Employers and consumers are facing the biggest health insurance premium increases in nearly two decades. National estimates project the costs for employer coverage to surge by about 9.5% next year. Recently, the State Department of Financial Services approved an average 13% increase in small group rates and 7.1% in the individual market.

I'm often asked, "Why do premiums keep increasing?" The reason is simple: health insurance premiums are driven by health care costs. Premiums are a direct reflection of the cost of care, and it is important to understand the factors contributing to premium increases. In announcing the approved rates, the Department of Financial Services cited the rising cost of medical care, including inpatient hospital stays and rapid increases in drug prices, as the main drivers of premium increases.

A number of factors have contributed to rising health care costs in New York and across the country. This includes greater use of medical services, the aging of the population and increases in the prices that providers and drug companies charge. Nationally, hospital costs account........

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