Why Consumer Issues Are Rising on the Health Agenda

This was published as a Wall Street Journal Think Tank column on September 22, 2015.

Data on health-care deductibles and inflation and workers’ earnings over the past five years, according to the Kaiser Family Foundation/HRET Survey of Employer-Sponsored Health Benefits.

Employer health insurance premiums rose 4% this year, according to the 17th annual employer health benefits survey from the Kaiser Family Foundation and the Health Research and Educational Trust, published Tuesday. That caps a (remarkable) 10-year run of moderate increases, averaging 5%. But the slowdown in health-care cost growth has been all but invisible to average consumers because their out-of-pocket costs have been rising at a time when their wages have been relatively flat.

Nothing shows this more clearly than recent growth in deductibles. As the chart above illustrates, over the past five years deductibles have risen almost seven times faster than wages and almost three times faster than premiums. Growth in deductibles has been especially pronounced in smaller firms, where the share of covered workers with a deductible of $1,000 or more has grown from 16% in 2006 to 63% in 2015. If the “Cadillac tax” on more generous health coverage plans goes into effect as scheduled in 2018, it would lead to a spurt in deductibles as employers raise deductibles to try to keep premiums down and avoid the tax.

Public support may be gathering for a health-care agenda that focuses on consumer issues such as deductibles and drug costs, which means that soon the Affordable Care Act may not dominate the health agenda as it has since 2009, just before the law passed in 2010.