Health insurance is now experiencing the same inflation that has raised the prices of food and rent over the last three years. According to KFF, a nonprofit organisation that promotes health policy, the average cost of a family health insurance plan supplied by an employer increased 7% this year to $23,968 — the largest rate rise in ten years. Prices have significantly climbed since one year before, when premiums went up 1%.
According to the report, individual insurance costs increased 7% to $8,435. The workplace provides health insurance to more than 150 million Americans. KFF conducts an annual survey of more than 2,100 big and small businesses to monitor developments in employer health insurance.
Some customers will probably pay more when their companies open registration for health insurance plans for 2024 as a result of increased expenses this year. According to the report, almost 1 in 4 companies anticipate passing some of these increased expenses along to their workforce, who may experience greater paycheck deductions at a time when inflation is still outpacing wage increases. The rates are now catching up after this period of extremely high inflation, according to Matthew Rae, associate director of KFF’s healthcare marketplace project.
Compared to the double-digit rate hikes that were common throughout the early half of the last decade, the insurance price rises are far lower. The majority of health insurance costs are covered by employers, who also provide these benefits to recruit and retain staff. When unemployment is low, many are unwilling to pass on considerably greater expenses to employees, according to Rae. It’s just not the time to reduce benefits and pass along significant expenses if you’re looking to hire new employees, according to Rae.
For employees, company size matters
According to the poll, employees at smaller businesses typically pay more for health insurance. A median family health insurance plan cost $8,334 last year, or about $2,500 more for employees at smaller employers than for those at bigger ones. One in four employees of small businesses spent at least $12,000 for a family health plan.
The amount that insurance plans pay for hospital, physician, and other medical care fees determines how much health insurance costs. Even a small number of employees with cancer or other chronic illnesses who need expensive prescription medications or protracted hospital stays cause costs to skyrocket for smaller businesses. Nearly 300 employees and their families are covered by health insurance thanks to Anson Industries, a specialised contractor with its headquarters in a Chicago suburb. According to Anne Higginson, assistant risk manager at Anson Industries, despite accepting yearly hikes of 25% and 15% the previous two years, the firm hasn’t increased employee health insurance costs during the last four years.
For 2024, the organisation is still completing price and health plan alternatives. For employees like project managers and construction estimators, Anson Industries offers insurance protection. The business has had trouble keeping on young workers who prefer to work from home. In order to attract and retain employees, it “most definitely” wants to keep offering reasonable health insurance and profit sharing, according to Higginson.
Inflation is beginning to decline. Why are the costs of health insurance rising?
Prior to patients receiving care, health insurance premiums are determined. Insurance firms increase rates the next year if unanticipated expenditures result from an increase in medical claims or greater labour costs.According to KFF’s poll, family health insurance premiums rose merely 1% last year, despite rising costs for other daily living expenditures and the greatest inflation the country has seen in four decades. However, despite a decline in general inflation this year, the cost of health insurance is once more on the rise.
After a decade of yearly rises averaging 3% to 4%, health benefits consultancy Mercer estimated that health insurance prices will increase 5.4% in 2024. Insurance companies, according to Rae, “are definitely facing higher costs in wages” paid to healthcare personnel and are paying more for prescription pharmaceuticals. On October 13, Kaiser Permanente and 85,000 healthcare workers tentatively agreed to a salary increase of 21% over four years and a minimum hourly rate of $25 for workers in California and $23 for those working elsewhere in the country. Additionally, California Governor Gavin Newsom approved a law establishing a $25 minimum hourly pay for the majority of healthcare workers.