According to HIAA (1991c) data, the total monthly premium for individual employment-based health coverage in 1990 was $145 for conventional health plans ($1,740 per year). For family coverage the total premium was $316 per month ($3,792 per year). Data for 1989 indicated that the employer paid on average 86 percent of the cost for individual coverage and 74 percent of the cost for family coverage (HIAA, 1990). Note that even though the percentage of the premium paid by employers may be less for family coverage, the absolute dollar amount may be more because the premium for family coverage is higher than the premium for individual coverage.

As with other summary statistics, the premium figures cited above disguise an enormous amount of variation in what specific employers and employees pay. For example, a recent study of health benefits for state employees showed that total monthly premiums for 1991 ranged from $78 in Hawaii and $85 in Mississippi to $204 in California and $241 in Massachusetts (Segal Company, 1991). The percentage of premium contributed by the employer ranged from 50 percent in Louisiana and 60 percent in Hawaii to 100 percent in 26 states. Differences in premiums reflect a variety of factors, such as differences in coverage (e.g., Hawaii has a $250 individual deductible and Massachusetts's deductible is $50) and differences in area hospital and other input costs.

Although employment-based health benefit costs continue to increase more rapidly than general inflation, data from several sources suggest a modest slowing in the annual rate of increase in the last year or two (HIAA, 1991a,c; A. Foster Higgins, 1992). Figure 3.4 reports data from one survey on changes in average combined employee-employer spending on health benefits per worker from 1985 to 1991 (Geisel, 1992).13Table 3.7 shows HIAA data on rates of premium increases broken out for nonnetwork and network health plans for 1989, 1990, and 1991 (Hoy et al., 1991).

Administrative Expenses

HCFA attributes 5.8 percent, or $38.7 billion, of total national health expenditures to the costs of administering publicly financed health programs and philanthropic organizations and to the cost of private insurance net of benefit payments (Levit et al., 1991). Almost one-fifth of this amount involves the administrative costs of government health programs such as Medicare and Medicaid, and almost all the rest is accounted for by private health insurance. The HCFA estimates do not include expenses for the

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These expenditure data do not include amounts paid by employees for noninsured health services and supplies unless they were paid with funds from employee spending accounts (see discussion under "Flexible Benefits" below).



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