Rising cost of private insurance unsustainable for 180 million families, study finds
A new research letter published in JAMA Internal Medicine spells out how expensive private health insurance is for American families, where the average cost has increased from $3,920 to $4,907 between 2007 and 2019. [1]
The total spending was calculated by adding premiums, copays and out-of-pocket expenses for care, including on prescription drugs. The study authors, led by Sukruth A. Shashikumar, MD, from Brigham and Women’s Hospital, wrote that the increasing cost makes healthcare virtually unaffordable for 180 million families who have experienced increased premiums and decreased benefits as a result of private insurance.
“This issue is particularly salient for those with low incomes, who are more susceptible to debt, bankruptcy, and worse health outcomes due to poverty. Understanding changes in the financial burden of health care has important implications for patients and policymakers, who have made addressing care affordability a priority,” the authors wrote.
The researchers gathered their data by examining the finances of 96,075 families, as well as a weighted cohort of 83.5 million families. Financial medical burden was calculated on average at 8.4% of post-subsistence income in 2007. That number climbed to 9.8% by 2019.
For low-income families who did not qualify for Medicaid and had private insurance, the burden of medical expenses reached 23.5% in 2007 and hit 26.4% in 2019. Families were classified “low income” if they brought in less than 200% of the federal poverty line, which in 2019 was $25,750 in annual income for a family of four.
“In this national cross-sectional study of privately insured US families, inflation-adjusted health care spending increased from 2007 to 2019, largely owing to increasing contributions to premiums. Annual financial medical burden increased significantly, both overall and among low-income and higher-income families,” the authors noted.
The cost of medical expenses increased from 5.4% in 2007 to 6.5% in 2019 for higher income families.
“Our findings highlight the need to strengthen financial safeguards for low-income families, including those who do not meet enhanced state definitions of Medicaid eligibility and are considered well-resourced enough to rely on private insurance,” the authors said.
As for a solution, the authors did not mention a single-payer insurance system but did call for better policy to alleviate inflating costs of private insurance and reduce medical expenses, especially for families falling below the poverty line.
“[Our findings] suggest that, without stronger emphasis on regulating premiums, controlling out-of-pocket costs is necessary but not sufficient to alleviate the burden of healthcare,” they added.
The factors contributing to risings costs included the aging of the population over time, but drug costs, healthcare service mergers, and increased profits for insurers have also significantly increased the cost of care.
“Policymakers might consider strengthening income-based subsidies, improving drug price negotiation, and bolstering antitrust scrutiny to help contain the costs of premiums [to address these contributing factors],” the authors concluded.
The full study is linked below.
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