Rising cost-sharing for people with health insurance has drawn a good deal of public attention in recent years.  For example, the average deductible for people with employer-provided health coverage rose from $303 to $1,077 between 2006 and 2015.

While we can get a sense of employees’ potential exposure to out-of-pocket costs by looking at trends in deductibles, many employees will never reach their deductibles and other employees may have costs that far exceed their deductibles.  In addition to deductible payments, some employees also have copayments (set dollar amounts for a given service) or coinsurance payments (a percentage of the allowed amount for the 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.

We find that, between 2004 and 2014, average payments for deductibles and coinsurance rose considerably faster than the overall cost for covered benefits, while the average payments for copayments fell.  As can be seen in the chart below, over this time period, patient cost-sharing rose substantially faster than payments for care by health plans as insurance coverage became a little less generous.

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 785,000 and 15.3 million enrollees per year to analyze the change from 2004 to 2014 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 6 months of coverage during that year.

From 2004 to 2014, the average payments by enrollees towards deductibles rose 256% from $99 to $353, and the average payments towards coinsurance rose 107%, from $117 to $242, while average payments for copays fell by 26%, from $206 to $152.  Overall, patient cost-sharing rose by 77%, from an average of $422 in 2004 to $747 in 2014. During that period, average payments by health plans rose 58%, from $2,748 to $4,354. This reflects a modest decline in the average generosity of insurance – large employer plans covered 86.7% of covered medical expenses on average in 2004, decreasing to 85.3% in 2014. Worker’s wages, meanwhile, rose by 32% from 2004 to 2014.

Total benefits costs, cost-sharing amounts, and amounts paid by insurance for all enrollees and enrollees whose total spending is in the highest 15%, 2004-2014
	Total benefit costs		Paid by insurers		Deductibles		Copayments		Coinsurance		Total cost sharing
	All	Top 15%*	All	Top 15%*	All	Top 15%*	All	Top 15%*	All	Top 15%*	All	Top 15%*
2004	$3,169	$15,466	$2,748	$13,998	$99	$244	$206	$635	$117	$590	$422	$1,468
2005	3,414	16,649	2,945	15,035	117	280	218	663	134	670	469	1,614
2006	3,629	17,751	3,104	15,948	153	369	219	674	152	761	525	1,804
2007	3,792	18,521	3,238	16,612	165	393	220	679	169	837	554	1,910
2008	4,011	19,730	3,451	17,777	163	392	223	692	175	869	561	1,953
2009	4,321	21,236	3,725	19,191	178	419	234	711	183	915	595	2,045
2010	4,440	22,147	3,804	19,932	222	535	219	684	195	996	637	2,215
2011	4,615	23,203	3,951	20,878	248	600	203	641	213	1,084	664	2,325
2012	4,723	23,902	4,016	21,389	287	720	183	582	237	1,212	707	2,513
2013	4,867	24,930	4,125	22,236	323	834	169	558	250	1,302	742	2,693
2014	5,101	26,429	4,354	23,750	353	928	152	502	242	1,249	747	2,679
Source: Kaiser Family Foundation analysis of Truven Health Analytics MarketScan Commercial Claims and Encounters Database, 2004 – 2014*Includes enrollees with total spending (including claims paid by the insurer and out-of-pocket costs) in the top 15% in each year. In 2014, enrollees in the top 15% had total costs that exceeded $6,717.

Individuals in the top 15 percent of health spenders (who together account for 74.8% of total health benefit costs for the sample), had substantially higher out-of-pocket costs, averaging $2,679 in 2014, including $1,249 in coinsurance payments, $928 in deductible spending, and $502 in copays. The growth in cost-sharing for this group was similar to the sample overall.  As of 2014, 5.5% of all enrollees had deductible payments that exceeded $1,500 and 7.8% had overall cost-sharing payments that exceeded $2,500.

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 24% of cost sharing payments in 2004, rising to 47% in 2014.  Conversely, copayments accounted for nearly half of cost sharing payments in 2004, falling to 20% in 2014.  The increase in coinsurance over the period 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 in the context of total household budgets, they have increased quite rapidly. Deductibles are the most visible element of an insurance plan to patients, which may help explain why consumers are showing 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 greater share of their medical expenses out-of-pocket. And, while health care spending has been growing at fairly 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 2004 through 2014.  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 785,000 in 2004 to over 15.3 million in 2014.