Does the rise in ACA premiums affect employer-provided health insurance premiums?
There are a lot of moving parts, individual premiums and annual increases have little to do with employer premiums and annual increases and vice versa.  Most people think of XYZ insurer as a single company with a single pool of insured folks.  This common knowledge isn't accurate.  Insurers pool their business segments separately.  This means that Individual, small business, mid-size business, and large business are all different operating segments from the viewpoint of the insurer.    It's possible to argue that because so many people are covered by employer plans that individual plans have a hard time accumulating the required critical mass of subscribers to keep increases reasonable.   Age banded rating: Individual coverage and small group coverage is age rated, meaning every year you get older.  In addition to your age increase, the premium table for your plan also receives an increase.  Employers with 100+ eligible employees are composite rated (in general), meaning every employee costs the same amount.  The 18 year old employee costs $500 per month, the 64 year old costs $500 per month.  Generally, the contributions an employee pays to participate in the plan are also common among all ages.  This means that on a micro level increases can be more incremental because the employer is abstracting the gross premium.  Composite rating generally benefits older folks while age rating generally benefits younger folks. Employer Morale Incentive: Generally the cost to an employee covered by an employer plan isn't directly correlated to the gross premium, and increases to the contribution(s) aren't necessarily correlated to the increases the employer receives.  Employers are incentivised by employee morale.  It's pretty common for employers to shoulder a disproportionate amount of an increase to keep everyone happy.  Employers may offset the increase by shopping some ancillary benefit like group life insurance, or bundling the dental program with the medical carrier.  Remember, employees don't pay premiums they pay contributions and some employers are more generous than others.  Employers are also better at budgeting for planned increases than individuals are. Regulators: In many of the states that are making the news because of their healthcare premium increases there simply isn't a regulator scrutinizing increases.  California requires all individual and small group premiums to be filed with the state and increases must be justified with some sort of math and approved by a regulator.  Without this kind of oversight insurers have only the risk of subscriber flight to adjust plan provisions and press harder during provider contract negotiations. Expiring Transitional Reinsurance Fee and Funds: One of the fees introduced by healthcare reform paid by insurers and self-insured employers established a pot of money that individual plans could tap to cope with the new costs of the previously uninsurable folks.  This fee and corresponding pot of money is set to expire and can no longer be taken in to account by underwriters. Increased Treatment Availability: It's important that as new facilities go online, insurer costs will increase.  If a little town gets a new cancer clinic, that pool will see more cancer treatment costs simply as a result of increased treatment availability.  Consider that medical care inflation is running at about 4.9% annually as of the most recent CPI table, the rest of the increases will result from the performance of that specific risk pool.  If that risk pool had a lot of cancer diagnoses, you're looking at a big increase.  If that risk pool was under priced the prior year you will see an above average increase, etc. "It's likely impossible to determine why premiums are increasing in a meaningful way; not only is the interrelationship between the various data points very complex, but some of the increases are likely due to decisions by people who do not and will not publicly post what they decided and why. However, it is possible to compare health insurance premium increases over time to see if the increases in employer-sponsored health insurance premiums are comparable or not to the pre-ACA timeframe. Since the ACA phased in over a few years, we can compare the period 2008-2010 ""pre-ACA"" and 2013-2015 ""post-ACA"", ignoring 2011-2012 as being unclearly affected by the ACA phase-in.  For this, I will look at single coverage premiums only for the purpose of simplifying the analysis. I found a good table of 2008-2010 premiums from the NCSL; they list the following: Kaiser Permanente had a good list for 2013-2015 here: From 2008-2010, the average growth was around 6% per year.  From 2013-2015, the growth averaged about 3%.  In both of these cases we are comparing total premiums (sum of employer and employee contributions). So, from a data-driven look, it seems that the premium growth is lower post-ACA than pre-ACA, so it's unlikely that the ACA could be accused of causing increased premium growth.  