Actuarial consulting firm Milliman reported recently that the average American family’s health insurance costs are now over nineteen thousand dollars. Costs have more than doubled in the last ten years.
CORRECTION – Families are paying over $8000 towards the cost of insurance – “$4,728 in employee contributions and $3,280 in employee out-of-pocket cost…”
Think about that.
If medical inflation rates stay the same, we’re looking at the cost of family health insurance hitting $30k a year in six and a half years.
And over $40,000 four years after that.
Of course, trend could accelerate…
If there’s any good news, it is that under health reform, both insurance premiums and out of pocket costs won’t be as much of a killer for those at lower income levels. Out of pocket costs including deductibles will be indexed to income, as will premiums which will be subsidized for those with incomes below 4 times the poverty level (about $88,000 in today’s dollars).
thanks to Jane Saransohn-Kohn for the heads up.
Insight, analysis & opinion from Joe Paduda
I can attest to the family health insurance costs noted in the article.
I am the Administrator for a 6 physician ENT / Head & Neck Surgery group in the Midwest. I just received our group health insurance renewal premiums from one of the largest, if not the largest, group health insurance providers in the country.
The cost for family coverage under our group health plan is going up to $1,883 a month which is $22,596 annually. This is for a $6k deductible plan where the first $6k is on me including the cost of prescription drugs. Preventative care is covered at 100% with no deductible.
There are a lot of different factors that go into the determination of premium rates. We’ve had some staff with serious medical conditions which obviously drives the premium rates up plus I believe medical groups tend to have higher utilization of health care services because it’s easily accessible and know how to navigate through a sometimes complicated health care system.
After reviewing the renewal with the physicians, there was some discussion as to whether to continue to offer group health coverage to the staff is financially sustainable for the group. At some point we may have the decision taken away from us as we may not be able to meet the minimum enrollment requirements from the group health carrier.
Just think a new car for every family every year or Health insurance that rarely pays anything. I have been a long time supporter of letting the market work this out but with all the regulations, requirements it really is not a free market. The Idea of the opportunity of supplementing not only my employees health benefits but every family that makes less than 88k is not something I can be excited about. I don’t think I can afford it.
I think you need to correct the post. The Milliman data says total health care costs, which include out-of-pocket, premium share and the part paid for by insurers is that amount. It is not really the cost of insurance, although between the employee and employer share of premium that is a lot of the cost. Out-of-pocket, however, has been climbing rapidly and makes up a big chunk of that total.
“If there’s any good news, it is that under health reform, both insurance premiums and out of pocket costs won’t be as much of a killer for those at lower income levels. Out of pocket costs including deductibles will be indexed to income, as will premiums which will be subsidized for those with incomes below 4 times the poverty level (about $88,000 in today’s dollars).”
Bare in mind taxes are not indexed to inflation. Reform didn’t solve anything or lower cost it just promised to move it someplace else, an action that never solves the problem.
If over utilization is already a major contributor to cost how does paying for it at 100% and removing any caps help? Providers know when someone hits their OOP limit for the year, Reform just turned insurance into ATMs with no annual limit.
Nate – welcome back.
I disagree with your comment “Reform just turned insurance into ATMs with no annual limit.” In fact, there are specific cost controls for Medicare that kick in if inflation does exceed specified limits. This from Maggie Mahar:
“Under the Affordable Care Act, if Medicare spending rises over a certain amount, IPAC is required to come up with ways of reducing Medicare spending without cutting benefits or shifting costs to patients. IPAC does not need permission from Congress; legislators can over-ride IPAC’s suggestions only if they can find a way to achieving equal savings without reducing benefits –or raising co-pays and deductibles.”
Re non-Medicare, isn’t it private insurers’ responsibility to control costs? There’s nothing in reform that limits their ability to implement small networks, alter reimbursement based on efficacy, set up staff model HMOs, use strong disease management – you know, all the things the MMA prevented Medicare from using.