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CCH® BENEFITS — 5/13/08

Health Insurance Cost Increases Outpace Family Income: Study

From Spencer's Benefits Reports: Americans with employer-provided health insurance have seen their premiums increase ten times faster than their income in the past few years, according to a study released on April 29 by the Robert Wood Johnson Foundation. The analysis of U.S. Census Bureau data from 2001 to 2005, conducted by the State Health Access Data Assistance Center at the University of Minnesota, showed that an increasing proportion of workers’ incomes is going to pay for the rising cost of health care. The report was released during the annual national Cover the Uninsured Week (April 27 through May 3), a nonpartisan campaign that the Foundation organized to advocate for health care coverage for all Americans.

The amount that employees pay for family health insurance coverage rose 30% during the study period, compared with a 3% increase in employees’ income. The share of premiums that workers pay for family coverage has remained stable at about 24% over the years, but the dollar amount that they pay, on average, has increased substantially (from $1,921 in 2001 to $2,585 in 2005). Employers’ costs for their share of family premiums rose 28% during the same period. Meanwhile, workers’ median income rose by only $1,250, from $40,818 to $42,068.

Consequently, 30,000 fewer private-sector firms nationwide in 2005 than in 2001 offered health insurance to their employees, and 4.1 million fewer employees worked in private-sector jobs that offered health insurance. Furthermore, the number of Americans with private health insurance coverage fell by nearly 2.4 million, or 6%, and 47 million Americans are uninsured.

“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, a physician and president of the Robert Wood Johnson Foundation. “There is a clear connection between the rising cost of health care 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. Public opinion polls show that health care reform is a top concern among Americans.”

For more information on the report, Squeezed: How Costs for Insuring Families are Outpacing Income, including a state-by-state breakdown of cost data, visit http://www.rwjf.org.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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