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Coming to an insurance plan near you: the $32,000 premium

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The Kaiser Family Foundation and Health Research & Education Trust are out this morning with their annual survey of employer-based insurance. The results, unsurprisingly, aren’t pretty: health insurance premiums for employee-based health insurance have increased 113 percent since 2001 and are expected to more than double from an average of $15,073 today to $32,175:

That’s a pretty terrifying chart - and keep in mind, that’s just for the employer-based insurance market. It doesn’t include individual market plans, where even bigger premium increases are more common. Health insurance costs have risen fast enough to eat up an entire decade of earning increases, a Health Affairs study found last month, and this new survey shows they could continue to do so for the next 10 years, too.

While that squiggly red line is scary, the chart that might matter more shows the share of benefits that employees are paying for. Over the past decade, not only have employees’ benefits cost more, as medical costs have risen, but employers have come to expect subscribers to pick up an increasingly large part of the tab:

Proportionately, workers have been expected to pay increasingly more of their health insurance bill. This shows up in deductible levels, too: 28 percent of employers’ plans for single coverage now have a deductible over $1,000, up from 6 percent in 2006.

The health reform law has mechanisms to control the cost of health insurance. The new medical loss ratio regulation requires that insurers spend at least 80 percent of subscriber premiums on medical costs, limiting the amount that can go to profits and administration. In the small group market, where some employer-based plans fall, it requires the review of any double-digit rate increases. But even if these mechanisms do get insurance costs to go down, that doesn’t mean the change will trickle down to employees: the health reform law doesn’t really touch how employers divvy up the bill.

There’s been a trend developing for over a decade now where employers expect employees to pay a bigger chunk of the insurance bill. If a higher worker contribution has become the new normal, decreases in the cost of health insurance may not necessarily mean lower costs for the consumer.

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