Health premiums for employer plans surge 41 percent

Premiums for employer-sponsored family health insurance increased an average of 41 percent from 2003 to 2009, more than three times faster than median incomes, according to a report released Thursday by the Commonwealth Fund.

The report, which presents a state-by-state analysis of private employer health insurance costs for those six years, found that by 2009, the jurisdictions with the highest annual total premiums included Alaska, Connecticut, Maryland, Massachusetts, Vermont, Washington, D.C., Wisconsin and Wyoming.

The average employer-sponsored family premium for all states was $13,027. Premiums for employer-sponsored coverage include the amounts paid by employers and employees combined. The Commonwealth report did not break down how costs were divided over the years.

The Commonwealth Fund supports the new health-care law. Its report said the law's provisions have the potential to slow the rate of cost growth by giving states the ability to challenge excessive premium increases and by providing assistance for low- and middle-income families to pay for health insurance.

Industry analysts, however, say that figuring out how the new law will affect health-care costs, and therefore premiums, is among the trickiest issues surrounding the statute.

One of the lead authors of the report, Cathy Schoen, said health-insurance costs will tend to vary by costs of care and prices charged by doctors, hospitals and diagnostic laboratories. Health-care costs tend to be somewhat higher in higher-income areas than lower-income states, she said.

The report also found that deductibles rose sharply in almost all states, increasing an average of 77 percent from 2003 to 2009 in both large and small firms. In addition, more workers are paying deductibles; 74 percent faced a deductible in 2009 compared with 52 percent in 2003.

Schoen said the rapid increase in health-insurance premiums means many working families have been forced to trade off pay raises just to hold onto health benefits. The expanding share of premiums paid by workers themselves also has taken a greater cut out of paychecks, she said.

Other recent studies have shown that employers are shifting health-care costs to workers to help ride out the economic downturn.

A survey released in September by the Kaiser Family Foundation and the Health Research and Educational Trust found that workers with health benefits are paying an average of 30 percent of the premium for family coverage and 19 percent of the premium for single coverage this year, the highest in 12 years of surveys by the two organizations.

Workers last year were paying an average of 27 percent of the premium for family coverage and 17 percent for single coverage.

Washington Post researcher

Lucy Shackelford contributed

to this report.

Information in this story, published Dec. 2, was corrected Dec. 3. Washington, D.C, and not Washington state, was among the jurisdictions with the highest annual total premiums. A previous version inadvertently referenced Washington state.