Monday, April 20, 2015

Health Care Costs, Premiums, Deductibles, Subsidies and Wage Increases ... ObamaCare Won't Help

Health care costs aren't rising as quickly as they did for many years, but don't get your hopes up. While it may appear that costs are abating in the health care sector, they aren't --- at least not in inflation adjusted terms.

The fact is that health care costs are increasing at a much faster rate than other costs are rising, including wages. Thus, health care as a percentage of our economy continues to grow uninterrupted. Things aren't improving, regardless of what the politicians may say and want us to believe.

And besides that, ObamaCare and government created monopolies in the health care sector will cause prices to rise down the road by far more than we would experience in a healthy competitive environment for health care. See The ObamaCare Effect: Hospital Monopolies.

The slow growth non-inflationary government driven U.S. economy has resulted in low employment, underemployment and low wage increases compared to health care cost increases. The lack of inflation generally has caused health care costs in percentage terms not to rise as high as historically has been the case. In inflation adjusted dollars, however, it's a different story completely.

When we include the impact of health care premiums, co-pays and deductibles, the real cost of our health care system continues to outpace other costs by a wide margin.

Why Low Growth in Health Costs Still Stings has the story:

Kaiser Family Foundation

"In my last Think Tank piece, I {President and CEO of Kaiser Family Foundation} reported that just 3% of Americans felt health costs had been rising more slowly than usual, even though they have been growing at record low rates in recent years. The chart above shows why that might be the case: The gap is widening between growth in wages and what workers pay for health premiums and deductibles. The gap between deductibles and wages is especially yawning, reflecting the steady growth in deductibles seen in recent years. Since 2006 wages have grown 23% while deductibles for single coverage have risen 108%.

The rate of increase in health spending and premiums in recent years is about as low as I have ever seen it. But for most people the pain from health-care costs is more intense, because the divide between out-of-pocket health costs and individuals’ wage growth has widened. Deductibles in particular could be the emerging issue in health policy.

An improving economy with, one hopes, more robust wage growth would help ease the sting of out-of-pocket health costs. But all signs suggest that out-of-pocket health costs will continue to rise faster than worker earnings. No employer I know wants to increase deductibles, if only because raising cost-sharing is so unpopular with employees. But employers have limited options to forestall premium increases, and they know that unless they do so their health premiums will continue to rise and it will be more difficult to raise wages and hire more workers. Ultimately, employers need better ways to control health-care costs."

Summing Up

The next time you hear that health care cost increases are abating, remember that they are in fact increasing at a faster pace than salaries are being raised.

And remember too that premiums, deductibles and co-pays are being increased because health care costs continue to be out-of-control.

The lack of general inflation, due to declining energy costs and a lousy economy, has made health care cost increases not as high as they used to be, but that's no reason to cheer.

What We the People really need is a faster growing private sector economy, but that doesn't appear to be anywhere on the political agenda in Washington. 

That's my take.

Thanks. Bob.

No comments:

Post a Comment