Why your health insurance premiums could explode in 2023
Health insurance premiums for American workers are poised for a big jump in 2023 after largely plateauing this year.
For families who get health insurance through their employer, annual premium outlays averaged $6,106 this year, up about 2% from $5,969. in 2021, according to a new study by the Kaiser Family Foundation (KFF). For singles, out-of-pocket spending on premiums rose from $1,299 in 2021 to $1,327 this year, another increase of about 2%.
Disbursements represent only a fraction of the overall cost of premiums. Employers usually cover the majority and workers take the rest. The total cost of premiums – including the two actions – rose just 1% last year to an average of $22,463, according to the KFF survey, which surveyed nearly 2,200 public employers and private non-federal.
In total, these increases are historically small and seem minimal compared to the overall inflation rate for the 12 months ending in September, which was 8.2%. Unfortunately, workers can expect much larger health insurance price increases to come.
“This could be the calm before the storm,” KFF Chairman and CEO Drew Altman said in a press release from the study, “as recent inflation suggests bigger increases are imminent. “.
Health insurance costs and inflation
This year’s modest bonus increases are unusual because they tracked both headline inflation and employee wage gains, KFF says. In pre-pandemic years, the annual increase in health insurance premiums generally exceeded these factors by wide margins. In 2019, for example, family bonuses jumped 5% while wages rose 3.5% and annual inflation was 1.6%.
Why has 2022 reversed this trend? “Costs for employers for this year were largely set last year, before inflation became a major economic concern and after the COVID-19 pandemic caused a temporary slowdown in the use of health services. health,” the report said.
However, once the 2023 insurance contracts are established, these price increases should start to be felt, according to KFF. Premium hikes could affect the nearly 160 million Americans who depend on workplace health coverage. KFF did not estimate the exact size of the premium hikes, but an above-average increase could be on the horizon.
“As inflation continues to grow at relatively high levels, we could potentially see a higher increase in average premiums for 2023 than we have seen in recent years,” the report said.
Small business workers pay more for health insurance
KFF’s findings also show that workers in small businesses – those with less than 200 employees – pay significantly more for their health insurance.
“The report reveals persistent disparities in the burden of health care costs on workers in small and large employers,” KFF says.
On average, workers in small businesses pay significantly more out of pocket for their bonuses. For family coverage, small business workers pay about $7,600 per year, while large business workers pay about $5,600, a difference of about $2,000. Small business workers also tend to have health plans with disproportionately higher deductibles, which means they have to pay more upfront and out of pocket before certain benefits kick in.
Similarly, the premiums of workers in small firms are increasing much faster than those of workers in large firms. The KFF report shows that since 2017, average family premiums have increased by 26% for small companies compared to 17% for large companies.
If premiums increase in the coming year, KFF’s findings suggest that all workers are likely to pay more for their health insurance. But workers in small businesses, who are already paying more, are likely to bear a particularly heavy burden.
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