Employer-sponsored health insurance premiums, including both employer and employee contributions, represented 20 percent or more of household income in 37 states by 2013, compared to just two states in 2003. That finding is at the heart of a new report, State Trends in the Cost of Employer Health Insurance Coverage, 2003–2013, from the Commonwealth Fund, a private foundation that promotes access to affordable health care.
The report revealed trends in premium and deductible growth state-by-state over a 10-year period, and is a companion analysis to a December 2014 Commonwealth Fund report on national premium trends.
Along with the new research, the Commonwealth Fund posted an interactive map with “click and see” state-specific premium and deductible averages and trends.
From 2010 to 2013 “there has been a marked slowdown in premium growth in 31 states and the District of Columbia," the report notes. Some contend this is a result of the Affordable Care Act, while others cite the tepid economic recovery, or the rise in consumer-directed health plans that promote cost conscious spending decisions. But whatever has sparked slower premium growth, “the costs employees and their families pay out-of-pocket for deductibles and their share of premiums continued to rise, consuming a greater share of incomes across the country,” states the report. “In all but a handful of states, average deductibles more than doubled over the past decade for employees working in large and small firms.”
State Premium Variations
In 2013, family premiums, including both employer and employee contributions, ranged from a low of $13,477 to $14,382 in Alabama, Arkansas, Idaho, Mississippi and Hawaii to a high of $17,262 to $20,715 in Alaska, the District of Columbia, New Jersey, Massachusetts and New York, the researchers found.
Average premiums amounted to 20 percent or more of the median income in all but 13 states and the District of Columbia, a significant increase compared to 2003 when just two states (New Mexico and West Virginia) reached that mark. In seven states—Alaska, Arkansas, Kentucky, Nevada, New Mexico, Texas and West Virginia—average premiums were 25 percent to 28 percent of the state median income in 2013.
Premiums relative to incomes were particularly high in the South. Average total premiums equaled 22 percent or more of median income in 12 Southern states.
Employees’ Premium Share
In 2013, employees contributed an average of 21 percent of the total premium for single-person coverage, up from 17 percent in 2003. But as a result of total premium cost increases, employees have borne a 93 percent increase in annual costs for their share of health insurance premiums over the decade.
In 2003, employees’ premium contributions averaged $606 a year for a single-person plan; by 2013 this had risen to $1,170. This amount ranged from an average of $751 in Arkansas, Hawaii, Montana, Oregon and Washington to an average of $1,480 in the five states with the highest annual employee premium costs (Connecticut, Delaware, Florida, Massachusetts and New Hampshire).
In 15 states, the annual costs to employees for their share of premiums rose by 100 percent or more from 2003 to 2013. Costs in Nevada, for instance, were up 175 percent over the decade. When increases in workers’ annual health care costs outpace the growth of their paychecks, they experience a de facto pay cut.
Keeping premium growth down without eroding health benefits will require the concerted efforts of the public and private sectors, the report contended. It will also require policymakers to “pursue reforms that improve the quality of health care, rein in cost growth, and ensure that savings are shared with patients and families across the income spectrum.”
Potential out-of-pocket costs for health care—deductibles, co-insurance and co-pays—also increased markedly over the decade. For example:
• In 2013, 81 percent of workers were enrolled in a health plan with a deductible, compared with 52 percent in 2003. The spread of deductibles to more employees occurred across all states.
• During the same period, deductibles doubled or more than doubled in all but six states and the District of Columbia. In 2003, no state had an average deductible of as much as $1,000. By 2013, however, average per-person deductibles exceeded $1,000 in all but three states and the District of Columbia.
• Employees’ combined out-of-pocket costs ranged from 6 percent to 7 percent of median income in the District of Columbia, Hawaii and North Dakota, to a high of 12 percent or more in Florida and Texas.
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