The Future of Insurance Premiums

The big difficulty with health care reform is that, somewhat perversely, most Americans are satisfied with their current health insurance. That means that you can’t just offer a reform package that amounts to “take everyone’s insurance away and replace it with something better.” Even though what people currently have is actually pretty lousy and it would be easy to design something better. That said, people do worry about how much they pay for health insurance. So it’s important to make the point that whatever you think of the status quo, the current trajectory is very bad.

David Cutler explains in a new paper for CAP:

This analysis shows that without health reform, average family premiums will grow to more than $22,000 by 2019, up from $13,100 today. In some states with higher-than-average premiums, family premiums will exceed $25,000 in 10 years. Of course, a family’s total health care costs will be even higher once co-payments and other out-of-pocket expenses are calculated into the total.

These projections, as alarming as they are, need not come true. We know how to “bend the curve” of growing health care costs, reducing the future costs that will be borne by American families, businesses, and government budgets. In fact, we can save more than $2 trillion over the next 10 years by promoting cost-saving innovations and reducing waste and inefficiencies. We can significantly reduce health care spending over the long term through a combination of increased research into which treatments work and which do not, improved payment systems that reward efficient and effective care, and the infrastructure we need to enable these elements to work together.


To me, spending a lot of money on health care isn’t necessarily a terrible thing. But it’s only worth doing if we’re doing it because we’re getting tremendous value for our money. At the moment, we’re not.