Trends and Indicators in the Changing Health Care Marketplace Section 3: Trends in Health Insurance Premiums
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Trends and Indicators in the Changing Health Care Marketplace
Exhibit 3.1: Average Annual Premiums for Covered Workers for Single and Family Coverage, by Plan Type, 2005
Annual private employer-sponsored insurance premiums averaged $4,024 for single coverage and $10,880 for family coverage in 2005. Preferred Provider Organization (PPO) coverage was the most expensive coverage for both single ($4,150) and family ($11,090) options. At $3,767, Health Maintenance Organization (HMO) coverage was the least costly choice for single coverage and about 9% less than PPO coverage. Conventional coverage is the least costly family coverage, about 10% less than PPO coverage.
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*Estimate of total premium is statistically different from All Plans by coverage type shown at p<.05.
Note: Family coverage is defined as health coverage for a family of four.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 3.2: Average Annual Employer Health Plan Premiums for Covered Workers, by Plan Type and Region, 2005
Premiums vary by region. The South was the least expensive region for family coverage in 2005, driven by the low cost of HMO coverage in this region. The Northeast had the most expensive family premiums as a result of the high rates for PPOs, which dominate the region.
Annual
Single Coverage
Family Coverage
CONVENTIONAL PLANS
Northeast
$3,227
$8,544
Midwest
3,250
9,476
South
3,955
10,420
West
NSD
NSD
ALL REGIONS
$3,782
$9,979
HMO PLANS
Northeast
$3,932
$10,903
Midwest
3,880
10,592
South
3,950
10,754
West
3,421*
9,809
ALL REGIONS
$3,767
$10,456
PPO PLANS
Northeast
$4,313
$11,938*
Midwest
4,235
11,354
South
3,998
10,526
West
4,177
11,012
ALL REGIONS
$4,150
$11,090
POS PLANS
Northeast
$4,105
$11,528*
Midwest
3,809
10,806
South
3,726
10,142
West
4,059
10,958
ALL REGIONS
$3,914
$10,801
ALL PLANS
Northeast
$4,147
$11,504*
Midwest
4,103
11,115
South
3,950
10,507*
West
3,937
10,638
ALL REGIONS
$4,024
$10,880
* Estimate is statistically different from All Regions within a plan type at p<.05. NSD: Not Sufficient Data
Note: Family coverage is defined as health coverage for a family of four.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 3.3: Increases in Employer Health Plan Premiums Compared to Increases in Overall Inflation and Workers’ Earnings, 1988-2005
In 2005, premiums for family coverage increased 9.2%. This is the first year of single digit increases since 2000. This is the second consecutive year that premium increases were less than they were in the previous year. While lower than in recent years, the 9.2% increase in the cost of coverage exceeds the overall rate of inflation by nearly 6 percentage points and the increase in workers’ earnings by over 6 percentage points. Since 2000, the cost of premiums for family coverage have increased by 73%.
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*Estimate is statistically different from the previous year shown at p<.05. No statistical tests were conducted for years prior to 1999.
†Estimate is statistically different from the previous year shown at p<.10.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Historical estimates of workers’ earnings have been updated to reflect new industry classifications (NAICS).
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988, 1989, 1990; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1988-2005; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April), 1988-2005. From Exhibit 1.1, at http://www.kff.org/insurance/7315/sections/ehbs05-1-1.cfm.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 3.4: Average Annual Percent Change in Employer Health Plan Premiums, by Plan Type, 1996-2005
Employer health insurance premiums for different types of plans (Conventional, HMO, PPO, and POS) grew at similar average annual rates from 1996 to 2005 (about 8%), although the actual average premiums for these plan types varied (see Exhibit 3.1).
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Notes: Data reflect the cost of health insurance premiums for a family of four.
Source: Kaiser Family Foundation calculations using unpublished data from the Kaiser Family Foundation/Health Research and Educational Trust Annual Survey of Employer-Sponsored Health Benefits, 1999-2005, and the KPMG Survey of Employer-Sponsored Health Benefits, 1996.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 3.5: Average Monthly Employee Premium Contributions and Percent of Total Premium Paid by Employees, by Coverage Type, 1988-2005
In 2005, employees paid on average 16% of the single coverage premium, or $51 monthly, and 26% of the family coverage premium, or $226 monthly.
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*Estimate is statistically different from the previous year shown at p<.05. No statistical tests were conducted for years prior to 1999.
