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    Health Care Reform:

    Health Insurance & Affordable Care Act

    Hint: It's Not the Affordable Care Act

    Why the Jump in Health Insurance Premiums?

    Health Care Reform and Health Insurance Cost continued...

    "These are changes that really needed to be made," Collins tells WebMD. "Kids who go off parents' policies at 19 and can't find a job are very costly to the health system. And obviously people don't want to blow through their benefits if they need something like cancer treatment. The span-of-life benefit affected 38 million people."

    America's Health Insurance Plans, the trade group that represents the health insurance industry, puts health reform well down its list of factors driving up premiums.

    Why Health Insurance Premiums Went Up

    So if it wasn't health care reform, what did cause the spike in health insurance premiums?

    The AHIP and other experts agree: The price of health care is going up faster than inflation, and much faster than wage growth.

    According to a Standard & Poor analysis, health care costs covered by commercial insurers went up 7.73% in the year ending July 2011.

    "The big issue is that health care costs continue to climb faster than the rest of the economy," Collins says.

    Levitt notes that insurers have to predict in advance what their costs will be. In 2011, he says, they guessed wrong.

    "This year many insurers guessed costs would go up faster than they actually have," he says. "The big factor is the economic downturn. Families are struggling financially, and cutting back on health care. Insurers and many of us thought the downturn was ending, and that people would seek health care they had put off."

    The AHIP points out another factor. In harsh economic times, healthy people gamble that they will stay that way and don't buy health insurance. That means people who are insured, as a group, are less healthy and need more health care.

    What about greedy insurers gouging customers to ensure high profits? The AHIP says this isn't a factor, and that the average profit margin for health insurers is 4.5%.

    Collins says that insurers' administrative costs and profit margins vary widely from company to company. But she notes that the Affordable Care Act will force insurers to spend at least 80% to 85% of premiums on health care.

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