Here's how much group health insurance premiums have gone up since 2010

Employer-provided health insurance has been the standard in the United States for more than 75 years. In fact, many businesses began offering health insurance as a workplace benefit in the aftermath of World War II. 

Favorable tax rules implemented in the 1950s further cemented employer-provided coverage as the standard, resulting in a system in which more than 160 million Americans rely on their companies to offer insurance coverage for their health needs. 

Unfortunately, while this is the standard practice, employers' costs have been steadily rising. A look at the insurance premium increase since 2010 shows how rapidly prices have risen, increasing the burden on businesses and workers alike. 

How much have health insurance premiums increased since 2010?

How much does health insurance cost today compared with 2010? Data from the U.S. Census provides insight into how costs have changed over time. 

The table below shows the change in average total health insurance premiums per enrolled employee from 2010 to 2022. 

As you can see, health insurance premium increases were above 50% for every type of insurance coverage provided. 

These increases were well above the rate of inflation. In fact, $4,940 in 2010 had the same buying power as $6,409.57 in 2022, according to the Bureau of Labor Statistics — more than $1,500 less than the average health insurance premiums of $7,950. Average premiums for employees+1 and for family coverage also saw increases that significantly outpaced inflation. 

These rapid price increases are likely to continue in the coming years, with the consulting firm Mercer indicating that U.S. employers are anticipating a 5.8% increase in health insurance renewal rates in 2025. 

Unfortunately, this creates affordability challenges for both companies and workers. Businesses often cannot afford to pay the full cost of these premiums without reducing salaries or other employee benefits, so workers are asked to take on a growing share of total premium costs -- especially at small firms where employers don't have as much flexibility in their benefit budgets. 

Why are health insurance premiums increasing so fast?

Health insurance premium costs have been on a steady climb for decades, with many potential reasons why premium costs are rising so quickly. Some of the big drivers in increased coverage costs include:

• Consolidation within the healthcare system: As large health conglomerates replace more small practices, the lack of competition can increase the costs of care which, in turn, drives up health insurance premium costs. (National Library of Medicine)

• Consolidation within the insurance industry: The small-employer group market has become more concentrated between 2011 and 2022, with 47 states now having concentrated markets thanks to mergers, acquisitions, and insurers leaving the market. When there is less competition among insurers, premium costs will go up as a result of lower supply with the same or higher demand. (Government Accountability Office)

• An aging population: As the country grows older, medical needs increase. With insurers paying out more money for the care of older Americans, many of whom have chronic health issues, premiums have gone up across the board. (KFF)

• Medical advances: Medical advances can extend life but can also be very costly. New drugs for serious conditions such as cancer and Alzheimer's are helping people to live longer lives, but at a high cost, as they need expensive cutting-edge medications for longer periods of time. ()

These are some of the key factors that have left employers shouldering an ever-increasing financial burden as they work to maintain the status quo of an employment-based health insurance system.

How can companies make offering health insurance more affordable?

There are few good options for companies facing rising premium costs. However, companies aren't likely to stop providing health insurance coverage just because of rising costs, as too many people depend upon this employment benefit and prioritize jobs that subsidize insurance premiums. 

In fact, the sources have found that 96% of Americans believe it is important for a job to offer health insurance. Businesses that don't offer comprehensive coverage as part of their benefits package are at a significant disadvantage when it comes to recruiting and retaining top talent. Still, companies must ensure that the coverage they offer is both within their budgets and effectively meets the needs of their workers. 

One of the best ways for businesses to do this is to explore alternatives to traditional group health insurance coverage, such as an Individual Health Coverage Reimbursement Arrangement (ICHRA). 

When a company adopts an ICHRA, it sets a budget for its contribution to workers' health coverage. Employees receive this money tax-free and can use it to pay for premiums for individual insurance coverage and other healthcare needs. 

ICHRAs allow employees to choose any qualifying health insurance policy they want after shopping for coverage on the Healthcare.gov insurance marketplace or elsewhere within the individual market. Workers can choose whether to pay higher premiums for more comprehensive coverage or choose a plan with lower upfront premiums and use some of the employer subsidy to cover medical care costs as they are incurred.

ICHRAs offer numerous benefits for both employees and employers. For companies offering coverage, ICHRA makes the process simple. Your business can decide on a budget for the healthcare subsidy and allow employees to find plans that work for them. 

Thatch makes managing ICHRA plans effortless. You specify what you can spend on employee healthcare subsidies, and Thatch helps employees choose a plan and spend their money on the services that meet their needs. 

If your company is facing a financial burden due to rising health insurance premiums and you want a better alternative for both you and your workers, schedule a demo today to learn how Thatch can help you implement an ICHRA as a solution.