When health insurance premiums are on the rise, the common reason for the increase is due to healthcare costs. Insurance companies bear these healthcare costs and as a means to account for their financial liability, it comes back to the policy holder in the form of more expensive premiums. For many who have employer-based health insurance plans, the policy holder includes the employee and the employer who contribute to a health insurance policy. According to Centers for Medicare and Medicaid Services there was a 40% increase in healthcare spending nationwide. That 40% increase over a 10-year period from 2005 to 2014 shows how increased healthcare costs lead to a 20% increase in employer-based health insurance premiums.
Key findings:
- Average annual health insurance premiums up 20% nationwide from 2013 to 2018.
- Healthcare expenditures increased 40% over a 10-year period.
- Arkansas, Iowa and Nebraska lead nation with the largest increase in annual health insurance premiums.
- North Dakota, Vermont and Alaska saw largest increase in healthcare expenditures over a 10-year period.
- Alaska, New York and New Jersey have the highest annual health insurance premiums costing over $7,500 annually.
On average the split between contributions is 20% employee and 80% employer on an employer-based health insurance policy. Employers offering health insurance benefits bear the greatest cost increase when health insurance companies are increasing premiums. Pew Research suggests the rising cost of employer-based health insurance policies are a leading reason for wage stagnation. The theory is businesses are unable to increase wages because of employer contributions to health insurance plans are increasing at a higher rate. Pew Research indicated over the last five years wages experience a 2% to 3% year over year increase. Employer-based insurance premiums are increasing 5% to 6% year over year. With insurance premiums out pacing wage growth it seems that trend could be a key factor in wage stagnation.
Each state has its own set of economic factors that are leading to health insurance increases. However, the strongest indicator of health insurance premiums is the increase in healthcare expenditures. When healthcare costs go up, health insurance premiums will follow. Of states with the highest annual premium four of the top 10 states had the highest healthcare cost increase.
The biggest key factor we want to highlight are the states seeing the biggest increase in health insurance premiums. The increase in premiums for employer-based plans has a direct impact on the bottom line of the individual and the business. When health insurance premiums go up in your state, it’s an economic factor that costs the individual more and could limit wage increases from the employer.
| Rank | State | 2018 Annual Premium | 2013 Annual Premium | Increase in Annual Premium | Healthcare cost increase |
|---|---|---|---|---|---|
| 1 | Arkansas | $5,974 | $4,536 | 31.70% | 41.00% |
| 2 | Iowa | $6,796 | $5,207 | 30.52% | 40.99% |
| 3 | Nebraska | $6,851 | $5,268 | 30.05% | 41.24% |
| 4 | Oklahoma | $6,630 | $5,129 | 29.26% | 42.14% |
| 5 | Minnesota | $6,781 | $5,274 | 28.57% | 40.10% |
| 6 | Kentucky | $6,690 | $5,257 | 27.26% | 41.21% |
| 7 | Hawaii | $6,475 | $5,103 | 26.89% | 35.44% |
| 8 | Georgia | $6,799 | $5,374 | 26.52% | 34.68% |
| 9 | New Mexico | $6,624 | $5,250 | 26.17% | 43.68% |
| 10 | New York | $7,741 | $6,156 | 25.75% | 37.80% |
| 11 | North Dakota | $6,643 | $5,330 | 24.63% | 58.76% |
| 12 | Florida | $6,674 | $5,383 | 23.98% | 35.57% |
| 13 | South Carolina | $6,708 | $5,426 | 23.63% | 35.31% |
| 14 | Louisiana | $6,537 | $5,300 | 23.34% | 43.84% |
| 15 | Idaho | $6,175 | $5,019 | 23.03% | 44.34% |
| 16 | Virginia | $6,635 | $5,408 | 22.69% | 46.24% |
| 17 | Missouri | $6,664 | $5,442 | 22.45% | 42.88% |
| 18 | Texas | $6,589 | $5,386 | 22.34% | 38.30% |
| 19 | Illinois | $7,123 | $5,824 | 22.30% | 45.20% |
| 20 | North Carolina | $6,339 | $5,218 | 21.48% | 30.67% |
| 21 | Montana | $6,862 | $5,654 | 21.37% | 51.34% |
| 22 | Pennsylvania | $6,769 | $5,582 | 21.26% | 40.36% |
| 23 | New Jersey | $7,507 | $6,200 | 21.08% | 37.69% |
| 24 | Connecticut | $7,264 | $6,002 | 21.03% | 40.90% |
| 25 | Mississippi | $5,993 | $4,961 | 20.80% | 41.93% |
| 26 | Vermont | $6,919 | $5,764 | 20.04% | 55.15% |
| 27 | Ohio | $6,804 | $5,679 | 19.81% | 42.24% |
| 28 | Wisconsin | $6,816 | $5,730 | 18.95% | 41.63% |
| 29 | Michigan | $6,322 | $5,319 | 18.86% | 45.71% |
| 30 | New Ha>New Hampshire | $7,405 | $6,249 | 18.50% | 52.91% |
| 31 | Massachusetts | $7,443 | $6,290 | 18.33% | 41.09% |
| 32 | Oregon | $6,441 | $5,449 | 18.21% | 49.10% |
| 33 | South Dakota | $6,931 | $5,876 | 17.95% | 51.79% |
| 34 | Rhode Island | $7,018 | $5,968 | 17.59% | 36.05% |
| 35 | California | $6,542 | $5,581 | 17.22% | 47.82% |
| 36 | Maine | $6,866 | $5,865 | 17.07% | 36.14% |
| 37 | Alabama | $6,089 | $5,204 | 17.01% | 31.31% |
| 38 | Maryland | $6,695 | $5,730 | 16.84% | 41.85% |
| 39 | Washington | $6,646 | $5,690 | 16.80% | 45.19% |
| 40 | Nevada | $6,032 | $5,168 | 16.72% | 36.13% |
| 41 | Arizona | $6,229 | $5,343 | 16.58% | 33.64% |
| 42 | West Virginia | $6,898 | $5,940 | 16.13% | 47.94% |
| 43 | Tennessee | $5,971 | $5,146 | 16.03% | 27.70% |
| 44 | Delaware | $6,848 | $5,934 | 15.40% | 46.91% |
| 45 | Utah | $6,125 | $5,309 | 15.37% | 35.99% |
| 46 | Kansas | $6,262 | $5,432 | 15.28% | 32.23% |
| 47 | Alaska | $8,432 | $7,369 | 14.43% | 54.85% |
| 48 | Indiana | $6,778 | $6,099 | 11.13% | 47.24% |
| 49 | Colorado | $6,255 | $5,668 | 10.36% | 37.82% |
| 50 | Wyoming | $6,779 | $6,301 | 7.59% | 46.40% |
Methodology
QuoteWizard analyzed expenditure data from the Agency for Healthcare Research and Quality to evaluate average annual health insurance premiums for employer-based plans. We looked at total annual premiums from 2013 compared to 2018 to see which states experienced the largest increase in average health insurance premiums. We then analyzed healthcare expenditure data from the Centers for Medicare and Medicaid Services to see which states saw the largest increase in healthcare spending per capita from 2005 to 2014. Health spending per capita figures are based on spending on private and public healthcare services and products per person in each state. Ranking are ranked 1 to 50, with 1 being the highest increase in annual premium.
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