The average premium for a family plan purchased through an employer last year was $12,680—nearly the annual earnings of a full time minimum wage job, according to a new report, Hidden Costs of Health Care: Why Americans are Paying More but Getting Less, released Tuesday by the Department of Health and Human Services.
For an individual with employer based coverage, this meant that they paid an average of $1,522 on healthcare—not including premiums—in 2006, compared with $1,260 in 2001. When combining these higher premiums with out of pocket costs, the price increased by 30%--from an average of $2,827 in 2001 to $3,744 in 2006.
"Every year, co pays, deductibles and other expenses are taking a bigger bite out of the family budget and the American people are demanding reform,” HHS Secretary Kathleen Sebelius said in a statement.
For preferred provider organization (PPO) plans purchased through an employer, the average family deductible increased 30% in two years--from $1,034 to $1,344. This effect is more pronounced among small firms, the report said, where PPO deductibles increased from $1,439 to $2,367, an increase of 64%.
For families purchasing insurance through the individual market, deductibles were more than two times greater than families in employer sponsored PPO plans. The average deductible for a family plan in the individual market was $2,753 in 2007—an increase of nearly one-third from 2004, when it was $2,081.
For families purchasing healthcare directly from insurance companies in the individual market, deductible costs showed sharp increases. The percentage of families with a deductible of more than $2,000 increased from 41% to 59% in the past four years. About one in five families with employer based insurance also had a deductible more than $2,000 in 2008.
The prevalence of employer sponsored high deductible plans also increased from 2005 to 2008, with the percentage of firms offering such plans rising from 4% to 13%. For Americans receiving coverage through an employer, the average deductible under this type of plan was $3,511 in 2008, while the average deductible in the individual insurance market in 2007 was $5,329.
Higher copayments were evident as well, according to the report. In 2004, only one in five people with health insurance through an employer had a copayment of more than $25, but by 2008 the number jumped to one in three. In comparison, 84 percent of families purchasing coverage from the individual market paid copayments of more than $25.