WASHINGTON — After modest increases last year, the cost of job-based health insurance for families and individuals has jumped sharply this year, even though insurers are paying less in benefits as cash-strapped American workers opt for less medical care.

For the estimated 150 million workers with employer-sponsored coverage, the average cost of family health insurance jumped 9 percent this year to $15,073, while the price of individual coverage rose 8 percent to $5,429.

Both increases are the largest since 2005. Each far outpaced a national 2 percent hike in wages and a 3.2 percent rise in inflation, according to an annual survey of nearly 2,100 businesses the Kaiser Family Foundation and the Health Research & Educational Trust released Tuesday.

Premiums for family and individual coverage increased only 3 percent and 5 percent, respectively, in last year’s survey.

“We don’t know if this is a one-time jump and premiums will go back down again next year or whether we’re entering a period of higher increases. We really don’t know, and we won’t know until next year,” said Drew Altman, the president and CEO of the Kaiser Family Foundation.

What is clear, however, is that family coverage premiums have climbed 113 percent since 2001, compared with a 34 percent rise in workers’ wages and a 27 percent increase in inflation.

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Employers still absorb the bulk of insurance costs. They pay an average of 72 percent, nearly $11,000, toward the cost of family coverage. Workers pay about 28 percent, an average of $4,129. For single coverage, workers pay about 18 percent, or $921, in premiums, while employers pay the rest, about $4,508.

The rising costs are why more employers and workers are opting for cheaper, high-deductible health plans that require patients to pay $1,000 or $2,000 in medical costs before their coverage kicks in. The survey found that 31 percent of covered workers are in high-deductible plans, up from 10 percent in 2006.

Karen Ignagni, president of America’s Health Insurance Plans, said the increasing cost of medical care was the main culprit behind the higher rates. Rising medical costs also helped pave the way for the 2010 Affordable Care Act, which overhauled the nation’s health-care system.

But Altman said this year’s higher premiums, which were set last year, also might reflect insurers’ expectation of a stronger economic recovery this year, with more patients presumably seeking more services.

Other insurers may have set rates higher this year thinking the Affordable Care Act would increase their costs. But analysis by Kaiser and the federal government found provisions in the new law probably accounted for just 1 to 2 percentage points of this year’s higher premiums.

“In the end, both assumptions were wrong – but insurance companies still charged high premiums and earned impressive profits,” said a blog post Tuesday by Nancy-Ann DeParle, the White House deputy chief of staff.

Indeed, profits continue to pour in for insurers, who are spending less for services as covered workers postpone doctor visits and other elective medical procedures during the economic downturn.

Barclays Capital reported that 13 of the 14 top health insurers beat their projected earnings for the first quarter, with profits averaging more than 46 percent higher than expected.

 


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