise at an unsustainable rate. Released late last week, the report’s findings highlight that the average annual premiums for families whose health coverage is employer-sponsored has risen to nearly $20,000. Up 5% from Kaiser Family Foundation’s 2017 survey results, 20% since 2013’s results, and 55% since 2008.

These annual premium increases significantly offset any increase in workers’ wages and inflation, which were 2.6% and 2.5% for last year. What’s even more dramatic and concerning is that while annual premiums have increased 55% since 2008, wages have only risen 26% and inflation 17% over this same period. Put another way, premiums have increased at double the speed of workers’ earnings and nearly three times the speed of economic inflation.

Additionally, a Health Affair article reviewing KFF’s Employer Health Benefits Survey highlighted the burden of increased deductibles for workers at small firms compared to those in large firms ($2,132 versus $1,355), as well as their high premium shares for family coverage (workers at small firms contribute 38% of the total annual premium versus the 26% contributed by workers at larger firms). These trends represent even steeper challenges for workers who earn lower-incomes. Over the last year, we’ve consistently heard from employer members and other purchasers that benefit designs and cost-sharing burdens for workers with lower wages is becoming a top of mind issue. In response to these concerns, CPR is exploring ways to help scale best practices and spur innovations in this critical area of health care purchasing, and we hope as many purchasers as possible will join us on Thursday, November 8 to hear Sara Rothstein, Director of the Health Fund at 32BJ Benefits Fund, and Jeff Levin-Scherz, National Co-Leader of Willis Towers Watson’s Health Management Practice and Assistant Professor at Harvard School of Public Health, share their perspectives on rethinking benefit design for employees with lower incomes.

Looking at these increasing price trends price year after year, how much more can we expect costs rise? How much more cost-sharing can individuals and families bear? And most importantly, how can this be stopped? The current rate of health care costs is wildly unsustainable, something has got to give and soon!

Although increasing health care costs are a symptom of various system dynamics- price negotiations, provider consolidation and market power as a few examples Anna Matthews details in her latest Wall Street Journal piece– employers and purchasers can take initiative and assume accountability in pushing for change as the health care system evolves. And for that reason, CPR’s shared agenda emphasizing pricing and quality transparency, benefit design and provider network innovation, and value-oriented payment reform is more critical than ever.

Ready to join the health care revolution and be an active agent in change? Contact today!

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