If you thought your health insurance costs were safe from inflation, think again. The United States is suffering from the fastest rate of inflation in nearly 40 years. No sector is safe from price hikes. The health sector was relatively unscathed for a while, but inflation has finally caught up.
Going Downhill Fast
Prices of healthcare services have risen 6.5% compared to this time last year, according to the Bureau of Labor Statistics. Analysts expect that the increases will continue in the coming months. These price hikes will hit Americans in their pocketbooks, especially those with employer-sponsored healthcare plans.
Premiums, deductibles, and out-of-pocket costs will get the brunt of the price increases. The price hikes will present issues to the Biden Administration, who have been doing their best to prioritize lowering costs for Americans.
“Policymakers should be very concerned about what this means for people's ability to get health care, and also the medical debt that they'll be carrying over time,” said Sara Collins, a vice president at the Commonwealth Fund, an independent health-care research group.
No Room To Breathe
The economy has seen very little reprieve from skyrocketing inflation. Prices are rising at an overall rate of 8.2% compared to October of last year.
Insurance costs are rising now because prices for healthcare services are almost always delayed. Insurance companies and providers typically negotiate year-long contracts, so the higher costs don't start showing up until a year later.
The price of labor is also increasing exponentially. More people are reportedly coming in to get care since the pandemic, and as a result, hospitals and other facilities are paying more for food, energy, and other goods.
“All those things that it takes to provide care have gotten more expensive,” said Corey Rhyan, a research director at Altarum, a nonprofit health research and consulting group.
When Will the Costs Show Up?
The cost increase will reportedly show up when workers are signing up for employer-sponsored coverage in the next enrollment season. Some experts claim that the rise in prices will continue through 2024.
The Affordable Care insurance marketplaces are already starting to see these changes. Most insurers are already requesting premium increases within the high single-digit to the low double-digit range.
At the end of the day, what workers will start paying for healthcare depends entirely on how businesses choose to react to the rising costs of care and services.
How Will Employers Respond?
Employers are struggling to decide if they want to pass on these rising costs to their employees. Their other options would be to change the design of the benefit plans or absorb the spike into their broader budget. James Gelfand, president of the ERISA Industry Committee, says that price hikes are reportedly forcing some “really tough decisions” onto employers.
“The only 100% sure way to keep within budget as the medical industry (especially hospitals) demand more and more is to raise premiums, increase deductibles, higher copays and coinsurance,” Gelfand wrote in an email. “Employers hate to do this, but the medical-industrial complex demands an ever-increasing share of workers’ wages.”
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This article was produced and syndicated by Wealth of Geeks.