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Group health plan premium increases jumped 9% this year: Kaiser survey

Group health plan premium increases jumped 9% this year: Kaiser survey

Increases in group health insurance premiums spiked sharply this year, according to a survey the Kaiser Family Foundation released Tuesday.

The survey of more than 2,000 employers found that the premium for family coverage rose an average of 9%, increasing to $15,703 this year.

That compares with an average increase of 3% that Kaiser found in 2010. Officials with the Menlo Park, Calif.-based Kaiser Family Foundation said they didn't know if the 9% increase was a sign of a new trend—after years of relative stability—or just a fluke.

“The open question is whether that's a one-time spike or the start of a period of higher increases,” Drew Altman, Kaiser's president and CEO said during a Washington briefing. “We will just have to wait until next year.”

That 9% increase for 2011 is at variance with other surveys.

For example, premiums increased an average of 7.3% this year in the Federal Employees Health Benefits Program—the nation's largest group health care program, which covers federal workers and their dependents.

In addition, employers responding to a Mercer L.L.C. survey last year predicted that their group plan premiums would rise an average of 6.4% in 2011. Typically, such projections are within one percentage point of the actual increase, said Beth Umland, Mercer's director of research for health and benefits in New York. Mercer's findings for 2011 will be released later this year.

Despite the 9% increase this year, Mr. Altman predicted that health plan cost increases are likely to be lower next year, “but that is just a guess.”

Separately, the Office of Personnel Management, which administers the federal health benefits program, said premiums in the plans offered in that program will increase an average of 3.8% in 2012, while employers responding to a Mercer survey projected an average increase of 5.4% in the plans they provide to their employees.

A White House official attributed the large health care premium hikes Kaiser found for 2011 to, at least in part, insurers' miscalculations on the impact of the health care reform law.

“These premiums were generally set in 2010, when insurance companies thought medical costs would be significantly higher than they turned out to be….Some insurers assumed that the (Patient Protection and) Affordable Care Act would dramatically raise their costs. In the end, both assumptions were wrong—but insurance companies still charged high premiums and earned impressive profits,” Nancy Ann-DeParle, the Obama administration's deputy chief of staff, said Tuesday in a White House blog posting.

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