Sen. Bernie Sanders continues to make the misleading claim that “the average family of four spends $28,000 a year on health care.” That’s the projected average cost for employer-sponsored health insurance for “typical” families of that size, but the employee paid about 44% of that total amount in 2018, while the employer paid the other 56%.
About half of the U.S. population receives insurance through work. According to the most recent Kaiser Family Foundation data, 49% have employer-based health insurance; 36% percent have Medicaid, Medicare or other public insurance; and 7% buy nongroup or individual insurance, such as the Affordable Care Act marketplace plans available on the federal- and state-run health care exchanges. About 9% are uninsured.
Sanders, the Vermont independent who is again running for president as a Democrat, most recently made that claim in a “PBS NewsHour” interview on Oct. 21. He has made similar claims before, including in a May tweet that said, “Medicare for All will eliminate the $28,000 a year that the average American family today is forced to pay to insurers.”
But the figure Sanders cited is not the cost paid by that family.
The Sanders campaign told us he was referring to the Milliman Medical Index, which is produced by the Milliman actuarial and consulting firm and projects the “cost of healthcare for a hypothetical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan.”
In 2018, the MMI report said, “of the $28,166 total cost for a typical family of four, the employer pays about $15,788 while the employee pays the remaining $12,378, which is a combination of $7,674 in employee payroll deductions and $4,704 in out-of-pocket costs paid when using healthcare services.”
The report for 2019 did not include an updated breakdown, but it still noted that its projection for “the total cost of healthcare is shared by employers and employees.” That means the cost of over $28,000 is not shouldered completely by families with those employer-provided policies, as Sanders said.
Sanders better explained the figure in a summary of his Medicare for All legislation that was posted on his Senate website. As the name indicates, the plan would expand Medicare, which now covers primarily those age 65 and older and some with disabilities, to everyone, creating a new universal, single-payer health care system in the United States. (For more on his proposal, read our Q&A “The Facts on Medicare for All.”)
Now, we did find evidence that at least some families of four may pay well over $20,000 for their own health insurance on the nongroup, or individual, market.
In July, the online health company eHealth Inc. published a report on the average costs among its customers who applied for an Affordable Care Act-compliant plan on eHealth.com during the most recent open enrollment period without the help of government subsidies to lower their costs. “Total combined annual premiums plus deductible for a four-person family now tops $25,000,” according to the report.
That includes an average annual deductible of $8,441 for those four-person families, as well as an average monthly premium of $1,403, or $16,836 for the year.
But, again, that applies to a specific subset of families. The report said the data is based on “over 7,000 unsubsidized individual and family health insurance applications submitted” through the company’s website.
“Information presented in this report is based solely on rates quoted for health insurance applications submitted by unsubsidized consumers through the company’s website, eHealth.com, in the specified time period. It does not offer a comprehensive view of costs for all plans available, whether through eHealth, through government exchanges, through private exchanges other than eHealth, or directly from insurance carriers,” the report said.
As the report also indicated, the vast majority of people who purchase insurance through the Affordable Care Act marketplace receive government subsidies to reduce their costs.
The Kaiser Family Foundation reports that 87% of the 10.6 million marketplace customers receive tax credits that lower their monthly premiums, and 52% of enrollees receive other cost-sharing reductions that lower out-of-pocket costs.
Out of all 13.7 million people who had some kind of individual market insurance as of March, a total of about 4.5 million people bought it without the help of subsidies. That includes 1.3 million who purchase unsubsidized plans on the ACA exchanges.