Workers' insurance costs soar

Health insurance premium costs for private-sector employees skyrocketed more than 100 percent from 1996 through 2006, according to new statistics from the U.S. Department of Health and Human Services.

The survey by the Agency for Healthcare Research and Quality measured insurance premium costs for private employers and their employees.

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Nationally, the average premium cost of a family insurance plan jumped from $4,954 to $11,381 a year, while the average cost of a single premium rose from $1,992 to $4,118.

Employers' share rose from $3,679 to $8,491 a year for family coverage and from $1,650 to $3,330 a year for single coverage. Employees also saw their share rise significantly, from $1,275 to $2,890 a year for family coverage and from $342 to $788 a year for single coverage.

Arizona was not among the top 10 states in terms of the highest costs for private employer health insurance, but it did rank between 11th and 20th, according to the study. With the exception of the single employee contribution of $803, which was close to the national average, Arizona premiums and employee contributions are consistently above the national average.

"The general cost of health care has risen at a faster rate," said Jim Branscome, a statistician with the agency. "Employees are getting older, which also is a factor. There was a period of time about three or four years ago when it was going up 10 percent or more per year, and in the last couple of years, it seems to have moderated a bit."

Overall, the rising cost of health insurance can be attributed to higher-quality health care, said Marjorie Baldwin, director of the School of Health Management and Policy in the W.P. Carey School of Business at Arizona State University.

"Overwhelmingly, economists believe that increasing costs of health care are related to improvements in technology," she said. "We are able to treat diseases we could never treat before. We are able to keep alive people we could never keep alive before. But all of this costs money. So that is going to be a major contributor to the increasing health care costs."

Employees are paying the higher costs because insurance is part of their compensation package, Baldwin said.

"It's tied to employment, so people have the choice of plans that their employer picked and not the broad range of choices that they might have in the market," she said. "Secondly, it's regulated within states, and many times states will have a lot of regulations about what the minimal coverage is. So there may be people who would want to pay less for health insurance and only have catastrophic coverage ... but that may not be allowed."

Deductibles, co-payments and co-insurance all have risen along with premiums, Branscome said.

Phyllis Rowe, president emeritus of the Arizona Consumers Council, said it's more important than ever for employees and employers to thoroughly examine and compare all options before selecting a health insurance plan.