This is an interesting article that tracks employer health insurance premium increases versus medical care price rises. 80% to 90% of any health insurance premium is used for health care costs, so the trend in those costs is obviously what drives health insurance prices. The change in the consumer price index medical services component is used to determine inflation in health care costs, but it may not be the most accurate source. Actual claims payments by the large insurers would be a far better metric. The annual Kaiser survey, which I believe is pretty accurate, is used to determine the trends in health insurance premiums.
Employer health plan premiums have risen 342% in the period from 1999 to 2024. Employee contributions to those premiums have grown by 308%. Average earnings have risen only 119% in the same period and general inflation has grown 64%. The good news is that real, after inflation, earnings have grown significantly. The bad news is health insurance and medical care costs have eaten much of that up.
When hospital prices, physician service prices, drug prices and health insurance premiums are trended against each other, insurance premiums have generally increased at the lowest rate, except during the epidemic. Professional service prices and drug prices grew at a rate only slightly higher than the rate for health insurance. Hospital costs increased far faster than any of the other categories. As I have frequently said hospitals, and the large health systems they run, are the primary driver of medical cost inflation and health insurance premium increases. (JAMA Article)
