Cost of Insurance Far Outpaces Income

Study released during "Cover the Uninsured Week" shows cost of covering families takes bigger piece of household budget.

    • April 29, 2008

Americans who get health insurance for their families through their jobs have seen their premiums increase 10 times faster than their income in recent years, according to a new analysis of government data. The study, released today by the Robert Wood Johnson Foundation, shows that a growing share of workers' earnings is being absorbed by the increasing cost of health insurance.

Nationwide, the amount employees pay for family coverage increased 30 percent from 2001 to 2005, while family policyholders' income increased just 3 percent over the same period.

The analysis was conducted by researchers at the University of Minnesota. It shows that the proportion of insurance premiums that workers pay for family coverage has remained constant over the years, but the dollar amount that workers contribute has substantially increased.

Nationally, the average cost of family coverage increased nearly $2,500—from $8,281 in 2001 to $10,728 in 2005. The percentage of family premiums that employees pay held steady at about 24 percent. The amount that workers pay for family premiums, on average, increased $664, from $1,921 in 2001 to $2,585 in 2005. Meanwhile, the median income of people who hold family health insurance policies increased just $1,250 during the same period, from $40,818 in 2001 to $42,068 in 2005. The average cost that employers pay for their share of family coverage increased from $6,360 to $8,143, or 28 percent, during the period.

“This study makes plain what every working parent knows—that providing insurance coverage takes a bigger bite from the family budget every year,” said Risa Lavizzo-Mourey, M.D., M.B.A., president and CEO of the Robert Wood Johnson Foundation. “There is a clear connection between the rising cost of health care and the increasing number of uninsured Americans. As costs continue to go up, fewer people can pay their portion of the premium, and fewer employers are able to offer insurance benefits. This research shows that an ever-increasing number of people will join America's uninsured unless our nation's leaders act to reform our health care system.”

The findings show:

  • Fewer employees are working in private-sector jobs that offer insurance.
    Nationally, 4.1 million fewer people worked in private-sector jobs that offered health insurance in 2005 than in 2001.
  • Fewer private-sector businesses offer coverage.
    The number of private-sector employers nationwide who offered health insurance benefits to their employees fell by 30,000 from 2001 to 2005.
  • Fewer people have private health insurance coverage.
    Americans with private health insurance fell nearly 2.4 million, or 6 percent, from 2001 to 2005.
  • More people are uninsured.
    According to the latest Census figures, 47 million Americans do not have any health insurance.

The analysis was compiled by researchers at the State Health Access Data Assistance Center, located at the University of Minnesota. It uses the most recent data from the U.S. Census Bureau (two-year averages for 2001–2002 and 2006–2007) and the Medical Expenditure Panel Survey, conducted by the Agency for Healthcare Research and Quality (2000, 2001, 2005).

“Public opinion polls show that health care reform is a top concern among Americans, and policy-makers are responding with ideas,” said Lavizzo-Mourey. “As these discussions continue, our leaders need to pledge to work together to find common ground policies to provide coverage to all Americans. This will require every interest being willing to give a little to find a solution that everyone can support. Real action involves tough choices, trade-offs and compromise—but we need action.”

The report is being released during Cover the Uninsured Week, a nonpartisan campaign organized by RWJF to advocate for health coverage for all Americans. Now in its sixth year, Cover the Uninsured Week (April 27–May 3) has become the largest, nonpartisan mobilization in history seeking solutions for the 47 million Americans who are uninsured. Thousands of people will participate in hundreds of Cover the Uninsured Week community service and education events held across the nation.

“Throughout this week, working moms and dads who are struggling to make ends meet will add their voices to demand solutions for our health care system,” said Lavizzo-Mourey. “With our economy sputtering, more than 47 million people already uninsured and millions more worried about losing their coverage, the plight of the uninsured cannot continue to be ignored. These are Americans who are worried about their future. When millions of Americans lack stable, affordable coverage, it affects all of us. We all need a solution.”


The Robert Wood Johnson Foundation focuses on the pressing health and health care issues facing our country. As the nation's largest philanthropy devoted exclusively to improving the health and health care of all Americans, the Foundation works with a diverse group of organizations and individuals to identify solutions and achieve comprehensive, meaningful and timely change. For more than 35 years the Foundation has brought experience, commitment, and a rigorous, balanced approach to the problems that affect the health and health care of those it serves. When it comes to helping Americans lead healthier lives and get the care they need, the Foundation expects to make a difference in your lifetime.

Related websites

  • Cover the Uninsured

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