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December 12, 2019
David Burda
Economics Policy System Dynamics

Will 2020 Be the Year that Healthcare Gets More Affordable?

As 2019 draws to a close, the evidence continues to mount that healthcare affordability again will be the No. 1 challenge facing patients in 2020. What incumbent industry stakeholders, lawmakers, new market entrants and policymakers do to address their customers’ No. 1 concern will be fascinating to watch.

One sign of trouble was CMS’ release of national health expenditure figures for 2018. CMS said spending rose 4.6 percent to more than $3.6 trillion last year, up from a 4.2 percent increase in 2017.  

One factor that drove the higher annual increase, CMS said, was the cost of providing commercial health insurance to employees of privately owned companies. Private employers paid $561.3 billion last year in health insurance premiums for their workers. That’s a whopping 7.1 percent more than the year before. It’s also the highest annual increase since 2003, when private employers’ costs jumped 8.7 percent.

By comparison, employees of privately owned companies paid $216.2 billion last year, or 3.9 percent more than in 2017, for their health coverage. That’s down from a 6.1 percent increase in 2017.

To me, that’s a red flag. I just don’t see private employers absorbing another 6 to 8 percent hit this year or in 2020. I think that what you’ll see is more of those costs pushed on to the shoulders of employees.

Showing that I don’t just make this stuff up were the results of a survey by the Transamerica Center for Health Studies. The TCHS asked nearly 1,400 employers their thoughts on where employer-based health insurance is going. In its seventh annual U.S. Healthcare Employer Survey, the TCHS said 19 percent of the respondents said they increased employee cost-sharing this year to help manage their company’s healthcare costs. Thirty-seven percent said they expect employees’ out-of-pocket healthcare costs to increase over the next one to three years.

Another sign of trouble was the Commonwealth Fund’s report Trends in Employer Health Care Coverage, 2008–2018: Higher Costs for Workers and Their Families, which kind of gives away the ending in its title. The report is based on survey data from more than 40,000 private-sector employers about their health insurance plans for their workers. 

The combined cost of health insurance premiums and deductibles represented 11.5 percent of median household income in 2018, according to the report. That’s up from 7.8 percent in 2008. 

“Higher costs for insurance and health care have consequences,” the report said. “People with low and moderate incomes may decide to go without insurance if it competes with other critical living expenses like housing and food. Research indicates that high deductibles lead people to delay or skip needed health care and prescription medications.” 

Right on cue, Gallup released the results of a survey of 1,015 adults that found that 25 percent said that they or a family member skipped or delayed treatment for a serious medical condition this year because of the cost. That’s up from 19 percent who said the same thing last year. 

“While most of the increase Gallup sees in delayed treatment occurred over a decade ago, the sharp increase in the past year…suggests that healthcare costs could be a more potent political issue than previously seen,” the polling organization said.

Maybe.  Talk is cheap. Really doing something about the affordability of medical care is hard. Let’s hope the New Year brings true market-based reforms and innovations that put high-value healthcare services within the financial reach of all Americans.

To learn more on this topic, please read “An Unbearable Burden: Paying for Commercial Health Insurance” on 4sighthealth.com.

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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