White Paper on Health Care Cost Drivers

The National Association of Heath Underwriters (NAHU), a professional trade association representing more than 20,000 health insurance agents, brokers and employee benefit specialists nationally, is extremely concerned about how rising health care costs are impacting health insurance coverage in this country. NAHU serves millions of Americans by working to help both individuals and employers purchase and maintain health insurance coverage. As such, we see on a daily basis, how much the cost of health insurance coverage is impacting our nation’s employers and economic growth, and we know the cost of financing health care will continue to rise if the driving medical care cost factors remain unchecked.

Statistical evidence supports what NAHU has observed relative to the economic impact of health care spending. In 2006, health care spending in the United States will exceed $2 trillion and account for 15.9 percent of the gross domestic product (GDP). This is an increase from $1.3 trillion and 13.3 percent of GDP in 2000, and spending is only continuing to rise. Costs are projected to exceed $2.7 trillion and 17 percent of GDP in 20101. Furthermore, the annual increases in national health care spending consistently outpace both the rate of general price inflation and the average U.S. household income. According to a 2005 study by Hewitt Associates, LLC, health care cost increases have averaged 12 percent per year since 2000.During the same time period, increases in the Consumer Price Index have averaged 2.7 percent and the U.S. household income 3.7 percent.