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Family Insurance Premiums Rise 4% for 2nd Year, Still More Than Double Inflation Rate

| August 20, 2013

Where your money is slipping. Click on the image for larger view.

Where your money is slipping. Click on the image for larger view.


For the second year in a row, health insurance premiums for job-based family coverage rose a relatively modest 4 percent, reflecting slowed health spending.

Nonetheless, workers are likely to feel an increased pinch from health care costs: More than a third have annual deductibles of at least $1,000 this year before their insurance kicks in, while wages continue to grow far more slowly than health insurance costs.

The average family plan premium topped $16,000 for the first time, with workers paying on average $4,565 toward that cost, not counting copays and deductibles,according to a survey of about 2,000 employers released Tuesday by the Kaiser Family Foundation and the Health Research & Educational Trust. (KHN is an editorially independent program of the foundation.)

The average cost of a single employee’s insurance premiums rose 5 percent, to $5,884, with workers paying an average of $999, the survey found.  Workers’ wages increased 1.8 percent on average, while general inflation rose 1.1 percent. The survey was done between January and May of this year.

“The premium increase this year is very moderate, but the pain factor for health insurance cost has not disappeared,” said Drew Altman, president and CEO of the foundation. “Over time, what people pay for health care has dramatically eclipsed both their wages and inflation.”

The increases documented in the report, moderate by historic standards, come amid ongoing debate over the federal health law’s ability to rein in health care costs. In July, the Obama administration granted a one-year delay, until 2015, in the requirement that employers with 50 or more workers offer coverage or face a fine, prompting Republicans to call for a similar delay in the rule requiring most individuals to carry coverage.  Critics and opponents have also sparred over whether the health law will slow premium growth. All sides may find fodder in the report, observers say.

“You will have the administration and the Democrats saying, ‘Look how the health law is helping moderate health cost increases,’ and Republicans and those against the law will say, ‘It hasn’t done anything because costs are still four times inflation,'” said Paul Fronstin, director of the Health Research and Education Program at the Employee Benefit Research Institute, a nonpartisan Washington think tank.

The employer survey found that 93 percent of firms with more than 50 workers offer coverage, down from 95 percent in the 2012 survey. Overall, 57 percent of all employers offer health insurance to their workers, down from 66 percent decade ago.  The rate of coverage by employers with 200 or more workers remained steady, with about 99 percent offering insurance.  Coverage drops off with firm size, with only 45 percent of the smallest companies offering insurance to workers, down from 55 percent in 2003.

Other findings include:

  • Workers pay 18 percent of the premium costs for single coverage on average, and 29 percent of the premium cost for family plans, rates that have changed little in a decade.
  • Health insurance premiums have risen 196 percent since 1999, with worker contributions growing 182 percent.  Meanwhile, wages have grown an average of 50 percent since 1999.
  • Thirty-eight percent of all workers with single health insurance had at least a $1,000 annual deductible, the amount they pay before most insurance coverage kicks in. At small firms, 58 percent of those covered workers had at least a $1,000 deductible, while nearly 31 percent had deductibles of at least $2,000, up from 12 percent in 2008.

“One of the changes in this report is the growth in deductibles,” said economist Paul Ginsburg of the Center for Studying Health System Change, a nonpartisan research group in Washington.  The deductibles were likely “a factor behind the premium increase being as low as it was.”

Workers in small firms with three to 199 employees face an average annual deductible of $1,715 compared with $884 for those in larger firms.

Small businesses generally see more volatile insurance premium rates than larger firms. Scott Hauge, who runs an insurance brokerage firm in California, says his clients have seen increases averaging around 10 percent a year for the past seven years. He doesn’t dispute the findings of the survey, but added that “small businesses are not seeing those minor increases.”

Analysts say premium increases are cyclical, with periods of rapid increases, such as the double-digit hikes that marked the late 1980s and the early 2000s, followed by periods of slower growth. Since about the mid-2000s, rate increases paid by employers fell below 10 percent each year, with the smallest annual growth tracked at 3 percent in the 2009-2010 employer survey. In what surprised many analysts, rates jumped by 9 percent from 2010 to 2011 before moderating the past two years to around 4 percent.

