By Douglas Tardio, HealthCost Founding Partner
The Wall Street Journal recently published an article discussing 2018 projected healthcare premium increases. It states that, on average, insurers will ask for a 20 percent increase in premiums, with some asking for over 50 percent. Before we get lost in the numbers, let’s consider a few points:
- Annual premium increases are not new
- They are not a one-time event while the market re-stabilizes
- The lack of clarity on future subsidies are not driving them
- “All the healthy people” that haven’t purchased insurance are not to blame for rising premiums
The Kaiser/HRET of Employer Sponsored Health Benefits (1994-2004) provides some clarity. Keep in mind that employer-sponsored plans have little or nothing to do with Obamacare or the Exchanges. These plans aren’t new, and they still cover a majority of the insured consumers in the country (roughly 147 million v. 20 million for ACA exchange plans). Below is a graph from Kaiser/HRET to better understand the changes in premiums over the years.
And yes, while you might not see a 50 percent jump in any one year for employer-sponsored plans, one thing is clear: The true answer lies in the access to and cost of care. By access, I don’t mean access to insurance – I mean access to healthcare services. Let’s look at drugs, for example. Direct-to-consumer advertising of drugs was legally approved in 1985, but rapidly accelerated in 1997 with FDA review. Today, if you watch the nightly news, you understand the impact to access this has made. If not, “go ask your doctor about it.” And second, the cost of healthcare services. Again, drug cost increases lead the way, but they are often followed by inpatient hospital cost increases. For example, aligned with the acceleration of direct-to-consumer drug advertising, the U.S. Bureau of Labor and Statistics found a 195 percent inpatient hospital cost increase from 1997 to 2016.
The problem is that we don’t find out about the majority of these cost increases until after services are performed. At that point, there is little you as a patient can do. But there is a lot Congress can do, if they would only stop for a moment and address the cost of care.
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