National reforms that slow healthcare cost increases by between 1 percent and 1.5 percent per annum would yield substantial savings in premiums for families and businesses across the country, a new report from the Commonwealth Fund finds.
The report, Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes (20 pages, PDF), found that family premiums for employer-sponsored health insurance increased by 119 percent nationally between 1999 and 2008 and could increase another 94 percent, to an average $23,842 per family, by 2020 if cost growth continues on its current course. However, if the annual rate of growth were slowed by 1 percent, premiums for family coverage would be reduced by more than $2,500 by 2020, while a reduction in the growth rate of 1.5 percent would yield more than $3,700 in premium savings.
According to the report's state-by-state analysis, between 2003 and 2008 increases in employer-based premiums for family coverage averaged 33 percent, ranging from a high of 45 percent in Indiana and North Carolina to a low of 25 percent in Michigan, Texas, and Ohio. Most states saw increases of 30 percent to 40 percent. At the same time, insurance premiums have been rising much faster than household income. As a result, by 2008 total premiums — including employee and employer shares — equaled or exceeded 18 percent of the average household income for the working-age population in eighteen states, compared to just three states in 2003.
"With health spending projected to double if we stay on our current path, middle- and lower-income families are at high risk of losing their coverage or facing long-term stagnant incomes," said Commonwealth Fund senior vice president Cathy Schoen, who was lead author of the report. "Employers and employees share premium costs but we know that take-home pay and retirement savings are being sacrificed to maintain health benefits. Reforms that slow the growth of healthcare costs could go a long way toward health and financial stability for working families."