Some employers say changes associated with the health law, such as a provision allowing adult children to stay on their parents’ plans until age 26, are adding costs.

“We’re all seeing it,” said Forrest Cook, vice president of human resources at NCP Solutions, a 350-employee company in Birmingham, Ala. “We have around a 5 percent to 6 percent increase this year. Before that, our costs held steady for about three or four years.”

Cook was also concerned with the uncertainty surrounding the health law, such as the year delay in the requirement that large employers provide health coverage or pay a penalty.

His firm does not require workers to pay a large sum before their insurance kicks in because “when you have a high deductible plan, it’s going to discourage people from using it,” Cook said.

But the firm is enthusiastic about wellness programs, as are 35 percent of employers in the survey, who consider them an effective strategy for controlling costs. Such programs range widely, from providing small gifts to employees for filling out a health risk questionnaire, to offering large reductions in premiums for workers who get screened and meet certain goals for weight, blood pressure, cholesterol or blood sugar. The federal health law allows employers to increase those financial incentives from 20 percent of the cost of the health coverage to 30 percent.

NCP offers workers financial incentives to participate in wellness programs, including getting flu shots and checking for such things as high blood pressure. Those who sign up for a stop-smoking class get credit for paid time off, Cook said.  And the firm discusses health costs with workers.

“We’re very honest about the cost of our plan,” said Cook, whose firm is self-insured. “We tell people if you control the cost of the health plan, if you’re lively and well, it will cost us less.”

–Julie Appleby, Kaiser Health News, with Ankita Rao 

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16 Responses for “Family Insurance Premiums Rise 4% for 2nd Year, Still More Than Double Inflation Rate”

  1. The Truth says:

    As long as our insurance is offered privately by companies who are looking to MAKE A PROFIT our rates will continue to rise each and every year. Greed is a bad ingredient in our current healthcare system.

  2. m&m says:

    My insurance company just cancelled me and the rest of retirees because of OBAMACARE.. Now we have to scramble for a new company before the end of the year.. For those of you who voted for that idiot I hope it happens to you too. This guy has done more in the last five years to destroy America then anyone else in history.. Politicians are exempt from the system because they know how bad it is..

    • The Truth says:

      Your insurance company canceled you BECAUSE THEY CAN. The purpose of “Obamacare” or what it’s actually called: Affordable Care Act is to NOT allow insurance companies to treat everyone as profit margins. You can blindly blame OBAMACARE all you want, but until you wake up and realize that our healthcare industry is PRIVATE for anyone under the age of 65 you will continue to spread false information.

      In it’s current form, the ACA can be tweaked but since the GOP refuses to work towards a common resolution to our healthcare crisis, we will get no where. Instead, they want to point fingers, balk about how bad Obama is and brainwash people like you who are not able to do your own research and learn more about the ACA.

    • Anonymous says:

      yup thank you 0bama and all that voted for this mess. 0bama care will destroy our heath care not make it better. 85% of us had/have Ins and for the most part of that we liked what we have. So DC makes a plan to undue it for the 85% to “help” those who did not have it.

      • The Truth says:

        Yes, before Obamacare we were all so pleased with our insurance. Give me a break! Get back to reality, we all know very much so that health insurance has been a joke in this country for a very long time.

