In Rough Economic Times, Premiums Continue to Rise
A recent study has shown that, since 2000, health insurance premiums for employer-based policies have risen ten times faster than incomes. The average premium has risen by 30 percent while the average income has risen by only 3 percent. The implications of this are quite obvious. The average family is finding it harder and harder to afford insurance coverage and it is eating up a larger portion of their income year over year.
This study should be taken seriously given the state of the U.S. economy. Usually when the economy experiences slow or no growth, wage growth can slow to levels lower than the figures presented in the study. To make matters worse, many economists believe the U.S. economy is headed for, or is in the midst of, a recession. Although it is hard to determine when the economy is in recession, even a stagnant economy will affect the ability of the average household to afford their employer-based premiums. For those without insurance from their company, the situation is even more dire.
The Plight of Employers
Employers who offer coverage for their employees shoulder an average of 76 percent of the cost of premiums. This means that as premiums rise, and companies are doing poorly, employers will be less inclined or able to offer coverage to new hires. 30,000 fewer companies offered medical benefits to their employees in 2005 when compared to 2000. This trend is expected to continue. This will likely have the effect of pushing the number of uninsured Americans even higher and will put further strain on the overall American healthcare system. The American system has largely functioned because of the sheer number of individuals buying into the system. Statistically, the vast majority of Americans at any given time are healthy. This is what allowed providers to remain profitable for so long. However, with more and more people uninsured, finding deals for individuals looking for coverage will become an increasingly difficult task because less people can afford to buy into the system.