NEW YORK – Family premiums for employer-sponsored health insurance increased 119 percent between 1999 and 2008, and could increase another 94 percent to an average $23,842 per family by 2020, according to a Commonwealth Fund report.

“Paying the Price: How Health Insurance Premiums Are Eating Up Middle Class Incomes, State Health Insurance Premium Trends And The Potential Of National Reforms,” finds that national reforms that slow healthcare cost increases by 1 percent to 1.5 percent per year would yield substantial savings for families and businesses across the country.

By 2020, slowing the annual rate of growth by 1 percent would yield more than $2,500 in reduced premiums for family coverage, and slowing growth by 1.5 percent would yield more than $3,700 in premium savings, compared to projected trends.

"With health spending projected to double if we stay on our current path, middle and lower income families are at high risk of losing their coverage or facing long-term stagnant incomes," said Commonwealth Fund Senior Vice President Cathy Schoen, the lead author of the report.

According to a state-by-state analysis, the five-year increase (2003 to 2008) in employer-based premiums for family coverage averaged 33 percent, ranging from a high of 45 percent in Indiana and North Carolina to an average low of 25 percent in Michigan, Texas and Ohio. Most states saw increases of 30 percent to 40 percent.

By 2008, average family premium costs were highest in Indiana, Massachusetts, Minnesota and New Hampshire – topping out at more than $13,500. Idaho, Iowa and Hawaii had the lowest average family premiums, at around $11,000.

"Employers and employees share premium costs but we know that take-home pay and retirement savings are being sacrificed to maintain health benefits,” said Schoen. “Reforms that slow the growth of healthcare costs could go a long way toward health and financial stability for working families."

The report found that insurance premiums have been rising much faster than income across states. As a result, by 2008 total premiums – including employee and employer shares – equaled or exceeded 18 percent of the average household income for the working age population in 18 states, compared to just three states in 2003. In three states – Mississippi, Tennessee and West Virginia – family premiums averaged 20 percent or more of middle household incomes for the state’s under-65 population.

“These rapid premium increases aren’t sustainable for families or employers,” said Commonwealth Fund President Karen Davis. “If we craft patient-centered reform that focuses on improving quality and efficiency and bending the cost curve, the insured in every state stand to benefit. We could assure coverage and, over time, make more money available for wages, retirement, and other family needs.”

The stress on businesses and families is particularly severe in southern and south-central states, where premiums are often high, yet incomes are lower than national averages. In addition, employees are often paying more for less because as costs rise, employers have increased patient cost-sharing while limiting benefits.

Estimates indicate that payment and system reforms, including the choice of a public insurance plan to compete with private plans, could reduce projected spending by $2 trillion to $3 trillion between 2010 and 2020 – a reduction of 1 percent to 1.5 percent in annual growth rates.