Rising healthcare costs continue to strain household budgets across the United States, with a analysis revealing that employer-sponsored health insurance premiums and deductibles now consume 10% or more of income for employees in 19 states. The burden is particularly acute in Southern states like Louisiana and Nevada.
The analysis, conducted by the Commonwealth Fund, highlights a growing affordability crisis in healthcare, even for those with employer-sponsored coverage. This comes as healthcare costs are projected to increase at a faster rate in than in recent years, driven by factors including rising costs of services, labor shortages, inflation impacting supply costs, and the increasing popularity of weight-loss drugs and other specialty medications.
The Commonwealth Fund’s findings demonstrate a significant disparity in healthcare affordability across the country. In Louisiana, a combined 15.6% of the median household income is allocated to premium contributions and deductibles for family coverage. In contrast, residents of the District of Columbia spend only 5.7% of their income on these costs. This geographic variation underscores the complex interplay of factors influencing healthcare affordability, including market dynamics and state-level policies.
“Premiums and deductibles for many American workers can drain household budgets and increase the risk that people will delay care or take on medical debt,” said Sara Collins, PhD, a senior scholar at the Commonwealth Fund, in a press release. This statement emphasizes the real-world consequences of rising healthcare costs, potentially leading to delayed or forgone medical care, and increased financial hardship for families.
The majority of families facing these high costs reside in Southern states, including Mississippi, North Carolina, and Florida. Importantly, many of these families are middle-income, suggesting that the affordability challenge extends beyond those with lower incomes. This broad impact highlights the need for comprehensive solutions that address the rising cost of healthcare for a wide range of Americans.
Lack of Competition Fuels Rising Costs
A recent hearing of the House Committee on Energy and Commerce with CEOs of private health insurance companies revealed concerns about a lack of competition within the health insurance market. Both Republican and Democratic representatives expressed the view that limited competition contributes to higher healthcare costs. This lack of competition allows insurers greater latitude in setting prices and controlling access to care.
Representative Diana Harshbarger (R, Tennessee) articulated a concern about the vertical integration of the healthcare industry, where insurers own pharmacies, pharmacy benefit managers (PBMs), and even physician practices. This integration, she argued, allows insurers to control various aspects of the healthcare system, effectively setting their own prices and prioritizing profits over affordability. “That is not competition; that is control,” she stated.
The issue of market concentration was further highlighted by the fact that a single insurer may control 80% to 90% of the market in certain geographic areas. This dominance can stifle competition and limit consumer choice, ultimately driving up costs.
Affordability Concerns Extend to the Affordable Care Act
Republican representatives at the House hearing also raised concerns about the Affordable Care Act (ACA) and its ability to reduce costs for working families as originally intended. The analysis revealed that in five states – West Virginia, North Carolina, Mississippi, Florida, and Louisiana – the total cost of premium contributions for family coverage exceeds the ACA’s threshold for affordable employer-offered coverage, which is defined as 8.39% of a household’s median income.
deductibles alone averaged 5% or more of the median individual household income in in nearly half of the states. This demonstrates that even with insurance coverage, many Americans face substantial out-of-pocket expenses when accessing healthcare.
The Broader Context of Employer-Sponsored Insurance
The Commonwealth Fund analysis also underscores the prevalence of employer-sponsored health insurance. More than 60% of working-age adults under 65 receive health insurance through their employers. This makes the affordability of employer-sponsored coverage a critical issue for a large segment of the population.
Addressing the rising cost of healthcare requires a multifaceted approach involving Congress, employers, insurers, and healthcare providers. As Collins stated, “Congress, employers, insurers, and health care providers all can play a role in lowering costs and making care more affordable so families across the income spectrum can get the care they need.”
Policymakers recognize that the lack of competition in the healthcare market is a key driver of rising prices. They are also increasingly concerned about the potential impact of these rising costs on the uninsured population and the overall healthcare system. Finding solutions to promote competition, control costs, and ensure access to affordable healthcare remains a significant challenge for the nation.
References
Kolb K, Radly DC, Collins SR. Is employer coverage affordable? how the states stack up. The Commonwealth Fund. . Accessed . https://www.commonwealthfund.org/blog/2026/is-employer-coverage-affordable-how-states-stack-up
Bonavitacola J. Health Insurance CEOs questioned by House committee about rising costs in health care. AJMC®. . Accessed . https://www.ajmc.com/view/health-insurance-ceos-questioned-by-house-committee-about-rising-costs-in-health-care
