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Small Businesses Look At Health Care Costs

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Rising Healthcare Costs & High-Deductible Insurance Coverage Increasingly Lead Consumers to Negotiate Medical Costs
Rising Healthcare Costs & High-Deductible Insurance Coverage Increasingly Lead Consumers to Negotiate Medical Costs
Autumn. That wonderful time of year for colorful trees, an abatement of unbearably hot weather and the return of children to their schools. For small business owners, the season also means a return to the anxious wait to see if their health insurance rates for employees will go up. And if so, by how much?

Their 2017 premiums could see just minor adjustments upward, or could jump by double-digit figures and for many of the companies that operate on a small margin, it could be the breaking point. Finding workers to man positions in the small companies often depends on being able to provide health insurance.

Prescription Drug Costs

Factors that enter into the health care issue include in which state the business is located and how much its carrier paid in claims in the previous year. But pin the greatest cause of rising health care costs on increasing prescription prices. It’s an issue that has risen to the level of national concern among lawmakers.

Companies with 50 or more employees are required by law to provide employee health insurance. Many smaller businesses do it because they think it is the right thing to do and because it’s a perk that draws better qualified employees.

Health Care Managers

When carriers up their charges, the small business operators sometimes have to decide if they must scale back coverage or find other alternatives. Many companies hire a manager to deal with health care issues. The managers prefer companies that have self-funded plans. Such plans sidestep the 6.5 percent federal tax on premiums.

12% Rise In Cost

Self-funding has inbred risks, but with the costs of commercial coverage rising at the rate of some 12 percent per year, it is an option more employers are considering. Unexpected fluctuations keep the pot boiling. An unexpected drop of 11 percent in premiums had a small businessman in Las Vegas scratching his head, since nothing in his figures had drastically changed. He didn’t ask questions, but took the windfall and added vision coverage to the plan for his employees. Other business owners have simply had to dig deeper to provide the coverage for their workers.

Health Care Spending Per Person Hits New High

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Rising healthcare costs are a big concern.
Rising healthcare costs are a big concern.

Health Care Problem For New President

Whoever wins the current presidential election will inherit a scary health care reality when he/she takes office. For the first time in history, health care spending in America has topped, on average, $10K per person. That means the new president will be stuck with an unprecedented problem in how to provide the health care that was initiated during the Obama years.

Increase In Total Cost

The bean counters in the Department of Health and Human Services announced the new high last month and predicted that the total cost will increase by 5.8 percent annually from 2015 to 2025. That’s less than the increases from 2007-09, just before the Great Recession, but faster than in the post-recession years, when health care spending kept pace with modest economic growth.

Average Per Person

The per-person average of $10,345 is part of the $3.35 trillion total in health care expenditures expected this year. The annual increase for 2016 is expected to be lower than the forecasts for the rest of the decade.

Attributing Factors

DHHS experts attribute the rise to a stronger economy, faster growth in medical prices and an aging population. The Medicare and Medicaid programs that provide for the elderly and needy are both expected to see new demands as the baby-boomers shift into these categories. By 2025, the experts say, government spending at all levels will account for nearly half of all health care expenditures, an estimated 47 percent.

Obamacare

If Obama’s health care reforms survive attacks from the Republicans, the experts project that more than 90 percent of Americans will have some form of medical insurance.

Republican and Democratic Plans

The figures are causing major angst for both major political parties. Republican nominee Donald Trump has declared he will do away with Obama’s plan while preserving Medicare and seeing that Americans are not “dying in the streets.” Democratic choice Hillary Clinton promises to expand government health care benefits.

Prescription Drug Costs

Both candidates say they will tackle the high costs of prescription drugs and the resultant drain on health care dollars. But the extension of benefits to millions of Americans through Obama’s plan will inevitably add to the overall total unless changes are made.

Out-Of-Pocket

The DHHS report, published in the journal Health Affairs, also predicts that Americans will pay more out-of-pocket for care as the number of people covered by high-deductible plans continues to grow.