Study: Health insurance deductibles up 117 percent, premiums up 62 percent

By , Posted on 20 December 2012

health insurance deductibles increasingHealth insurance is complicated, even for those who don't have to buy an individual plan because they get coverage from their employer. Despite having a human resources team to help you -- in most cases, anyway – it's still hard to wrap your mind around the costs and coverage associated with your group plan. (See: "5 things you don't know about group health insurance.")

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Honestly, if I had to take a pop quiz right now, I'm not sure I could say how much my family plan deductible is now that my company switched insurers. It's on my list of things to do. (Note to self: read pile of health insurance documents on desk.) If you need motivation for brushing up on your health plan details, consider that costs are rising, so you really should be up-to-speed on what you're paying and what insurers are doing to trim expenses.

For example, average premiums for employer-sponsored family health insurance plans jumped a whopping 62 percent between 2003 and 2011 – from $9,249 to $15,022 per year, according to a new Commonwealth Fund analysis.

Employees are also paying more, with their share of premium out-of-pocket expenses spiking by an average of 74 percent for the eight-year study period. Deductibles also increased, up 117 percent, according to the report, which tracks state trends in employer provided health insurance coverage. (See: "5 ways your boss is downsizing your health insurance.")

Total health insurance premiums now comprise 20 percent or more of annual median family incomes in 35 states, affecting 80 percent of the U.S. working-age population, according to the report, "State Trends in Premiums and Deductibles, 2003-2011: Eroding Protection and Rising Costs Underscore Need for Action."

States in the South and South-Central U.S. had the highest costs relative to household income--in West Virginia, New Mexico, South Carolina, and Texas, average total health insurance premiums amounted to more than 25 percent of median incomes, the report found.

Average annual premiums for families in 2011 topped $15,000 a year in 21 states.

In 2011, average annual premiums for family plans ranged from about $12,400 to $13,500 in the following lowest-cost states:

  • Arkansas
  • Alabama
  • Iowa
  • Tennessee
  • Idaho
  • Mississippi
  • Utah

Family plan premiums averaged from $16,000 to nearly $17,000 in the following states which have the highest average family rates:

  • Delaware
  • Alaska
  • Connecticut
  • Vermont
  • New York
  • New Hampshire
  • Massachusetts

Health insurance premiums increased faster than incomes across the country from 2003 to 2011. While average family premiums jumped 62 percent during that time, median family income rose just about 11 percent. The increase in premiums ranged from 42 percent in the lowest-growth state, Tennessee, to 76 percent in the highest-growth state, New York. Twenty-seven states had increases of 60 percent or more.

The average annual amount an employee paid toward a family health insurance plan rose from $2,283 in 2003 to $3,962 in 2011--a 74 percent increase. Looking state-by-state, employee contributions ranged from about $3,300 in Indiana, Hawaii, West Virginia, Ohio, and Wisconsin, to more than $4,600 in Arizona, South Carolina, New Mexico, Colorado, and Mississippi.

One way insurers are trying to save money is by offering incentives to encourage people to make healthy lifestyle choices – and penalizing them when they don't. Research shows that this trend could very well become standard practice in the coming years. (See: "Take care or pay a higher share of your health insurance.")

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About

Des Toups

Des Toups

Managing editor

dtoups@quinstreet.com

Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's. Follow him on Twitter @destoups.

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