Health Insurance
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12.5.2022

The Bulge Beneath- Cost of Healthcare

Employee premium payments in employer-sponsored health plans rose by a staggering 47% in just a decade, from 2011 to 2021. Despite a 23% rise in inflation and a 31% increase in wage growth in that timespan, employers have struggled to curb healthcare costs for their employees. A lack of incentives has prevented employers from collectively affecting the local insurance market and the absence of expertise among employers and their representatives has hindered direct negotiations with healthcare providers.

The increase in employer-sponsored health plan premiums, however, goes largely unnoticed in the Consumer Price Index (CPI), as the CPI only takes into account out-of-pocket costs. For example, say an individual pays $20 for a primary care physician. Next year's annual enrollment period comes along and their same insurance plan costs additional $100 in monthly premiums, while their primary care physician's visit remains $20. The $100 increase in monthly premiums will not be reflected in the inflation rate, as calculated by the CPI because out-of-pocket costs only consider the amount paid for the service.

Research shows that the surge in prices is not due to higher utilization of healthcare services, but rather the consolidation of commercial insurers and providers, which are dictating prices through restrictive contracts.

To counter this consolidation, consumers must consider consolidate their communities and negotiate better prices through state exchanges. By providing citizens with incentives and funding through exchanges, state governments can shake up the status quo and bring down prices for consumers. It is important to shift the focus from overall spending to strategies designed for specific patient populations.

Lowering healthcare costs and improving care for all will require education and advocacy. States can help their economies by providing their citizens with disposable income through state exchanges, but only if the public can be convinced to change their attitudes towards health insurance. The first step is to raise awareness of the better options available through state exchanges, compared to traditional employer-sponsored plans.


To find out your options for lowering your healthcare costs, please contact Specular Financial for a complimentary, no-obligation quote.
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Dec 05, 2022