Health care eating up more of income in New Mexico

December 23, 2018

If you think health insurance is taking a much bigger bite out of your paycheck than just a few years ago, it’s not your imagination.

The cost of health insurance and the percentage it draws from paychecks are way up across the country.

Employer-sponsored health insurance premiums paid by employees with family coverage soared nationally from $3,394 in 2008 to $5,218 in 2017. New Mexico saw a jump from $4,021 to $5,255 in the same time period, according to a study by The Commonwealth Fund.

The same study noted the median household income in New Mexico dipped from $45,000 in 2007-08 to $42,545 in 2016-17. In all, 22 states have lower median household incomes now than 10 years ago.

In New Mexico, employer insurance rates are relatively low in comparison to other states, with single-person, employer-sponsored health insurance premiums the 17th lowest in the country and family premiums near the national average at 23rd highest.

Average single-person deductibles in New Mexico are the 14th lowest, according to the study.

But some of that good news is negated by this statistic: New Mexico has the second-lowest household income in the country.

“In New Mexico, what people in employer plans contribute to premiums and the deductibles they face are near or below the national average,” said Sara Collins, vice president of health care coverage and access at The Commonwealth Fund. “But because median income in the state is among the lowest in the country, those costs can take a very large bite out of household income for people with incomes at the midrange of the income distribution or below.”

That news, however, isn’t all bad, said Damon Bower, co-owner of Agape Insurance in Santa Fe.

“Rates are lower and incomes are lower,” Bower said. “That works in the favor of [low-income people] because they receive more of a subsidy on the health exchange [New Mexico Health Connections]. When we talk about health insurance, we are doing better than other states. We have five individual insurance carriers and four are available on the exchange and are available in every county.”

New Mexico is among 18 states — predominantly the southern tier from Arizona to the Carolinas – where the percentages of combined premiums and deductibles in employee-sponsored plans are the highest in relation to median state income.

“All 18 states have median incomes below and far below the national average,” Collins said.

These states all have residents paying more than 12 percent of their incomes on premiums and meeting deductibles compared to the 7.8 to 9.9 percent in the 11 states with the lowest percentages, according to the study.

Health care costs are the primary driver of premiums and deductibles costs, and incomes are not keeping pace in many states, Collins said.

The Commonwealth Fund, a New York City-based private foundation focused on health care, this month issued a state-by-state report titled, “The Cost of Employer Insurance Is a Growing Burden for Middle-Income Families.”

“Families’ costs for employer health insurance are rising faster than median income,” the report states. “Moreover, even as costs climb, many families aren’t receiving higher quality insurance.”

Nationally, employees contributed 7 percent of their median income when averaging single and family employee-sponsored health insurance. The Commonwealth Fund singled out 11 states that had premium contributions above 8 percent, including New Mexico at 9 percent.

To counter soaring employer insurance rates, many employers are turning to offering voluntary employee supplemental insurance, said Ned Jacobs, owner of Quezada Jacobs Family Agency, an Allstate insurance agency in Santa Fe.

“The supplemental plans fill the gaps and holes in ‘Obamacare,’ ” Jacobs said.

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