The average cost of a family health coverage through an employer is nearly $27,000 a year. As the Kaiser Family Foundation (KFF) phrased it: a new car vs. health insurance? It’s pretty difficult these days to find new car models selling for $27,000 but the point is still a good one. A base model Honda Civic is around $27,000, but a husband and wife could own a pair of matching Mercedes GLE 350 SUVs with payments of about $27,000 a year. After a few years, they would own the SUVs and could drive them another decade. Not so with health coverage. What you spend this year does not accrue for future years. The following is from KFF Health News:
Premiums for job-based health insurance rose 6% in 2025 to an average of $26,993 a year for family coverage, according to an annual survey of employers released Oct. 22 by KFF, a health information nonprofit that includes KFF Health News.
The average annual premium for an individual health plan provided by employers increased by 5% to $9,325 — nearly $3,000 higher than in 2016, according to the survey.
KFF explains that employees contribute to the cost of their health coverage with direct contributions.
Most people with job-based insurance contribute to the cost of their premiums, with the average worker this year contributing $1,440 for individual coverage or $6,850 for family coverage.
What they do not explain – probably do not even understand – is that workers bear the entire cost of coverage through direct contributions and indirectly through reduced take home pay. Employee health coverage is not just another cost of doing business as some seem to believe. Economists generally agree that workers bear the entire cost simply because fringe benefits are a portion of total compensation. Compensation is the cost of employing workers and anything that increase the cost must come at the expense of how much employers are willing to pay their workers. Advocates for universal coverage hate to admit workers themselves bear the entire cost because if workers understood they are paying $27,000 a year rather than $6,850 they would balk and demand control of their own compensation.
Employer and employee contributions do not tell the entire story. Employee cost sharing has also been rising for decades.
Over time, more workers have paid increasingly higher deductibles, the amount they must spend out-of-pocket on medical services before their insurer pitches in. More than one-third of covered workers are enrolled in a plan with a deductible of $2,000 or more for an individual. The share of workers with such a plan has increased 32% over the last five years and 77% over the last 10 years, the report said.
Workers are paying increasingly large sums for family coverage that provides decreasing benefits. As a result, workers and their families are paying most (if not all) of their day-to-day health needs out of pocket. In other words, families are paying $2,250 a month for coverage that pays few of their health care bills.
The Wall Street Journal reports:
Higher spending on chronic diseases, weight-loss drugs and hospital bills help drive the increase.
J.H. Berra Paving Co., in St. Louis, is struggling with this trade-off. The company is facing a 15% health-insurance rate increase this year, on top of last year’s increase, said John O’Connor, a risk manager for the company. That extra cost is likely to put a lid on wage increases for the company’s workers, O’Connor said.
Small firms are especially experiencing a huge uptick in premiums. Some small employers are backing away from traditional coverage and looking for other ways to benefit employees. For instance, some firms have begun offering health reimbursement arrangements (HRAs), allowing workers to use the funds to buy their own insurance.
I have written about what a bad deal Obamacare is by design. Increasingly, employer coverage is following in Obamacare’s footsteps. Workers are paying ever increasing premiums for coverage that provides them with little value unless they are among small percentage of the sickest enrollees. The rising cost of health coverage has forced many people to switch to high-deductible health plans. Health coverage is becoming a bad deal for most people by regulatory design. That is an inefficient way to subsidize those with high heath costs.
Read more at:
A New Car vs. Health Insurance? Average Family Job-Based Coverage Hits $27K – KFF Health News
The Average Cost of a Family Health Insurance Plan Is Now $27,000 – WSJ
You sure are right that the costs are appalling. At these prices, a company with 100 emplolyees on family coverage will pay about $27 million in premiums. Take off 15% for insurer overhead, and you wtill have about $23 million in premiums.
Does every company have a bunch of near-death heart or cancer patients, getting $300,000 treatments? Maybe so, but it sure feels like a stretch.
I cannot follow your last paragraph, where you imply that this deadly inflation/death spiral comes from regulatory design. What regulations? Employers have guaranteed issue, but how else could you insure everyone in a coimpany?