Have you even looked at YOUR health insurance premiums?

This headline in the NY Times caught my eye:


The article leads with:

The Obama administration on Friday unveiled data showing that many Americans with health insurance bought under the Affordable Care Act could face substantial price increases next year — in some cases as much as 20 percent.

Now, those are exchange premiums so they don’t apply to me.

Still, the headline was shocking enough to make me take a serious look at the premiums that I pay.

What I discovered is very interesting …



First, let me declare that I have no beefs with either my employer – whose plans are, in my opinion, quite generous …. nor with my insurance carrier who has a broad network of great doctors & hospitals, offers reasonable coverage, and stepped up big during my wife’s successful cancer treatments this year.

That said, the summary chart I developed is quite revealing.

I’ve been on the same carrier’s plan for the past several years, so all comparisons are apples-to-apples … except for mandated coverages mandated by ACA (none of which I wanted).



A couple things to note …

First, the total annual policy premium – the sum of my contributions and my employers – increased by over $4,000 over the past 5 years …. That’s a 46% increase … an average annualized increase of 9% over the past 5 years.

Geez, what happened to the $2,500 premium decrease that the President promised?

Second, note that my employee share of the bill has increased by 5% … from 25% to 30%.

Again, I don’t fault my employer – it has to keep its costs contained.

But, the arithmetic is interesting …

Over the past 5 years – when total premiums were increasing by 9% — my premiums have gone up 17% annually.


The 2015 premiums are a case in point: the total premium is going up 9% … my share of the premium is going up 23%.

Double ouch.

At least I’m getting good coverage with a great network … and my employer is still paying 70%.

That’s enough to keep a guy working.


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2 Responses to “Have you even looked at YOUR health insurance premiums?”

  1. John Carpenter Says:

    I confess, I know I am paying more and I know I get excellent health care, but I do not completely understand the ACA and the health care industry. I rely on my father, an economist, who says that it is almost impossible to use the supply and demand model to analyze the health care industry. The reason is that the demand side is unlimited and supply of doctors and hospitals or other health care options are kept limited artificially. It is a rare case when someone of any means at all, or even in this country of NO means at all, will go into the hospital and refuse health care that is necessary to keep him alive or at east patch him up, no matter what the price. How does anyone figure out the economies of that? Why would any supplier not take advantage of it? Does more or less government control fix it?

  2. Steve Says:

    John: in a rational world your comments make sense, but we’re talking about healthcare. Costs are going up for a whole host of reasons. Interestingly, most doctors are seeing declining reimbursement rates, particularly from Medicare and Medicaid but also on the insurance side; this has the double negative of creating a disincentive for aiding the elderly and the poor and simultaneously makes the decision to become a doctor less appealing for the best and brightest of those coming out of school. The real culprits are many: unnecessary tests done to avoid potential future litigation; state insurance commissions (as opposed to cross-state border competition); direct advertising by pharmaceutical companies that leads to self-diagnosis and patient request/demand for more costly prescription drugs when less-costly, generics are generally available with the same efficacy; the huge and growing costs associated with local, state, and federal regulation; the aging population; a public that is ignorant to their ability to shop services, but there is no incentive to steer patients to lower cost options and the insurance companies don’t take an active role in facilitating (e.g.: a CT scan by a hospital and by a private center have the same results but the hospital will generally cost 2x-4x the cost of the private center.
    Worse: the hospital-employed family practitioner will steer you to the more expensive option owned by their employer); publicly-traded insurance companies that have a perverse incentive to provide protection for their “members” but also provide a decent return for their shareholders; and the list goes on. There are many market-led options to drive lower costs, but they require government action to do so: tort reform, remove state insurance commissions, ban direct advertising by pharma, hold insurance companies responsible for cost differences in basic services such as scans (CT, MRI), screenings (colonoscopy, mammogram, prostate), blood work (cholesterol, glyceride), etc., highly regulate or disallow hospitals from owning healthcare and specialty practices, and mandate that health insurance companies, or at least the portion of the insurance company that provides health insurance, privatize. Unfortunately, all of these options are third rails with many entrenched stakeholders.

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