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Health reform not as predicted: How self-insured health plans can sustain coverage

May 15, 2023

Because of the recent surge in general inflation, Americans are now paying more for healthcare coverage and services than ever before. And, because wages haven’t kept up with inflation, many have become “financially fragile” – unprepared for regular expenses, let alone out-of-pocket medical costs. The economic slowdown, and looming potential recession, is also forcing employers to pare back on benefits before restoring to layoffs and terminations.

As healthcare inflation continues in 2023, medical providers are increasing their fees to maintain revenues. This financially affects most employers and plan participants who can expect to pay more for provider services and health coverage, as well as paying for the subsidy of other’s healthcare coverage through the Health Insurance Marketplace.

As all stakeholders, including patients, providers and payers, are looking towards “what’s next,” many are encountering volatile economic conditions, labor issues, and government health policies to sustain cost-effective health coverage, despite the mechanisms of Health Reform.

Ordinarily, the past is not a good predictor of the future. However, when it comes to employer-sponsored health coverage, the future, “what’s next”, looks like a repeat of the past, if not worse. Consider the following chart – it shows that costs have increased at a greater rate since 2010 – when Health Reform became law:

Data from the annual Kaiser survey shows that, during the twelve years after Health Reform worker contributions for single coverage have increased 3.3% per year while family coverage costs increased 3.6% per year. For comparison, employer-paid costs increased 4% per year, single and 4.4% per year, family.

This data shows that employers continue to shoulder more of the burden of health care inflation.

The average costs for U.S. employers that pay for their employees' healthcare now exceeds $13,800 per employee, according to professional services firm Aon. Aon and other benefit consulting firms project a future of ever-increasing rates for those covered under employer-sponsored plans.

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