Employer-Sponsored Health Insurance Costs Double Inflation: KFF Report

The cost of employer-sponsored health insurance is spiraling, with new data from a KFF report showing costs in California climbing at double the rate of inflation over the last three years. The surge is squeezing the finances of both businesses and their employees, who are paying more for less coverage.

• Staggering stats: The numbers from the 2025 Employer Health Benefits Survey are stark. In California, the average family plan has surged 24% to $28,400 a year—far outpacing wage growth and inflation. Nationally, the average family premium jumped 6% in the last year alone, hitting nearly $27,000.

• The triple threat: This price shock is fueled by three main factors: a post-pandemic surge in demand for medical care, the explosive popularity of pricey GLP-1 drugs like Ozempic, and rampant industry consolidation that has reduced competition through over 400 hospital mergers since 2018.

• Paying more for less: The result is a raw deal for workers. "People are paying more and more, it's taking up more and more of their family budgets, and they're getting less," said Miranda Dietz of the UC Berkeley Labor Center. That feeling is borne out by the data, as the share of California employees facing a deductible has jumped to three-quarters, a sharp increase from 68% just three years ago.

As small businesses and workers feel the squeeze, some of California's largest insurers are reporting massive profits. An analysis found Kaiser Permanente put $27 billion into its reserves over the last four years, while Elevance Health, parent of Anthem Blue Cross, posted $1.2 billion in profit in a single quarter of 2025. A new crisis looms as enhanced Affordable Care Act tax credits are set to expire at the end of 2025. The expiration threatens to double average monthly premiums for individual plans, potentially pushing even more people out of the market.