Home Our View Getting Reform Right Resources For the latest poll numbers on health care reform click here WHY ARE HEALTH INSURANCE PREMIUMS RISING? Escalating Health Care Costs Medical care is expensive. And the costs for medical care are increasing at a rate higher than inflation. Health care costs increase every time you go to the doctor, check into a hospital, use new medical technology or take a prescription drug. The more these medical services are used, the more costs go up. All these costs are paid for by the health insurance premiums you pay. Health insurance premiums, therefore, reflect the underlying costs of providing care. When these costs of care increase above the inflation rate, they drive premiums higher. Today, the United States spends more than $2.5 trillion dollars on health care, representing more than 17% of our gross domestic product (GDP). In 1970, we spent $75 billion or just over 7% of GDP on health care. Click the links below to learn how the costs of providing care are affecting the premiums you pay. The Factors Fueling Rising Health Care Costs 2008 – PriceWaterhouseCoopers Healthcare Trends in America AHIP Statement on New Health Spending Projections The Real Drivers of Health Care Costs Trends in Health Care Costs and Spending – Kaiser Family Foundation, March 2009 Hospital and Physician Costs Keep Rising More than 52% of our nation’s health care spending goes for hospital, physician, and other clinical services. By contrast, health insurance company administrative costs and profits represent just 4% of overall health care spending. In a number of markets, hospitals and other health care providers have been consolidating and increasing their leverage to demand higher reimbursement rates from health insurers. Hospitals and physicians are paid with premium dollars insurance companies collect from customers. When reimbursement rates increase, they drive higher premiums. Click the links below to learn more. Boston Globe – January 29, 2010 – AG finds clout of hospitals drives cost Health Affairs – February 25, 2010 – Unchecked Provider Clout In California Foreshadows Challenges To Health Reform Robert Wood Johnson Foundation – February 2006 – How Has Hospital Consolidation Affected the Price and Quality of Hospital Care? National Institute for Health Care Management – November 2009 – Hospital Market Consolidation: Trends and Consequences Government Mandates and Taxes When a product or service is taxed, it raises its cost. This is common sense. When health insurance companies are taxed, it drives up the cost of health insurance premiums. Current health insurance reforms propose taxing health insurance companies by $2 billion annually, increasing to $10 billion by 2017. In 2008, Horizon BCBSNJ paid $146.6 million in state and federal taxes. Government mandates require health insurance policies to cover certain conditions. Therefore, mandates increase costs and cause health insurance premiums to rise. Simply put, if every condition was covered by all health insurance policies, premiums would be unaffordable. To find out how government mandates are affecting premium costs, click on the links below. The Heritage Foundation – Employer Health Care Mandates: Taxing Low-Income Workers to Pay for Health Care Council for Affordable Health Insurance – Health Insurance Mandates in the States 2009 Small Business & Entrepreneurship Council – Health Care Policy Cost Index 2009: Ranking the States According to Policies Affecting the Cost of Health Care National Conference of State Legislatures – Mandated Health Insurance Benefits and State Laws Economic Downturn The current economic downturn is another factor that is contributing to rising health care premiums. Here's why: Many employers are eliminating coverage for their employees. Many small employers are also requiring employees to pay a greater share of their health care. As a result, many people, especially those who are young and healthy, are choosing not to purchase health insurance – either through their employer or directly from a health insurance company. This leads to an insured population that is older and less healthy, which means more services are being used. This means higher health care costs and health care premiums. To learn more about how the current recession is affecting health care costs, click on the links below. Health care and the middle class: More costs and less coverage – July 2009 – Kaiser Family Foundation Health Care’s Share of U.S. Economy Rose at Record Rate – February 4, 2010 – New York Times Q&A: Why health care's economic impact matters – June 21, 2009 – USA Today, The Associated Press The Economic Recession: Early Impacts on Health Care Safety Net Providers – January 2010, Center for Studying Health System Change New Report Details Impact of Economic Downturn on Patients and Hospitals – The American Hospital Association, Press Release – November 19, 2008 Health Coverage in an Economic Downturn: Impact of Tight Budgets on Families and States – Kaiser Family Foundation Health Care and Medicaid – Weathering the Recession – March 26, 2009, New England Journal of Medicine Services and products may be provided through Horizon Blue Cross Blue Shield of New Jersey, Horizon Healthcare of New Jersey, Inc., Horizon Healthcare Dental, Inc., or Horizon Casualty Services, Inc., each of which is an independent licensee of the Blue Cross and Blue Shield Association. 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