Employer Health Benefits 2005 Annual Survey Section 1: Cost of Health Insurance
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Section 1: Cost of Health Insurance
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.1
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 health insurance has increased by 73%.
The average cost of family coverage is $10,880 a year, which exceeds the annual gross earnings of a minimum wage worker who is fully employed throughout the year.2
Premium Increases
The cost of health insurance rose 9.2% in 2005, less than the 11.2% increase in 2004, but much higher than the overall rate of inflation of 3.5% and the increase in workers’ earnings of 2.7% (Exhibit 1.1).
Covered workers in small firms (3-199 workers) and large firms (200 or more workers) experienced similar premium increases (9.8% vs. 8.9%) (Exhibit 1.3).
There is considerable variation in premium increases across workers and firms: 7% of covered workers work in firms that experienced premium increases of greater than 20%, while 32% of covered workers work in firms that experienced premium increases of less than or equal to 5% (Exhibit 1.4).
Monthly Premium Costs for Single and Family Coverage
The average cost of single coverage for covered workers in 2005 is $335 per month or $4,024 per year. This figure includes both the employer and employee contribution. The average cost of family coverage is $907 per month or $10,880 per year (Exhibit 1.13).
Covered workers in PPO plans, the plan type with the highest enrollment, face higher average premiums for both single and family coverage than covered workers in HMO plans. The average annual premium for covered workers in PPO plans is $4,150 for single coverage and $11,090 for family coverage, while the average annual premium for covered workers in HMO plans is $3,767 for single coverage and $10,456 for family coverage (Exhibit 1.13).
1
Data on premium increases reflect the cost of health insurance premiums for a family of four.
2
Gross earnings for someone earning the federal minimum wage in 2005 and working 2,080 hours are $10,712.
For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.1: Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2005
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Exhibit 1.2: Increases in Health Insurance Premiums from the Previous Year, by Plan Type, 1988-2005
1988
1993
1996
2000
2002
2003
2004
2005
Conventional
12.4%
9.1%
1.9 %
9.5%*
13.8%*
14.3%
11.1%
5.0%*
HMO
8.4
7.7
-0.2
7.6*
13.5*
15.2†
12.0*
9.4*
PPO
20.3
7.2
1.0
8.5*
12.7*
13.7
10.9*
9.4*
POS
^
5.2
1.1
7.8*
12.2*
13.2
11.3
9.1
ALL PLANS
12.0
8.5
0.8
8.2*
12.9*
13.9†
11.2*
9.2*
*
Estimate is statistically different from the previous year shown by plan type at p<.05. No statistical tests were conducted for years prior to 1999.
†
Estimate is statistically different from the previous year shown by plan type at p<.10.
^
Information was not obtained for POS plans in 1988.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2005; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988.
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Exhibit 1.3: Increases in Health Insurance Premiums for Covered Workers, by Firm Size, 2005*
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For more information regarding survey methodology, click here to vie the Survey Design and Methods section.
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Exhibit 1.4: Distribution of Premium Increases for Covered Workers, by Firm Size, 2005
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For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.5: Increases in Health Insurance Premiums, by Firm Size and Plan Type, 2005
Conventional
HMO
PPO
POS
All Plans
FIRM SIZE
All Small Firms (3-199 Workers)
3.7%
7.5%
10.8%
10.0%
9.8%
All Large Firms (200 or More Workers)
5.8*
10.1
8.8
8.3
8.9
ALL FIRM SIZES
5.0%*
9.4%
9.4%
9.1%
9.2%
*
Estimate is statistically different from All Plans within a firm size at p<.05.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2005.
For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.6: Increases in Health Insurance Premiums, by Plan Type and Funding Arrangement, 2005*
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For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.7: Increases in Health Insurance Premiums, by Funding Arrangement, 1998-2005
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For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.8: Increases in Health Insurance Premiums, by Firm Size, 1996-2005
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For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.9: Increases in Health Insurance Premiums, by Region, 1996-2005
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For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.10: Increases in Health Insurance Premiums, by Industry, 1996-2005
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For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.11: Average Monthly Premiums for Covered Workers, Single and Family Coverage, by Plan Type, 2005
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For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.12: Distribution of Single and Family Monthly Premiums for Covered Workers, 2001-2005
2001
2002*
2003*
2004*
2005*
Single Premiums ($)
$0 to $200
37%
19%
10%
6%
5%
$201 to $250
41
36
22
16
8
$251 to $300
14
26
38
29
21
$301 to $350
4
11
19
29
30
$351 to $400
2
3
7
12
21
More than $400
2
5
5
8
15
Family Premiums ($)
$0 to $550
38%
19%
10%
5%
5%
$551 to $650
38
29
13
9
4
$651 to $750
15
27
25
17
10
$751 to $850
4
14
29
25
21
$851 to $950
2
6
13
24
22
More than $950
2
4
10
20
38
*
Distribution is statistically different from the previous year shown within a dollar category at p<.05.
Note: Family coverage is defined as health coverage for a family of four.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2001-2005.
