As Americans learn about the new health care law, a key question is: what will the Affordable
Care Act mean for health insurance premiums paid by consumers and employers? This report
examines the past, present, and future regarding the likely effects of the law on premiums –
along with what might happen without it.
From 1999 to 2009, health insurance premiums skyrocketed while Americans wages and cost of
living grew at a much slower rate. Premiums more than doubled, rising by over $7,500 for the
average family with employer-sponsored insurance. The cost of an employer-based family
coverage plan rose from 12 to 22 percent of family income over the decade. Health insurance
costs jumped as a percentage of private sector compensation from 5.4 to 7.3 percent from 1999
to 2009, eroding workers wages. Small businesses were particularly hard hit. The proportion of
small employers offering health insurance dropped from 65 to 59 percent between 1999 and
2009. Part of the reason for rising costs has been reduced competition: these increases occurred
at a time of tremendous consolidation in the insurance markets, both national and local.