Health Insurance

Labor Day Post II: Health Insurance Cost Shifting

Sticky wages is the concept that few employees will agree to a nominal decrease in wages even if there is a decrease in productivity.  However, the Kaiser Family Foundation found that although nominal wages may not be decreasing, the amount of money workers are paying for health insurance is rising quickly (full report).

Workers on average are paying nearly $4,000 this year toward the cost of family health coverage – an increase of 14 percent, or $482, above what they paid last year… The jump occurred even though the total premiums for family coverage, including what employers themselves contribute, rose a modest 3 percent to $13,770 on average in 2010, the survey found.¬† In contrast, the amount employers contribute for family coverage did not increase.

With employees bearing a larger and larger share of health insurance costs, pressure to increase decrease benefit generosity will build as workers begin to switch to less generous health insurance plans.



  1. I am an independent agent and our agency helps both individuals and small business with their health insurance needs. I can confirm that there has been an increase in both individual and small group premiums. While the increases in general have been significant, the percentage increase has varied with carriers as well as the state of residency.
    With the continued trend of increased healthcare costs, mandated coverage requirements and compliance regulations the pressure is mounting on both employees and employers. Many of the small businesses are slowly getting out of their business downturns and are quite reluctant to take on insurance premium hikes.
    Under the circumstances it should come as no surprise that either the employees are picking up the increased premium burden or they are choosing coverage options (if offered) with less benefits.

  2. These changes certainly highlight the risks associated with the employer mandate for health insurance coverage as well as the idea that health coverage fits the standard model of a consumable service. With the health care costs increasing and individuals reducing their level of coverage, more will be caught having to pay large costs out of pocket when unexpected illness occurs.

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