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State Trends in the Cost of Employer Health Insurance Coverage, 2003-2013
For the last decade, health insurance premium increases rose three times as fast as worker’s wages. Between 2010 and 2013, the rate of premium increase slowed from 5.1% for the prior seven years to 4.1% for the past three years. Premium rate increases slowed to less than 4% in the neighboring states of Arizona, Oregon and Nevada but stayed higher than 5% in California.
Employee contributions towards the costs of their premiums nearly doubled in the last decade; their out of pocket copays and deductibles increased as well. Employees’ out of pocket costs (share of premium plus out of pocket) increased from 5.3% of household income in 2003 to 9.6% in 2013. Most of that growth occurred prior to 2010.
The slower growth in per member per month (pmpm) applied to both Medicare and private insurance. Medicare’s pmpm growth rates were 5.4% in 2008, 4.0% in 2009, 1.3% in 2010, 2.1% in 2011, flat in 2012 and 2013. Private insurance pmpm growth rates were 7.6% in 2009, 4.5% in 2010, 3.8% in 2011, 4.0% in 2012 and 2.1% in 2013. The reforms of the ACA may account for the slower growth in Medicare costs, but do not explain the slower growth in private employment based coverage, except possibly as radiating impacts.
California’s performance was not exemplary. Average employer costs per individual grew 5.1% nationally and 5.6% in California from 2003-2010; average employer costs per individual grew 4.1% nationally and 5.1% in California from 2010-2013. Average premiums as a percent of median household income grew from 15% in 2003 to 22% in 2010 to 23% in 2013. By comparison, Massachusetts grew from 13% to 16% to 18% over the same time frame. Minnesota’s (the top performer) pmpm premiums grew from 13% to 17% to 16% between 2003 and 2013.