Health Care Spending and Insurance Premiums Among the Privately Insured

Importance: Large shares of the US public are struggling to afford their health insurance. High premiums limit access to coverage. Rising premiums in the market for employer-sponsored health insurance, where the plurality of the privately insured get their coverage, are also causing reductions in wage growth, lowering employment, and fueling income inequality. Objective: To analyze the extent to which rising health insurance premiums reflect growth in health spending vs growth in markups in the large-group market, small-group market, and in the health insurance exchanges. Design, Setting, and Participants: This cohort study analyzed the 2011 to 2024 Public Use Files from the Medical Loss Ratio Data provided by the Center for Consumer Information and Insurance Oversight at the Centers for Medicare & Medicaid Services. The data include information on insurance premiums, health spending, and insurer markups and are published annually. These data include information on the large-group market, small-group market, and health insurance exchanges. Main Outcomes and Measures: Insurance premiums, health spending, and insurer markups (profits combined with administrative costs). Results: From 2011 to 2024, across the large-group market, small-group market, and health insurance exchanges, the enrollee-weighted mean of insurance premiums grew by 78.4% ($3143). In percentage terms, insurer markups decreased from 18.6% in 2011 to 14.9% in 2024. Ultimately, 91% of the growth in health insurance premiums was explained by growth in health spending (R2 = 0.91). Conclusions and Relevance: This cohort study found that rising health spending explained 91% of the growth in insurance premiums from 2011 to 2024. This finding suggests that efforts to slow the growth in health insurance premiums should focus on slowing growth in health care spending.