Health insurance premiums outpace inflation, wages

Saturday, 24 November 2007

Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers’ wages (3.7 percent) or the overall inflation rate (2.6 percent), according to a study released in September by the Kaiser Family Foundation and Health Research and Educational Trust.

The average premium for family coverage in 2007 is $12,106, and workers on average pay $3,281 out of their paychecks to cover their share of a family policy.

“We’re seeing some moderation in health-cost increases, but premiums for family coverage now top $12,000 annually,” said Drew E. Altman, Kaiser president and CEO. “Every year health insurance becomes less affordable for families and businesses. Over the past six years, the amount families pay out of pocket for their share of premiums has increased by about $1,500.”

Covered workers on average pay 16 percent of the overall premium for single coverage and 28 percent for family coverage -- shares that have remained relatively stable over the past years. However, workers in small firms (three to 199 workers) pay significantly more on average toward the cost of family coverage ($4,236 annually) compared to larger firms ($2,831 annually).

For single coverage, the opposite is true, with workers at small firms annually contributing less on average than workers at large firms ($561 vs. $759).