Experts at odds over 9% spike in employer insurance premiums

Premiums for employer-based insurance just keep rising, but they particularly spiked this year with a 9 percent increase from 2010, according to a new study from the Kaiser Family Foundation. That's 2.1 percent faster than wages and 3.2 percent faster than general inflation.

The average annual premium for family coverage through an employer-based health plan now costs $15,073, and almost 75 percent of employees pay part of the insurance costs for doctor visits, reports the New York Times.

Of that $15,073, workers are now paying an average of $4,129 for their health insurance each year, while employers pay the rest--or nearly $11,000, the study notes. However, it appears that employees only pay on average $22 more for an individual policy and $132 more for a family policy, which according to Politico, isn't a "statistically significant increase."

"The open question is whether that's a one-time spike or the start of a period of higher increases," said Kaiser President and CEO Drew Altman.

Health insurers have defended higher premiums, particularly in relation to their increasing profits, by explaining that expenses would rise after patients resume their previous utilization rates. However, experts think the struggling economy will continue to suppress healthcare demand, and even if the economy rebounds, there's no guarantee that medical demand also will rise, the Times notes.

For instance, Cigna exec Tom Richards attributes some of the moderated health utilization to the economy, but believes that employees' increase in cost-sharing and programs that more closely monitor their health could be having a more lasting effect. "We've seen a moderation in the increase in health services, particularly in discretionary services," he  told the Times, adding that the question is "what is the economy going to be and what is the new normal."

Altman offered his own opinion on the reason behind the premium spike, saying that insurers assumed a faster economic recovery and geared their premiums to larger increases in use than actually occurred. "Another way of saying that is they assumed a return to more normal levels of utilization, and that didn't occur," he said in a phone briefing on the survey, reports Health Affairs. Altman said he would "guess" that next year's premium hike would be lower, in line with the slowing recovery and actual utilization, but he stressed the uncertainty in that prediction.

To learn more:
- here's Kaiser's employer health benefits survey
- read the New York Times article
- see the Politico article
- read the Health Affairs blog post

Related Articles:
Can bad publicity lower premiums?
HHS hopes to pressure insurers into lowering rate hikes
Insurers' medical expenses decline in 2010

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