NCPA - National Center for Policy Analysis

Higher Health Insurance Premiums This Year? Blame Health Reform.

October 12, 2011

Most Americans saw their insurance bills jump this year, according to a new study from the Kaiser Family Foundation.  The average employer-based premium for a family increased a startling 9 percent in 2011.  Over the next decade, rates are expected to double, says Sally Pipes, president of the Pacific Research Institute.

  • This year, the average premium for a family hit $15,073 -- $1,303, or 9 percent, higher than the year before.
  • And that's on top of increases of 5 percent in 2009 and 3 percent in 2010.

These premium hikes have outpaced general inflation and salary increases -- and thus are swallowing a greater share of American households' budgets.  Worse, there's no relief in sight.  Next year, employers expect premiums to rise 7.2 percent, according to the National Business Group on Health.

Health care reform is to blame for much of these impending increases.  Richard Foster, the Chief Actuary for the Centers for Medicare and Medicaid Services (CMS), reports that America will spend an additional $311 billion on health care in the next decade because of the law.

  • CMS estimates the growth in health insurance costs will increase 10 extra percentage points in 2014 because of health reform -- a 14 percent increase, versus 3.5 percent without the law.
  • In 2020, the net cost of health insurance is estimated to be $271 billion.
  • Without reform, that number would have been $248.7 billion -- a difference of more than $22 billion.

Reform drives up the cost of insurance by piling mandates and required coverage benefits onto every single policy, says Pipes.

Source: Sally Pipes, "Higher Health Insurance Premiums This Year?  Blame ObamaCare," Forbes, October 10, 2011.

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