Rising Health Insurance Costs Amidst Decreasing Inflation

The growing cost of health insurance reflects the inflationary trend in the cost of other necessities such as food and housing. A family plan via an employer now costs an average of $23,968, a 7% increase from the previous year. We have never seen a growth rate as rapid as this one in the last decade. These numbers are from KFF, a prominent non-profit health policy organization’s annual employer health benefits survey. The premium increase was 2% each year.  

My personal insurance premium has risen by 7% to $8,435 per year. Employers provide health insurance to more than 150 million Americans. Consumers should expect much higher premiums when employers begin enrolling employees in health insurance plans for 2024. According to the study, one-quarter of employers are considering boosting employee contributions to offset these costs. If inflation continues to outstrip wage growth, payroll deductions may increase.

According to Matthew Rae, assistant director of KFF’s healthcare marketplace initiative, rates have increased to reflect the era of high inflation. The bright lining is that these current increases in insurance premiums are reasonable in comparison to the double-digit percentage hikes that were frequent around the turn of the decade.

Employee health insurance costs are surprisingly responsive to company size. Companies with fewer than 200 employees tend to compensate their employees more. In 2012, the typical family health insurance plan for such firm employees cost $8,334 per year. Workers at comparable firms earn $2,504 less each year on average.  

The amount that insurance plans pay for various medical procedures is the primary cause of the high cost of health insurance. This covers hospital expenditures, doctor bills, prescription drug prices, and other services. The cost of treating a significant number of employees for major illnesses like cancer, which afflict only a tiny fraction of the workforce, might bankrupt small businesses. 

Anson Industries is located in the Chicago suburbs and is one of the few firms that has not raised health insurance premiums for its employees in response to escalating health-care costs. Because of their tenacity, it is critical in the fight for talent to provide reasonable health insurance rates if you want to recruit and retain top personnel. 

The question of why health insurance premiums are rising when total prices are down becomes increasingly relevant. Health insurance costs are estimated in advance. Insurance premiums may be modified annually to account for any unexpected expenditures, such as those spent by higher-than-expected medical claims or labor costs. Although overall inflation has been lower this year, the cost of medical coverage has risen.  

A poll conducted by Mercer, a health benefits consultant, predicted a 5.4% increase in health insurance premiums in 2024. This is a significant reversal after 10 years of consistent yearly growth of 3 to 4%. Factors such as the rising cost of healthcare and drugs are propelling this phenomenon. The growing cost of health insurance makes it more important than ever for consumers to shop around and choose coverage that suits both their financial and medical needs.