National Debt Clock

Thursday, December 10, 2009

Just What is the Average Cost of Healthcare Insurance?

1. The Association of Health Insurance Plans, an insurance trade group, conducts a survey of individual policies each year. In December 2007, they issued a report with information about average premiums sorted by age, as well as average premiums by state.

The report states that nationwide, annual premiums averaged $2,613 for single coverage and $5,799 for family plans in the 2006-2007 period. This is where McCain most likely obtained his numbers, though some would argue that information obtained from industry associations is not reliable, given the goals of the association: promoting private insurance plans.

The report goes on to state that for single policies, annual premiums ranged from $1,163 for persons under age 18 to $5,090 for persons aged 60-64. For family policies, premiums ranged from $2,325 for policies covering children under age 18 to $9,201 for families headed by persons aged 60-64.

The limitation of relying on this study is that it is only based on individual policies and does not incorporate the costs of corporate insurance policies.

2. The National Coalition on Health Care, the nation's largest non-profit, non-partisan alliance working to improve America's health care, places the average annual cost that a health insurer charges an employer for a health plan covering a family of four at $12,100 (2007 estimate). This relays the true cost of the insurance to the employer, even though the average cost per employee for family coverage is estimated at $3,300.

The information comes from a 2007 report by the Henry J. Kaiser Family Foundation which goes on to state that the average annual cost for health care premiums for individuals is $4,500, of which the average person actually pays $694.

A major limitation of this study is that it only addresses employer-sponsored health care plans, leaving out the 40 percent of Americans (U.S. Census Bureau number) not covered by corporate health care plans. But it seems, Senator Obama still used the $12,000 estimate for health care costs, even though that estimate pertains for corporate costs for families of four, not the actual cost felt by employees, and does not account for those without corporate insurance.

3. A third study conducted by Leighton Ku of George Washington University and Matthew Broaddus of the Center on Budget and Policy Priorities compares the costs of Medicaid to individual health care plans. The study found that average medical expenditures per person are lower under public programs like Medicaid or the State Children's Health Insurance Program (SCHIP) than under private insurance.

Specifically, the study places the cost of insuring those on Medicaid at $5,700 versus $7,000 per year for private policies, after adjusting for the poor health of Medicaid recipients on average.

In summary, the actual annual cost would likely fall around $9,000-10,000 per year, per family. This means both candidates are using erroneous numbers. Anyone surprised?

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