Escalating health care costs threaten to erode the income of the more than 160 million people who depend on employer-sponsored coverage. Without real changes to our health care system, annual health care spending for families of four with employer-sponsored coverage will grow from nearly $17,000 today to over $39,000 by 2019—or from 19 percent of family income to 31 percent.
Most American families depend on employer-sponsored insurance for their health coverage. Yet premiums and out-of-pocket expenses for families with employer-sponsored plans are rising at an unprecedented pace. Without health reform, health care costs will continue to eat away at family budgets, compromising families’ ability to pay their bills, buy a home, or save toward long-term goals such as their retirement or their children’s education. Health reform promises to slow cost growth by promoting cost-saving innovations, improving payment systems, reducing waste and inefficiencies, and modernizing the health care infrastructure. The uninsured are not the only ones who stand to gain from health reform—the millions of Americans who receive coverage from their employers will also see improvements in their coverage.
The Milliman Medical Index measures annual employer and employee spending on health insurance premiums, as well as employee out-of-pocket cost sharing. We calculated the MMI’s historical average annual rate of growth to trend forward the annual health care spending for a typical family of four with employer-sponsored coverage. For family income, we relied on Current Population Survey historical median income tables of families by size, and because employer-provided health insurance is part of compensation, and added MMI estimates of the employer contribution to premiums. We developed income projections based on the CBO’s average annual wage increase projections, and calculated its historical average annual rate of growth to trend forward the employer share of premiums.