Florida workers see health insurance taking a bigger bite of their paychecks
Florida families are seeing more of their paychecks going to health insurance as wage growth lags against escalating premiums and deductibles, according to a national health care foundation.
The state is one of five where middle-income families average spending 14 percent or more of their income on out-of-pocket insurance costs, according to the Commonwealth Fund.
The average for premiums and deductibles combined in Florida is $7,925, which is 14.5% of middle income earnings of $64,000, according to Commonwealth. The national average is $7,388, or 11.5 percent.
The foundation released its annual assessment of employer-sponsored insurance costs as millions of workers are now reviewing their 2020 plans and potential upticks in what they will pay.
Commonwealth’s latest state-by-state analysis shows no slowdown in how insurance keeps pinching paychecks.
For the past decade, income growth has not kept pace against rising premiums and deductibles.
“This is concerning, because it may put both coverage and health care costs out of reach for millions of people,” said Sara Collins, vice president for health-care coverage for Commonwealth.
Some families skip seeing a doctor when sick or filling prescriptions, she said.
Costs of employer-based health insurance vary greatly across states but the analysis found they run higher in some southern states.
The other four states where middle income families are paying 14% or more of their income for out-of-pocket insurance costs are Arkansas, Louisiana, Mississippi and Nevada, according to Commonwealth.
Why Florida faces higher costs
The Florida Chamber of Commerce said several issues come into play for why Florida workers face higher costs.
“Florida has a higher average population age, which naturally means higher premiums,” said Edie Ousley, the chamber's vice president of public affairs.
Florida also ranks 46 among the states for its prevalence of liability lawsuits against businesses compared to other states, and those costs get passed on to consumers, she said.
A September survey from the U.S. Chamber Institute for Legal Reform asked company executives about the fairness of state courts and its impact of doing business in the state.
The survey found that Florida families pay about $4,400 a year for goods and services due to the state’s lawsuit climate, she said. The city of Miami ranks among the 10 worst jurisdictions nationally.
“The result is that it is making goods and services in Florida more expensive,” she said.
At least three issues come into play in Florida, said Steve Wojcik, vice president of public policy for National Business Group on Health, which represents large employers on health policy issues.
Florida has a high rate of uninsured that results in cost shifting of the uninsured’s care to the insured, and the state has an older population that drives up care costs for all, he said.
The third reason is there are fewer large employers in Florida relative to other states and that means less bargaining power with insurers, Wojcik said.
But overall, companies across the U.S. continue to see costs tick up.
Costs increasing for everyone
“Out of pocket costs are going up for everyone, even large companies,” he said.
His organization surveys business members and found the expectation is a 5% increase in health care costs for 2020. Employers pay for 70% or more and their workers pay for the rest. That’s not expected to change, he said.
Mercer, the global human resources consulting firm, released survey results in September from 1,500 employers that found total health benefits’ costs per employee will rise by 4% next year.
Roughly 43% of the surveyed companies told Mercer they are raising deductibles or cutting benefits to hold down costs next year. That means cost-shifting to workers is expected to dip in 2020 compared to prior years, according to Mercer.
The Commonwealth analysis nevertheless found workers year after year are getting squeezed.
Employees last year in 42 states spent more than 10% of their income on out-of-pocket insurance expenses, an increase from seven states a decade ago, according to Commonwealth.
The analysis used a national survey of more than 40,000 private sector employers in 2018, based on two-year averages for premiums and deductibles to smooth out fluctuations.
The analysis did not separate out cost differences between small and large employers, according to Dr. David Blumenthal, president of Commonwealth.
About 164 million Americans under the age of 65 get their health insurance through employers yet it is increasingly unaffordable, he said.
“Ensuring that everyone can afford health insurance and healthcare will require policy fixes and systemwide efforts to get to the heart of health care cost problem, the exorbitant prices we often pay or health care in the United States,” he said.
Breaking down the numbers
In 2018, premiums and deductibles accounted for a national average of 11.5% of paychecks in middle-income households, Commonwealth found. That’s up from 7.8% in 2008.
The national average for what an employee paid last year for a single-person premium was $1,427. In Florida, the average premium for single coverage was $1,472.
The lowest annual premium for single coverage was $755 in Hawaii and the highest was $1,903 in Massachusetts, according to the analysis.
For family coverage, the average premium nationally was $5,431 last year; in Florida it averaged $5,908.
The lowest family coverage premium was in Washington at $3,862 while Virginia was highest at $6,597.
Add in the expense of deductibles, especially the prevalence of high deductible plans, families face hardships accessing health care despite being insured, according to Commonwealth.
While the analysis focused on middle income families, lower income families devote an even larger share of their paycheck to insurance.
“Research has indicated that high deductibles can act as a financial barrier to care, discouraging people with modest incomes from getting needed services and leaving them effectively underinsured,” according to the analysis. “In studies of this phenomenon, the Commonwealth Fund has defined people as underinsured if their plans’ deductible equals 5% or more of income.”
In 2018, the average deductible for a single person was $1,846 across all states; in Florida, the average single-coverage deductible was $1,963.
Hawaii had the lowest individual deductible at $1,308 and Maine had the highest at $2,447.
Family plan deductibles typically involve the single rate for each family member, according to Commonwealth.
Nationwide, the average deductible was 4.7% of income for families making $64,000 last year, nearly the 5% threshold for what Commonwealth defines as being underinsured.
Ten years ago, middle-income families saw 2.7% of their income going to their insurance deductible.
In Southwest Florida
In Southwest Florida, JW Marriott Marco Island Beach Resort decided to absorb cost increases for next year, along with reducing what employees pay for their premium share, said Amanda Cox, director of marketing and sales. That will apply to at least 95% of the 1,150 employees, she said.
"Employees will not bear the weight of the increase and the majority will see a slight decrease," she said.
JW Marriott has the advantage of being a global company and more negotiating power for its workforce health insurance plans. At the Marco Island resort, employees have a choice of at least three health plans. Deductibles are not going up, Cox said.