As medical expenses and health insurance premiums skyrocket in the United States, the cost of employee health insurance that companies must bear is snowballing.
Companies are taking measures to reduce the burden of premium increases, such as raising employee contributions and expanding deductibles; however, this burden is being passed on entirely to workers, putting pressure on household finances.
In particular, while the average annual premium for workplace-provided family health insurance exceeded $28,000 this year, the amount directly borne by employees averaged $7,471 per year. Even those enrolled in company-provided health insurance face a situation where hundreds of dollars are deducted from their monthly salaries for premiums, and they must also bear the cost of medical treatment separately.
According to a report by the Wall Street Journal (WSJ) on the 22nd citing the latest survey results from the non-profit healthcare policy research institute Kaiser Family Foundation (KFF), employer-provided family health insurance premiums rose 5% this year compared to the previous year, surpassing an annual average of $28,000.
In contrast, the premiums paid by employees surged by 9% from last year to $7,471. This represents an annual increase of $621, meaning that an average of approximately $623 is being deducted from employees’ salaries each month for health insurance.
The fact that the increase in employee contributions is higher than the rise in total health insurance costs implies that companies are shifting a greater burden of rising medical expenses onto their employees.
The problem is that the situation is highly likely to worsen next year.
According to a survey conducted by global HR and insurance consulting firm Marsh on over 1,800 U.S. companies, health insurance costs per employee are projected to rise by an average of 8.2% by 2027. This is the highest growth rate since 2003.
If companies do not take cost-cutting measures, such as changing insurance products or reducing coverage, the expected rate of increase will reach an average of 11%. Considering that the expected cost growth rate for this year was 6.7%, the burden of health insurance on companies is growing increasingly heavier.
Many companies are changing their insurance products, primarily because it is difficult to keep up with the rapid rise in medical costs. As hospital treatment and inpatient fees continue to rise, medical expenditures for insurance companies are surging due to the increased use of expensive drugs, such as cancer and obesity treatments.
According to a KFF survey, the average annual premium contribution for employees enrolled in family health insurance at small and medium-sized enterprises (SMEs) with 10 to 99 employees reached $9,687. In contrast, the average burden for employees at companies with 200 or more employees was $6,840, indicating that SME employees pay $2,847 more annually.
SME employees directly bear an average of 37% of total family insurance premiums, whereas the burden rate for large enterprise employees was only 25%. Furthermore, the survey found that 32% of SME employees were enrolled in insurance plans where they directly pay more than half of the family health insurance premiums. This figure was merely 6% for large enterprise employees. Under these circumstances, companies are facing the difficult choice of controlling costs while maintaining employee benefits.
A Marsh survey revealed that 59% of companies plan to implement cost-cutting measures, such as restructuring insurance plans, to reduce health insurance costs next year. Approximately two-thirds of large enterprises are expected to increase the proportion of premiums borne by their employees.
In addition to raising insurance premiums, measures such as increasing deductibles, raising out-of-pocket expenses for medical treatment, reducing insurance networks, and restricting coverage for certain expensive medications are being discussed as means to cut costs.
However, there are concerns that these measures will increase the costs workers bear when using medical services, potentially leading them to postpone or forgo necessary medical treatment.
Experts advise that workers approaching the enrolment period for workplace health insurance next year should carefully compare not only premiums but also deductibles, copays, and maximum annual out-of-pocket expenses.
In particular, they should be aware that while choosing a high-cost insurance product with low premiums can save money for those who rarely visit hospitals, it could actually increase overall medical expenses for families with chronic illnesses or those requiring regular treatment.