USA Today reported that the typical American family of four with employer-provided healthcare coverage spent $7,726 in 2018 (enough to buy a Harley-Davidson) and over $22,000 when considering the remaining cost of premiums paid by the employer. This is based upon data from the Kaiser Family Foundation. The Bureau of Labor Statistics reported median wages in 2018 at around $46,000. Health represents almost half of the cost of labor – and these costs continue to trend higher than the general rate of inflation.
I read a blog on The Hill that speculates that next year may be a year of transformation for healthcare. Equating the allowance of using Health Reimbursement Accounts (HRAs) to fund health insurance to the advent of 401(k)s, it’s not hard to envision that if employers are allowed to easily do so, they will change healthcare to a defined contribution toward premiums.
This shift would drastically change the dynamic. What portion of that $22,000 do you think employers will pay and will that subsidy keep up with inflation? For sure, it is going to lessen the scope and comprehensiveness of health insurance plans. And this is going to facilitate the shift to a public option that, because of cost pressure, will start to look like Medicaid for all.
The cost of care for the indigent will increase if there is no safety net as the responsibility to maintain coverage shifts more to the individuals. It’s clear that states that have not expanded Medicaid have a greater illness burden.
We should be very careful what we wish for.