Of course, this is US-wide average, and on a state-by-state basis there may well be significant differences that may or may not be related to the ACA. One thing that is covered on the NCSL page linked above that is interesting: while the premium growth has slowed significantly (about 50% of the growth pre-ACA), health insurance premiums are a higher proportion of employee's wages, and that growth is continuing - because wage growth has not kept pace with inflation post-2008 recession.  Employee contributions also may be higher post-recession; many companies reduced their contribution percentage (as my then employer did, for example).   Finally, increases in the ACA plans are also commonly overstated.  They largely are in line with employer plans or even less.   In 2015, premiums were basically flat, decreasing slightly in fact - see the KFF analysis here.  2016 saw a 3.6% by this methodology (see the 2016 analysis).   It's very easy to cherrypick examples that are favorable to any interpretation from the data, though; there are such big swings as a result of the different conditions in the marketplaces that it's easy to pick a few that have high swings and claim the ACA has massive premium increases, or pick a few that have low swings and claim it's reducing costs." Depends on the insurance company itself, as well as the costs of treatments. Imagine an ideal scenario where costs of treatments stayed the same, and that all insurance plans were segregated and pulled from the same pool of funds to pay for treatments. Then employer subsidized health insurance plans would be unaffected by the drama in the ACA plans. Those are the factors to consider, from my understanding. But I wouldn't be surprised if the burdens of accepting people that would previously never have been serviced by these companies has greatly distorted the market as a whole.
"I disagree. If nobody got their health insurance through their employer, then everyone would go out on the market and acquire them. This would create a more dynamic health insurance market which would, over time, drive down the cost of getting health insurance.   I don't follow your logic about how ""wages wouldn't keep up"" 10 or 20 years down the road. If anything, not having to worry about benefits in a particular job would give employees more job mobility, causing the job market to be more competitive. In other words, it would be more likely to cause wages to up.  Also, ancillary benefits of getting employers out of the health insurance/benefit dynamic would be to create more efficiencies within those businesses (reduce staff spent on coordinating plans and such), make small businesses more competitive (they are at a disadvantage now with regard to big companies with pools of employees), and get more people to acquire at least some form of insurance (health coverage goes up).  I, for one, welcome a world in which our employers have absolutely nothing to do with our benefits choices and we choose them at our own discretion, just as I do with my car insurance." It's working well by one metric: covering the uninsured. However, Obamacare doesn't do enough to control costs. Wait a few years for double-digit premium increases due to the continuing spiral of costs and it's not going to be working so well. IMHO "J Gruber's consulting reports for the various states (Minnesota, Wisconsin, etc).  * http://www.washingtonpost.com/blogs/ezra-klein/post/jon-gruber-on-the-premiums-in-health-care-reform/2011/08/25/gIQAN0TUWS_blog.html  ...and the article it addresses (which included some numbers from the reports):  * http://dailycaller.com/2012/02/11/obamacare-architect-expect-steep-increase-in-health-care-premiums/  Note that Gruber has made a whole spectrum of claims (from initially claiming that premiums would go DOWN for a consulting agreement with the Obama administration, to later ""revisions"" showing significant increases {to varying degrees depending on the individuals specific demographic}), to wit:  &gt;Gruber’s new reports are in direct contrast Obama’s words — and with claims Gruber himself made in 2009. Then, the economics professor said that based on figures provided by the independent Congressional Budget Office, “[health care] reform will significantly reduce, not increase, non-group premiums.”  &gt;During his presentation to Wisconsin officials in August 2011, Gruber revealed that while about 57 percent of those who get their insurance through the individual market will benefit in one way or another from the law’s subsides, an even larger majority of the individual market will end up paying drastically more overall.  &gt;“After the application of tax subsidies, **59 percent of the individual market will experience an average premium increase of 31 percent,”** Gruber reported.  &gt;The reason for this is that an estimated 40 percent of Wisconsin residents who are covered by individual market insurance don’t meet the Affordable Care Act’s minimum coverage requirements. Under the Affordable Care Act, they will be required to purchase more expensive plans.  &gt;Asked for his own explanation for the expected health-insurance rate hikes, Gruber told TheDC that his reports “reflect the high cost of folding state high risk pools into the [federal government's] exchange — without using the money the state was already spending to subsidize those high risk pools.”  