Almost a third of spending is on insurance premiums and out-of-pocket payments
In 2020, health care spending accounted for 19.7% of the nation’s gross domestic product, up from 5% in 1960, according to a report from the Employee Benefits Research Institute. A total of $4.1 trillion was spent on health care in 2020, or $12,530 per person. In 2030, health care spending is projected to account for 19.6% of GDP, a total of $6.8 trillion.
A large percentage (31.2%) of total health care spending in 2020 was on health insurance premiums and out-of-pocket costs for employers and individuals. According to the report, employers paid $521.3 billion toward premiums, while workers paid $366 billion. Another $388.6 billion was spent on out-of-pocket costs.
The remaining 68.8% of health care spending breaks down as follows: Medicare 20.1%, Medicaid 16.3%, other health insurance programs 3.8%, other third-party payers and programs 17.8%, investment 4.7%, government contributions and subsidies 6.4%.
EBRI says that larger employers are much more likely than smaller employers to offer health benefits to workers. Nearly all private-sector employers with 1,000 or more employees offered health benefits in 2021. Similarly, 97.5% of those with 100–999 employees did so as well. Those with lower headcounts were less likely to offer health benefits: 77.9% of employers with 25–99 employees, 52.4% of employers with 10–24 employees, and 24.6% of employers with fewer than 10 employees offered health benefits.
According to the report, the share of adults and children with employment-sponsored health insurance fell since 2019. Overall, 70.8% of workers had employment-based health benefits in 2020 either through their own job or through a family member’s job. Only 36.6% of non-working adults had employment-based health benefits. Over one-half (53.9%) of children were covered by employment-based health benefits.
Premiums for health insurance have continued to trend upward since at least 1996. In 2021, average annual premiums for employee-only coverage were $7,380. They were $21,381 for family coverage. Despite rising premiums, for the last decade, the percentage of total health insurance premiums paid by workers has been relatively flat. On average, workers paid 22.3% of the premium for employee-only coverage and 28.9% of the premium for family coverage in 2021, according to EBRI data.
The report reveals that almost everyone is paying for health coverage. In 2021, only 7.3% of workers were not required to contribute to employee-only coverage, and only 12.6% were not required to contribute to family coverage. In contrast, in 1996, 37.1% of workers were not required to contribute to employee-only coverage, and 19.3% were not required to contribute to family coverage.
The types of plans vary, but Preferred provider organizations are the most common type of health plan, covering 46% of workers in 2021. High-deductible health plans covered 28% of workers, health maintenance organizations covered 16%, and point-of-service plans covered 9%.
Another trend the report studied was how the percentage of private-sector employees enrolled in a health insurance plan with a deductible has been steadily rising over time. While only 47.6% of employees had a deductible in 2002, 88.5% did in 2021. Among individuals with a deductible, the average deductible increased from $446 to $2,004 from 2002 to 2021 among those with employee-only coverage. And it increased from $958 to $3,868 among those with family coverage. The average copayment for an office visit has remained constant at $27 from 2016–2021. Coinsurance rates for office visits increased modestly, from 20% in 2019 to 20.8% in 2021.