Brace Yourself: Health Insurance Premiums Are Going Up in 2023!
Just when we thought we were getting a break, 2023 is sneaking up with a wallet-thumping surprise—you guessed it—higher health insurance premiums. In 2022, premium costs for U.S. workers were as stable as a table with three legs, but hang on to your hats (and your wallets), because we’re in for a bumpy ride this coming year.
Last year, families shelling out for health coverage through their employers dished out about $6,106 in annual premiums, which only ticked up a modest 2% from $5,969 in 2021. Individuals weren’t exempt from the uptick either; they saw their yearly premium expenses nudge up by around 2%, from a quaint $1,299 to a slightly less quaint $1,327. This gem of data courtesy of the Kaiser Family Foundation (KFF) suggests we’ve been on a gentle slope. But don’t let that fool you!
Although these out-of-pocket expenses are just a snippet of the overall premium costs (the lion’s share is usually picked up by employers), we all still feel the pinch. Last year, the combined wallet dent for premiums reflected a slight 1% rise, reaching an average of $22,463, revealed by KFF in a survey spinning almost 2,200 non-federal public and private entities into its web.
Despite these baby steps in increases, especially when pitched against the hefty 8.2% inflation rate recorded by last September, word on the street (and by street, I mean the KFF President and CEO, Drew Altman) is that this calm is just the quiet before the storm. “The current stability might be short-lived,” he cautioned, signaling that we might need to buckle up for heftier hikes aligned with recent inflation trends.
How Inflation Is Sneaking Up on Health Insurance Costs
This year’s premium hikes have been about as low as my cat’s tolerance for the vacuum cleaner, trailing behind both the overall rate of inflation and wage increases. Cast your mind back to 2019, if you will, when health insurance premiums took a 5% leap while wages only saw a 3.5% uptick and inflation lollygagged at 1.6%.
The stunted growth in 2022 can largely be blamed on employers setting costs in the year before, blissfully unaware of the post-pandemic inflation surge and a pandemic-induced dip in health service usage. However, as we stare down the barrel of 2023, with new insurance contracts on the horizon, an expected price surge could leave approximately 160 million Americans, who rely on employer-provided health coverage, feeling the sting. While KFF hasn’t put a number on these expected rises, they’re hinting it’s going to be more than just a pinch.
Smaller Companies, Bigger Bills
Digging a bit deeper, KFF’s crystal ball reveals that it’s not all sunshine and rainbows for everyone. Employees at smaller companies, particularly those with under 200 peeps, are coughing up considerably more dough for their health insurance premiums.
Here’s a fun fact: “On average, small business workers fork over about $7,600 annually for family coverage compared to about $5,600 for their counterparts at larger companies—a difference that amounts to roughly $2,000,” reports KFF. And as if that wasn’t enough, the folks at smaller firms are also grappling with higher deductible plans, translating to more out-of-pocket expenses before insurance benefits even kick in.
With premiums for employees at smaller firms having jumped 26% since 2017 (versus a 17% rise at larger firms), 2023 looks set to tighten the screws even more on those already facing higher costs.
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