The Woodlands, Texas – Health insurance is an important component of employee compensation and typically represents a company’s largest benefit expense outside of wages. As health care costs continue to rise in the United States, access to competitive health insurance is essential for employees who rely on these benefits to help alleviate rising health care costs. For employers, offering a comprehensive health insurance package is an essential tool not only for attracting talent but also for retaining workers seeking jobs that offer better coverage.
A new study conducted on behalf of Take Command breaks down U.S. health insurance costs by state and metropolitan area.
Employer-sponsored plans remain the primary source of health insurance for most Americans under age 65 and their families, with approximately 165 million people covered in 2023. However, the cost of providing these benefits is becoming increasingly difficult for both employees and employers. Forecasts for 2025 predict that healthcare costs will increase by 8%, reflecting continued upward price pressures.
This analysis examines health insurance costs by company type and location over time to reveal the economic impact on employers and employees across the country.
How fast are health insurance premiums rising?
Over the past 20 years, health insurance premiums have risen far faster than the rate of inflation.
Rising employer premiums are increasingly outpacing inflation and wage growth, driving up costs for businesses and employers across the economy. In 2000, the average single-coverage premium (employer and employee contributions combined) was $4,698 in 2023 dollars, with employees contributing $796 and employers contributing the remaining $3,902. I paid for it. By 2023, average premiums rose to $8,182, with employees contributing an average of $1,640 and employers contributing $6,542. This reflects an inflation-adjusted increase of 74% over 23 years.
For family insurance, the increase is even more pronounced. In 2000, the average inflation-adjusted premium for family coverage was $11,983, with employees contributing $2,856 and employers contributing $9,127. By 2023, average family coverage premiums will increase to $23,938, doubling in 20 years. Currently, employees contribute an average of $6,889 per year for family insurance, and employers contribute $17,049.
In addition to rising premiums, the proportion of health insurance costs borne by employees has also increased over time. In 2000, employees contributed 16.9% of the total premiums for single-person insurance and 23.8% of the total premiums for family insurance. By 2023, these contributions increased to 20.0% for individual coverage and 28.8% for family coverage. This change shifted a large portion of the burden of health care costs to employees.
Health insurance costs by company size
Medium-sized employers contribute the least to employee health benefits
Employees of medium-sized businesses (25 to 99 employees) generally pay higher premiums for health insurance than employees of small businesses, but they receive less support from their employers. For a single policy, employees at midsize companies contribute an average of $1,810 per year. In comparison, the national average for all businesses in 2023 is $1,640. For family insurance, employees pay an average of $8,839, which is significantly higher than the national average of $6,889 and higher than what employees at other company sizes pay.
In contrast, employer contributions for medium-sized companies remain lower than average. For a single plan, midsize businesses contribute an average of $5,916, compared to the national average of $6,542 for employers. Similarly, for family insurance, medium-sized employers contribute $13,662, which is well below the average for all companies of $17,049.
The tendency for employee contributions, both in percentage and amount, to be lowest for both the smallest and largest companies is shaped by several factors. Small businesses often benefit from tax credits that help offset medical costs, allowing them to cover a larger portion of premiums without significantly increasing their financial burden. Larger companies, on the other hand, typically use competitive health insurance as a tool to attract and retain top talent and have the resources to invest more in employee benefits. However, mid-sized companies often find themselves stuck in the ‘middle ground’, lacking both the tax benefits and financial capabilities of larger companies. As a result, employer contributions tend to be low and a large proportion of health care costs are passed on to employees.
Health insurance costs by industry
Professional and financial services employers face the highest health insurance premiums
High-income industries such as professional services, financial services, and real estate tend to have the highest health insurance premiums. In these areas, employers often offer more comprehensive coverage to match competitive compensation packages, leading to higher overall premiums. The average total premium for a single coverage for professional services was $8,653 and for financial services and real estate it was $8,569, both well above the national average. Family coverage premiums follow a similar pattern, with the average annual amount for both categories being approximately $24,800.
Despite these higher premiums, employees in these industries contribute similar amounts to the national average. For professional services, employees pay $1,648 for single coverage and $7,091 for family coverage, which is slightly above the national contribution rate. In financial services and real estate, employee contributions are below average. This is possible due to the higher profitability and financial resources of these sectors, allowing employers to absorb more premiums while maintaining attractive benefits for employees.
Regional differences in employer health insurance costs
Neighboring states of New Jersey, Massachusetts and New York face the highest health insurance premiums
Health insurance premiums vary widely across the United States, with the highest costs concentrated in northeastern states. New Jersey, Massachusetts, and New York report the highest average premiums for both single and family insurance. In 2023, the average premium for a single policy in New Jersey reached $9,662, while the average premium for a family policy in the state was $26,870, both higher than the national averages of $8,182 for a single policy and $8,182 for a family policy. That was well over $23,938. Neighboring states Massachusetts and New York follow suit, with average family premiums of $26,355 each.
The Northeast’s higher premiums reflect the region’s higher per capita health spending, which is about 25 percent higher than the national average, according to the Centers for Medicare and Medicaid Services. Additionally, states in this region often have more comprehensive health care mandates and regulations, which can result in higher premiums.
In contrast, some states in the South and Midwest also have the lowest average premiums. For example, in Mississippi, average premiums in 2023 were $7,243 for single coverage and $21,939 for family coverage. These lower premiums may reflect lower per capita health spending, less comprehensive employer-sponsored plans, and fewer mandates that affect plan coverage requirements.
Here is a summary of the data for Texas:
Average health insurance premium (single coverage): $8,180 Average employee contribution (single coverage): $1,645 Average employer contribution (single coverage): $6,535 Average health insurance premium (family coverage): $23,976 Average employee contribution (family coverage): $7,391 Average employer contribution (family coverage): $16,585 Employee share of health insurance premiums (single enrollment): 20.1% Employee share of health insurance premiums (family coverage): 30.8%
For reference, here are the stats for the entire US:
Average health insurance premium (single coverage): $8,182 Average employee contribution (single coverage): $1,640 Average employer contribution (single coverage): $6,542 Average health insurance premium (family coverage): $23,938 Average employee contribution (family coverage): $6,889 Average employer contribution (family coverage): $17,049 Employee share of health insurance premiums (single enrollment): 20.0% Employee share of health insurance premiums (family coverage): 28.8%
methodology
The data used in this study came from the Agency for Healthcare Research and Quality’s Medical Expenditure Panel Survey (MEPS), which is under the U.S. Department of Health and Human Services. To determine the cost of employer-sponsored health insurance, Take Command researchers calculate employee and employer contributions using average premiums for single and family insurance plans. did. Unless otherwise specified, all statistics shown are averages for 2023 and represent private companies only. All 50 states and some metropolitan areas tracked by MEPS were included in the analysis. Importantly, because there are significant differences in health insurance costs across state boundaries, certain metropolitan areas that span multiple states are listed multiple times with their corresponding states.
Read the full study at https://www.takecommandhealth.com/health-insurance-cost-by-state.
