What if I were to tell you that we’ve entered a period where health care costs are rising only moderately? You’d think I was crazy, right? You'd feel a serious temptation to show me the medical bills you had to deal with—and you have insurance! In some cases you had big bills even though you have really good insurance. You can relax, you’re right that medical services seem more expensive, even though the cost of medical care itself is not rising at nearly the pace it was a few years ago.
On a personal level the leveling off of medical care costs is basically invisible because you’re paying more out of pocket in the form of deductibles. Some of that is insurance company profit, some of that higher deductible is being passed along to you by your employer.
Big Money in Health Care
The average cost of employee health coverage went up three percent this year, still outracing inflation. On average employers are paying $18,142, while employees paying $5,277. That means the cost of a year’s health care coverage for the average family is over $23,000 a year. It’s hard to imagine why, with a system of medicine where profit is critical at every step in the cycle, Americans are so opposed to single-payer health care. Every provider in the medical care process is concerned with making money. The insurance company, the hospital, the doctor, the pharmacy and the pharmaceutical company that supplies the drugs are all trying to squeeze out a profit every time you go in for treatment. Those profits ultimately come out of your pocket and the pocket of your employer.
Passing the Costs on to Employees
Your employer is also in business to make a profit and health insurance premiums eat into that bottom line. Businesses are working with insurance companies to pass more medical-related costs onto their employees. Typically that process comes in the form of high deductible insurance policies. Deductibles have risen nearly ten times faster than insurance rates, with many employees these days looking at spending $600 to $1,000 per insured in out-of-pocket expenses. On average Americans have to pay $1,478 out of their own wallets before insurance kicks in to cover the bulk of the charges. A shock out-of-pocket deductible for medical care frequently collides with the reality that nearly a third of Americans have no emergency fund.
More of Us Facing Deductibles
To me deductibles in health care are like baggage fees on airlines and parking fees at hotels; extra costs that you end up paying that weren’t figured into the top line price quote you received. The number of people paying those higher insurance deductibles has been going up steadily for the last ten years. In 2006 only 55% of employees had high deductible plans, today that figure is 85%.
Consumers Caught in the Middle
Today consumers are caught in the middle of a profit war between insurance companies and providers. One of the areas where prices are rising the fastest are drug prices. To save money insurance companies are mandating “step” prescriptions on some policies, insisting that patients try generic alternatives before stepping up to brand name drugs. Insurance companies are also, in some cases, requiring employees to get clearance for certain drugs before taking the prescriptions to get filled.
Just when consumers get a break on rising health insurance premiums, employers step in to boost profits by pushing more of the cost onto employees. If it sometimes feels like you can’t get a break, there are good reasons behind that feeling.