Employer-sponsored health insurance is growing costlier in the US, according to new data.

According to the Kaiser Family Foundation (KFF)’s 25th Employer Health Benefits Survey, the average annual premium for employer-sponsored health insurance as of July 2023 was $8,435 for individual coverage and $23,968 for family coverage, marking a 7% increase for each over the last year.

Workers are contributing a greater amount to premiums too. In 1999, workers contributed $318, or 14.4%, to the average annual premium for individual coverage of $2,196. In 2023, worker contributions reached $1,401 out of $8,435 total, or 16.6% of the overall premium.

“I think it just sort of demonstrates the continued strain that employees and employers are facing when it comes to being able to afford to both offer health insurance to employees and then for employees to afford that coverage," Andrea Ducas, vice president of health policy at the Center for American Progress, told Yahoo Finance. "It’s sort of untenable.”

What's driving up the cost?

Healthcare affordability is still a major issue in the US overall.

An October 2023 survey from the Commonwealth Fund indicated that 38% of US adults in the past year delayed or skipped healthcare or a prescription drug because they couldn’t afford it, including 54% of those with employer-sponsored coverage.

"I think that even for working people, but particularly for low-wage workers, many of the cost-sharing provisions required by employer-sponsored health plans raise real affordability issues [for] what their ability is to actually use the plan," Matthew Rae, associate director of the healthcare marketplace project at KFF, told Yahoo Finance.

Ducas explained that health insurance companies determine the cost of premiums based on how much they expect to spend on a particular insured population. Healthcare utilization rates and the cost of that care are two major drivers, she added.

Though inflation has cooled in recent months, the Commonwealth Fund survey found that nearly two-thirds of working-age adults reported that price inflation had some type of impact on their family’s ability to afford healthcare in the past year, including 60% of those with employer-sponsored coverage. Among that 60%, those earning less than 200% of the federal poverty level reported struggling the most with inflation and healthcare costs.

Rae speculated that part of the bump in premiums could be due to an increase in utilization of healthcare services that people had put off during the pandemic, along with new treatments that cost more money.