The cost of health insurance premiums in the United States rose sharply this year compared to previous years, outpacing the rate of inflation and growth in workers’ wages and fueling the attitude that medical costs are rising at an unsustainable speed.
A yearly study of American employers found that the cost of annual premiums for employer-sponsored family health coverage spiked this year, up 9 percent from last year.
The increase, which is a threefold hike from the previous year, means that premiums for families hit an average high of $15,073. For single workers, premiums increased 8 percent to $5,429 on average, according to the survey, released Sept. 27 by the Kaiser Family Foundation and the Health Research & Educational Trust.
On average, workers paid $4,129 out of pocket toward their health plans while single workers paid $921 for their coverage.
"What makes the big premium increase painful this year is that it’s happening in a struggling economic recovery,” Kaiser Family Foundation President Drew Altman said on a conference call. "It comes at a time when wages have been falling in real terms for many workers.”
In 2010, the same survey found that premiums grew at a rate of only 3 percent from the year before.
What’s troubling is that within the past year, premiums grew at a faster rate than workers’ wages, which increased 2.1 percent, and general inflation – which increased 3.4 percent.
Since 2001, the growth in family premiums is even more startling. Average annual premiums increased by 113 percent. Over the past 10 years, premiums grew at a significantly higher rate than workers’ wages, which increased 34 percent, and general inflation – which increased 27 percent.
The study did not examine the possible causes of this year’s extreme hike in premiums – something that is still up for debate. Republicans blame President Barack Obama’s healthcare reform package for the increase, while supporters of the Patient Protection and Affordable Care Act say in the long run the law will help to lower costs for consumers.
America’s Health Insurance Plans, the Washington, D.C.-based industry lobbying group, says insurance companies aren’t to blame for the increase in premiums.
"Policymakers in Washington and the states need to focus on all of the factors that are driving premium increases: soaring prices for medical services, changes in the covered population that has resulted in an older and sicker risk pool, and new benefit and coverage mandates that add to the cost of insurance,” AHIP President CEO Karen Ignagni said in a statement.
The good news is that even though premiums are becoming more expensive, employers don’t seem to be dropping their health coverage for employees. The survey found that the number of employers offering health insurance to workers this year was 60 percent, comparable to the levels in 2009 and earlier years.
The other major trend the survey found was the growth in employees enrolled in high deductible plans. As employers seek more affordable coverage options, they could potentially shift higher healthcare costs onto workers, the survey notes. The percentage of workers enrolled in these types of plans increased to 17 percent this year, up from 13 percent in 2010 and 8 percent in 2009.
The study also looked at employers’ experiences with several provisions of the Affordable Care Act that have already been implemented since it was passed in March 2010. In particular, the survey estimates that employers added 2.3 million young adults to their families health insurance policies as a result of a provision in the law that allows children up to age 26 without employer coverage to be covered as depended on their parents’ plan.
A significant percentage of employers also made changes in their preventive care benefits to comply with a provision in the health reform law that require health plans to offer certain preventive services to consumers without copays.