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Health Plan Premiums Vary Widely by State

 |  By HealthLeaders Media Staff  
   September 03, 2009

A new set of tables from the federal government shows a wide state-by-state variation in what Americans paid in premiums for employer based health coverage in 2008.

Not only does the total amount of premium cost vary, but also the share paid by the employer versus the share paid by the employee.

For example, workers with families in Alaska were covered by health plans costing on average $13,383 a year, while $3,248 was paid by the employee and $10,135 paid by the employer. At the high end, plans in Alaska cost $20,000 a year, $8,000 more than the national average.

In contrast, a worker with a family in Alabama was covered by health plans costing on average $11,119, and the employee's share was $3,265 while the employer's cost was $7,855.

"What we're trying to point out is how this data varies from state to state," says Jim Branscome, statistician and project manager for the Agency for Health Research and Quality.

"If you look at where the premiums are most expensive, it's usually in those areas where the housing costs and wages are higher. A lot of healthcare premium costs are driven by what it costs a hospital to operate in New York, for example, versus the Midwest," he says.

The set of tables was issued without a companion report, an unusual occurrence for the agency, Branscome acknowledged. "We will get around to doing a paper on this, but for now, we wanted people to know these special tables exist, and how the distributions have changed."

The state-by-state breakdown shows average costs for employees and employers depending on whether the plan covers a single person, a single person plus one, or a single person and his or her family.

The tables break down each state's premium payments in five categories to show how the most expensive plans in the state compared with the least expensive.

Other highlights show that for the nation as a whole, 10% of covered workers, or about 2 million—had family plans that cost $17,000 per year or more. The average annual premium for a family plan in 2008 was $12,298.

The cost figures may also vary depending on how much competition there is in each state. In a large number of states, for example, one or two insurance companies dominate the market, reducing the amount of price and plan competition.

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