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Employer Dilemma: Health Insurance Costs Top $20,000 for Families in Texas

Employers are working to reduce healthcare costs as they rise, but the pandemic has stalled any major reforms.
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Doctor and patient iStock

According to The Commonwealth Fund, healthcare insurance costs  for a family surpassed $20,000 for the first time in 2019 and are up more than 44 percent since 2010, when the average cost for family coverage was $14,526. Employers subsidize a great deal of these costs and are increasingly focused on reducing their healthcare spending, which is often one of the top business expenses.

The story is worse for Texans. Texas’s family coverage is more than $500 higher than the average for the entire country and rose more than 4 percent each year on average between 2010 and 2019. For a family health plan, employees contributed $6,655 per year, which was more than $900 more than the national average for family contribution. That also means the employer is picking up around $14,000 of the costs for a family.

Amid the pandemic, employers looking at health pans didn’t make any drastic moves. Despite rising costs, the pandemic-induced instability meant that most employers didn’t want to change much about their health plans despite, according to the Dallas-Fort Worth Business Group on Health President and CEO Marianne Fazen. “Because it was so uncertain, nobody knew how many employees would be laid off, what changes would be happening, how working from home was going to impact things,” she says. “So senior management pretty much left the benefits department just to continue to manage things as usual without throwing in many dramatic changes, even for next year.”

While premiums rose from 2018 to 2019, they went down in 2020, ranging from 12 to 27 percent less that in previous years. This was due to the pandemic, delayed care, and people avoiding going to the doctor for safety reasons. According to data from actuarial and consulting firm Milliman, routine care was down 37 percent. A Kaiser Family Foundation survey found that 48 percent of respondents deferred medical care this year. For some, missing an appointment might not have much impact, but 11 percent of those studied said their medical condition worsened because of the missed care. The pandemic also caused a 40 to 60 percent reduction in cancer and other screenings, possibly resulting in higher costs and worse outcomes down the road. “What that means is that these people won’t be diagnosed until the stages have already progressed,” Fazen says. “Then, of course, it’s harder to treat, and the survivability is much lower.” Milliman says costs are expected to jump between 6 and 14 percent next year.

Economic struggles have tightened budgets in nearly every industry, with salary cuts and raise freezes impacting employees’ finances, but employers are also looking for ways to cut costs. Fazen says employers will continue to look for quality and efficient care for the enormous cost areas of specialty pharmacy, musculoskeletal procedures, and cancer treatment and will also embrace telehealth, which has proven to be both convenient and cost-effective.

Fazen says the employers are working on connecting employees to primary care physicians who can manage care, give patients access to their health information, and guide them to specialists who follow research-based methods to avoid unnecessary treatment and costs. But many practitioners can’t provide that level of care or are incentivized otherwise.

“It’s changing the way healthcare is being delivered. There’s just not going to be a free rein anymore,” Fazen says. “Employers are not going to continue raising their rates for employees. Employers are quite sensitive to that, so they’re working hard to reduce those costs for their employees, which means they’re required to get engaged in routine healthcare and preventive care.”

Even though costs are are likely to go up in 2021, it isn’t all bad news for North Texas. Because the region has several large health systems without any dominant organization, there is greater competition, which can mean better payers and patients. “They’re all competing with each other to be better at managing the costs and delivering high-value care,” Fazen says. “I think that’s a good thing.”

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