The Kaiser Family Foundation’s survey of health benefits found that health insurance premiums are up 6.8 percent this year and the average pay increase is 3.1 percent.

  • Wages average about $30,000 per person.
  • Employers cover 85 percent of insurance premiums for individuals and 73 percent for family coverage – this is constant.
  • Insurance premiums paid by employers equal 12 percent of wages for those with individual coverage and 29 percent for those with family coverage

Put it all together and total compensation is up 3.7 percent in 2007, which tracks pretty well with what the Bureau of Labor Statistics estimates.

This is important because the typical spin on these numbers is that insurance premiums are rising faster than wages and inflation. True enough, but premiums paid by an employer are an untaxed part of a worker’s compensation. Higher premiums therefore keep wages down. This is one reason why President Bush and others have suggested changing the tax code and why we have suggested state tax credits for individuals who purchase health insurance.