Note: Emphasis added.    Note 2: To begin with, an ""average"" increase of 31% qualifies as ""significant"" (hell, it's a lot more than merely ""significant"", that's a HUGE increase); and secondly, that is an AVERAGE, meaning that while some of the people in that ""59%"" will probably not see such a high increase, a fairly large segment {and per the provisions of the Act versus current premium calculation methods, we KNOW these will be ""young healthy singles"", and especially males} will face increases that are substantially HIGHER than 31%, and in fact will probably be in the nature of double or triple previous premiums {as would be required in order to meet another provision of the act, that highest premiums for older/sicker pool members cannot be higher than 3x that of the youngest/lowest tier premiums -- and if the company is to balance the books, it can only ""bring down"" the one end if it makes a compensating increase at the other end.})  None of that is ""rocket science"" and it is entirely predictable. (The only things that would be ""odd"" would be that anyone should expect anything different, and that Gruber's initial claims of across the board lower costs were ever accepted in the first place.)" As the premiums go up, so do the individuals subsidies because they are limited in how much they have to pay. John has to pay $450 if his total insurance costs $11k or $15 k. So, in effect, he will get more money. To pay for his increased insurance costs.   This increases the overall costs to the taxpayers by millions of dollars. The money goes to the person to pay premiums instead of straight to insurance companies.   The taxpayers would be much better off if the payments to insurance companies continue to prevent the raise in premiums. If Trump stops the payments, we are all going to pay more, except for those near the poverty level. "I am very late to this forum and post - but will just respond that I am a sole proprietor, who was just audited by the IRS for 2009, and this is one of the items that they disallowed.  My husband lost his job in 2008, I was unable to get health insurance on my own due to pre-existing ( not) conditions and so we had to stay on the Cobra system.  None of the cost was funded by the employer and so I took it as a SE HI deduction on Line 29.  It was disallowed and unfortunately, due to AGI limits, I get nothing by taking it on Sch. A.  The auditor made it very clear that if the plan was not in my name, or the company's name, I could not take the deduction above the line.  In his words, ""it's not fair, but it is the law!""" For the record I am not the one that downvoted you because you raise a decent point/opinion. However, you should consider the impact this has on the rest of us. Many employers have already said that they are not hiring people because of concerns on what the ruling means for them. That could have been a ploy to pressure politicians to back down from it. However, that probably wouldn't explain everything. They are going to paying more for insurance when hiring no doubt. That isn't good when we are already having a hard time getting them back to work. So I wouldn't write off capitalists concerns so easily. Secondly, they aren't going to be able externalize it anymore than before unless they are forced to pay for part-time workers and others previously exempt. I didn't read enough on this to know one way or the other. However, if workers aren't getting anymore coverage from their employers then the added cost (higher premiums) wouldn't mean much for any of us. Actually they would still be externalizing the cost. Instead of the government picking up the bill it would be Americans who aren't getting insurance from the employer who are forced to pay for the penalty. "Discounting premiums based on some past history is not unique to auto policies.  Other insurers will discount premiums based on past claims history they just don't shout about it as a marketing means to attract customers.  Life insurance is underwritten based on your health history; if you want to consider your ""preferred"" underwriting status based on your clear health history a ""discount based on your healthy habits"" you're free to do so.  All sorts of lines of insurance use all sorts of things to determine an underwriting classes.  The fact that auto insurers trumpet specific discounts does not mean the same net effect is not available on other lines of coverage. Most states require auto rates and discounts to be filed and approved with some state regulator, some regulatory bodies even require that certain discounts exist.  You could likely negotiate with your business insurance underwriters about a better rate and if the underwriters saw fit they could give you a discount.  Auto insurers can offer discounts but are generally beholden to whatever rate sheet is on file with the applicable regulatory body. For the person who downvoted, here's a link to a spreadsheet outlining one of the CA department of insurance allowable rating factor sheets related to auto insurance." "Even though this isn't really personal finance related I still feel like there are some misconceptions here that could be addressed. I don't know where you got the phrase ""pass-through"" insurance from.  