The cost of health insurance is outstripping income growth in all 50 states, according to a report released by the Commonwealth Fund.
“Whether you live in California, Montana or West Virginia, health insurance is expensive. Out-of-pocket costs for premiums and care are consuming a larger share of people’s incomes at a time when incomes are down in a majority of states,” said Cathy Schoen, Commonwealth Fund senior vice president and lead author of the report, in a statement accompanying the report. “Workers are paying more for less financial protection. The steady rise in costs from 2003 through 2010, before enactment of the Affordable Care Act, points to the urgent need for health insurance market and healthcare system reforms.”
The report, “State Trends in Premiums and Deductibles, 2003-2010: The Need for Action to Address Rising Costs,” found that by 2010, 62 percent of Americans “lived in a state where health insurance premiums equaled 20 percent or more of earnings for a middle-income individual under age 65.”
The study’s authors analyzed nationwide private sector health insurance premium and deductible trends between 2003 and 2010 for those under age 65. Insurance data came from the federal government’s annual surveys of employers conducted for the insurance component of the Medical Expenditure Panel Survey. Income data came from the U.S. Census Bureau’s Current Population Survey of households.
Other findings from the report include:
• Premiums for employer-sponsored family health insurance increased by 50 percent from 2003 to 2010, reaching an average of $13,871 a year by 2010.
• The annual amount that employees pay toward their insurance increased by 63 percent. By 2010, the cost to employees rose to an average of $3,721 a year for a family policy.
• Employers expect their employees to contribute more even though incomes are stagnant or have declined. Per-person deductibles increased an average of 98 percent from 2003 to 2010 with average deductibles exceeding $1,000 in 29 states in 2010. Higher deductibles impacted employees working at small and large companies.
Slowing the rate of healthcare premium growth is imperative, concluded the study’s authors, and reforms must apply to both the private and public sectors. They recommend that in addition to improving the quality of care, wasteful overhead spending must be curbed and innovative ways for paying for care must be implemented.
“The combination of rapidly rising costs and stagnant incomes is putting families in an untenable situation,” said Karen Davis, Commonwealth Fund president, in a statement. “New rules for insurers, along with new models of healthcare delivery such as accountable care organizations and new ways of paying doctors and hospitals, can help control healthcare costs and provide families and business owners with the relief they need.”
Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.