A recent article in the Wall Street Journal (WSJ), “Americans Don’t Feel the Slowdown in Health Costs,”i indicates that most families feel that the expense of health care is increasing. Although costs for health care are increasing somewhat, “national spending on health care and insurance premiums has risen at historically low rates in recent years.” Yet, the perception of families is different. The chart below shows how Americans perceive costs of health care.
For many families, it feels like premiums, deductibles, and prescription costs are rising more than they really are. This is because in the last 15 years, inflation has risen 43% and “wages have been relatively flat.” So although medications are only 10% of overall health costs, families are reminded of a co-pay whenever they get a refill. Deductibles and other cost sharing, even if only rising slightly, are perceived as higher than they really are due to other factors.
Another WSJ follow-up article, “Why Low Growth in Health Costs Still Stings,”ii looked at why this is the case. “The gap is widening between growth in wages and what workers pay for health premiums and deductibles.” The chart below illustrates the discrepancy between stagnant wages and health care costs.
Kaiser Family Foundation
So in reality, although increases in premiums are at an all-time low, wages aren’t keeping up. Employers also don’t want to increase premiums – or spend more for health coverage themselves – so are left with choosing higher deductibles for their employees. As the economic landscape improves, wages will increase, and the gap between the cost of health coverage and salaries will lessen.
The Kaiser Family Foundation (KFF) also looked at the difference between misperceptions of the public and low growth of health care costs (e.g., an increase in premiums of only 4%). The conclusion was that this misperception is fueled by attacks on the Affordable Care Act that contain inaccurate information. The KFF added that the Affordable Care Act, in fact, has and will likely continue to address “the affordability concerns people have, chiefly by reducing future increases in Medicare payments and by providing coverage to a projected thirty million Americans, with tax credit subsidies for many of them, lowering their out-of-pocket expenses. Other provisions of the law dealing with costs appear to be working well, such as its review of outsized premium increases in the non-group market and requirement that insurance companies devote most of their premium dollars to patient services.iii
The Department of Health and Human Services also released “The Affordable Care Act is Working”iv (last updated 3/13/15.) Key findings include:
It should be reassuring to all families, but especially to those who have children with special needs, that increases in health care costs have been reduced in recent years.
Lauren Agoratus is the parent of a child with multiple disabilities who serves as the NJ Coordinator for Family Voices. She also serves as the southern coordinator in her state’s Family-to-Family Health Information Center.