Economy Now

Instant reaction and smart charts on economic trends.

Health care premiums rise by an average of 62% since 2003

December 12, 2012: 12:16 PM ET

Average health insurance premiums for employer-sponsored family coverage soared 62% between 2003 and 2011, far outpacing the rise in wages, a new study found.

By 2011, there were 35 states in which the annual premium equaled 20% or more of income, according to a study issued Wednesday by The Commonwealth Fund. This compares to just one state in 2003.

Premiums in the south and south-central United States were the highest relative to income. In New Mexico, South Carolina and West Virginia, average premiums exceeded one-quarter of median income.

And there are now no states where premiums are less than 14% of median incomes, compared to 13 such states in 2003.


Employees have been shelling out far more for health care costs. In 2011, employees paid an average of $3,962 for their share of family plan premiums, up from $2,283 in 2003.

And family deductibles more than doubled to an average of $1,123, up from $518 in 2003.

If costs continue rising at the same pace, annual premiums could hit nearly $25,000 in 2020. But the Commonwealth Fund expects the rate to slow thanks to provisions in the Affordable Care Act. These include the creation of state-based health insurance exchanges, the introduction of new consumer protections and insurance market rules and more state and federal oversight of industry practices.

For instance, insurers must now report the share of premiums spent on medical care. If they spend less than 80% or 85% of the premiums on this care, depending on their target market, they must provide rebates to employees and employers.

Join the Conversation
About This Author
Tami Luhby
Tami Luhby
Senior writer, CNNMoney

Tami Luhby is a senior writer at CNNMoney and covers income inequality, state fiscal problems, unemployment, housing policy and other economic issues. Luhby previously covered personal finance for Newsday and banking for Crain's New York Business.

Powered by VIP.