Cost-sharing between insurance providers and patients has increasingly become a topic of public discussion. In particular, the increasing proportion that enrollees are paying for healthcare has been an area of concern. For example, in the ten years from 2006 to 2016, average deductibles increased from $303 on average to over $1,200.

However, when considering the level of affordability in US healthcare we can get only a partial sense of employees’ potential exposure to out-of-pocket costs by looking at trends in deductibles. In fact, often an employee and their dependents will never reach their deductibles in a given year while others may have costs that far exceed it. Additionally, some employer plans require patients to also make copayments (set dollar amounts for a given service) or coinsurance payments (a percentage of the allowed amount for the service) when using healthcare service. To look at what workers and their families actually spend out-of-pocket for services covered by their employer-sponsored plan, we analyzed a sample of health benefit claims from the Truven MarketScan Commercial Claims and Encounters Database to calculate the average amounts paid toward deductibles, copayments and coinsurance.

Most people have little deductible spending each year

This analysis shows that from 2006 to 2016, average payments for deductibles and coinsurance among people with large employer coverage rose considerably faster than the total cost for covered benefits; however, the average payments for copayments fell during the same period. As can be seen in the chart below, over this time, patient cost-sharing rose notably faster than insurer payments for care as health plans have become a little less generous in this regard.

Deductible spending has risen while copayment spending has fallen

The MarketScan claims database contains information about health benefit claims and encounters for several million individuals each year provided by large employers. The advantage of using claims information to look at out-of-pocket spending is that we can look beyond the plan provisions and focus on actual payment liabilities incurred by enrollees. A limitation of these data is that they reflect cost sharing incurred under the benefit plan and do not include balance-billing payments that beneficiaries may make to health care providers for out-of-network services or out-of-pocket payments for non-covered services. We use a sample of between 1.05 million and 15.3 million enrollees per year to analyze the change from 2006 to 2016 in average health costs for covered benefits overall, the average amount paid by health benefit plans, and the average amounts attributable to deductibles, copayments, and coinsurance. The analysis of costs for each year was limited to enrollees with more than six months of coverage during that year.

From 2006 to 2016, the average payments by enrollees towards deductibles rose 176% from $151 to $417, and the average payments towards coinsurance rose 67%, from $149 to $249, while average payments for copays fell by 38%, from $225 to $140. Total out of pocket spending rose by 54%, from an average of $525 in 2006 to $806 in 2016. Overall, payments by health plans rose 48% on average, from $3,182 to $4,724. This reflects a slight decline in the generosity of insurance – large employer plans covered 85.8% of covered medical expenses on average in 2006, but decreased to 85.4% in 2016. Wages, meanwhile, rose by 29% from 2006 to 2016.

Individuals in the top 15 percent of health spenders (who together account for 79% of total health spending among people with large employer coverage), had substantially higher out-of-pocket costs, averaging $2,837 in 2016, including $1,286 in coinsurance payments, $1,089 in deductible spending, and $462 in copays. The growth in cost-sharing from 2006 to 2016 for this group was similar to that for people with large employer coverage overall. As of 2016, 7.6% of all large employer plan enrollees had deductible payments that exceeded $1,500 and 9.1% had overall cost-sharing payments that exceeded $2,500.

Deductibles account for less than thirty percent of cost-sharing payments in 2006, but almost half in 2016

The relatively high growth in payments toward deductibles is evident in the changes over time in the distribution of cost sharing payments: deductibles accounted for 30% of cost sharing payments in 2006, rising to 52% in 2016. Conversely, copayments accounted for 43% of cost sharing payments in 2006, falling to 17% in 2016. The increase in coinsurance over the period from 28% of total employee cost-sharing in 2006 to 31% in 2016 may reflect the strong growth over the period in plans that qualify a person to establish a health savings account; these plans are more likely to have coinsurance than copayments for physician services. Patients are more sensitive to the actual price of health care with deductibles and coinsurance than they are with copays, which are flat dollar amounts. The other difference between a copay and a deductible is that copays may add up over time, while a deductible may need to be met at once, causing affordability challenges.

While average payments towards deductibles are still relatively low, they have increased considerably in the context of total household budgets. To people with employer coverage, deductibles are the most visible element of an insurance plan, which may help explain why consumers continue to show concern about their out-of-pocket costs for care. Although health insurance coverage continues to pay a large share of the cost of covered benefits, patients in large employer plans are paying a somewhat greater share of their medical expenses out-of-pocket. While overall healthcare spending has been growing at modest rates in recent years, the growth in out-of-pocket costs comes at a time when wages have been largely stagnant.

Methods

We analyzed a sample of claims obtained from the Truven Health Analytics MarketScan Commercial Claims and Encounters Database. The database has claims information provided by large employers and health plans. We used a subset of claims from the years 2006 through 2016. The analysis for each is limited to claims for enrollees with more than six months of enrollment in that year. We excluded claims paid on a capitated basis. With these limitations, the number of enrollees in the sample varied from about 1.05 million in 2006 to over 15.3 million in 2016.