Report indicates sharply rising premiums, family plans, and employer plans
Fulfilling the prognostications of opponents of President Obama’s health care law, the cost of employer-based family health care plans has risen by 9 percent over the past year, according to a study by the Kaiser Family Foundation.
Kaiser’s report determines that the average cost of an annual premium for employer-based coverage is now $15,073. This amount is double the average premium in 2001 of $7,061. To make matters worse, while premium costs have risen by 9 percent over the last year, wages have only increased by 2 percent.
The implications for this steep increase are uncertain but alarming. As Kaiser CEO Drew Altman states in the New York Times, “The open question is whether that’s a one-time spike or the start of a period of higher increases.” Regardless, the timing of this increase could hardly be worse, as the economy is fighting stagnancy and high levels of unemployment. The Times also notes that many employers are avoiding hiring new employees because of the high costs of coverage.
While most of ObamaCare’s provisions are not activated until 2014, many are attributing this rise in cost to anticipation on the part of insurers and employers, creating market uncertainty similar to stocks dipping in apprehension of regulations. This uncertainty is crippling in a period which needs price stability urgently.
The argument that expenses will even out once the provisions take effect and the market stabilizes is a tenuous one. As long as expenses clearly outpace wage growth and employers are hesitant to hire, recovery will be suppressed. Moreover, escalating health care costs over the last decade have erased concurrent middle class growth wage growth. The specter of even more pronounced rising costs, as evidenced by Kaiser’s study, may not only keep the economy stagnant, but exacerbate the already fragile situation.
While the new health care law’s provisions have not yet fully taken effect, it is nonetheless already making a hugely detrimental impact on the economy. Increased regulations are leading insurers to raise costs, and in turn, employers are not hiring new workers, keeping American unemployment at historic levels.