Health Reform Isn’t Responsible For The 9 Percent Increase In Employer Health Premiums

The Kaiser Family Foundation released its annual report on health care premiums moments ago, showing that family premiums for employer-based coverage increased by 9 percent in 2011, the most since 2005 when premiums rose by 9.2 percent :

The average annual premiums for employer-sponsored health insurance in 2011 are $5,429 for single coverage and $15,073 for family coverage. Compared to 2010, premiums for single coverage are 8% higher and premiums for family coverage are 9% higher. The 9% growth rate in family premiums for 2011 is significantly higher than the 3% growth rate in 2010. Since 2001, average premiums for family coverage have increased 113%.


The findings will surely light up conservatives, who will argue, as Michele Bachmann did just yesterday in Iowa, that rising health insurance premiums undermine the effectiveness of the Affordable Care Act. But one can’t test a law that has yet to be implemented. The survey concluded that “many of the most significant provisions of the Patient Protection and Affordable Care Act (ACA) will take effect in 2014,” even as some firms are already making changes to their preventive care benefits and enrolling adult children in their benefit plans. Altogether, however, “these provisions are responsible for 1–2 percentage points of the 9% increase in family premiums in 2011,” Kaiser concluded.


The rest of the rise can be attributed to the usual suspects: the development and dissemination of new technologies and medical services which are often used inefficiently, the aging of the population, unhealthy lifestyles, a growing prevalence of high-cost diseases, lack of information technology, administrative costs and defensive medicine — factors that have increased employer health costs by 9.2 percent in 2005, 11.2 percent in 2004 and 13.9 percent in 2003. Thankfully, the health care law begins to tackle all of these problems through the Independent Payment Advisory Board (IPAB), the tax on high-cost plans and delivery reforms that begin to change the provider reimbursement system.