Health Insurance Premiums Up 4 Percent, Study Finds

Health insurance premiums rose 4 percent for family coverage this year, well below last year’s increase and half the 8 percent average of the previous decade -– largely because people used less health care in an uncertain economy.

Family plan premiums hit $15,745 on average, while premiums for single employees rose to $5,615, according to a survey of employers released Tuesday by the Kaiser Family Foundation and the Health Research & Educational Trust. (KHN is an editorially independent program of the foundation.)

"We’re seeing people make more consumer-oriented decisions, going for less expensive treatments or deferring surgery," said Julie Stone, senior consultant at Towers Watson, an employer benefit consulting firm that does its own survey. Still, hospitals and other medical providers "are not agreeing" to lower their prices, she said.

Although the increase is less than half last year's 9 percent spike, the Kaiser foundation’s survey results will likely be seen through the prism of election-year politics. Premium increases are a big pocketbook issue for individuals and small businesses -- something both sides have used to justify their positions on the 2010 health law. Democrats have said the federal health law is working to slow spending growth, while Republicans contend it will increase costs.

Many analysts say both sides are overplaying the law’s effect since many of its provisions are not yet in effect. Full implementation of the Affordable Care Act is January 1, 2014.

While the law's opponents blamed it for last year’s 9 percent increase, policy analysts said the premiums rose mainly because insurers incorrectly assumed that use of medical care would rise as the economy recovered.

But Americans did not rush out to use medical services last year, nor has use jumped this year, helping hold down overall medical spending.

Weak Economy Kept Premium Increase Down

The historically moderate level of premium increase was "driven mostly by the weak economy that has caused some people to use less health care," said Drew Altman, president and CEO of the foundation.

In addition, many employers continued efforts to limit premium growth by raising deductibles, among other benefit changes. For example, 34 percent of covered workers had an annual deductible of at least $1,000 for employee-only coverage, up from 10 percent in 2006.

Low-wage workers were hit hardest, paying on average $1,000 more each year toward their premiums for family coverage than workers at higher-wage firms. They were also more likely to have high deductibles, according to the survey.