Employer Premiums and Deductibles Consume Significant Portion of Income in 19 States

Employer health insurance premium contributions and deductibles take up 10% or more of employees’ income in 19 states across the US, particularly Southern states like Nevada and Louisiana, according to a new analysis from the Commonwealth Fund.1

Health care costs are expected to skyrocket in 2026 at a faster rate than in recent years. These increases in costs are primarily driven by overall increases in the costs of health care services, labor shortages, inflation impacting the cost of supplies, weight-loss drug popularity, and other specialty medications.1 In a hearing of the House Committee on Energy and Commerce last month with CEOs of private health insurance companies, both Republican and Democratic representatives emphasized the lack of competition within the health insurance market, which increases health care costs as well.2

A new Commonwealth Fund report shows rising employer premium contributions and deductibles are straining household budgets, especially in Southern states. | Image credit: @KMPZZZ_adobestock.jpeg

Using the most recently available national data on employer contributions to premiums for family coverage, the Commonwealth Fund analysis found that they ranged drastically by state. For example, in Louisiana, 15.6% of the median household income was spent, collectively, on premium contributions and deductibles for family coverage, whereas in the District of Columbia, only 5.7% of income was spent on health insurance.1

“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,” Sara Collins, PhD, Commonwealth Fund senior scholar for health care coverage and access and tracking health system performance, said in a press release.

The majority of families who spent 10% or more on their health insurance contributions also lived in Southern states such as Mississippi, North Carolina, and Florida; many were also middle-income.

These findings underscore the inequities by employee class and socioeconomic status. They also show that more than 60% of working-age adults younger than 65 years received health insurance through an employer.1 Yet, varying by location, a single insurer may control 80% to 90% of the market in that area, many of which have monopolized vertical integration by owning their own pharmacy and pharmacy benefit managers (PBMs).

During the January House hearing, Rep Diana Harshbarger (R, Tennessee) said this system allows insurers to decide what drugs to cover, set drug prices through their PBM, own the doctors, control the pharmacy counter, and make referrals. Insurers can effectively set their own prices for health care services, she said, and without competition, they can continue to increase prices that are then passed onto the consumer to grow their profit margins.2

“That is not competition; that is control,” she said.

During the hearing, Republican representatives also emphasized the inability of the Affordable Care Act (ACA) to reduce costs for working families as intended.2 The total cost of premium contributions alone for family coverage in 5 states exceeds the ACA’s threshold of unaffordable employer-offered coverage of 8.39% of a household’s median income. Those states were West Virginia (8.6%), North Carolina (8.8%), Mississippi (8.8%), Florida (9.3%), and Louisiana (10.7%).1

Furthermore, deductibles alone averaged 5% or more of the median individual household income in 2024 in nearly half of the US states.

“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,” Collins said in the press release.

As health care costs continue to rise, policy makers agree that the lack of competition in the health care market is fueling a rise in prices. They have also expressed concerns about how this increase in costs will coincide with a growing uninsured population and their impact on health care costs as well.2

References

1. Kolb K, Radly DC, Collins SR. Is employer coverage affordable? how the states stack up. The Commonwealth Fund. February 11, 2026. Accessed February 11, 2026. https://www.commonwealthfund.org/blog/2026/is-employer-coverage-affordable-how-states-stack-up

2. Bonavitacola J. Health Insurance CEOs questioned by House committee about rising costs in health care. AJMC®. January 22, 2026. Accessed February 10, 2026. https://www.ajmc.com/view/health-insurance-ceos-questioned-by-house-committee-about-rising-costs-in-health-care