Since the Affordable Care Act became law, health insurance premiums have risen slower than years past. However, the cost to employees is increasing due to stagnant wages and cost-shifting. “Annual premium increases have far exceeded wage growth for more than a decade,” recent research shows.

From 2003 to 2013, premiums have increased faster than median incomes for employees under the age of 65 in every state, according to the Commonwealth Fund’s latest report. By 2013, average annual premiums — including contributions from employees and employers — totaled at least 20% of median income for three-fourths of the country. In 2003, that was true of only New Mexico and West Virginia.

A huge majority, 82%, of workers under 65 live in states where premiums are at least 20% of median incomes, the report says. Southerners are bearing the brunt of the financial stress as many of those states “fall well below the national average” for median income.

Alabama, Arkansas, Idaho, Mississippi and Hawaii have the lowest annual costs of employer-sponsored family plans, ranging from $13,477 to $14,382. The highest costs in the U.S. — between $17,262 and $20,715 — are found in New Jersey, Massachusetts, New York, Alaska and the District of Columbia. “Family insurance premiums exceeded $15,000 in 39 states and D.C. by 2013,” the report says.

Massachusetts also has some of the most expensive single-person plans in the country — a $1,480 annual average it shares with Florida, New Hampshire, Delaware and Connecticut. With an average of $751, Hawaii, Washington state, Oregon, Montana and Arkansas have the cheapest premiums. Overall, the national average grew from $606 a year in 2003 to $1,170 in 2013, Commonwealth found. Annual costs grew by 100% or more in 15 states — Nevada’s increased 175%. 

Out-of-pocket costs increasing

Cost-shifting continues to be a popular method for employers to control their health care costs. Annual contributions from employees nearly doubled in the past decade, increasing 93% from 2003 to 2013. During that same time, employees paid an average 21% of the total premium for single coverage, a 4% increase from 2003.

This practice has harmed employees, Commonwealth says. “The result has been a rapid increase in employees’ out-of-pocket costs for premiums for plans that provide less financial protection.” Out-of-pocket costs jumped from 5.3% of median household income in 2003 to 9.6% by 2013.

Deductibles are also increasing, in both size and popularity. In 2013, 81% of employees had a deductible — nearly a 30% increase from 2003. During that same timespan, the average deductible per person grew by a whopping 146%. In all but six states and D.C., deductibles at least doubled in that decade, and nine states had an increase of 200%.

No state had an average deductible of more than $1,000 in 2003, the report says. Twenty-nine states did by 2010 and by 2013, per-person deductibles averaged more than $1,000 in all but three states and D.C.   

On the upside, premium increases have slowed since 2010. The national average for employee-only plans grew 4.1% from 2010 to 2013 — a 1% drop in average growth from 2003 to 2010.

Premiums increased slower since 2010 in 31 states and D.C. The smallest gains were in Delaware and North Carolina, 1.6%, followed by Oregon and Florida at 1.7% — and costs actually dropped in Louisiana by 0.1%. Ten states had increases of at least 6% from 2010 to 2013, led by South Dakota (7.5%), Colorado (7%) and Indiana and Ohio, both of which increased 6.7%.

Still, rising health care costs are a major concern for Americans, the report says. “For many workers and their families, the slowdown has not made a difference in their wallets. Indeed, for many people with employer health benefits, out-of-pocket cost burdens are consuming a greater share of income.” 

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