Health Insurance Jumps 119 Percent in One Decade
Employer-Sponsored Health Plans Expected to Double by 2020
Oct 1, 2009
The Commonwealth Fund released the report, Paying the Price: How Health Insurance Premiums Are Eating Up Middle Class Incomes, State Health Insurance Premium Trends and the Potential of National Reforms, Aug. 20, 2009. Written by Cathy Schoen, Jennifer Nicholson and Sheila Rustgi, the report found that national reforms that slow health care cost increases by 1% to 1.5% per year would yield substantial savings for families and businesses across the United States. A 1% reduction will produce more than $2,500 in lower premiums for family coverage, the report said. A 1.5% reduction would save families more than $3,700 per year.
Health Care Costs Rise Faster Than Incomes
Across the United States, middle-class families have been struggling because the costs of health care have gone up faster than income levels. Rising employer insurance premiums have forced many working families to trade off increases in their wages so they can keep their health benefits, the authors reported.
The expanding share of health insurance premiums paid by workers also has taken a greater amount from their paychecks, making them have difficulties paying bills. Many families have nothing available to save for college or retirement because of the health premiums they have to pay.
Trends in Health Care Costs
As a result of the high premiums, the report listed these trends.
- Slower growth in wages and lower savings for retirement being done
- Tradeoffs are increasing
- Despite tradeoffs, health care costs are consuming a larger share of paychecks
- State premiums have increased faster than average incomes
- Family premiums ranged from about 25% in the lowest-growth states to 45% in the highest-growth states
- The average insurance cost was $13,000 per year per family in 2008
- People with employer-sponsored insurance typically don’t see the total annual cost of the premiums
- Health insurance has become less affordable
- Employers are limiting benefits and increasing cost sharing
Without significant reforms, the Commonwealth Fund predicted that the national per-person spending on health insurance will increase 94% from 2009 to 2020, or about 6% annually. Families would be paying about $18,000 by 2015 and $24,000 by 2020.
Over the last several years, the combination of rising health care costs and slow growth in incomes have forced people to spend more of their paycheck to cover insurance premiums. They also have to pay more out-of-pocket when the insurance plan doesn’t cover the health problem. Reforms that produce a small reduction in premium costs could provide big savings to families, the report concluded.
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