Study: Group Health Insurance Premiums Rose by 5 Percent in 2009

Sept. 15, 2009 – U.S. workers will pay an average $3,515 for employer-provided group health insurance premiums this year while job providers will pay an average $9,860 for a total of $13,375 annually to provide family health insurance coverage, according to results of the 2009 Employer Health Benefits Survey recently conducted by the Kaiser Family Foundation and the Health Research and Educational Trust.

The $3,515 family contribution indicates a 5 percent rise in the amount families pay for health insurance premiums from last year and outpaced inflation, which dropped by 0.7 percent primarily due to decreasing energy costs. The 5 percent rise also outpaced average wage increases, which went up by 3.1 percent. Workers’ wages rose by 3.1 percent during the same period.

Despite rising health insurance costs, most job providers likely will continue offering them.

“We’re seeing many businesses struggling with ways to curb their health care costs, including offering high-deductible plans for workers, though relatively few expect to drop health benefits altogether,” said Gary Claxton, Kaiser Family Foundation vice president and lead author of the study.

While health insurance premiums outpaced inflation and average wage increases during the past year, the rise in health insurance costs has been much higher over the past decade. For workers and their employers, the Kaiser Family Foundation says health insurance premiums have far outpaced inflation and wage increases over the past decade.

Health insurance premiums increased by an average 131 percent since 1999 while wages rose by an average 38 percent and inflation an average 28 percent over the same period. Although health insurance premiums have more than doubled over the prior decade, the annual cost increase has slowed in more recent years after posting double-digit jumps earlier in the decade.

The study indicates about 60 percent of employers provide health insurance benefits, but smaller job providers are least likely to offer such perks. About 46 percent of firms with between three and nine employees offer health insurance benefits, according to the Kaiser Family Foundation.

But many employers are paring costs to maintain benefits. Among job providers offering health insurance benefits, some 21 percent indicated they either decreased the scope of coverage provided or increased the amount workers must pay to maintain coverage.

In addition to paying more to keep their health insurance benefits, survey results suggest many workers also are paying higher deductibles for treatment. Some 22 percent of workers with health care benefits pay at least $1,000 annually for individual health care coverage before receiving a benefit. And many opt for managed-care plans.

Most employees with health care benefits utilized preferred provider organizations with about 60 percent opting for PPOs. About 20 percent use health maintenance organizations and another 10 percent point-of-service medical care providers, according to the study. About 8 percent use consumer-oriented health care plans offering high deductibles, such as health savings accounts and health reimbursement arrangements.