    • A.S.F. says:

      @m&m–And your insurance company was so benign BEFORE Obamacare came along? Oh, those poor, poor insurance companies! They have been so charitable to so many of us up to this point! Why, oh why, would ANYONE see a need to change things? Could it be because of the suffering of all those people who had no insurance at all before Obamacare? Good, kind proud American citizens that we are, why should we care about THOSE losers? And all those people thrown out of (or unable to obtain) any possibly life-sustaining medical coverage due to pre-existing conditions–Well, I guess that doesn’t matter until it happens to YOU or someone YOU happen to care about! It seems to me, m&m, that your anger should be reserved for your former insurance company, especially if you faithfully paid your premiums for any length of time before they decided that it didn’t suit their bottom line to have you and your retired buddies dragging down their profit margin anymore. To them, you simply aren’t worth the risk you look to be on paper. THEY, and companies like them, are the ones destroying your peace of mind. And they will pull stuff like this to create a sense of outrage among the very people they are screwing and use it as a threat to leverage more dough out of the government and the people the government represents. Perhaps the geniuses running these companies even feel they can help defeat the Affordable Healthcare Act before it can get on its feet by pulling this crap. Too bad for them…Obviously, most Americans WANT mandated healthcare or Obama wouldn’t have been elected twice. I say, more the fool you, for picking the wrong target as the source of all your woes.

  3. Charles Ericksen Jr says:

    Let’s just add another side of the story of rising premiums.

    The providers ( Hospitals, physicians and other medical professionals) have raised their fees, at least 2x inflation for the past 30 years. Hospitals have gone out and purchased expensive surgical tools, that are already in place in the hospital next door. Labratories, have broken down simple blood draws , into seperate procedures , to double the expense. Anesthesiologists, have added a second individual to the operative session to double their fees,
    Here are some recent experieces of members in my family
    1. Er visit, that lasted 24 hours. $11,750, that included numerous MDs not ever seen by the patient previously, who just “stopped in to “consult” on the patient. Over $4,000 was for lab work only. Reading an xray..$375, taking the xray $1500.
    2. Minor eye surgery lasting 45 minutes, perfomed in a sugical center. Physician $2,700, Anesthesiologist #1, $2250, assistant anesthesiolgist #2, $2250. , surgical center $3800. total $11,000….

    The point I am making is that YES, the system is broken, but the “profit push” is not just on the part of the Insurance companies, but let’s not forget the providers, who push up the costs and where all the money is actually going .

  4. m&m says:

    The Truth. We have had this insurance system for over one hundred years without problems like this.. OBAMA care is designed to take care of the dead beats mouching off the country with their lavish entitlements.. OBAMA will totally destory this country in the next three years before he leave office..

    • The Truth says:

      I realize it may be hard for you to see reality through the jungle that is outside your door of a cushioned pension and health insurance, but the fact is that health insurance has been an ongoing problem for many in this country. Being self employed, I see it first hand every single day. My costs have gone up EVERY SINGLE YEAR since I started my policy and yet my costs to the insurance company has gone down. I use services very little at this time (thankfully) yet my insurance company sends me a letter blaming “Obamacare”. The fact is that insurance companies are about their BOTTOM LINE. It’s a business and you don’t matter to them. The working world has long changed – thanks to the likes of companies like Walmart, among many others – it’s now nearly impossible to get health insurance through your employer.

      Do you honestly believe that these issues we are having were all created by “Obamacare”? Take a look at the last 15 years, companies have been cutting employee’s hours to knock them down to part time for YEARS before “Obamacare”. Please turn off Fox News and start living in reality.

  5. Shocked, I tell you... says:

    As long as employers are responsible for premium payments of $5,000 to let’s say $6,000 per premium per family member, what do you think is going to happen many businesses? First they are going to cut wages, then employees, and then reduce everyone to part time employment, and then they are going to close.

    This is a disaster.

    • A.S.F. says:

