Employer Health Insurance Costs and Worker Compensation

Source: Kaiser Family Foundation

Health insurance premiums have increased rapidly over the recent past, growing a cumulative 78 percent between 2001 and 2007 and far outpacing cumulative wage growth of 19 percent over the same period.1 These figures, which have been widely cited to demonstrate the growing burden of health insurance costs on employers and employees, illustrate overall trends in health benefit costs, but they do not show how this growing burden is affecting employers and employees in different settings. To address this issue, this analysis shows employer costs for payroll and health benefits over a six-year period for workers in different occupations and at different establishment sizes.

Our analysis focuses on employer costs for health insurance for workers with access to health benefits. Employer costs for health insurance increased significantly as a percentage of payroll between 1999 and 2005, and varied meaningfully across the workforce when viewed as cost per hour worked or as a percentage of payroll. Employer costs per hour for health insurance were higher for workers in higher wage occupations than for workers in lower wage occupations, but overall employer costs represented a lower percentage of payrolls for workers in high wage occupations than for workers in low wage occupations.

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