Health Care Premiums Could Reach $23,341 By 2020
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Health Care Premiums Could Reach $23,342 by 2020
By: Jon Walker Friday December 3, 2010 5:45 am
The cost crisis in our health care system simply can’t be overstated. The rapid growth in cost is the driving force behind our projected long-term public debt and the growth in private health insurance premiums threaten to cripple private industry. The Commonwealth Fund is out with a new study showing just how quickly the situation is worsening.
National surveys have found that family premiums for employer-sponsored health coverages increased 52 percent from 2003 to 2009, while median family income rose 13 percent. Such a rapid increase in the cost of employer-sponsored health benefits has forced difficult choices at workplaces across the country. Studies indicate that slower growth in wages and lower savings for retirement (worker and employer contributions) have been part of the trade-off to preserve health benefits. Despite such trade-offs, the monthly cost of premiums paid by workers and their families is up, consuming an ever-greater share of any wage increases they might receive.
Health care premiums have grown roughly four times faster than income. This simply isn’t sustainable without crushing government and private budgets. And if the problem is not truly dealt with, that is what will happen:
As of 2009, the average premium was $13,027 a year for family coverage for private sector employers, ranging from $11,000 to over $14,000 across states. If insurance premiums for employer-sponsored health plans in each state continued to grow at the same average annual rate seen from 2003 to 2009, the average premium for family coverage would rise to $23,342 by 2020—an increase of 79 percent.
The study looked at what would happen if the new health care reform law reduced the annual projected premium growth rate by one percentage point or 1.5 percentage points. In the former, average premiums would reach only $21,019 in 2020, and in the later they would reach only $19,938.
Even with optimistic projections, the new health care law would still see premiums growing faster than income, and we’d still have by far the most costly health care on earth. This means, even assuming health care reform works well, which I highly doubt, the ever-growing cost of our health care premiums will force it to remain a critical political issue for years. It has not be fully dealt with.MORE
