Study links soaring health care spending to higher insurance premiums

Growth in health care spending in the United States is driving increases in health insurance premiums, limiting people’s access to care and contributing to wage reductions, job losses and rising inequality, according to a new study co-authored by Yale economist Zack Cooper.

The study—an analysis of state-level data on insurance premiums, health spending and insurer markups from 2011 to 2024—found that rising spending accounted for 91% of the growth in premiums during the period covered.

The finding suggests that measures to slow increases in health insurance premiums should focus on reining in the growth of health care spending, said Cooper, who directs the Health Care Affordability Lab at Yale.

“Insurance premiums are rising rapidly, putting an immense amount of pressure on people across the country,” said Cooper, an associate professor of health policy at the Yale School of Public Health and of economics in Yale’s Faculty of Arts and Sciences.

“Our work shows that growth in premiums is being driven by growth in health care spending. This means that efforts to address the high cost of insurance premiums require thinking about how to make health care spending more affordable.”

The study was published in the journal JAMA Health Forum. Stuart V. Craig of the University of Wisconsin-Madison is the study’s co-author.

To accompany the study, the Health Care Affordability Lab created a data-visualization tool to help people understand the findings and explore changes in health insurance premiums and spending in individual states.

Since 2011, the average premium for private health insurance has grown 78%, double the rate of inflation over the same period. Among individuals who purchased health insurance directly from an insurer in 2025—about 6% of people in the United States—48% reported struggling to pay their monthly premiums, according to the Kaiser Family Foundation. That same year, 54% of U.S. adults received health insurance coverage from their employers, according to the U.S. Census Bureau.

A growing body of research suggests that increases in premiums in employer-sponsored insurance markets cause job losses and decreased wages outside the health care sector, the researchers said.

To better understand the causes of rising premiums, the researchers analyzed state-level data on insurance premiums, health spending and insurer markups published annually in the Medical Loss Ratio Public Use Files from the Center for Consumer Information and Insurance Oversight (CCIIO), a division of the Centers for Medicare & Medicaid Services.

The data cover the large-group insurance market, which generally serves employers with more than 50 employees; the small-group market, which serves smaller employers; and insurance exchanges where individuals purchase coverage.

Between 2011 and 2024, average insurance premiums increased by $3,143 (78.4%), while health spending rose by $2,844 (84.2%), according to the analysis. Over the same period, insurer markups—the portion of the premium that includes insurance companies’ administrative costs and profits—decreased from about 19% to 15%, indicating that rising premiums are largely being driven by increases in health care spending, the researchers said.

“We found that health insurance premiums increased nearly dollar-for-dollar with health spending,” Cooper said. “The fact that insurer markups, measured as a share of premiums, actually decreased during the study period further demonstrates that increased health care spending is the primary cause of rising premiums.”

Mean premiums nationwide were $7,151 per person in 2024, compared with $4,008 in 2011. They varied across states, with Massachusetts having the lowest at $5,603 per individual and Alaska having the highest at $11,438. Growth in premiums over the study period ranged from about 11% in Massachusetts to nearly 164% in Mississippi.

The Health Care Affordability Lab’s new digital tool breaks down the study’s key findings through a series of easily digestible visualizations. Users can also explore the relationship between rising insurance premiums, health spending and insurer markups in each of the 50 states.

It is the second data-visualization tool developed by Yale to help inform people about the causes of rising health care costs. In March, the lab released a digital tool supplementing its research on hospital markets in the United States.

“One way to improve public policy is to improve the discourse on major policy questions like the rising cost of health insurance premiums,” Cooper said.

“What we’re trying to do at the lab is to integrate scholarship at the academic frontier with communications and policy engagement to reach the people who are affected by high health care costs and those who can do something about it. Our data-visualization tools support that work.”

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