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Health Premiums Rise, Outstripping Inflation

BY Carolyn O'Hara  September 15, 2009 at 12:00 AM EDT

Doctor and patient; Getty Images

The average cost of a family health insurance policy now averages $13,375 a year, more than double the cost of a decade ago, according to an annual survey of health benefits conducted by the Kaiser Family Foundation and the Health Research & Educational Trust.

Employees contribute an average of $3,515, with employers paying $9,860.

The 5 percent rise in premiums is relatively modest; by comparison, average annual premium costs rose 13 percent in both 2002 and 2003. But the premium rise in 2009 exceeds both inflation, which has fallen 0.7 percent, and workers’ wages, which have risen 3.1 percent, over the same period.

“When health care costs continue to rise so much faster than overall inflation in a bad recession, workers and employers really feel the pain. That’s why we are having a health reform debate,” Kaiser President and CEO Drew Altman said in a statement announcing the results.

Altman summarizes the results and weighs in on their meaning in the ongoing health insurance reform debate:

Of the 60 percent of firms that offer health benefits to their workers, 21 percent report they have recently reduced health benefits or increased cost sharing due to the recession, and 15 percent report they have increased the worker’s share of the premium.

The survey also found that many employees may see their employer-provided health care coverage erode in the near future. Nearly four out of ten firms surveyed report their intention to increase employee deductibles, office visit cost sharing, and the share employees have to pay for prescription drugs over the course of the next year.

According to calculations in the report, if premium increases average over the next decade what they have for the past five years, the average family premium could rise to more than $24,000 by 2019. If cost increases average what they have over the past decade, however, premiums in a decade could surpass $30,000.

“It underscores the urgency of reaching a greater consensus on ways to control healthcare costs for the future,” Altman told the Online NewsHour.

This is the eleventh annual report on health benefits conducted by Kaiser, a nonprofit research group, and Health Research & Educational Trust, a research organization affiliated with the American Hospital Association.