      @Shocked, I Tell You–Have you not read the comments immediately preceeding yours? The entire system needs to change, in order to make life-preserving healthcare available to all Americans. ALL PARTIES’ expectations are going to have to change. That includes Doctors, the system that educates Doctors, Patients, Insurers, Hospitals, Pharmaceutical companies–You name it, it’s going to need some tweaking, if not a complete overhaul. That is what scares me–The fact that we look to be so unprepared for what is needed and inevitably coming. We need to consider all the changes that will be necessary in order for this to work. If we don’t, THAT is the real potential disaster. As for employers (especially the huge ones) who are already threatening to cut their workforce and want the rest of us to feel sorry for their “victimhood”–I mean, really? We seem to hear a lot about the poor undertrodden businessman. Am I supposed to feel sorry for them, when they ignore the needs of their employees–the very people who make it possible for them to operate their businesses on a daily basis? This is especially true of the “Papa Johns” and “Walmarts” of that world, who have been low-balling their employees since they opened their doors (because they can) while reaping in huge profits. Am I supposed to feel sorry for them because they are now being FORCED to care about the health, safety and welfare of their employees? Businesses that protect their top management’s bloated profits by reducing hours just enough so that their employees won’t qualify for benefits are selfish and short-sighted. If they don’t care about their own employees, chances are that they don’t care a great deal about the nameless public who they supply their product to. Sorry, but they are going to have to learn to compromise and innovate in order to survive, just like the rest of us. If their answer to that is–Well, I’m just going to fire everybody willy-nilly, cut my workers’ hours so I can rob them of any potential benefits, move my business overseas so I can take advantage of some other starving population and hold my breath and cry WAH-WAH until I turn blue–As far as I’m concerned, they don’t deserve much sympathy. I sincerely hope the employees they are taking advantage of for the sake of a job, will find better jobs at a more deserving company.

  6. rhweir says:

    You think the recent insurance premium rise is bad, just wait till 2014. The ACA is poorly thought out compromises tied to the FPL. Since it is tied to the FPL, if you are middle class, no subsidies. The ACA is for lower income people. My wife was an early victim of the legislation. One of the earliest parts of the act required that my pension plan cover children up to age 26 but not spouses. My pension plan spotted the spouse loophole and immediately cancelled all spousal coverage. We had to go out and get a private policy for my wife and it was $200 a month in 2013. In 2014, it will cost over $300 a month due to ACA requirements. There are no price controls or standardization with the ACA. Prices will remain the contracted rate. If you think you will avoid the insurance requirement by not having insurance, think again. If you have an emergency and end up at the doc’s office or medical facility, you will pay the off the street rate just as you do now. The off the street rate is whatever the doc or facility says it is and can be 400 to 600% or more of the contracted rate. So, you want to have insurance and the basic, cheap plans that would at least get you the contracted rate, will be gone in 2014. The ACA is just more welfare and in this case, inefficient government regulation.

    • A.S.F. says:

      @rhwier–I would say your ire should be reserved for the company that manages your pension plan. The government is not to blame for their irresponsible actions towards the people whose welfare they are supposed to protect and serve . Rather, it is THEIR decision-making process that left you (and many others like you, I am sure) out in the cold. They saw a loophole and THEY TOOK ADVANTAGE. You, yourself, said it. The government does not determine, and is not to blame for, the conduct of your pension company.

  7. Random Citizen says:


    1. The government already manages and has total control over the health insurance industry and it is managed by not just one, but 50 insurance commissioners in all 50 states.

    2. Healthcare costs are increased by medical expenses – not health insurance companies. Health insurance commissioners in each state require health insurance companies to raise rates in order to remain solvent to pay all legitimate health insurance claims or they will be invited to stop doing business and leave the state.

    3. The health insurance industry only averages a profit of about 2.5% per year. Is that really getting wildly rich at the expense of others? Don’t you think they should stay on the profit side so that they don’t go broke (like the federal govt) and stop paying their claims?

    Obama and his pals planned for rates to skyrocket from the Obamacare laws they passed. When you add 30 million people to the national insurance pool, who’s going to pay for it?

    a.) the government

    b.) you and I

    Obama chose b.) you and I, and is blaming the insurance industry who would bear the brunt of the costs. If it isn’t the existing insurance industry, it will be one big government insurance company with no one huge difference – no one to compete with to keep them honest.

