Rising Health Care Costs Felt by Employers

A recent Wall Street Journal article discusses the results of a survey conducted by the Kaiser Family Foundation and Health and Research Educational Trust, which found that the average cost of family health-insurance coverage has exceeded $15,000 for the first time. The survey was conducted between January and May 2011 and included 3,184 randomly selected companies. According to the survey, the average annual family premium for this year, $15,073, is a 9% increase from last year's $13,770. Most of the burden of the cost increase is being felt by employers, as employees' average premium contribution is only up 3% from 2010. This is illustrated in the chart from the article (below), which indicates the average annual premiums for family coverage from 2000 to 2011 and the portion contributed by employers and by employees. While the chief executive of Kaiser Family Foundation said that the cause of the increase in employers' premiums was unclear, the article quotes Goldman Sachs analyst Matthew Borsch, who speculates that the increases may have been due to the fact that insurers "have been conservative in their pricing, so they have overshot to some degree."

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