As your club is considering its benefits package and health insurance offerings, there are a few things that you might want to keep in mind. Though the cost of health insurance has been steadily rising over the past several years, this year saw a drastic increase, possibly setting a new standard for rising medical costs.
The Kaiser Family Foundation released a new study detailing the changes in employer-sponsored health insurance that indicated a 9 percent increase in the average health insurance premium for family coverage since last year—making the new average premium cost an astounding $15,073 for 2011. Of the $15,073 in average premiums, workers shoulder an average of $4,129 towards the cost, in addition to skyrocketing out of pocket costs. Almost three-quarters of workers pick up at least some of the tab each time they see a doctor, and about one-third of individuals with single coverage have deductibles of $1,000 or more, though employee wages remain essentially flat.
Many companies are beginning to implement comprehensive wellness programs aimed to keeping employees healthy, which cuts down on the incidence of illness and helps to keep premium costs low. Other companies with a new wave of younger, healthier employees also see minimal rises in insurance costs, but many feel that the costs of providing health care to their employees are largely out of their hands.
In the past few years, it had appeared that drastic premium increases were on their way out, as increases averaged 5 percent in recent years, and even dropped to 3 percent in 2010. Though many hoped that this was a sign of the long-term stabilization of health care costs, some speculate that the shift from the double-digit premium increases of years past was due to the recession: Many people may have been putting off more expensive procedures until the economy improves, which helps to keep premium costs low.
Though it still seems unclear if this is simply a one-time spike as a result of new changes to the health care system or the beginning of consistent increases for years to come, all eyes are on the new health care reform law. Some believe that these new premium hikes resulted from insurers trying to get in under the wire—raising their rates before the new health care law requires them to justify premium increases of more than 10 percent after the beginning of 2012. Others posit that insurers are attempting to preempt new potential costs stemming from new provisions of the law, such as new mandatory coverage for preventative treatments and the requirement that adult children up to 26 years old be offered coverage under their parents’ plans.
Major health insurance providers contend that hefty premium increases, and the higher profit margins that accompany them, are justified by the marginal economic recovery. As people find themselves with more available income, insurance companies believe that their expenses will increase as people seek additional medical care, which they might not have been able to afford at the height of the recession. But, with the hopes for the resurgence of the market falling, the cost of medical coverage is likely to do the same.
Data from a recent survey by Mercer indicates that employers are anticipating a 5 percent increase in the cost of providing their employees with health benefits—considerably less than the 9 percent jump seen last year. Some of these responses may be a result of the economic slowdown: The pervasive negative outlook on economic improvement over the past few months is a stark change from the optimism we saw at the end of last year. With economic recovery seeming less likely than it did at this time last year, many believe that health insurance costs will slow accordingly.
The specter of economic recovery may end up being the deciding factor in rising premium costs, but it is yet to be seen if the new health care reform law will have a decisive impact in the long run.
Jackie Abrams is NCA’s communications manager.