It's Not the Fault of ACA

A lot of people are complaining about the health insurance premiums they have to pay these days. Some insurance companies are asking the government for reimbursement. The Affordable Care Act (ACA--or Obamacare as some like to call it) is the villain in their eyes.

What they don't realize is that the trend in insurance premiums has been on this path for over 15 years. It was known before 2010 that companies could barely afford the increases. See the chart below from Kaiser Family Foundation and JAMA. The one in the middle left doesn't show any change in the rate of increase. It's linear. The chart in the top left shows that 1999-2005 had double the rate of increase as any five years since then.

Yes, premiums have increased. Deductibles have increased in order to mitigate some of the premium increases. However, a typical family's expenditures haven't increased much. In 2004 the average expenditure was $422 and $747 in 2014. Still well below the typical high-deductible level of $2500. Even though deductibles have increased, the risk of high medical bills hasn't increased. The annual increase in typical expenditures is roughly 6%. Compare that to the rate of medical inflation.

The expenditures have had double the increase of inflation.

If you look at the latest years for total health care expenditures, the rate of increase has slowed in the past few years despite the aging of Baby Boomers.

Before the ACA, expenditures were increasing 6-10%. It wasn't unusual for health care premiums to jump 15-20%. Since the recession in 2008, the increases have dropped to 4-5%.

Regardless of which set of data you look at it, it's clear the ACA hasn't made it worse. It seems to have been worse in the 1970's long before the ACA. And the premium increases were double from 1999-2005 than they have been since then.