The health care cost spiral is slowing- finally. Prior to 2008, the increase averaged at least 8% a year- for two decades! Over the past 5 years (up to 2014), total healthcare costs have growing by less than 3% annually. That trend is up for grabs through, as the last year’s(2015) increase seems to 5.5%- but the current year’s increase will be a little less at 4.8%. Except, these numbers still don’t tell the whole story….
The amount you and I pay- if we have private insurance (that means our copays and our deductibles) have been growing almost 6.5% a year. Most of us don’t really have high or expensive copays- it’s that co-insurance and that deductible that does us in. Back when Obama became President, we were shelling out $ 738 a year for these costs; now we drop more than $ 1K a year. That is a real problem.
Yet, the overall out-of-pocket health care spending only rose 1.3% last year- to $ 329.8 billion, which is the fifth lowest increase ever. Why would that be true?
First, because employers have been shifting the cost burden to their employees. Or, the fact that Obamacare insurance programs have slightly higher deductibles (but much lower overall rates) than existed before Obamacare. And, second, because as I reported, most American’s don’t have enough money to cover an emergency $ 400 expense- like the health care deductible bill that came in the mail today.
Moreover, this cost shifting to consumers (which increases our personal costs) seems to be by design. The insurance companies and our employers want us to spend more of our money, so we have ‘skin in the game’, so that we are more careful of the overall total bill. But, the data indicates something different- that we cut back on health care itself when these costs are so high. Moreover, consumers have NO clue what an individual treatment, operation, procedure actually costs. Until they get the bill afterwards.
Another problem- one to which I fell victim this past year- was not paying attention to what the insurance companies have done. I was succumbing to bronchitis- approaching the advent of pneumonia- and knew that a simple prescription would probably solve my problem. But, instead of visiting my primary care physician, I thought I would save the system money by going to an urgent care facility.
The fact is I did save the insurer money. Because they have decided that urgent care facility charges are totally part of my deductible- which limit I had not yet exceeded. So, instead of paying my physician $ 10 or $ 20 and being done with the problem- I dropped around $ 100. Oops.
Interstingly, even as the health care cost spiral is becoming a slow walk, the insurance companies are conniving to increase rates by 20% for CY2017. It’s pretty clear that this potential rise is not needed to cover the 3% rise in costs; maybe it’s to raise the pay for their executives?
Now, the proposed increases are not automatic; they are subject to the various states’ approvals. Some of those states are rubber stampers, but more and more of the states’ overseers are wondering why these rates could be justified. And, PPACA (the formal abbreviated name for Obamacare) stipulates that excess rates must be refunded to the insured.
Which brings up some other rainbows on the horizon. We’ve already seen that one of the big insurers in the DC area has been found to have way too much in reserves (funds it keeps for a rainy day, like if a plague hits)- and must refund some of the paid premiums to its consumers. It also won’t be getting the increases it seeks for next year’s rates.
And, for those at the lower economic strata, it’s not clear how much of a subsidy there will be, should premium rate increase. That doesn’t really help those at the higher income levels, though.
Tomorrow, we’ll talk about some other problems on the PPACA horizon.