Not surprisingly, employer-sponsored healthcare insurance premiums are up this year and a whopping 50 percent since 2003.
What’s more, employees are paying more of the tab and are expected to be asked for more in coming years.
These and other statistics are contained in a new Commonwealth Fund report available at www.commonwealthfund.org/Publications/Issue-Briefs/2011/Nov/State-Trends-inPremiums.aspx.
While some experts may question the methodology, the report offers comparison data that could be helpful to company benefit managers.
Both employee and employer are also getting less for their increased payments.
Employer-sponsored family health insurance increased by 50 percent from 2003 to 2010, and the annual amount that employees pay toward their insurance increased to 63 percent as businesses required employees to contribute a greater share, according to the Commonwealth Fund. The report examined state trends in health insurance costs and also found that health insurance costs are outpacing income growth in every state in the country.
At the same time, premiums are buying less protective coverage: per-person deductibles doubled for employees working for large as well as small firms over the same time period, it said.
According to the report, 62 percent of the U.S. population lived in a state where health insurance premiums equaled 20 percent or more of earnings for a middle-income individual under age 65.
Today there are virtually no states where premiums are relatively low compared to income. In 2003, there were 13 states where annual premiums constituted less than 14 percent of the median (middle) income; by 2010, there were none.
“Whether you live in California, Montana, or West Virginia, health insurance is expensive. Out-of-pocket costs for premiums and care are consuming a larger share of people’s incomes at a time when incomes are down in a majority of states,” said Commonwealth Fund Senior Vice President Cathy Schoen, lead author of the report. “Workers are paying more for less financial protection.
The analysis of state-by-state trends between 2003 and 2010 finds that premiums for employer-sponsored family health insurance increased 50 percent across states, reaching an average of $13,871 a year by 2010.
Annual premiums rose in every state, with increases ranging from 33 percent in Idaho to 70 percent in Mississippi. Premiums for family coverage were highest in New York, Rhode Island, Connecticut, Florida, New Hampshire, and Washington, D.C., ranging from $14,730 to $15,206.
Premiums ranged from $11,379 to $12,409 in Idaho, Arkansas, Hawaii, Montana, and Alabama, the five states with the lowest average costs for private employer-based coverage.
Employees Are Paying More for Less
As premium costs have risen, employers have asked employees to contribute more to their health insurance costs by paying a larger share of premiums and accepting higher deductibles.
The report shows the annual amount employees contributed to their health insurance premiums increased by 63 percent between 2003 and 2010. By 2010, the cost to employees rose to an average of $3,721 a year for a family policy.
Workers in Michigan, Montana, Vermont, Pennsylvania, and Kentucky had the lowest average annual costs for their share of premiums, while workers in Delaware, Maine, Virginia, Texas and Florida made the highest contributions.
Despite paying more for their health insurance, employees are getting coverage that offers less protection. The report finds that per-person deductibles increased an average of 98 percent across states from 2003 to 2010. By 2010, 74 percent of workers faced a deductible, compared to 52 percent in 2003. Average deductibles exceeded $1,000 in 29 states in 2010; in 2003, not one state had an average deductible of more than $1,000. Deductibles were up for employees working in large as well as small firms, although employees of small firms generally faced higher deductibles than employee of large firms did. Deductibles were highest in Wyoming, where the average was $1,479, and lowest in Hawaii, where the average was $519.
An interactive map with premiums in each state is available at:
Methodology: Data for premiums and deductibles are from the Medical Expenditure Panel Survey of employers. State median incomes are from the Census, using two-year averages for the under-65 population. The report uses the average annual increase in premiums across states from 2003 to 2010 to project premiums in 2015 and 2020 if past rates of increase continue. The same inflation rate is applied to all states