Employer Health Insurance Premiums Rose Sharply in 2011

Features The Wall Street Journal

The health insurance premiums paid by US employers rose sharply this year, with the average annual cost of family coverage passing the $15,000 mark for the first time, The Wall Street Journal reported Tuesday, citing a major survey.

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The nine percent average increase in family premiums for 2011, reported in an annual poll of employers performed by the Menlo Park, Calif.-based Kaiser Family Foundation and the Health Research and Educational Trust, comes despite a continued trend toward more limited use of medical services in the US. Last year, family premiums rose just three percent, the survey found.

The average annual family premium for 2011 was $15,073, up from $13,770 last year. For a single worker, the figure was $5,429, up eight percent from $5,049 in 2010. The increase in employees' average premium contribution for a family plan in 2011 was far less: $4,129, up three percent from 2010, according to the survey.

Drew Altman, the chief executive of Kaiser Family Foundation, said the cause of the employers' premium jump was not clear. Self-insured employers, which bear the risk of their own coverage, and insurers may have pegged expected rates to "higher utilization and a stronger economic recovery than has turned out to be the case," he said.

Gary Claxton, a Kaiser Family Foundation vice president, noted that surveys do not always capture exact changes but said the difference between the rates of premium increase in 2011 and 2010 was statistically significant. The survey included 3,184 randomly selected companies, polled between January and May 2011.

The Kaiser survey's researchers estimated that only around 1.5 percentage points of the nine percent increase was tied to provisions of the federal health care overhaul, which mandated changes to plans, including the addition of children up to the age of 26 to their parents' plans and an end to out-of-pocket costs for certain preventive-care benefits.

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One possible reason for the limited impact is that 56 percent of covered workers were in plans that had been "grandfathered," or kept largely unchanged so that certain provisions of the federal law would not affect them. Only 23 percent of employees were enrolled in plans in which the cost-sharing for preventive services changed because of the law.

Karen Ignagni, chief executive of America's Health Insurance Plans, a trade group, said the higher premiums were linked to the increasing cost of medical care, despite the damped demand for health services. "It's the price, the cost, that is driving premiums," she said. 

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