What you're describing is a self-funded plan.  In a self-funded arrangement an employer contracts a third-party-administrator (TPA), usually one of the big health insurance carriers, to use it's provider network, process and adjudicate claims, etc.  In addition to the TPA there will be some sort of stop-loss insurance coverage on each participant.  Stop-loss coverage usually provides a maximum amount of risk on a given member and on the entire population for a given month and/or year and/or lifetime.  The employer's risk is in between the plan deductible and the stop loss coverage (assuming the stop-loss doesn't have a maximum). Almost all of the claim dollars in a given plan will come from very very few people.  These costs typically arise out of very unforeseen diagnoses not chronic issues.  A cancer patient can easily cost $1,000,000 in a year.  Someone's diabetes maintenance medicine or other chronic maintenance will cost no where near what a botched surgery will in a year. If we take a step back there are really four categories of employer insurance. Small group is tightly regulated.  Usually plan premiums are filed with a state authority, there is no negotiating, your group's underwriting performance has zero impact on your premiums.   Employers have no way of obtaining any medical/claim information on employees. Mid-market is a pooled arrangement.  The overall pool has a total increase, and your particular group performs better or worse than the pool which may impact premiums.  Employers get very minor claims data, things like the few highest claims, or number of claims over a certain threshold, but no employee specific information. Large-group is a mostly unpooled arrangement.  Generally your group receives it's own rating based on its individual underwriting performance.  In general the carrier is offloading some risk to a stop-loss carrier and employer's get a fair amount of insight in to claims, though again, not with employee names. Self-funded is obviously self-contained.  The employer sets up a claims checking account.  The TPA has draft authority on the account.  The employee's typically have no idea the plan is self funded, their ID cards will have the carrier logo, and the carrier deals with them just as it would any other member.  Generally when a company is this size it has a separate benefits committee, those few people will have some level of insight in to claims performance and stop-loss activity.  This committee will have nothing to do with the hiring process. There are some new partially self-funded arrangements, which is just a really low-threshold  (and relatively expensive) stop-loss program, that's becoming somewhat popular in the mid-market group size as employers attempt to reduce medical spend.   I think when you start thinking on a micro, single employee level, you really lose sight of the big picture.  Why would an employer hire this guy who has this disease/chronic problem that costs $50,000 per year?  And logically you can get to the conclusion that with a self-funded plan it literally costs the company the money so the company has an incentive not to hire the person.  I understand the logic of the argument, but at the self funded level the plan is typically costing north of half a million dollars each month.  So a mid-level HR hiring manager 1. isn't aware of specific plan claims or costs and is not part of the benefits executive committee, 2. won't be instructed to screen for health deficiencies because it's against the law, 3. a company generally won't test the water here because $50,000 per year is less than 1% of the company's annual medical expenses, 4. $50,000 is well below the cost to litigate a discrimination law-suit.    Really the flaw in your thought process is that $50,000 in annual medical expense is a lot.  A harsh child-birth can run in the $250,000 range, so these companies never hire women?  Or never hire men who could add a spouse who's in child bearing years?  Or never hire women who might have a female spouse who could be in child bearing years?  A leukemia diagnosis will ratchet up $1,000,000 in a year.  Spend a bit of time in intensive care for $25,000 per day and you're fired?  A few thousand bucks on diabetes meds isn't anything relative to the annual cost of your average self-funded plan. The second flaw is that the hiring managers get insight in to specific claims.  They don't. Third, you don't hand over medical records on your resume anyway. I typed this out in one single draft and have no intention of editing anything.  I just wanted paint a broad picture, I'm sure things can be nit-picked or focused on." "This is really unfortunate.  In general you can't back date individual policies.  You could have (if it was available to you) elected to extend your employer's coverage via COBRA for the month of May, and possibly June depending on when your application was submitted, then let the individual coverage take over when it became effective.   Groups have some latitude to retroactively cover and terminate employees but that's not an option in the world of individual coverage, the carriers are very strict about submission deadlines for specific effective dates.  