For more than 2 decades, the Kaiser Family Foundation (KFF) has produced an invaluable annual survey of employer-sponsored insurance (ESI). This year’s report, which the authors summarized in a companion article published in Health Affairs, provides insights into key characteristics of the insurance model that most working-age Americans and their families rely on to access medical services.
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The following are some of the report’s numerous interesting data points:
- A relatively small number of large firms provide an outsized share of workers’ health coverage. Firms that employ more than 1000 workers account for just 0.4% of the 3.2 million firms operating in the US but are the sources of coverage for 57% of the entire population enrolled in ESI. Seventy-seven percent of workers who are offered an employer plan accept it.
- The average premium for family coverage in 2022 was $22,463, which is just 1.0% more than the average premium in 2021. Over the past decade, premiums for ESI family coverage have risen at an average annual rate of 3.6%. The pattern for single coverage is similar. Premiums for coverage in 2022 were likely set before insurers and firms were fully aware of surging inflation. Consequently, some catching up in 2023 is now expected.
- The average worker premium in 2022 for family ESI coverage is $6,106. From 2012 to 2022, the family coverage premiums for workers employed by large firms increased at an average annual rate of 3.6%.
- ESI premiums are large relative to average wages. The Bureau of Labor Statistics (BLS) estimates the median wage in the third quarter of 2022 at $55,640 annually (the data is reported as a weekly average wage). Thus, the average premium for ESI family coverage is 40% of the median wage. Households often have more than one wage earner, but, even so, health benefits are now sizeable relative to the cash wages of millions of American workers.
- The average deductible for single coverage was $1,763 in 2022, up 5.6% from 2021. From 2012 to 2022, the average deductible increased at an average annual rate of 4.9%.
- Most workers have more than one type of ESI option from which to choose, although these workers are concentrated in the largest firms. Among all workers enrolled in ESI in 2022, 61% had more than 1 plan option but for workers in firms with 200 or fewer employees, 63% were offered just one plan. In firms with 5000 or more workers, 32% of the employees had 3 or more choices, and 45% had 2 choices.
- The preferred provider organization (PPO) is the most popular health plan design among ESI enrollees. In 2022, 49% of all persons enrolled in ESI are in PPO plans, with 29% in high-deductible health plans with savings account options (HDHP-SOs) and 12% in health maintenance organizations (HMOs). Ten years ago, HDHP-SO enrollment accounted for just 19% of the total ESI census.
- Among the workers who were offered just one plan in 2022, 55% are enrolled in PPOs, 28% in HDHP-SOs, and 5% in HMOs.
- For workers enrolled in HDHP-SO plans which utilize health savings accounts (HSAs), the average employer contribution in 2022 to the HSAs is $1,117 for family coverage and $648 for single coverage. The average deductible for HDHP-HSA plans for families is $4,533 and $2,458 for individuals.
- Workers in HDHP-HSA plans face larger out-of-pocket costs for their deductibles than do their counterparts in non-HDHP plans even after considering employer contributions to HSAs. In 2022, for single coverage, the average deductible for non-HDHP plans is $1,387, while it is $1,733 for those in HDHP-HSA plans after subtracting the average employer HSA contribution.
- Most firms offer ESI coverage that utilizes tiered cost-sharing for prescription drugs. In the typical design, covered drugs are sorted into cost-sharing tiers based on where the products fall in the drug plan formulary (preferred drugs are available at lower rates of cost-sharing). In 2022, of the workers enrolled in ESI coverage, 90% are in plans with 2 or more cost-sharing tiers for prescription drugs. For workers in plans with three or more tiers, the average cost-sharing per prescription rises from $11 in the first tier to $67 in the third.
- The availability of telemedicine options in ESI has increased rapidly in recent years. In 2022, in the ESI plans that are the most popular among workers, 90% covered some telemedicine services, up from 31% in 2015.
- ESI has been under increasing financial pressure in part because of the high prices many of the plans are forced to pay for certain services, particularly for those offered by hospital systems. However, only a small percentage of firms are aware of the availability of state-facilitated all claims databases that are designed to help payers identify excessive pricing. Among the largest firms (those with at least 5000 workers), just 22% were aware of state-run databases that they could access to better control their costs.
ESI has been under increasing financial pressure for much of the last two decades, and yet it has proven resilient. It remains popular both with firms and workers.
James C. Capretta is a columnist for State of Reform and a senior fellow at the American Enterprise Institute.