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    Health Insurance Costs Outpace Wages

    Study Shows Premiums Rise Faster Than Workers' Incomes
    WebMD Health News
    Reviewed by Louise Chang, MD

    Oct. 23, 2008 -- Workers' health insurance premiums have shot up more than five times faster than their wages since 2000, adding to an increasingly tight squeeze on family budgets, according to a report released Thursday by a health care consumer group.

    The report shows that the average cost of family coverage in the workplace went from $6,672 in 2000 to $12,078 in 2007. That's more than a 78% rise. But at the same time, average wages rose about 15%, according to Families USA, a left-leaning advocacy group.

    "People who used to take health care coverage for granted no longer can do so, and they are at growing risk of joining the ranks of the uninsured or underinsured," says Ron Pollack, the group's president.

    As health costs rise, employers around the country are moving to save money by cutting back benefits or scaling down their share of premium costs. Still, most Americans still get their health coverage through an employer or the workplace of a family member.

    The gap between wages and health costs varies widely between states, Pollack says. But here are some highlights:

    • Michigan had the biggest gap. Health insurance premiums rose more than 17 times faster than workers' average earnings between 2000 and 2007.
    • Nevada had the narrowest gap. Overall, premiums rose 2.5 times as fast as wages.
    • Wyoming workers saw the biggest premium increase in the nation. Premiums rose nearly 130% over the eight years of the study.

    Robert Zirkelbach, a spokesman for America's Health Insurance Plans, an insurance industry trade group, says one reason insurance costs are rising: "There is overuse, underuse, and misuse of health care services."

    Zirekelbach also notes: "There are a lot of new and expensive technologies that are being used without proof of which ones work best and which ones are cost-effective."

    Strain on Family Budgets

    Other studies show that the growth in private insurance premiums has slowed in recent years. Premiums rose just 5% in 2007, much more slowly than the nearly 14% rise as recently as 2003, according to the Henry J. Kaiser Family Foundation.

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