Cost of Health Insurance Premiums

On September 30, 2012 Former Mississippi Republican Governor Haley Barbour on ‘This Week With George Stephanopoulos’ said that the Kaiser Family Foundation (KFF) report that came out last week said that since ObamaCare premiums have gone up $3,000. I checked the KFF report - Premiums for employer-sponsored health insurance rose from $5,791 in 1999 to $13,375 in 2009 with the amount paid by workers rising 128%. Employers, in contrast, paid 20% more toward their employees’ health insurance than they did 5 years ago. Although consumers faced rising health insurance premiums over the period, lower cost sharing enabled consumers to use more health care. KFF said 31% of the 47 million Americans who get insurance at work now have preventive care without a co-pay or deductible and 23% now have lower cost sharing; between 1970 and 2010 the share of personal health expenditures paid directly out-of-pocket by consumers fell from 40% to 14%. The KFF report showed the Bureau of Labor Statistics found that the health insurance employer cost index (a measure of the price of health care services) was the lowest it has been in over 10 years in the first half of 2011. But, insurance companies increased premiums by 9% in 2011. Analysts’ reviewed the results from the first quarter of 2011 and found 13 of the top 14 health insurers exceeded their earnings expectations by more than 45%. The report also confirmed what Bill Clinton said – the government has been subsidizing health providers and insurance companies.

What does this mean? First, the employer didn’t pay the cost increase-they made the employee pay most of the burden. Second, the insurance companies overcharged thinking services would cost more but instead they got huge profits. This is why ObamaCare had them refund billions of dollars to whoever paid the premiums if they didn’t spend 80% on a person’s care. Although the former Governor’s statement is correct – he failed to tell you the increase was due to company profit and not to ObamaCare; he also didn’t tell you the KFF report did not adjust for the dollars reimbursed to the premium payer or the reduced out-of-pocket costs so the $3,000 is distorted.