Cost of Insurance Rising Five Times Faster Than Incomes in Pennsylvania

August 31, 2009

Between 2000 and 2009, the cost of family health insurance provided by Pennsylvania employers jumped by 95 percent - from $6,721 to $13,116 annually, according to a study by Families USA. During that same period, median earnings for a Pennsylvania employee grew by only 17.5 percent - from $24,834 to $29,188.

Families USA blamed the rapid rise in health insurance costs on the rising cost and increasing use of medical treatments, inadequate oversight of insurance companies, lack of competition among insurers, and cost-shifting from the growing number of uninsured.  Between 8% and 10% of annual health insurance premiums are attributable to the costs of treating the uninsured.

Employers view health care benefits as a part of an employee's total compensation package.  As insurance costs increase, employers tend to cut back on wage increases in an effort to keep overall personnel-related costs in line with available revenue.  Slowing this rapid rise in health premiums is a key factor in restoring the purchasing power of wages and a reason why the labor movement is so strongly supportive of national health reform.

The report also documented that even while insurance costs were climbing at the rate of 8% to 9% annually, the coverage employees and their families received eroded due to higher deductibles and co-pays.  The average worker's share of family health coverage rose by 144% - from $1,297 to $3,161.

"Our findings are clear," the report states. "Health coverage is simply becoming too costly for Pennsylvania's working families. ... The health reform legislation that is currently pending in the House and the Senate would address each of the four factors (driving up costs), reducing the rate of increase in premiums and helping make coverage more affordable for all."