Biden’s claim of wrangling down health costs to run into biggest premium spike in nearly a decade
Despite President Biden’s claim that he is controlling costs, health insurance premiums are expected to sharply increase in 2024.
Healthcare industry analysts have stated that the rise is primarily caused by a surge in medical claims and hospitals seeking substantial payments from insurers. These hospitals have endured significant expenses for labor and supplies.
According to WTW, formerly known as Willis Towers Watson, the rising costs of expensive specialty drugs and the growing popularity of weight-loss medications like Ozempic are causing an increase in rates. These rate increases are projected to be around 6% to 7% for plans provided by employers.
Alan Silver, senior director and financial, analytics and actuarial intellectual capital leader at WTW, stated that there is a general agreement that expenses in 2024 will surpass those of the past ten years.
The rise poses a risk for Mr. Biden as he seeks reelection based on his claims of successfully curbing inflation and taking on the pharmaceutical industry by designating 10 drugs for price negotiation through Medicare.
“The policies of President Biden are contradicting his words,” stated Cathy McMorris Rodgers, the Chairwoman of the House Energy and Commerce Committee, a Republican from Washington, in an interview with The Washington Times.
Overall inflation is easing but multiyear deals prevented hospitals and other health care providers from nudging insurers for higher payments until now. That means employer plans are seeing rate hikes even while price shocks for other goods start to cool down.
Mr. Silver stated that there are various factors that are causing the increase, with one of the main ones being the influence of inflation on the agreements between insurance companies and healthcare providers, facilities, and systems.
Rates are rising alongside greater use of medical services. Many people put off procedures or doctor’s visits during the pandemic when public health officials urged Americans to stay home. Now, medical claims have returned to typical levels, putting cost pressures on insurers.
Aon, a consultancy specializing in health benefits, predicts that the average expenses for U.S. employers covering their employees’ healthcare will rise by 8.5% to exceed $15,000 per worker in 2024.
The estimate assumes that employers do not shift the cost burden on employees or implement other types of cost-saving strategies. With those changes, Aon expects a 6.5% to 7.5% increase in average health care cost increases for employers in 2024, though it is still above the 4.5% increase seen in 2023 following plan changes to save money.
Many employers will be reluctant to shuffle new costs onto their workers, which may obscure the pain for everyday workers. Employers typically subsidize around 80% of the plan cost, while employees pay the remainder.
Debbie Ashford, the North America chief actuary for Health Solutions at Aon, anticipates that the trend of employers bearing the brunt of health care cost increases will persist in the coming year. In a competitive job market, plan sponsors are reluctant to burden plan participants with substantial costs and reduce the affordability of benefits.
Federal subsidies, meanwhile, will act as a cushion against higher rates in the Obamacare marketplace. Consumers who use the program can find health plans on the federal HealthCare.gov website or state-managed portals.
KFF analysts, previously known as Kaiser Family Foundation, anticipate that 320 insurers in the Obamacare marketplace across 50 states and the District of Columbia will propose a median premium increase of 6%.
A deeper analysis based on 58 insurers found that growth in health care prices was a key factor driving costs in 2024.
Congress eliminated COVID-19 related safeguards that ensured individuals remained enrolled in government-funded Medicaid. As a result, certain individuals may lose their coverage and potentially seek alternative options in the individual insurance market, consequently affecting premium rates.
KFF stated that insurers are considering factors such as inflation and adjustments in pandemic-related expenses. However, the impact on premiums from the unwinding of Medicaid continuous coverage is minimal, if any.
Approximately 18.2 million individuals purchase health insurance independently in the individual market, marking the highest level since 2016. Nearly 16 million of these individuals obtain their insurance via an Obamacare portal, while approximately 14.3 million receive federal subsidies to assist with their coverage expenses.
Republicans are frustrated by Democrats’ decision to increase the generosity of subsidies in recent years, as they believe it is an inefficient policy to use taxpayer money to address the escalating health costs.
“I cannot reword”
In a written statement, the Centers for Medicare and Medicaid Services expressed that the Biden-Harris Administration prioritizes enhancing health insurance availability and reducing healthcare expenses for American families. They continue to show their dedication to making healthcare accessible and affordable for everyone.
“I cannot reword”
Policymakers in Washington have the ability to enhance accessibility to health savings accounts and other tax-exempt methods of financing healthcare within the employer-based market.
However, the primary burden will rest on employers, as they have to make the decision of either transferring costs to their employees by increasing payroll deductions or implementing larger deductibles. Deductibles refer to the sum that an individual has to pay for services prior to the commencement of coverage by the health plan.
“I cannot reword”
Employees may also modify their benefits framework, leading to plans that necessitate employees to go through various obstacles in order to receive healthcare.
Lindsay Bealor Greenleaf, the solution leader for the federal and state policy group at ADVI, a health care and life sciences consultancy, explained that health plans will introduce additional obstacles for patients to receive services, medications, and medical devices. These obstacles may include not covering specific items or implementing new requirements such as prior authorization requests. In the case of prior authorization, physicians would need to complete multiple forms and spend significant time on the phone with insurance companies in order to obtain approval for a particular treatment or service.
Ms. Amin advised employees to carefully examine the coverage provided by each health plan available to them when choosing during the open enrollment period this autumn.
“It is generally advisable,” she stated, “to research and determine your healthcare requirements as well as the associated out-of-pocket expenses for various plans.”