Is Healthcare The Next Bubble?

The cost of healthcare, like higher education, has continued to escalate year after year, outpacing wage growth and overall inflation rate.


Share this on your site or within a blog post: (Copy Paste This Code)

The cost of healthcare, like higher education, has continued to escalate year after year, outpacing wage growth and overall inflation rate

  • The Reality Is Your Healthcare Premiums Are Going Up—But How Much?
    • In 2017 monthly insurance premiums are projected to rise by an average of 25% for plans obtained through Obamacare or exchanges
      • That’s over 3X the 7.5% increase from 2015 to 2016!
    • Some states will see sharper increases than others
  • States with serious increases share similar traits
    • Less expansion in Medicaid
    • Low number of active insurers
    • Larger rural populations which cost more to cover
  • Where Are Premium Hikes Coming From?
  • Enrollment is lower than initially predicted
    • Even with the draw of goverment assistance, not as many healthy people are signing up for plans as projected
  • Insurers report patients are sicker than estimated
    • Policies have largely been taken out by older/less healthy people who are more expensive to insure
  • “Guess factor” led to mispriced plans
    • Insurers underestimated the costs of medical care to new customer pool so higher rates will cover reconfigured costs
  • Decreased competition as major insurers pull out of exchanges
    • UnitedHealth is exiting exchanges in 31 of 34 states
      • $650 million anticipated loss 2016
    • Aetna is pulling out of 11 of 15 states where it currently offers ACA coverage
      • $430 million loss from ACA policies since 2014
    • Dwindling pool of insurers
      • 1 in 5 consumers on average will have a single insurer to choose plans from from

Though 85% of exchange consumers receive government assistance/subsidies, that’s not the case for everyone

  • Will Some Americans Be Hit Harder Than Others on Healthcare Premium Increases?
    • Individuals and Small Businesses
    • 10 million people shop through Obamacare exchanges and will be able to find a plan for

In 2016, total healthcare subsidies for people <65 will total more than $600 billion, but Obamacare’s coverage provisions alone will result in a net cost to the federal government of $110 billion

  • But 4 million people are ineligible for subsidies and will have difficulty finding affordable coverage
    • 7 million buy coverage directly from insurers
    • 5 million use exchanges/state equivalents but earn too much to qualify for assistance
      • g., Single, 30
  • $311.17
  • Large employer-based plans
    • 2017 monthly premium cost
  • Tax penalties are set to the max if you choose no coverage
    • $695 per adult
    • $2,085 per family
    • or 2.5% of adjusted gross income

Do you know what’s happening to your healthcare premiums?


Related Topics Articles