Low Wages vs. High Deductibles (and the Employers Stuck in Between)

June 28, 2023

A photo of a man in a green shirt working on a project.

While health insurance deductibles have been skyrocketing (the average deductible has gone up 68% in the last decade), wages have not kept up.

New research has found that premium contributions and deductibles totaled 11.6% of median income in 2020, up from 9.1% in 2010. It’s no wonder so many Americans are feeling the pinch of rising healthcare costs.

Individuals aren’t the only ones impacted; employers are caught in the middle. As costs go up, employers face increasing pressure to shift premium costs to employees or offer plans with higher deductibles.

Controlling Spend

Cost-sharing – costs that the member pays out of their own pocket, such as a deductible – was first introduced during the Great Depression to reduce healthcare spending. Since then, the cost-sharing burden on employers and employees has ballooned into a major expense, and in the midst of today’s prolific inflation, we can expect employees to be on the hook for more than ever before.

This only exacerbates income inequality. When we increase premiums and/or raise deductibles for employees – without the wage increases to match – we increase the number of “underinsured,” or those who have a deductible equivalent to 5% or more of their income. In almost half of states, middle-income households face average deductibles that leave them underinsured and exposed to high out-of-pocket costs.

Since this disparity has been the status quo for years, few are willing to talk about it, let alone rise up against the traditional health plan model to tackle it.

Affordable Coverage Isn’t Out of Reach

At Gravie, we know that better healthcare coverage and lower out-of-pocket costs can co-exist. In fact, they can go hand in hand when we prioritize helping individuals get the care they need to help them get – and stay – well. Offering quality benefits now, means greater utilization and a healthier population with fewer medical costs in the long run. Gravie’s Comfort® plan does away with the traditional deductible and copay model, fully covering the most common healthcare services while maintaining premiums equivalent to industry averages. This includes preventative care in addition to primary and specialist visits, along with mental health services, imaging and so much more. 

We’ve learned a lot since cost-sharing began nearly 100 years ago, and now is the time to put that knowledge to use. With innovative, outcome-oriented health plan options like Comfort® on the market, employers don’t have to choose between affordable benefits and the best coverage for their employees. 

Insurance shouldn’t get in the way of medical treatment, instead it should be a means for making it easier for people to access care.

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