New Healthcare Cost Study Complicates Democratic Messaging on Medicare for All in Texas

As the cost of living, including healthcare costs, remains a top concern for Texas voters, a recent study is out challenging a central premise of the Democrats’ healthcare agenda, indicating that rising premiums are driven almost entirely by the cost of care itself rather than insurance company profits.

The study, published in the peer-reviewed JAMA Health Forum by researchers from Yale University and the University of Wisconsin-Madison, analyzed health insurance markets from 2011 to 2024.

Across the large-group market, small-group market, and health insurance exchanges, the researchers found that mean insurance premiums grew by $3,143 (a 78.4% increase). Over the same period, health spending grew by $2,844, or 84.2%. Researchers found that 91% of premium increases over that 13-year period were caused by underlying health spending, such as rising pharmaceutical prices and hospital consolidation.

Conversely, the data showed that insurer markups actually decreased during the same period, falling from 18.6% of premiums in 2011 to less than 15% in 2024.

The finding suggests that measures to slow increases in health insurance premiums should focus on reining in the growth of health care spending,

The findings introduce a complex dynamic into Texas politics, where healthcare access and affordability are perennial campaign issues. Texas currently has the highest rate of uninsured residents in the nation, and the most recent KFF Employer Health Benefits Survey found the average annual family premium reached $26,993, up 6 percent from the prior year, with single coverage averaging $9,325.

For years, progressive Democrats in Texas and nationally have advocated for a transition to "Medicare for All," a single-payer system that would effectively eliminate private health insurance. A core argument for this transition has been that removing corporate insurer profits and administrative overhead would generate significant savings for patients.

However, the Yale and UW-Madison findings suggest that replacing the insurance mechanism may not address the primary root of skyrocketing costs. If insurer markups are shrinking and account for a minor fraction of premium growth, a single-payer system would still inherit the underlying trajectory of healthcare spending.

The JAMA study's authors note that rising premiums carry consequences beyond household budgets. Citing prior economic research, they write that increases in employer-sponsored insurance premiums lead to "reductions in employment and wages for workers outside the health care sector" — a dynamic with outsized implications in a large, employer-driven economy like Texas, where 50.1% of residents rely on employer-sponsored insurance for coverage.

As Texans head into November and candidates message to voters, these findings could force a shift in how both parties approach healthcare affordability. For Democrats pushing to expand government coverage, the challenge will be outlining exactly how their proposals will curb hospital and drug spending, rather than just eliminating insurance margins.

Meanwhile, the data is likely to be utilized by opponents of Medicare for All to argue that restructuring the entire insurance market is a disruptive approach that fails to address the actual economic drivers of Texas's healthcare crisis.