Discussion on Connecticut Health Insurance Premiums

Discussion Overview

This report analyzes trends in employment-based health insurance premiums and workers' earnings from the beginning of 2000 to the end of 2007. Our findings draw attention to a disheartening trend: Over the past eight years, Connecticut's working families have seen their health care costs go up faster than their earnings. As a result, the cost of health insurance premiums now imposes a greater burden on family budgets than ever before.

Premiums for employment-based health insurance have risen rapidly over the past eight years: Health insurance premiums for Connecticut's working families have risen by 80.7 percent, 8.2 times faster than median earnings in Connecticut (Table 4). At the same time, rising health care costs have forced employers to make hard choices. Some employers have concluded that they can no longer afford to offer health insurance to their workers and have dropped coverage, driving an increase in the number of uninsured workers. The proportion of Americans covered by employment-based insurance dropped by more than 5 percentage points between 2000 and 2007 (from 64.2 percent of adult Americans in 2000 to 59.3 percent in 2007). During the same period, the number of uninsured Americans rose from 38.4 million to 45.7 million -- an increase of nearly 20 percent. In Connecticut, the number of uninsured people under age 65 is now 322,000 (approximately 10.7 percent of the non-elderly population). ³

Other employers continue to provide coverage, but they now ask their workers to pay a greater share of the premiums. In addition, a growing share of employers are lowering their health costs by providing "thinner coverage" -- coverage that offers fewer benefits and/or that comes with higher deductibles, copayments, and co-insurance. ⁴

As a larger portion of health care costs is shifted onto workers, Connecticut's families are finding that the burden is becoming too great to bear. Families' paychecks are increasingly consumed by health care costs. For many, the growing costs are hindering their ability to pay for other necessities -- and reducing their standard of living. Other families are making even tougher decisions -- decisions that may force them to join the ranks of the uninsured and underinsured.