Inflation within the United States has spiked a whopping 7.9% in the past year . This includes everything from housing costs, gas, food and health insurance. Many people would not think to consider the cost of health insurance rising as an added result of inflation, but it is an all-too-real fact and one that we are now facing as a country. The current inflation spike is the “sharpest [we’ve seen] since 1982,” and there is currently no end in sight meaning prices could and likely will continue to grow from here .
Why Does Inflation Affect Healthcare Costs?
Inflation increases the cost of health insurance as a side effect of increasing the cost health care facilities need to spend on things such as medical “supplies, utilities, and employee costs” . With this, health insurance coverage and even prescription drug costs are on the rise to help cover the inflation of healthcare facility expenses. This is further prevalent for those who are under plans such as Medicare or Medicaid, both of which are funded by the U.S. government.
In addition to the inflation we are seeing now in the late spring of 2022, we are also still dealing with residual inflation from the pandemic of 2020. When something such as a pandemic occurs that is directly tied to increased need for doctors, physicians, hospital and hospital staff and supplies – health insurance costs will go up as a result. While the vaccine and booster shots are readily available, we are still seeing people get infected with COVID-19 and need medical attention because of it. Add to it inflation form other world events now in 2022 and health insurance premiums are sky-high for employers and self-employed people alike.
Inflation and Insurance Premiums
As the cost of health care goes up, so do insurance premiums. It works like this: health insurance companies set a general cost for different levels of their premiums before the start of each new year. As an enrolled person, let’s say specifically an employee for sake of this example, you will pay “below the plan deductible out of pocket, and often are charged with co-payments after reaching [a] deductible…making [you] susceptible to inflation’s bite” .
As an example, individual PPO coverage in the end of the fiscal year for 2021 averaged “$6,516…up from $6,052 in 2020” . Unfortunately, healthcare costs within the U.S. have been on the rise for a long time and it is projected to continue in that direction. The U.S. “The United States spent more than $3.8 trillion on healthcare in 2019 and exceeded $4.1 trillion in 2020, according to a study by the Peterson and Kaiser organizations” . Other factors for the rising cost of health insurance are due to our expanding population, increase in chronic illness and increased life expectancy. Couple this together with inflation and it explains the massive spike in health insurance costs.
Even proposed solutions such as the Affordable Care Act (ACA) have significantly increased in price due to inflation. ACA costs for a family plan rose about “37% from 2015 to 2020” and continue to rise now . Due to the increase, many people are opting for high-deductible plans, which conversely only continues to contribute to the rising cost of healthcare insurance as a whole. Government put forward something known as the No Surprises Act, which took effect Jan 1 of 2022 which helps protect people against surprise medical bills. In addition, the act proposes more transparency between medical costs and services when it comes to billing patients. This is in an effort to allow people to know where their money is going to and be able to compare health insurance plans more effectively. More can be read about the No Surprises Act here.
How to Obtain Reasonable Healthcare
It can be a double-edged sword to be stressed about the cost of healthcare and still need it. That’s where our company comes in. We know how important it is to have the coverage needed for both you and your family to be at ease and know you will be taken care of in times of unforeseen illness and injuries. We’re here to help you find the best possible coverage at the most reasonable price for you and your family. One report states that overall, “premiums are increasing” nationwide in 2022 .
Small business employee benefits don’t have to come at an extreme cost. Your company can offer health and retirement benefits that will be a vital part of your total compensation package when onboarding. If your small to mid-sized business currently uses a plan that has gone up in cost and you’re looking to make a change, we can assist with finding the more appropriate plan for you. Healthcare coverage can change during any open enrollment period, where you can give employees advanced notice about change in coverage and what their new options are so no one will have to go with a gap in their coverage or voluntary benefits.
Whether you need benefits for your small business, mid-sized business retirement plans or the like, we’re here to help you find the coverage that best suits your insurance and liability needs. From compliance to employee benefit options and paperwork, Enterprise Benefits has a team of experts ready to help your small to mid-sized business choose proper healthcare and retirement plans. Need guidance on executive benefits? We can help you there, too. Finding the right plan to offer your employees in a time when the market is volatile can be stressful, but it doesn’t have to be.
Reach out to us to get started on your consultation today.