The Kaiser Family Foundation released its annual report on health insurance costs Tuesday, finding a nine percent increase from last year.
MENLO PARK, Calif.—After several years of relatively modest premium increases, annual premiums for employer-sponsored family health coverage increased to $15,073 this year, up 9 percent from last year, according to the Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey released today. On average, workers pay $4,129 and employers pay $10,944 toward those annual premiums
Premiums increased significantly faster than workers' wages (2.1 percent) and general inflation (3.2 percent). Since 2001, family premiums have increased 113 percent, compared with 34 percent for workers' wages and 27 percent for inflation
"This year's nine percent increase in premiums is especially painful for workers and employers struggling through a weak recovery," Kaiser President and CEO Drew Altman, Ph.D. said.
This will, no doubt, be used by Republicans to further assail the Affordable Care Act. But as Igor Volsky notes, that would be a fallacious argument.
[O]ne 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.
The ACA will be a decent start to reducing coverage costs, and of course to expanding coverage. But until some of the other systemic cost drivers—lack of unified records and billing systems, medical equipment and pharmaceutical costs, etc.—are seriously addressed, insurers will likely continue to pass their higher costs on to consumers.