Rising Insurance Premiums Outpace Salary Increases

April 30, 2008

The cost of family health insurance plans in the United States is increasing 10 times faster than salary increases, meaning that a growing share of workers' earnings are eaten up by health care costs, according to a report issued April 29 by the Robert Wood Johnson Foundation.

WEDNESDAY, April 30 (HealthDay News) -- The cost of family health insurance plans in the United States is increasing 10 times faster than salary increases, meaning that a growing share of workers' earnings are eaten up by health care costs, according to a report issued April 29 by the Robert Wood Johnson Foundation.

Researchers at the University of Minnesota analyzed government data to track changes in health care premiums and income between 2001-2005.

Premiums for family health coverage plans increased by 30 percent between 2001-2005 in the United States, while policyholders' income only increased by 3 percent during the same period. The average cost of family coverage increased from $8,281 in 2001 to $10,728 in 2005. While the percentage of premiums that employees paid remained stable at 24 percent, the dollar amount paid by workers increased by $664, from $1,921 in 2001 to $2,585 in 2005, while median income of the same workers only increased by $1,250.

"This study makes plain what every working parent knows -- that providing insurance coverage takes a bigger bite from the family budget every year," commented Risa Lavizzo-Mourey, M.D., president and CEO 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. This research shows that an ever-increasing number of people will join America's uninsured unless our nation's leaders act to reform our health care system."

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