September 27 2011

New Survey: Health Insurance Premiums Surge, Young Adults Back on Mom and Dad's Plan

Hadley Heath

For many Americans, it's been a while since they've gotten a raise.  What they may not see - if their employer sponsors their health insurance - is that the cost of that benefit has been rising steadily, and this year, shot up 9 percent according to a new study from the Kaiser Family Foundation

From the Kaiser news release:

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.

Sadly, the more money that employers spend on health benefits, the less money is left over for increases in take-home pay, or for the creation of new jobs and the growth of American businesses. 

Kaiser Foundation CEO Drew Altman told the New York Times, "The open question is whether that's a one-time spike or the start of a period of higher increases."  Ah, yes, the open question.

Another way to ask this question is, "What does the health reform law ('ObamaCare') have to do with this?"  It's easy to speculate that insurers are raising premiums now, bracing for any number of minimum essential coverage requirements (to be release by the IOM on October 7) or that insurers need to raise funds now ahead of 2012 when they will have to justify any increase of 10 percent or more.  The plentiful and unpredictable regulations in the health reform law will be costly, and it appears that those higher costs are already well on their way. 

For some good reading on this topic, see IWF's Policy Focus called "How You'll Pay for ObamaCare."   

In other news from this same survey, about 2.3 million young adults are now insured under their parents' plan:

"The law is helping millions of young adults to obtain health coverage.  In the past, many of these young adults would have lost coverage when they left home or graduated college," said study lead author Gary Claxton, a Kaiser vice president and co-executive director of the Kaiser Initiative on Health Reform and Private Insurance.  

Also in the past these young adults would have gotten a job or employer-sponsored health benefits of their own.  Today's economy, however, doesn't have much to offer these young workers, and the health reform law is making hiring even more difficult.  But please let's keep it up, the idea that if you are under age 26 the concept of personal responsibility does not yet apply to you.  That sounds like a great idea!  (sarcasm)

Has anyone considered that perhaps the increase in premiums across the board has something to do with these new customers?  There's no such thing as a free lunch, and I imagine that in many families with young adult children, mom and dad have had to increase their contribution to their family health plan.  Or, they've simply been passed over for this year's raise because of the additional cost of their health benefits.

The real solution to youth un-insurance and high health costs is the same: Target the root causes of expensive health care (that so much of it is paid for with someone else's money, that perhaps doctors are too agressive with their care, that malpractice insurance is so high, that we cannot trade insurance across state lines...) and reduce costs by freeing the health care market and focusing more tightly on solutions for those in need.

Step One: Repeal "ObamaCare."


 
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