Get ready for a surge in your health insurance premiums
As if Americans didn’t have enough to worry about on the inflation front – gas prices still higher than early 2021 coupled with escalating food and energy bills on top of that – the price spikes have spread to other areas of the economy. According to a recent article, health insurance premiums could skyrocket for 2023 in many states.
Analysis by the Kaiser Family Foundation says insurers in 13 states have proposed average rate increases of 10%. While state insurance regulators may scale back the size of some rate increases before they’re finalized, the numbers still hold some shock value, as insurers in New York are demanding rate increases of up to 46%.
The premium increases reflect and exacerbate existing inflation problems. Medical providers continue to face labor shortages when it comes to filling medical practices and hospitals. Higher labor costs, coupled with rising prices for energy and other medical supplies, are causing hospitals and medical associations to want to charge insurers more for their services. Of course, insurers pass these higher costs on to American families in the form of premium increases.
Actions in Congress have exacerbated this trend by encouraging insurers to hike rates. Lawmakers recently extended expanded stock market subsidies for another three years, which were originally included in the $1.9 trillion “stimulus” measure passed by Democrats last spring. These expanded subsidies lower what people buying insurance on exchanges pay out-of-pocket for coverage and eliminate a previous income-based cap on subsidy eligibility.
That might sound like good news to some families, but it’s really just a godsend for insurers. With federal subsidies protecting most families from the effects of higher premiums, insurance companies have every incentive to raise rates — so they can siphon every dollar out of Washington. In the meantime, taxpayers will subsidize health insurance for families who make hundreds of thousands of dollars a year and can afford to fund their own insurance.
While people who buy individual coverage through the exchanges will see the federal government paying their higher premiums for them, small businesses won’t get similar luck. You will bear the brunt of these premium increases and face agonizing choices along the way. Small companies that lack the clout of larger companies must decide whether to pass bonus increases on to employees — at a time when companies across the country are finding it difficult to hire and retain employees — or to charge higher rates into their already existing ones involve narrow profit margins.
In some cases, premium increases could be so unaffordable for small businesses that they decide to drop insurance altogether. The Journal cites an analysis by Moody’s Investors Service that says some companies may be doing just that. Small wonder, then, that the Congressional Budget Office (CBO) recently concluded that a permanent expansion of enhanced exchange subsidies, as Congressional Democrats want, would result in “a reduction in employment-based coverage offerings that are changing would result from the improvement [Exchange] subsidies.”
All in all, CBO believes that extending the improved subsidies permanently would reduce the number of people covered by employer insurance by 2.3 million Americans. Not only would this increase the size and reach of government by moving people from privately funded to publicly funded reporting. By isolating more people from the effects of higher premiums, it would exacerbate the current inflationary spiral the economy is in.
Democrats dubbed the law they passed in August, which included the improved insurance subsidies and other spending measures, the Anti-Inflation Act. They were almost right, but off by a single word. As the Journal’s story shows, the legislation will not lower prices, but rather accelerate them. Just call it the law of inflation.
• Mary Vought is the founder of Vought Strategies and a visiting fellow at the Independent Women’s Forum (iwf.org).