    He knew rates would increase so significantly when they wrote the law and that they would then prey on the naive and ignorant by blaming the increase on greedy corporate American insurance companies. Do you ever hear any of Obama and his friends tell the truth that insurance companies must. must, must answer to state government before raising any rates? He’s playing on the non-engaged, naive, and ignorant American public to create bigger and more centralized government because that’s what his socialist friends have paid him millions upon millions to do.

    And now rather than use existing pool of licensed and trained health insurance agents already in place for decades, these ignorant politicians have created 200,000 more unnecessary jobs to “explain” Obamacare and average $8 an hour working for the gubment!

    Of course we absolutely do need to take care of the 10% or so of Americans that are legitimately handicapped etc.! Nobody disagrees, but we have goons like Al Sharpton pounding their chest and claiming conservatives could care less while people send millions to him just to hear him keep spewing his racist hate-filled virtiol.

    But, Obama and his friends actually have a plan in place for the federal govt to take health insurance over from state governments rather than simply requiring
    a.) everyone should be insurable and non-cancelable for health reasons
    b.) offer care for those in poverty or disabled either discounted or for free
    c.) use the highly regulated health insurance industry already in place that ain’t broke and don’t need fixin’
    d.) and for goodness sake, don’t create 200,000 more redundant federal jobs when people are already educated, licensed, and in place to do the job! That’s just plain Washington politics stupid!

    Instead, they created the MONSTER CALLED OBAMACARE because they believe “we the people” need to be managed by one big huge central ego/government to be herded into their ignorant “plans” while they insist upon laws that provide better plans for themselves.

    Do you really want to keep giving up more and more of your freedoms just for hand-outs?

    If you believe what they are doing is good for any one of us, you may be naive and ignorant.

    I don’t say that as an insult. I mean the two words literally and would ask that you never trust a politicians agenda and look at the facts.

    We need to repeal OBAMA CARE -but- mandate states adopt point a,b & c above on one 8 1/2″ x 11″ sheet of paper to keep it simple. And then we really need to get to the work or lowering health care costs because that is the core issue causing all the financial problems.

    Can’t we all understand and agree to that?


    Do you really want to be owned by contract law by the federal government any more than you already are via Social Security and the IRS who assume they own our children?

    We went to war with the Brits over a measly tea tax. Now I have to give 39% plus another 15% before I can keep a #@%! dime on my business income!




    …and thanks for listening. :-)

  8. Sherry Epley says:

    Just as I thought, the FOX Vombies were drawn out to blame President Obama yet again. First of all, look at the chart in the article. . . it shows health care premiums rising dramatically beginning in 1999. . . well before President Obama was elected! But, NO. . . it is just much to easy to blame TWICE elected President Obama for all the problems in your lives.

    I worked as a senior health underwriter for Pudential over 11 years, so I do have some relevant experience in this area. In can tell you absolutely that the core of the problem is the “FEE FOR SERVICE” medical treatment process we have in the US. That process motivates doctors and hospitals to just TREAT YOU and NOT CURE you, and to MAXIMIZE PROFITS by :

    . Ordering unnecessary tests
    . Prescribing unnecessary drugs
    . Performing unnecessary surgeries
    . Requiring unnecessary doctors visits

    This profit motivation creates “sky rocketing” insurance premiums. . . pure and simple!

    In other countries, excellent doctors are paid excellent salaries. . . NOT by every pill they prescribe!
    Anyone who thinks doctors, hospitals and pharaceutical/ insurance companies are not out to take advantage of you and your wallet in every way is completely blind to the greed and down side of capitolism we all deal with every day.

  9. rhweir says:

    Regarding ASF comment, the government and not my pension plan sets federal policy. The pension plan has to operate within those parameters. The federal government has stated that insurance plans must cover children up to age 26, but not spouses. To afford this, my pension plan, has ended all spousal coverage. If the federal regulation had not been changed, my pension plan could still afford to cover spouses. The ACA is for lower income people, it is based on the FPL. For my wife and I, it will not help us, it will hinder us. Obama, who I voted for twice, has abandoned the middle class. He got my vote and now it’s good bye middle class, just pay your taxes and shut up.

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