New survey of health insurance brokers: Private health plan premiums are spiking. Now, even the Fed is watching these trends

Article Highlights

  • Get ready for even higher health care costs.

    Tweet This

  • You can’t tap the average family by 2 or 3k in additional health care costs & not expect some macro impacts.

    Tweet This

  • Health plans are predicting higher cost trends in 2014, after years of stabilization.

    Tweet This

Get ready for even higher health care costs.

A new survey of health insurance brokers shows that commercial insurance rates are going to rise “significantly” in 2014.

The research team at investment bank Morgan Stanley surveyed 131 brokers, finding that December 2013 rates are rising in excess of 6% in the small group market, and 9% in the individual market.

The spike in the quarterly-reported rates for annual premiums on new or renewing contracts is being attributed to the continued implementation of Obamacare rules, as well as new Obamacare taxes and fees that are being assessed on plans this year.

The December 2013 rate hikes are the largest reported since Morgan Stanley’s research team first started conducting the quarterly surveys of brokers in 2010. In prior quarters, the average quarterly reported rate increases never rose above 3% over the preceding period.

On top of this, health plans are also predicting higher cost trends in 2014, after years of stabilization (much of it attributable to the economic downturn, which reduced medical utilization rates). These higher cost trends were also among the reasons health plans cited for their December rate increases.

According to the survey, Aetna and United are increasing insurance rates in excess of 10%. Commercial carriers such as United are already on record attributing the bulk of their increased healthcare costs to new, Obamacare-related provisions.

Among the states seeing the highest annualized rate hikes (for the full 2013 year) in the individual market are Connecticut, which is averaging a 37% increase; Florida (42%); Illinois (33%); Michigan (39%); and Minnesota (35%).

Among the states with the biggest annualized spike in the small group rates are Delaware, which is averaging a 35% increase; Michigan (30%); and Minnesota (50%).

These rate increases have broad implications. Federal Reserve Board Member Jeffrey Lacker said today that the Fed has its eye on these costs.

Lacker said that he expects a “lot of turmoil” in the healthcare industry, and that the Fed will be watching how Obamacare unfolds.

In a speech to the Greater Raleigh Chamber of Commerce Friday afternoon he said, “I think the Affordable Care Act is something that we are watching very closely because it’s something that could well have a substantial economic impact.”

In other words: You can’t tap the average family by $2,000 or $3,000 in additional health care costs and not expect some macro impacts.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Scott
Gottlieb

What's new on AEI

Love people, not pleasure
image Oval Office lacks resolve on Ukraine
image Middle East Morass: A public opinion rundown of Iraq, Iran, and more
image Verizon's Inspire Her Mind ad and the facts they didn't tell you
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Event Registration is Closed
Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.