“There’s never a slow news day in health-care land. Today, the Kaiser Family Foundation and the American Hospital Association’s Health Research and Educational Trust released their annual Employer Health Benefits survey, which showed that insurance premiums spiked 7.5 percent for single coverage, and 9.5 percent for family coverage, in 2011. This compares to increases of 4.7 percent and 3.0 percent, respectively, in 2010.
While Candidate Obama promised at least 20 times that his plan would “bring premiums down by $2,500 for the typical family,” President Obama has presided over a $2,393 increase in premiums for the typical family. The spike in rates is striking, given that utilization of health care services is down, due to the poor economy, which in theory should lead to a slowdown in premium growth.
Now, premium growth isn’t (yet) entirely under the control of the President, and growth rates for insurance premiums were even higher in George W. Bush’s first term. But it is striking that, 18 months after passage of a law called the “Affordable Care Act,” the growth rate of insurance premiums has gone up, not down.
How could this possibly be? Three reasons: First, the blizzard of new mandates and regulations on private insurers has, and will continue, to drive premiums up. If you force every restaurant to serve fancy organic vegetables, restaurants will have to charge higher prices for the food on their menus. Same goes for insurance.
Second, Obamacare contains significant tax increases that will get passed down to consumers in the form of increased premiums. Pharmaceutical companies, for example, will charge $7-8 billion more for their products in order to recover the costs of Obamacare’s $2.5 billion pharmaceutical excise tax. Similar excise taxes on medical devices and health insurance policies themselves will get passed down to individuals. Corporations really are people.
Third, insurers know that Obamacare’s insurance price control regulations are set to go into effect for 2012, and are doubtlessly trying to get in as big a price increase as they can before the process of premium increases becomes completely politicized.
Obamacare was sold to the public as a measure that would reduce insurance costs for average Americans, in a manner that wouldn’t add to the federal deficit. Both of these things are measurable.
UPDATE: Kaiser Health News notes that premiums for the Federal Employee Health Benefits Program, a model for Paul Ryan’s premium-support Medicare reforms, were up 3.8 percent this year.