Health insurance family plans no longer affordable for workers in small business

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Health care affordability is reaching crisis levels in the United States, according to results of a new survey.

This fall, KFF published its 25th annual Employer Health Benefits Survey and foundation President and CEO Drew Altman declared: “Small employers no longer have affordable coverage for workers with families.”

One solution could be expanding Affordable Care Act (ACA) Marketplace health insurance coverage for families, Altman said.

The plan year 2024 open enrollment period started Nov. 1 and continues to mid-January next year.

As of Nov. 21, about 4.6 million people selected a plan, with four out of five eligible for coverage at $10 or less per month, according to the U.S. Centers for Medicare & Medicaid Services. Among them, 920,000, or 20%, were new to the marketplaces for 2024.

The administration of President Joe Biden noted record ACA Marketplace enrollment of almost 16.4 million people for 2023. The U.S. Centers for Disease Control and Prevention found in 2022, 91.6% of Americans had health insurance, a record rate.

But studies have found health insurance availability does not necessarily lead to affordable health care, and medical debt is crushing the finances of some patients. A survey published this month reported 72% of consumers are unable or unwilling to pay their medical bills immediately, largely due to financial constraints and rising costs of health care.

Health insurance costs

Workers in companies with fewer than 200 employees would need to pay an average of $8,334 a year toward premiums for family coverage, while employers pay the difference for premiums averaging $23,621 for a family health insurance plan, Altman said in a new commentary.

In those small companies, up to 25% of covered employees pay $12,000 a year or more for family coverage, not including deductibles. Among smaller employers, 57% have to pay $3,000 or more before at least one family member meets the deductible and the health insurance plan begins paying for services, Altman said, citing the survey.

A full 35% of insured workers at small firms have deductibles of at least $5,000.

“The bottom line: For many of the almost 50 million people working for the 3.2 million smaller companies in America, family coverage is no longer affordable,” Altman said. “It is likely to be prohibitive for the really small companies, the pizza shop, the dry cleaners, or the bakery.”

Those employees have larger costs but less income, with small-company salaries averaging $44,600 a year, compared to the average salary of $63,200 a year for workers in large companies.

Other figures from the survey showed a five-year hike in prices for family insurance. Premiums rose 22%, compared to a 27% increase in workers’ wages and 21% inflation for the same time.

On average, workers at these firms have fewer resources to cover health costs: Salaries at firms of less than 200 employees are $44,600 on average compared to $63,200 for workers at larger firms.

Altman characterized the issue as one of two parts in a health cost crisis in the United States. The other is national health spending and its effects on the country, he said.

The survey sought information from 2,133 randomly selected nonfederal public and private employers with at least three workers and was conducted January to July this year. The survey had an overall response rate of 15%, including firms that offer or do not offer health benefits.