The average employer health plan now costs $15,745, and that’s kind of good news

September 11, 2012

The Kaiser Family Foundation is out with its annual look at the state of employer-sponsored insurance, and it's a bit of a mixed bag. The good news: Health insurance cost growth has slowed, for nearly a decade, in a meaningful way.

The bad news: It's still growing much faster than wages. The long term trend, charted below, is pretty stark:

Workers' contributions to their health insurance premiums have grown by 180 percent since 1999. Earnings, meanwhile, have grown just a quarter as fast.

The average health insurance plan offered by a large company now costs $15,745.

That's the bad news. But there's also some good news buried in this report: Health insurance premiums rose by 4 percent between 2011 and 2012. That's not nothing, but it's a whole lot less than the double-digit premium increases that were common about a decade ago. In fact, since 2004, the Kaiser Family Foundation has not seen any double-digit increases at all. Just like national health expenditures, employer-based premiums are seeing a cost-growth slowdown.

"These are strikingly low numbers to those of us who have been studying health costs for a long time," Altman writes. "A 4% increase in health premiums is good news."

The big question is whether this is permanent: Does the slowdown in premiums reflect a weakened economy, with Americans scaling back on care? Or is there a more fundamental change happening? The fact that small employer-insurance hikes stretch back to 2004 (alongside other research) suggests it could be the latter.

There are a few other good nuggets of news here too. For example, employer insurance is stable - employers aren't dropping coverage, as they had slowly done over the course of the last decade, and more dramatically in recent years:

A higher number of young adults have gained insurance coverage, a change that health policy experts on both sides of the aisle attribute to the Affordable Care Act extending dependent coverage up to age 26.

Our health care system has a whole lot of problems. We spend much more than other countries on health care - a third of it on stuff that doesn't make us healthier - and don't really see better outcomes.

At the same time though, new data trends suggest reason for cautious optimism on where we're headed. Employer-sponsored insurance looks to be holding stable if not ticking upwards (Census data to be released Wednesday, on the national uninsured rate, will tell us more on this front). Health care cost growth is ticking down. Overall health care cost growth is slowing, too. It's not all great news, but it looks better than the health care status quo.

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