Michigan individuals, families, and businesses are paying a growing portion of their incomes and revenues toward health care expenses, including insurance premiums, deductibles, and other out-of-pocket expenses. Between 2006 and 2011, the cost of a private sector employer sponsored family premium in Michigan rose an average of 2.1 percent per year, adjusting for inflation. In 2003, the combined employee and employer share of health insurance premiums in Michigan were 14.6 percent of household income and by 2011, this figure rose to 20.0 percent. This means that health care costs are growing faster than wages.
According to data from the Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, in 2011, single coverage health insurance premiums cost Michigan’s private sector employees and employers an average of $5,061, compared to a national average of $5,222. While Michigan employers paid an average of $3,960 toward single premiums, 25 percent of companies paid at least $4,900.
Table 1. Average Single Premium per Enrolled Employee for
Employer-Based Health Insurance, 2011
In 2011, employee contributions for family coverage averaged $3,470. More than 25 percent of private sector employees enrolled in family coverage paid more than $4,500 toward their premium. The total employee and employer share averaged $14,458 compared to a national average of $15,022.
The price of private sector health insurance premiums vary within the state with the Detroit-Warren-Livonia metro area paying 6 percent more than the remainder of the state for single premiums, six percent less for employee-plus-one premiums, and two percent more for family premiums.
Michigan employees and employers are paying below the national average in health insurance premiums, so does that mean premiums are relatively affordable in Michigan? Probably not. Unfortunately, Michigan’s median household income is $48,281, which is below the national average of $50,443, and the 32nd highest median annual income among the 50 states and the District of Columbia. So while premium prices are relatively lower, they are roughly of the same proportion to household incomes as they are throughout the rest of the country.
So what do these higher costs mean for businesses, individuals, and families? Because many studies have failed to show that higher prices translate into better health care, or better economic productivity, there is very little demonstrated value to these higher prices. Therefore, if the burden on businesses and families was alleviated they could put those dollars toward more productive uses and provide a positive impact to the economy. CRC’s new paper Health Care Costs in Michigan: Drivers and Policy Options discusses in more detail the implications of and solutions to rising health care cost in Michigan.