For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.13: Monthly and Annual Average Premiums for Covered Workers, by Plan Type and Firm Size, 2005*
Monthly
Annual
Single Coverage
Family Coverage
Single Coverage
Family Coverage
CONVENTIONAL PLANS
All Small Firms (3-199 Workers)
$325
$830
$3,895
$9,963
All Large Firms (200 or More Workers)
309
833
3,709
9,990
ALL FIRM SIZES
$315
$832
$3,782
$9,979
HMO PLANS
All Small Firms (3-199 Workers)
$310
$845
$3,720
$10,140
All Large Firms (200 or More Workers)
315
881
3,784
10,574
ALL FIRM SIZES
$314
$871
$3,767
$10,456
PPO PLANS
All Small Firms (3-199 Workers)
$349
$900
$4,189
$10,797
All Large Firms (200 or More Workers)
344
935
4,132
11,224
ALL FIRM SIZES
$346
$924
$4,150
$11,090
POS PLANS
All Small Firms (3-199 Workers)
$323
$874
$3,874
$10,483
All Large Firms (200 or More Workers)
329
924
3,950
11,083
ALL FIRM SIZES
$326
$900
$3,914
$10,801
ALL PLANS
All Small Firms (3-199 Workers)
$336
$882
$4,032
$10,587
All Large Firms (200 or More Workers)
335
919
4,020
11,025
ALL FIRM SIZES
$335
$907
$4,024
$10,880
*
Tests found no statistically different estimates from All Firm Sizes within a plan type at p<.05.
Note: Family coverage is defined as health coverage for a family of four.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2005.
For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.14: Monthly and Annual Average Premiums for Covered Workers, by Plan Type and Region, 2005
Monthly
Annual
Single Coverage
Family Coverage
Single Coverage
Family Coverage
CONVENTIONAL PLANS
Northeast
$269
$712
$3,227
$8,544
Midwest
271
790
3,250
9,476
South
330
868
3,955
10,420
West
NSD
NSD
NSD
NSD
ALL REGIONS
$315
$832
$3,782
$9,979
HMO PLANS
Northeast
$328
$909
$3,932
$10,903
Midwest
323
883
3,880
10,592
South
329
896
3,950
10,754
West
285*
817
3,421*
9,809
ALL REGIONS
$314
$871
$3,767
$10,456
PPO PLANS
Northeast
$359
$995*
$4,313
$11,938*
Midwest
353
946
4,235
11,354
South
333
877
3,998
10,526
West
348
918
4,177
11,012
ALL REGIONS
$346
$924
$4,150
$11,090
POS PLANS
Northeast
$342
$961*
$4,105
$11,528*
Midwest
317
900
3,809
10,806
South
310
845
3,726
10,142
West
338
913
4,059
10,958
ALL REGIONS
$326
$900
$3,914
$10,801
ALL PLANS
Northeast
$346
$959*
$4,147
$11,504*
Midwest
342
926
4,103
11,115
South
329
876*
3,950
10,507*
West
328
886
3,937
10,638
ALL REGIONS
$335
$907
$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.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2005.
For more information regarding survey methodology, click here to view the Survey Design and Methods section.
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Exhibit 1.15: Monthly and Annual Average Premiums for Covered Workers, by Plan Type and Industry, 2005
Monthly
Annual
Single Coverage
Family Coverage
Single Coverage
Family Coverage
CONVENTIONAL PLANS
Mining/Construction/Wholesale
NSD
NSD
NSD
NSD
Manufacturing
NSD
NSD
NSD
NSD
Transportation/Communications/Utility
NSD
NSD
NSD
NSD
Retail
NSD
NSD
NSD
NSD
Finance
NSD
NSD
NSD
NSD
Service
297
745
3,563
8,942
State/Local Government
NSD
NSD
NSD
NSD
Health Care
NSD
NSD
NSD
NSD
ALL INDUSTRIES
$315
$832
$3,782
$9,979
HMO PLANS
Mining/Construction/Wholesale
$302
$858
$3,619
$10,301
Manufacturing
317
898
3,800
10,772
Transportation/Communications/Utility
332
936
3,979
11,232
Retail
301
869
3,607
10,433
Finance
314
869
3,769
10,434
Service
303
836
3,636
10,029
State/Local Government
335
881
4,016
10,572
Health Care
319
896
3,827
10,749
ALL INDUSTRIES
$314
$871
$3,767
$10,456
PPO PLANS
Mining/Construction/Wholesale
$328
$916
$3,933
$10,994
Manufacturing
330
903
3,964
10,831
Transportation/Communications/Utility
321
890
3,858
10,684
Retail
309*
824*
3,712*
9,893*
Finance
371
987
4,451
11,843
Service
347
912
4,161
10,949
State/Local Government
381*
922
4,576*
11,069
Health Care
389*
1045*
4,662*
12,544*
ALL INDUSTRIES
$346
$924
$4,150
$11,090
POS PLANS
Mining/Construction/Wholesale
$305
$826
$3,666
$9,911
Manufacturing
352
1004*
4,230
12,045*
Transportation/Communications/Utility
NSD
NSD
NSD
NSD
Retail
301
831
3,616
9,976
Finance
NSD
NSD
NSD
NSD
Service
324
902
3,887
10,826
State/Local Government
372*
947
4,463*
11,365
Health Care
325
865
3,895
10,382
ALL INDUSTRIES
$326
$900
$3,914
$10,801
ALL PLANS
Mining/Construction/Wholesale
$318
$892
$3,819
$10,702
Manufacturing
329
910
3,948
10,925
Transportation/Communications/Utility
328
914
3,941
10,963
Retail
309*
833*
3,704*
9,992*
Finance
349
940
4,186
11,279
Service
331
889
3,977
10,672
State/Local Government
365*
915
4,377*
10,974
Health Care
366*
991*
4,393*
11,887*
ALL INDUSTRIES
$335
$907
$4,024
$10,880
*
Estimate is statistically different from All Industries within a plan type at p<.05.
NSD: Not Sufficient Data
Note: Family coverage is defined as health coverage for a family of four.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2005.
For more information regarding survey methodology, click here to view the Survey Design and Methods section.
The Kaiser Family Foundation and Health Research and Educational Trust Program Area: Health Care Marketplace Project |Publication Date: 09/14/2005