This is one of the very few ways that carriers are able to say ""no"" within the bounds of the ACA.  You submit an application, you are assigned an effective date based on the date your application was received and subsequently approved.  It has nothing to do with how much money you send them or whether or not you told them to back date your application. If someone at the New York exchange told you you could have a retroactive effective date they shouldn't have. Many providers have financial hardship programs.  You should talk to the ER hospital and see what might be available to you.  The insurer is likely out of the equation though if the dates of service occurred before your policy was effective. Regarding your 6th paragraph regarding having paid the premium.  In this day and age carriers can only say ""no"" via administrative means.  They set extremely rigid effective dates based on your application date.  They will absolutely cancel you if you miss a payment.  If you get money to them but it was after the grace period date (even by one minute) they will not reinstate you.  If you're cancelled you must submit a new application which will create a new coverage gap.  You pay a few hundred dollars each month to insure infinity risk, you absolutely have to cover your administrative bases because it's the only way a carrier can say ""no"" anymore so they cling to it." "Yes, you can. See the instructions for line 29 of form 1040. Self employed health insurance premiums are an ""above the line"" deduction." Your title question, Who could afford a higher premium who couldn't afford a higher monthly payment?, contrasts premium with monthly payment, but those are the same thing.  In the body of your question, you list monthly payment and deductible, which is entirely different. The deductible is paid only if you need that much medical care in any one year.  Most years a person in good health pays little because of the deductible.  Thus, the higher deductible options offer catastrophic health insurance without giving much in the way of reimbursement for regular medical expenses. Note - the original question has been edited since. 1)  When you apply for insurance you indicate your expected income, they figure the subsidy based on this.  Note that while this data isn't checked it's only an estimate, any errors will be fixed at tax time so lying is just going to gain you an unpleasant tax bill come April 15. 2)  It's not paid in installments, it's just a monthly premium.  It's quite possible for someone to be on the ACA for only part of a year. 3)  I can't address the issue of the fines.  However, you are wrong on who it's for--it's for anyone who doesn't have employer-provided insurance, whatever the reason.  I've been on it since it's inception because I have been self employed for most of that time--there's no employer to even offer me insurance. ACA has market stabilizing mechanisms like cost-sharing reduction subsidies.  Republicans have been blocking that in recently, causing many insurance companies to pull out of some states.  I imagine repeal will just be a continuation of that until there is less competition and insurance companies make higher margins to offset the risk of unprofitable quarters.  So maybe they make more money because of higher margins or maybe they don't because they lose subsidies. (the average person doesn't care nor are they affected by how much their employer spends in healthcare) It may be true that the average person doesn't care how much their employer spends on healthcare, but it's not true that we aren't affected.  From an employer's perspective, healthcare, wages, and all other benefits are part of the cost of having an employee.  When healthcare goes up, it increases the total employee cost.   Employers can handle this in several ways.  They could reduce the amount they give investors (as dividends, stock buybacks, etc.).  But then the stock is worth less and they have to make up the money somewhere else.  They could pass the expense on to customers.  But then the loss in business can easily cost more than the revenue raised.  They can cut wages or other benefits.  Then the average person will start caring...and might get a different job.   (I found this article saying that 12M households spend >=50% of income on rent, so I'm assuming that an even greater number spend more than the recommended 30%, which means rent should be weighted as high as it is in CPI.) According to the census, that's only about 10% of households.  It also notes that 64.4% of households are owner-occupied.  They don't pay rent.  The CPI makes up a number called owner's equivalent rent for those households to get to the higher percentage.   The CPI is intended for things like wages.  This makes it a good choice for a cost of living adjustment, but it doesn't quite represent the overall economy.  And for investments, it's the broader economy that matters.  Household consumption is less important.   What the Fed says. http://www.ehow.com/about_4625753_cobra-as-selfemployed-health-insurance.html This link makes it clear... it has to be itemized, and is subject to the > than 7.5% AGI rule.