As increasing numbers of states debate ways to expand health insurance coverage, the question of how to determine whether coverage is affordable is front and center. In a Health Affairs web exclusive published yesterday, Urban Institute researchers propose basing the affordability benchmark on the amounts now devoted to health spending by privately insured individuals.
The researchers emphasize that affordability thresholds should consider all health spending, not just premiums. “Because of the highly skewed distribution of healthcare spending and the large potential variation in plans’ actuarial values,” write the researchers, “affordability must take out-of-pocket liability into account in addition to premiums.”
Using data from the three most recent Medical Expenditure Panel Surveys, the researchers found that across all income levels, the median total health spending for individuals and families with nongroup coverage was 16.9 percent and 14.7 percent of income, respectively.
For those with employer-sponsored coverage, the median direct employee spending for individuals and families across all income groups was considerably lower: 3.1 percent and 5.5 percent of income across all income levels, respectively. However, if one assumes, as most economists do, that employees ultimately pay the employer’s share of coverage costs as well--through decreases in wages and other forms of compensation--then median total health spending rises considerably, to 12.3 percent of income for individuals and 15.1 percent of income for families. Read the abstract.
