Cost of insurance outpaces income of many Americans

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The cost for family health insurance premiums available through employers has increased 10 times faster than the income of many Americans in recent years, according to a new analysis of government data published by the Robert Wood Johnson (RWJ) Foundation.

A growing share of workers’ earnings is being absorbed by the increasing cost of health insurance, according to analysis conducted by University of Minnesota researchers and published by the RWJ Foundation.

Nationwide, the amount employees pay for family coverage increased 30 percent from 2001 to 2005, while family policyholders’ income increased just 3 percent over the same period.

The report indicates that the proportion of insurance premiums that workers pay for family coverage has remained constant over the years, but the dollar amount that workers contribute has substantially increased.

Across the nation, the average cost of family coverage increased nearly $2,500—from $8,281 in 2001 to $10,728 in 2005. The Foundation reported that the percentage of family premiums that employees pay held steady at about 24 percent, the report said.

However, the amount that workers pay for family premiums increased $664, from $1,921 in 2001 to $2,585 in 2005 on average, according to the RWJ Foundation. Meanwhile, the Foundation said that median income of people who hold family health insurance policies increased only $1,250 during the same period, from $40,818 in 2001 to $42,068 in 2005.

The average cost that employers pay for their share of family coverage increased from $6,360 to $8,143 (28 percent) during the period, according to the report.

The findings show nationwide:

  • Fewer employees are working in private-sector jobs that offer insurance: 4.1 million fewer people worked in private-sector jobs that offered health insurance in 2005 than in 2001.
  • Fewer private-sector businesses offer coverage: The number of private-sector employers who offered health insurance benefits to their employees fell by 30,000 from 2001 to 2005.
  • Fewer people have private health insurance coverage: Americans with private health insurance fell nearly 2.4 million, or 6 percent, from 2001 to 2005.
  • More people are uninsured: According to the latest Census figures, 47 million Americans do not have any health insurance.

“This study makes plain what every working parent knows—that providing insurance coverage takes a bigger bite from the family budget every year,” said Risa Lavizzo-Mourey, MD, president and CEO of the RWJ Foundation. “There is a clear connection between the rising cost of healthcare and the increasing number of uninsured Americans. As costs continue to go up, fewer people can pay their portion of the premium, and fewer employers are able to offer insurance benefits. This research shows that an ever-increasing number of people will join America’s uninsured unless our nation’s leaders act to reform our healthcare system.”

Researchers at the State Health Access Data Assistance Center, located at the University of Minnesota in Ann Arbor, Minn., compiled the analysis.

The researchers used the most recent data from the U.S. Census Bureau (two-year averages for 2001–2002 and 2006–2007) and the Medical Expenditure Panel Survey, conducted by the Agency for Healthcare Research and Quality (2000, 2001 and 2005).