Surge in Health Insurance Premiums: Not Everyone Will Be Affected
In the midst of inflation and the rising cost of living, the healthcare sector isn't exempted. In fact, it's quite the contrary. The United States boasts the priciest healthcare in the developed world, and it's only set to become more expensive.
The average yearly premium for workplace health insurance plans for a family of four was over $25,500 in the previous year. Out of that sum, employers shelled out approximately $19,200, leaving employees to foot the rest of the bill, around $6,300. The figures have surged more than 24% since 2019 and are expected to climb even higher in the upcoming year.
The Reason Behind the Price Hike
The culprits for the escalating prices are for-profit organizations like pharmaceutical companies, hospitals, and insurance companies, among others. They are collectively responsible for making medical care in the United States increasingly expensive.
The development of more advanced drugs, including those for weight loss and cancer treatments, is a contributing factor. But, their high price tags are a major concern. More people returning to their doctors after the pandemic has also inflated the demand, pushing prices up. Additionally, various for-profit entities in the healthcare system have merged or consolidated, often resulting in price hikes for their services.
A Surprising Solution for Some American Workers
Around 154 million people in the United States receive health insurance through their employers. Many of these individuals could see their paycheck deductions escalate next year, by about 6% to 7% on average.
Employers have limited control over these rising costs. However, they do have the power to decide how much of these costs to pass onto their employees. Some employers, both large and small, are opting to not charge their employees anything upfront for insurance premiums.
One company, for instance, covers all insurance premiums for its roughly 10,000 U.S. workers and their families. This means that these workers don't have any money taken out of their paychecks for premiums. The company’s chief people officer believes that healthy employees create a productive workforce and a desirable workplace. While the company doesn't specify the exact amount, it describes the full premium coverage as a "big investment."
Such an investment can yield significant returns for the employer. Offering zero-premium health insurance can help attract new employees and reduce turnover. It can also help employees concentrate on their jobs, rather than worry about the expenses and challenges of navigating the U.S. healthcare system.
Not Only Big Companies Offer Zero-Premium Healthcare
It's not common, but it's not unheard of for companies to offer zero-premium health insurance to their employees. Some nonprofits, small businesses, and startups also provide this type of coverage. These companies believe that healthcare is a non-negotiable factor for their employees.
Of course, getting healthcare in the United States involves many costs beyond just premiums. Many low-premium plans can have high deductibles, copays, or other forms of "cost sharing." Some companies don't cover every cost of the health insurance they offer to employees. They offer multiple plans, and employees who choose the zero-premium one have to pay a higher deductible, although the company does help with some of it.
A startup founder, who moved from Canada to Chicago, was determined to provide comprehensive healthcare to his employees. His startup covers all medical, dental, and vision premiums for its employees and their families. It also contributes $1,000 annually toward their flexible spending accounts.
There are, of course, trade-offs for doing so. As the company grows and healthcare prices surge, costs rise. On the employees’ side, the company doesn't offer some other mainstream employee benefits, including a formal parental leave policy.
Nevertheless, the founder believes that the startup's zero-premium healthcare has made it easier and cheaper to hire talented people and continue expanding.
He emphasizes that he values his team members and believes their ability to take care of their families is a priority. His rationale for continuing to pay more for his employees' healthcare stems from his Canadian upbringing, where healthcare is free.