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Commonwealth analysis finds steady rise in premium costs, shift toward employees


Health insurance premiums for employer-based plans grew 50% from 2003 to 2010 and if unchecked will increase another 72% by 2020, to nearly $24,000 for family coverage, according to a new state-by-state analysis by the Commonwealth Fund.

The nonprofit organization, which studies and promotes health care quality, affordability and access, is a vocal supporter of the Patient Protection and Affordable Care Act and asserts that the law provides a foundation for slowing that growth. Curbing it by just 1 percentage point would save the average household $2,161, according to the report.

The cost of family coverage averaged $13,871 in 2010 and exceeded $14,000 in 16 states, according to the analysis. The figures were more than $15,000 in New Hampshire, Florida and the District of Columbia. Family coverage in 2010 cost the least—$11,379—in Idaho.

The increases in all states were larger than the growth in median household income, according to the report, and by 2010 the premiums (including both the employee and employer contributions) equaled nearly two-thirds of household income for middle-income families. The share of premiums borne by employees, meanwhile, grew 63% for family plans during those seven years, and deductibles became more common and larger.

The researchers examined health insurance data collected in the federal government's annual survey of employers from 2003 to 2010 and assessed affordability by comparing the insurance costs with household income data from the U.S. Census Bureau.

“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 health care system reforms,” Cathy Schoen, lead author of the report, said in a news release. The report concludes that several provisions of the Affordable Care Act have the potential to abate the trend, including the state health insurance exchanges, restrictions on the amount of premiums spend on administrative costs, and state and federal reviews of large premium increases.

America's Health Insurance Plans, the industry's lobbying group, has countered that these measures don't address the primary driver of health insurance premiums: the runaway costs of health care itself.

Gregg Blesch is a reporter for Modern Healthcare, a sister publication of Business Insurance.