Health premiums surge 41%; Md., D.C. among costliest areas to insure

The House of Representatives passed landmark legislation to overhaul the nation's health-care system, approving a Senate bill and a separate package of amendments.
By Lena H. Sun
Washington Post Staff Writer
Thursday, December 2, 2010; 12:35 AM

Premiums for employer-sponsored family health insurance increased an average of 41 percent across states from 2003 to 2009, more than three times faster than median incomes, and Maryland's rise was among the highest, at 50 percent, according to a report to be released Thursday by the Commonwealth Fund.

The report, which presents a state-by-state analysis of private employer health insurance costs for those six years, found that by 2009, the 10 jurisdictions with the highest annual total premiums included the District and Maryland. The average employer-sponsored family premium for all states was $13,027. In the District, it was $14,222; in Maryland, $13,833. Virginia ranked 32nd, below the national average, at $12,622.

Premiums for employer-sponsored coverage include the amounts paid by employers and employees combined.

The other states with high total premiums were Alaska, Connecticut, Massachusetts, Vermont, Wisconsin and Wyoming.

The Commonwealth report did not break down how the costs were split between employer and employee over the years.

The Commonwealth Fund supports the health-care overhaul legislation. Its report Thursday said the new health-care law provisions have the potential to slow the rate of cost growth by giving states the ability to challenge excessive premium increases and by providing assistance for low- and middle-income families to pay for health insurance.

Industry analysts say, however, that figuring out how the new law will affect health-care costs, and therefore premiums, is among the trickiest issues surrounding the statute.

One of the lead authors of the report, Cathy Schoen, said health insurance costs will tend to vary by costs of care and prices charged by doctors, hospitals and diagnostic laboratories. Health-care costs tend to be somewhat higher in higher-income areas than lower-income states, she said.

In the District, Insurance Commissioner Gennet Purcell said the higher health insurance costs reflected the higher costs of doing business in the city. "The salaries here are higher, the cost of doing business is higher, and you can't pay [in premiums] what you pay in Iowa," she said. In addition, the District is an urban area and hard to compare to a state where the costs of living might be lower in some rural areas.

Beth Sammis, acting commissioner for the Maryland Insurance Administration, said she did not know what was behind the increase in private-sector health insurance costs. Her office reviews requests for rate increases from insurance companies. But many of the state's large employers, such as Lockheed Martin, Northrop Grumman and Marriott, are self-insured and therefore not regulated by the state.

The report also found that deductibles rose sharply in almost all states, increasing an average of 77 percent from 2003 to 2009 in large as well as small firms. In addition, more workers are paying deductibles; 74 percent faced a deductible in 2009 compared with 52 percent in 2003.

Schoen said the rapid increase in health insurance premiums means that many working families have been forced to trade off pay raises just to hold onto their health benefits. The expanding share of premiums paid by workers themselves has also taken a greater cut out of paychecks, she said.

Other recent studies have shown that employers are shifting health-care costs to workers to help ride out the economic downturn.

A survey released in September by the Kaiser Family Foundation and the Health Research and Educational Trust found that workers with health benefits are paying an average of 30 percent of the premium for family coverage and 19 percent of the premium for single coverage this year, the highest in 12 years of surveys by the two organizations.

Last year, workers were paying an average of 27 percent of the premium for family coverage and 17 percent for single coverage.

Staff researcher Lucy Shackelford contributed to this report.

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