JAMA Study: Health Spending Drove 91% of Premium Growth, Not Insurer Markups
Rising healthcare spending — not insurer profiteering — drove roughly 91% of private insurance premium growth between 2011 and 2024, according to a JAMA Health Forum study from Yale’s Zack Cooper and the University of Wisconsin-Madison’s Stuart Craig. Across large-group, small-group, and exchange markets, mean premiums rose 78.4% while underlying health spending climbed 84.2%. Insurer markups actually shrank in proportional terms, from 18.6% of premiums in 2011 to 14.9% in 2024, undercutting the popular narrative that carriers inflate premiums to pad margins. The analysis points instead to drug costs and hospital consolidation as the real engines of premium inflation for privately insured Americans.
For operators and finance leaders, the data reframes where cost pressure originates: premium growth tracks the cost of care itself, so margin defense and payer strategy hinge on controlling spend drivers — drug costs, site-of-care, and consolidation effects — not on blaming carriers.
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What drove the 78.4% rise in health insurance premiums from 2011 to 2024?
Growth in underlying health spending accounted for about 91% of premium increases over the period. Mean premiums rose 78.4% while health spending climbed 84.2%, meaning the cost of care itself — not insurer behavior — was the dominant driver.
Did insurers raise premiums to increase their profit margins?
No. The study found insurer markups fell in proportional terms, from 18.6% of premiums in 2011 to 14.9% in 2024. That decline counters the claim that carriers inflate premiums to pad profits.
Which cost drivers are pushing health spending and premiums higher?
Researchers point to rising drug spending and cost increases tied to hospital consolidation as key forces behind health spending growth. Because premiums track spending so closely, controlling these drivers is central to slowing premium inflation for privately insured populations.