Premiums for employer-sponsored family health insurance increased by 50 percent from 2003 to 2010, and the annual amount that employees pay toward their insurance increased by 63 percent as businesses required employees to contribute a greater share, according to a new Commonwealth Fund report that examines state trends in health insurance costs. The report finds 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.
According to the report, State Trends in Premiums and Deductibles, 2003-2010: The Need for Action to Address Rising Costs, by 2010, 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 steady rise in costs from 2003 through 2010, before enactment of the Affordable Care Act, points to the urgent need for health insurance market and health care system reforms."
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. But, the report finds that costs were high even in the "lowest" average-cost states. 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 that despite stagnant or declining incomes, 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.
The report's authors say that if the historic rate of increase between 2003 and 2010—before enactment of the Affordable Care Act—were to continue, the average premium for family health insurance coverage would increase 72 percent by 2020, reaching nearly $24,000 a year.
Slowing the rate of growth even modestly would make a significant difference for individuals, families, and businesses. Compared to historical trends, reducing the annual growth in premiums by even one percentage point would lead to $2,161 in annual premium cost savings for families by 2020. Slowing the rate of growth by 1.5 percent a year would yield savings of $3,173.
The authors note that the Affordable Care Act includes a range of insurance market reforms aimed at lowering premium growth, improving health benefits, and ensuring near-universal coverage. These include a set of affordable insurance options available through new state insurance exchanges, rules limiting insurance administrative costs and profits as a share of premiums, and review of excessive insurance premium increases. In addition, the law contains payment and health care system reforms that seek to slow the growth in costs. The authors point to the urgent need to spread reforms to private as well as public insurance.
Moving forward, the report authors conclude that lowering health care premium growth will require a significant focus on reforming how health care is paid for in the private sector, as well as in public programs like Medicare and Medicaid. In order to improve quality of care while slowing costs, wasteful overhead spending must be lowered and innovative ways of paying for care tested and spread broadly to maximize their impact.
"The combination of rapidly rising costs and stagnant incomes is putting families in an untenable situation," said Commonwealth Fund President Karen Davis. "New rules for insurers, along with new models of health care delivery such as accountable care organizations and new ways of paying doctors and hospitals, can help control health care costs and provide families and business owners with the relief they need."
The report will be available on November 17th, 2011 at: www.commonwealthfund.org/Publications/Issue-Briefs/2011/Nov/State-Trends-in-Premiums.aspxAn interactive map with premiums in each state is available at: http://www.commonwealthfund.org/usr_doc/site_docs/slideshows/
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.
The Commonwealth Fund is a private foundation supporting independent research on health policy reform and a high performance health system.
Mary Mahon | EurekAlert!
Reusable carbon nanotubes could be the water filter of the future, says RIT study
30.03.2017 | Rochester Institute of Technology
Pan-European study on “Smart Engineering”
30.03.2017 | IPH - Institut für Integrierte Produktion Hannover gGmbH
The Institute of Semiconductor Technology and the Institute of Physical and Theoretical Chemistry, both members of the Laboratory for Emerging Nanometrology (LENA), at Technische Universität Braunschweig are partners in a new European research project entitled ChipScope, which aims to develop a completely new and extremely small optical microscope capable of observing the interior of living cells in real time. A consortium of 7 partners from 5 countries will tackle this issue with very ambitious objectives during a four-year research program.
To demonstrate the usefulness of this new scientific tool, at the end of the project the developed chip-sized microscope will be used to observe in real-time...
Astronomers from Bonn and Tautenburg in Thuringia (Germany) used the 100-m radio telescope at Effelsberg to observe several galaxy clusters. At the edges of these large accumulations of dark matter, stellar systems (galaxies), hot gas, and charged particles, they found magnetic fields that are exceptionally ordered over distances of many million light years. This makes them the most extended magnetic fields in the universe known so far.
The results will be published on March 22 in the journal „Astronomy & Astrophysics“.
Galaxy clusters are the largest gravitationally bound structures in the universe. With a typical extent of about 10 million light years, i.e. 100 times the...
Researchers at the Goethe University Frankfurt, together with partners from the University of Tübingen in Germany and Queen Mary University as well as Francis Crick Institute from London (UK) have developed a novel technology to decipher the secret ubiquitin code.
Ubiquitin is a small protein that can be linked to other cellular proteins, thereby controlling and modulating their functions. The attachment occurs in many...
In the eternal search for next generation high-efficiency solar cells and LEDs, scientists at Los Alamos National Laboratory and their partners are creating...
Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are less stable. Now researchers at the Technical University of Munich (TUM) have, for the first time ever, produced a composite material combining silicon nanosheets and a polymer that is both UV-resistant and easy to process. This brings the scientists a significant step closer to industrial applications like flexible displays and photosensors.
Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are...
20.03.2017 | Event News
14.03.2017 | Event News
07.03.2017 | Event News
30.03.2017 | Health and Medicine
30.03.2017 | Health and Medicine
30.03.2017 | Medical Engineering