Las Vegas Sun

January 16, 2022

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Premiums, deductibles continue upward climb for insured Nevadans

The average Nevadan is paying nearly 14% of their annual salary to cover health insurance premiums and deductibles, a steep climb from the 8% they paid on average just a decade ago, according to a new study.

The study by The Commonwealth Fund found that the employee cost for health care premiums and deductibles increased about 30% to just under $8,900 annually from 2019 to 2020 for the average Nevada worker. The study analyzed data from changes in employer health plans in the United States from 2010 to 2020.

The report, released Wednesday, indicates spending on premiums and deductibles for Nevadans went from $6,812 in 2019 to $8,8842 in 2020 to mark a 29.8% change. That equates to 14% of the median pay of Nevadans, which the report put at $61,249. In 2010, Nevadans were paying $3,898 in premiums and deductibles, when the median income was $47,050.

More troubling: The increase nationally from a year ago in premiums and deductibles was just 3.4%, going from $7,806 to $8.070.

The study drew from a federal survey of U.S. employer health plans that includes over 40,000 private-sector employers in 2020.

For health insurance premiums alone, Nevadans saw a 41% increase from $4,066 in 2019 to $5,758 in 2021.

Sara Collins, lead Commonwealth study author, inspected two trends in employer coverage over the last decade: the average cost workers pay in premiums and deductibles and how these costs compare to each state’s median income.

In Nevada, costs increased across every category — employee-sponsored insurance premium costs; employee contribution to premium costs; and employee deductible costs, single coverage — for both single and family coverage.

The main driver of premium costs, Collins said, are health care costs, or prices that are paid to hospitals and other providers. Because of this, health care premiums tend to increase every year, though not in all states, she said.

As would be expected, premiums for employee-sponsored insurance for single coverage increased over the decade. The average cost for a Nevadan with single coverage increased by $1,722, or 3.1%, in premium costs over the 10-year period, from $4,771 in 2010 to $6,493 in 2020. (This despite a $93 decrease from 2019 to 2020).

It’s a similar trend nationally, as the premium for single coverage rose from an average of $4,940 in 2010 to $7,149 in 2020, a difference of $2,209, or a 3.8% increase, according to the report.

And the average cost of premiums for Nevada families spiked from $12,496 in 2010 to $19,524 in 2020, a 4.6% increase and $7,028 difference, according to the report. Family coverage in Nevada, on average, rose $804 from 2019 to 2020.

Additionally, the study found only about 6% of working-age adults reported losing their employer insurance during the pandemic. This is because the workers who lost their jobs likely already did not have employer-based coverage, Collins said.

“Industries that were disproportionately impacted by the recession and by COVID were industries that have historically had low levels of employer-based coverage, like the restaurant industry in particular, retail, hospitality — they have smaller shares of employer-based coverage,” she said.

When people have higher out-of-pocket costs and deductibles they seek out less medical treatment, Collins said. A layered effect comes in the health care they must pay for but cannot afford, she said, and so over time people become thwarted by medical bills that often turn into debt.

The result, Collins said, is a cutback on spending for other items, even necessary ones like heat, food and rent.

“It really does … have a big influence, these high health care costs, and often long-term effects on people’s ability to sustain the rest of their finances and the rest of their life and enable them to move forward, in terms of education and career,” she said.

These high health care prices also disproportionately affect uninsured workers, specifically Black and Latino people and low-income workers, according to a December 2021 study from the Kaiser Family Foundation. Even those who are covered by health insurance suffer under these high prices, with approximately 46% of insured adults reporting issues paying for their out-of-pocket care, 27% with affording their deductible, according to the same study.

In Nevada, Silver State Health Insurance Exchange and Nevada Health Link connect residents without employer-sponsored health insurance to affordable state-sponsored options, with some premiums as low as $0, said Janel Davis, communications officer of the two groups. The no-cost premiums, Davis said, were made possible through the American Rescue Plan — the COVID-19 stimulus package approved by Congress last March.

The annual open enrollment period for the Silver State Health Insurance Exchange — and the Affordable Care Act (ACA) Marketplace — ends Saturday. (Information is available at nevadahealthlink.com.)

Nevada Health Link has over 97,000 people enrolled in its programs, Davis said, a number that has increased every year since 2014, when the ACA’s Health Insurance Marketplace began. The number has continued to climb throughout the pandemic.

“I think there’s a lot to attribute to COVID and people losing their jobs and therefore their health insurance,” Davis said. “I think a lot of the exchanges nationwide are experiencing an increase. Some are just remaining steady, but Nevada specifically has seen a pretty big increase in enrollment.”

Policy change

The White House touts Build Back Better as “the biggest expansion of affordable health care in a decade.”

If passed, it would reduce prescription drug costs, expand Medicare to hearing coverage, offer ACA premium tax credits to about 4 million uninsured people, and decrease premium costs by an average of $600 per person per year for approximately 9 million Americans under the ACA Marketplace.

“Solving this problem will require policy actions to extend affordable health insurance coverage to all Americans,” Commonwealth Fund president David Blumenthal said in the statement. “But we also need to get at the root, which are the high costs that make health care so expensive for everyone.”

Collins also recommended lowering the affordability threshold that determines whether people are eligible for subsidized coverage. Employer-sponsored health coverage in 2022 will qualify employees for ACA affordability if the lowest-cost, self-only coverage option an employer offers does not exceed about 9.6% of the employee’s income. In 2021, the affordability threshold, set by the Internal Revenue Service, was about 9.8%.

Collins said the threshold should be lowered to about 8% to account for middle-income employee’s median income. Build Back Better would put the threshold at 8.5%.

This threshold additionally only applies to single-person coverage. The ACA “family glitch” is a rule that states a family’s premium subsidies eligibility depends on if employer-sponsored health insurance is affordable for the individual employee. But it may not actually be affordable for the whole family, Collins said, forcing people into paying for more expensive plans.

“The combination of both lowering the threshold from 9.8% to 8.5% of income, in addition to fixing the family coverage glitch, would help a lot of people in Nevada and a number of other states around the country,” she said.