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Sky High Medical Costs Keep Rising

High Deductible Health Plans Making Health Care Unaffordable

When her husband could no longer work, Becky Smith returned to her position as a full-time school bus driver for Clay County, Florida. She had left the job a few years earlier to care for a sick daughter.

Upon her return, she was shocked by one aspect of her new working life: the skyrocketing costs of medical care. Like so many teachers and education support professionals (ESPs) across the country, Smith experienced the sobering reality of trying to secure adequate health care coverage for when she or family members get sick, need surgery, or are hospitalized.

“I know I could make more money stocking shelves at the local grocery store, or I could go work in a neighboring district,” says Smith, a member of Clay Educational Staff Professionals Association (CESPA). “But I love my students.”

Smith says she particularly worries about deductions in her paycheck for the cost of health insurance and long- and short-term disability insurance, and her mandatory retirement contribution. Unfortunately, since she’d last worked for the county the portion of the premium that employees contributed had increased dramatically, and employees had not received a pay increase in seven years. Smith was routinely paid less than $100 per biweekly pay period.

Depending on how many work days fell within a given pay period, Smith generally netted $70-$80, with one paycheck last October coming in at $3.93.

In addition, medical bills from three years ago when her husband began suffering from seizures need addressing.

“I don’t know if I’ll ever be able to pay off all these doctor bills,” says Smith, who carries a $12,000 family deductible on her health insurance, plus pays 20 percent of the cost of services and all copayments.

Across the nation, an increasing number of school employees are required to pay extremely high deductibles, plus a coinsurance or copayment amount, before their health coverage kicks in. Some of the main reasons this is happening include:

  • State and local government budget cuts
  • State lawmakers eliminating the ability of educators to bargain for health coverage
  • State lawmakers capping the amount of money that schools can pay toward coverage

As a result, employers are shifting a larger and larger share of health care costs onto school employees and their families.

In North Carolina, where educators are covered under the state health plan, state budget cuts over the years have ushered in a high deductible (consumer-driven) health plan. While the plan has affordable premiums, it includes a deductible of up to $4,500 for a family in 2016, for in-network care plus a 15 percent coinsurance, before the plan will pay anything towards the cost of care. Using out-of-network providers pushes the family deductible up to $9,000 a year plus a 35 percent coinsurance. These are staggering amounts in a state where the average starting salary for a teacher is $43,000.

In Michigan, a 2011 law placed either a dollar cap or percentage limit on the amount of money schools can spend on employee health benefits. A 2015 proposal from the Detroit public school emergency manager to increase school employees’ annual deductibles from $500 to $4,000 for individuals and from $1,000 to $8,000 for families shows the impact of the law. Co-payments for doctor visits, prescription drugs and hospitalizations would also be increased under the plan.

According to the Kaiser Family Foundation, a health policy think tank, less than 50 percent of all households above the federal poverty level have enough assets to cover a yearly out-of-pocket expense of $3,000 to $6,000. And the Consumer Financial Protection Bureau notes that medical debt is the number one cause for people to have a negative credit report.

While the average monthly premiums for employer health coverage have increased only modestly in recent years, deductibles and the use of a coinsurance in employer plans has increased dramatically. The premium that employees pay has remained stable for the past several years but unaffordable annual deductibles and coinsurance amounts have risen dramatically.

As a result, employees, especially those who are sick, chronically ill and/or have a lower income, must bear far more of the cost of health care than the employer. While federal law now limits the out-of-pocket expenses that people can be asked to pay each year, these amounts are also high--$6,850 for individuals and $13,700 for families in 2016.

The National Education Association advocates for alternatives to cutting benefits and raising employee costs by promoting preventive services and wellness programs that keep employees and their families healthy long into the future.

NEA staff members from Campaigns and Elections, Collective Bargaining and Member Benefits, and Center for Communications contributed to this report.