Health Insurance Premiums Up, Benefits Down
Premiums Rose More Than 40% in 6 Years, Analysis Finds
By Todd Zwillich
WebMD Health News
Reviewed by Laura J. Martin, MD


Dec. 2, 2010 -- The price of Americans’ premiums for health insurance benefits through an employer shot up more than 40% between 2003 and 2009, according to a new analysis released by The Commonwealth Fund.

The report finds that yearly premiums for an average family of four went from about $9,250 in 2003 to more than $13,000 just six years later. At the same time, benefits continued to erode as employers struggled to cut costs and shifted more health care costs onto their workers.

Premiums hovered around $11,000 to $12,000 per year for families in Arkansas, Montana, Oklahoma, North and South Dakota, and Hawaii. Those states had the lowest average annual medical insurance premiums. Rates were highest in Alaska, Vermont, Wyoming, Wisconsin, Connecticut, and Massachusetts, where they often cost $14,000 per year or more, according to the report.

“No matter where you live in the United States ... health insurance is expensive,” says Cathy Schoen, senior vice president of the Commonwealth Fund, and the report’s main author.

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Rising premiums only partially affect workers because much of the cost is borne by employers. But Schoen says those rising costs also serve to depress wages, pressing down on family incomes as increasingly expensive benefits dwindle.

In no states were annual premiums less than 14% of the median income. And in more than half of states, premium costs were more than 18% of annual income.

Meanwhile, benefits like low deductibles eroded. Average deductibles -- usually paid solely by patients -- went up 77% over the six-year analysis. That amounts to a benefit cut because you have to pay more for the same medical care.

The Commonwealth Fund supports the new health care law known as the Affordable Care Act, saying its insurance market reforms, new private exchanges, and public subsidies for lower-income families could help slow the growth of premiums.

They said just a 1% slowdown in premium growth would cut average family costs by $2,323 in 2020. A 1.5% slowdown would drop family premiums $3,403, the report states.