Note: Family coverage is defined as health coverage for a family of four.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/26/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 3.6: Annual Change in Health Insurance Premiums for Employers Overall, FEHBP, and CalPERS, 1993-2003
Large purchasing programs like FEHBP and CalPERS are often cited as purchasing models best able to contain costs, but their premium growth has in fact largely mirrored employers overall. Premium trends for all three groups show the same general pattern from 1993-2003, except for CalPERS in 2002 and 2003.
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Notes: Employer-Sponsored Health Insurance Overall is the average premiums across all size employers based on the annual survey conducted by the Kaiser Family Foundation and Health Research and Educational Trust. The premiums are for employees (not retirees), for a family of four. FEHBP is the Federal Employees Health Benefits Program, which provides health insurance benefits to more than 8 million Federal enrollees, retirees, and their dependents. FEHBP data for this exhibit are weighted average premiums for employees (both non-Postal and Postal, not including retirees) in all plans, across all enrollment options (self and family). CalPERS is the California Public Employees’ Retirement System, which provides retirement and health benefits to California public employees and retirees. CalPERS is the nation’s third largest purchaser of employee health benefits, after the federal government and General Motors, covering 1.24 million active and retired state and local government public employees and their families. CalPERS data for this exhibit are weighted average premiums for Basic Plans (non-Medicare Plans), across all enrollment options (single, 2-person, and family); the 1996 premium is for a period longer than 12 months because of a change in the reporting period. *Estimate is statistically different from the previous year shown at p<0.5: 1996-1999, 1999-2000, 2000-2001, 2001-2002. ^Estimate is statistically different from the previous year shown at p<0.1: 2002-2003.
Source: Employers Overall: Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2003 Annual Survey, Exhibit 1.2, p. 21, at http://www.kff.org/insurance/ehbs2003-3-2.cfm. FEHBP: Kaiser Family Foundation calculations using data provided by the Office of Personnel Management. CalPERS: Data for 1993, 1996, and 1999 provided by CalPERS; data for 2000-2002 from Facts at a Glance: Health, December 2003, on the CalPERS website at http://www.calpers.ca.gov/about/factglan/health/health.pdf.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/01/04
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 3.7: Adjusted Medicaid Managed Care Monthly Payment Rates and Comparison to the National Median Payment Rate, 2001
There is substantial geographic variation in the amount states pay plans for public managed care coverage through Medicaid. This is likely the result of variations in fee-for-service spending levels, eligibility, local health care costs, and demographics. The national median Medicaid managed care (MMC) payment rate for 2001 was $150.60 per month, with a low of $105.35 in Michigan and a high of $209.34 in North Dakota.
State
Adjusted MMC Rate
Rate To 50th Percentile
North Dakota
$209.34
39%
Minnesota
$202.36
34%
Kentucky
$191.95
27%
Virginia
$190.35
26%
North Carolina
$188.68
25%
New Mexico
$186.94
24%
Washington, DC
$186.40
24%
Iowa
$181.43
20%
Maryland
$180.05
20%
New Hampshire
$175.95
17%
Massachusetts
$170.96
14%
Connecticut
$169.37
12%
Indiana
$164.84
9%
Ohio
$162.30
8%
Delaware
$159.61
6%
Rhode Island
$159.29
6%
Washington
$154.67
3%
Missouri
$151.79
1%
U.S. 50th Percentile
$150.60
-
New York
$149.41
-1%
Hawaii
$147.64
-2%
Illinois
$146.36
-3%
West Virginia
$143.81
-5%
New Jersey
$143.04
-5%
South Carolina
$141.38
-6%
Utah
$140.21
-7%
California
$137.79
-9%
Florida
$135.82
-10%
Kansas
$134.84
-10%
Colorado
$134.36
-11%
Pennsylvania
$132.52
-12%
Wisconsin
$132.44
-12%
Arizona
$131.54
-13%
Nevada
$128.06
-15%
Texas
$127.63
-15%
Oklahoma
$118.32
-21%
Michigan
$105.35
-30%
Source: The Urban Institute, John Holahan and Shinobu Suzuki, “Medicaid Managed Care Payment Methods and Capitation Rates in 2001, Results of a New National Survey,” March 31, 2003, at http://www.urban.org/urlprint.cfm?ID=8357.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/01/04
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number: 7031
