Where You Live: A Look at the Cost of Coverage

Everyone knows that homeowner's and auto insurance premiums depend heavily on where you live. However, few people realize that the the amount you pay also very much depends on your geographical location. Of course, if you purchase a private plan, your coverage will more than likely also be underwritten on the basis of your tobacco use, weight, age, and medical history. With an employer-sponsored plan, the insurer has to accept everyone at the same price, regardless of health status. This does not translate into universal equality in costs, though, simply because of geography. In reality, health insurance costs vary widely by state and city because of disparities in the amount of average employer contribution toward employees' premiums.

The Survey

A recent survey performed by the Agency for Healthcare Research and Quality best illustrates the variance in health insurance premiums by region. Before this study, no solid empirical evidence existed to aver the disparities in pricing based on geography. Experts have long known that the quality of medical care is strongly determined by region, but the confirmation of the geographical inequities was heretofore an unproved notion. The survey compared premiums on a state-by-state and city-by-city basis. Keep in mind that the survey only measured the costs of employer-based insurance, not private insurance.

Metro Areas with the Highest Premiums

Because the survey focused on employer-subsidized insurance, the cities with the highest pricing translate into the cities with the highest average employee contribution. Here are the top ten cities with the highest costs based on coverage for a single employee with no dependents:

1. Pittsburgh, PA - $1,249
2. Virginia Beach, VA - $1,172
3. Boston-Cambridge-Quincy, NH (NH portion) - $960
4. Boston, MA - $949
5. Arlington, VA - $940
6. Tampa, FL - $939
7. Baltimore, MD - $931
8. Milwaukee, WI - $916
9. Long Island-Northern New Jersey, NJ (NJ portion) - $914
10. Provo, Utah - $912

Metro Areas with the Lowest Premiums

Here are the metro areas with the lowest average employee contribution in the U.S.

• Boise, ID - $403
• Honolulu, HI - $434
• Portland, OR - $472
• San Antonio, TX - $545
• Las Vegas, NV - $572
• San Jose, CA - $576
• Sacramento, CA - $576
• Burlington, VT - $578
• Tulsa, OK - $590
• Kansas City, MO - $596

Premiums on the Rise

Clearly, the amount you will pay varies significantly by metropolitan regions, but prices across the country have one thing in common: they are rising. For 2007, premiums rose an average of 6.1%, down from 7.7% the year before. This increase outstripped inflation and wage increases. For 2007, wages only rose 3.7% on average, which means that the prices are increasingly becoming a financial burden on employees and employers alike, regardless of geography. As a result, employers are lowering their contributions and raising employees' contributions to premiums in an effort to contain costs. Though this is a national trend, some states were hit harder by skyrocketing costs than others. For instance, the annual amount for employer-sponsored family coverage in Alabama rose by a whopping 79% between 2000-2007, while median earnings only rose by 17%. Analysts attribute the meteoric rise of health insurance premiums in certain states to the struggling economies of these regions.