Hewitt Study: Highest Cost Increases in Five Years
Hewitt Associates released a study today projecting an 8.8 percent premium increase for employer-sponsored coverage in 2011 – up from 6.9 percent in 2010 and 6 percent in 2009. According to the survey data, out-of-pocket premium costs for employees are projected to rise 12.4 percent next year compared to 2010, with coverage costing $2,209. Likewise, other out-of-pocket costs (i.e., co-payments, deductibles, and co-insurance) are projected to rise by 12.5 percent in 2011. The Hewitt study is consistent with an Aon Consulting survey predicting trend rates for the coming twelve months exceeding 10 percent for most employer-sponsored health insurance.
The White House released a blog posting claiming the Hewitt survey confirms that “health care has been rising by up to double digits for more than a decade,” and that premiums should only rise by 1-2 percent as a result of the health care law. But a study claiming “rate increases reach highest levels in five years” undermines assertions that the health care law will reduce costs – and saying that premiums will “only” rise by 1-2 percent as a result of the law this year should not be considered an accomplishment in light of a campaign run on lowering premiums, not minimizing their increase.
As the below chart shows, while candidate Obama promised a $2,500 premium reduction for families as a result of his health care plan, premiums have risen by nearly $1,100 since his election. That means average premiums for employer-sponsored coverage will have to fall by more than 26%, or nearly $3,600, for the President to fulfill his campaign pledge.
