Typical Healthcare Plans are Changing

For the past 18 months the global pandemic has been the dominant storyline for headlines across the world. Because of this many are rethinking how we approach healthcare as a society. It is not so difficult to make the deductions from this emerging trend. The global pandemic raised the expenditure for drugs in the US to $358.7 billion, surpassing every other country’s expenses. Because of this typical healthcare plans will change.

As a result of this, healthcare took center stage. With approved drugs released now and then, the increment of healthcare premium plans will notice a visible, expensive change.

This article will discuss why this is happening and what you can do about this change.

Healthcare Plan Changes for the Individual Market

Most of the changes in healthcare plans typically occur for the individual market. This means people who currently subscribe to individual or family health insurance plans are bound to feel the effects of this increase. Also, those who are compliant with the Affordable Care Act are not left out. People who enroll in Medicare, the Children’s Health Insurance Program (CHIP), or Medicaid are excluded from this.

The Centers for Medicare and Medicaid Services (CMS) has already noted that 8.2 million Americans have enrolled on the health plans available on the ACA federal exchange. That is roughly 2.5% of the total population of the United States. This can only mean that most Americans subscribe to healthcare plans from their employers or government programs such as the VA, CHIP, and so on.

Which begs the question: why are healthcare plans so expensive these days?

An Aged Population

Before the pandemic, the number of persons aged 65 and above clocked in at 16.5% of the total population. Studies show that the rate of elderly persons is expected to reach 22% in 2050. Expectedly, people over the age of 65 spend more on healthcare than any other age group.

Thus, as they get older and enroll in Medicare, the cost of the healthcare service is bound to increase over some time. Even speculations from the Congressional Budget Office projects that Medicare spending will double over the next three decades.

Increased Healthcare Services

Another reason why healthcare costs are increasing every day is due to the inflation in drug costs. The cost of healthcare services outweighs the expense of other commodities on the market.

Noticeably, the Consumer Price Index (CPI) for standard products and services has grown annually at a rate of 2.1%. Whereas, the CPI for healthcare services yearly rose at a rate of 3.5%. Factors play directly into the reasons for this.

  • Administrative waste in the insurance provider payment systems.
  • The monopoly of hospitals granting insurance providers the medium to increase their costs.
  • The introduction of new medical technology hastens medical procedures triggering expensive payments.

It would seem as the price of healthcare plans faces increases, we would have better health outcomes for recipients. But that is farther from the truth. According to a health system tracker, the US is far behind other countries regarding health stats, even though it spends more on healthcare.

So, what is the solution to the ever-increasing healthcare plans?

Reset High Deductibles After 6 Months

A new study from the University of Wisconsin suggests that reducing your deductibles to cater to a 6-month plan might save you on some premium costs (about 6-10%). Typically, most people subscribe to an annual deductible which is now expensive.

Since several Americans are invested in high deductible health plans (HDHPs), it is particularly problematic for Americans to notice this cost shift. It also poses a financial burden for people only offered high deductible plans.

According to the study, individuals with a high income preferred a yearly deductible, while those with lower financial stability opt for a reset after six months.

Resetting your high deductibles will smoothen your financial burdens, allowing you to shave off some funds you channel elsewhere.

So what can you do?

As an individual you should always be aware of the elements of healthcare plan. Make sure to thoroughly review your plan and if it is through an employer engage your Human Resources department with any questions. Due to the dramatic change to where we physically work benefits packages have significantly changed and you should be aware of everything your employer offers.

As an employer you also have options. There are benefits for both employers and employees when using a proactive health management plan. Simply reviewing the plans that you offer and the costs associated with you the business owner and the employee can also positively effect both parties.

You can always reach out to us with any questions or to find out how insightful methods to reducing your weekly and monthly expenses while boosting your profit.

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Marc Freedman

To help you achieve your company's financial growth goals, Marc serves as our Chief Cost Advisor, providing advice to client management teams. He is highly regarded as an expert in his field, and he frequently collaborates with and contributes to other spend consultants to develop and implement cutting-edge strategies for their respective clients.

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