1. Presenting on behalf of the author team
State Trends in Premiums and Deductibles, : The Need for Action to Address Rising Costs
Cathy Schoen
Senior Vice President
The Commonwealth Fund
Presenting on behalf of the author team
November 16, 2011

2. Summary of Main Findings2
Summary of Main Findings
Private Employer Premiums have been going up far faster than incomes in all states
Employee direct payments for their share of premiums has risen even faster
Working Families are paying more for less protection
Deductibles have doubled, in large as well as small firms.
Highest in small firms
If historic trends before the Affordable Care Act continue annual premiums would average $24,000 by 2020
Affordable Act provisions have the potential to reduce the rate of growth while improving coverage protection
Realizing the potential will require joint action, spreading reforms and a focus on private – not just public costs

3. Health Insurance Premiums for Family Coverage, by State, 20103
Health Insurance Premiums for Family Coverage, by State, 2010
Dollars
State average = $13,871
Premiums Increased by 50 Percent on Average from
2003 to 2010
Source: 2010 Medical Expenditure Panel Survey–Insurance Component.

4. 4
Employer Premiums as Percentage of Median Household Income for Under-65 Population, 2003 and 2010
62 percent of under-65 population live where premiums are 20 percent or more of income by 2010
2003
2010 WA OR ID MT ND WY NV CA UT AZ NM KS NE MN MO WI TX IA IL IN AR LA AL SC NC KY FL MI WV PA NY AK ME VT NH MA RI DE DC HI CO GA MS OK NJ SD VA CT MD TN OH WA OR ID MT ND WY NV CA UT AZ NM KS NE MN MO WI TX IA IL IN AR LA AL SC TN NC KY FL OH MI WV PA NY AK ME VT NH MA RI DE DC HI CO GA MS OK NJ SD VA CT MD
Less than 14%
14%–16.9%
17%–19.9%
Median Rate: 14.9%
Median Rate: 19.5%
20% or more
Sources: 2003 and 2010 Medical Expenditure Panel Survey–Insurance Component (for total average premiums for employer-based health insurance plans, weighted by single and family household distribution); 2003–04 and 2009–10 Current Population Surveys (for median household incomes for under-65 population).

5. 5
Employee Average Annual Contribution for Family Coverage Premium Increased 63% from 2003 to 2020
Dollars per year for family coverage paid by employees
Source: Medical Expenditure Panel Survey–Insurance Component (employee premium share for 2003 and 2010).

6. 6
Private Health Insurance Deductibles: State Averages by Firm Size and Household Type, 2003–2010
2003
2010
Percent Change
Average All Firms
Single Person Plan
$518
$1,025
98%
Family Plan
$1,079
$1,975
83%
Average Small Firms
$703
$1,447
106%
$1,575
$2,857
81%
Average Large Firms
$452
$917
103%
$969
$1,827
89%
Note: Small firms = firms with less than 50 employees; large firms = firms with 50 or more employees.
Source: Medical Expenditure Panel Survey–Insurance Component, 2003 and 2010.

7. 7
Total Premiums for Family Coverage, 2003, 2010, 2015, and 2020 if Historic Trends Continue
Health insurance premiums for family coverage (dollars)
* Premium estimates for 2015 and 2020 using 2003–10 historical average national growth rate.
Source: Medical Expenditure Panel Survey–Insurance Component (premiums for 2003 and 2010).

8. Affordable Care Act Potential for New Directions8
Near universal coverage and affordable plan choices for individuals and small businesses in state exchanges
Medicaid expansion and premium tax credits for private health plans for families earning up to $89,400
Essential health benefit standard with cost-sharing limits
Reduce costs and slow the rate of cost growth
State/federal rate review for increases of 10% or more now in effect; new rules for medical claims as a share of premiums with rebates to consumers in Aug. 2012
Market reforms and exchanges to reduce administrative costs, create broad risk pools, achieve scale economies
Payment and system reforms to slow cost growth and improve access, quality and safety
Potential to reduce annual rate of increase by 1% or more if reforms creatively applied and spread to private insurance

9. Projected Annual Savings in Family Premiums, 2015 and 20209
Projected Annual Savings in Family Premiums, 2015 and 2020
2015
2020
U.S. average premium at 2003–10 historic rate of increase
$18,167
$23,793
1% Slower Growth
1.5% Slower Growth
U.S. average premium with savings
$17,322
$21,633
$16,912
$20,620
U.S. average savings
–$844
–$2,161
–$1,255
–$3,173
Average savings for lowest 10 premium states (ID, AR, HI, MT, AL, NV, SD, ND, UT, TN)
–$748
–$1,914
–$1,112
–$2,812
Average savings for highest 10 premium states (ME, MA, DE, IL, NY, RI, CT, FL, NH, DC)
–$904
–$2,312
–$1,343
–$3,396
Source: Medical Expenditure Panel Survey–Insurance Component; Premium estimates for 2015 and 2020 using 2003–10 historical average national growth rate.

10. Premium contribution as a share of income
Premium Tax Credits and Cost-Sharing Protections Under the Affordable Care Act 10
Federal Poverty Level
Income
Premium contribution as a share of income
Out of Pocket limits
Actuarial value:
Silver plan
<133%
S: <$14,484
F: <$29,726
2% (or Medicaid)
S: $1,983
F: $3,967
94%
133%- 149%
S: $16,335
F: $33,525
3.0%–4.0%
150%–199%
S: $21,780
F: $44,700
4.0%–6.3%
87%
200%–249%
S: $27,225
F: $55,875
6.3%–8.05%
S: $2,975
F: $5,950
73%
250%–299%
S: $32,670
F: $67,050
8.05%–9.5%
70%
300%–399%
S: $43,560
F: $89,400
9.5%
S: $3,967
F: $7,933
>400%
S: >$43,560
F: >$89,400 —
S: $5,950
F: $11,900
Four levels of cost-sharing: 1st tier (Bronze) actuarial value: 60%
2nd tier (Silver) actuarial value: 70%
3rd tier (Gold) actuarial value: 80%
4th tier (Platinum) actuarial value: 90%
Catastrophic policy with essential benefits package available to young adults and people who cannot find plan premium <=8% of income
Note: Actuarial values are average percent of medical costs covered by a health plan. Premium and cost-sharing credits are for silver plan.
Source: Federal poverty levels are for 2011; Commonwealth Fund Health Reform Resource Center: What’s in the Affordable Care Act? (PL and ),

11. Looking Forward: Building on Affordable Care Act11
Looking Forward: Building on Affordable Care Act
Past two decades trends spell higher premiums and worse coverage
Premiums up and buying less protective benefits
Squeeze on businesses and families across the country
Health and Economic security at risk if private insurance trends continue
Uninsured and under-insured
Sacrificing wage and job growth to maintain benefits
Affordable Care Act Potential for New Directions
Near universal coverage
Premium oversight; rebates in 2012
Better coverage and premium assistance: 2014
Slowing the rate of cost growth will require spread of payment reforms and focus on total health system