Private Insurance’s Costs are Skyrocketing

In a new Axios column, Kaiser Family Foundation’s President and CEO Drew Altman, PhD, takes a long-term view of the recently released federal data on health spending showing that spending for private insurance is rising much faster than for Medicare and Medicaid, and predicts rising pressure in the healthcare industry as a result. Below is his column.

The cost of private health insurance is out of control, compared to Medicare and Medicaid. You see that clearly if you take a long-term view of recently released federal data on health spending. 

Related: Healthcare Spending Triples in Last Two Decades

Why it matters: This is why the healthcare industry––not just insurers, but also hospitals and drug companies––is so opposed to proposals that would expand the government's purchasing power. And it’s why some progressives are so determined to curb, or even eliminate, private coverage.

By the numbers: Per capita spending for private insurance has grown by 52.6% over the last 10 years.

• Per capita spending for Medicare grew by 21.5% over the same period, and Medicaid 12.5%.

Private insurance generally pays higher prices for care than Medicare, which generally pays more than Medicaid.

• There’s a long-running debate about whether public programs deliver efficiency because of their purchasing power, or simply underpay. 

• Democrats have proposed a variety of steps to curb healthcare costs, including cutting payments for out-of-network care, competition from a public insurance plan, and steep payment cuts through Medicare for All. 

• Industry opposes most of them.

The bottom line: The industry knows cutting government spending can only go so far. Any effort to rein in healthcare costs will have to confront the growth in the cost of private insurance.