Family Health Plan Premiums 'Increasingly Unaffordable'

Jeff Elliott, for HealthLeaders Media, December 6, 2010

Family health insurance premiums for employer-sponsored plans rose 41% between 2003 and 2009, according to a study by The Commonwealth Fund. At the current pace, average premiums across the country would reach more than $23,000 per family by 2020, as detailed in the report.

The net effect, according to study authors, is and will continue to be a significant increase in the percentage that families pay in premiums relative to their household income. "This report details how health insurance has become increasingly unaffordable for families during the years before enactment of the Affordable Care Act," said Commonwealth Fund President Karen Davis during a press conference.

To illustrate, the report noted that in only three states—New Mexico, Texas and West Virginia—were average premiums 18% or more than the median household income (under-65 population) in 2003. By 2009, that number had climbed to 26 states. Data was gathered from U.S. Census Current Population Survey and the 2003 and 2009 Medical Expenditure Panel Survey (MEPS)—Insurance Component, as reported by private and public sector employers state-by-state.

Family plan premiums varied widely across the country, with Arkansas having the lowest average in 2009 at $10,969 and Massachusetts with the highest average premiums at $14,723. The report did not estimate what percentage employees are paying of these premiums relative to their employers’ contributions, but lead author Cathy Schoen, Commonwealth Fund senior vice president, said the overall rise has had significant financial impacts on employers and families.

"The steady increase in the cost of health benefits has directly contributed to slower wage growth and pressure on jobs," she said. "In effect, workers and their families with jobs with health insurance have been giving up wages to hold on to their health insurance. During the time period we looked at, median incomes rose far slower than premiums."

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