Last week the Kaiser Foundation released its 2011 Annual Survey of health benefits that showed an increase in the cost of health insurance premiums. Health insurance and health care being the hot button partisan issue they are today, the pundits immediately pounced.
The headlines sprouted across the infosphere, full of dubious comparisons and delicious adjectives. “President Obama’s health care law not fulfilling promise, “Health insurance premiums skyrocket,” and the whimsical “Surprise! ObamaCare doesn’t lower health-insurance costs.”
Of course, none of that has much bearing on what is actually taking place — as far as economics, that is.
The first thing that is obvious is that health insurance premiums have little to do with the Affordable Care Act, which is still being phased in. Any potential effect on premium costs are still almost two years away. The second obvious thing is that the Kaiser survey is for the past year. The first provisions that weren’t actually giving the health industry money didn’t go into effect until September of 2010.
Finally, that 9% number is being used as a red herring.
Let’s look at a summary of the Kaiser report from 2009. It quite clearly shows that the average increase for the last decade is 13%. This year’s increase isn’t high, the last few years have been low. The same last few years that were rife with claim denials and insurance company rule tightening — the very same practices that necessitated the Affordable Care Act.
Finally, looking forward to the next few years, it is widely agreed that there are factors at play that will serve to put downward pressure on premium prices. While no one has a crystal ball, it’s a pretty safe bet that any action taken, ACA specifically, is going to be better than the trend we have been experiencing. Watch the video below for a good explanation of what’s been happening.