Thanks to the Affordable Care Act, the uninsured rate in America has plummeted. Now that folks can be charged a penalty for not having insurance, only 8.6% don’t have healthcare coverage. While the hallmark of President Obama’s presidency has made health insurance available to more Americans, healthcare costs remain high and in many places, they’re on the rise.
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By the Numbers: The Average Cost of Health Insurance
The average cost of health insurance for a family of four in 2016 is $25,826, according to the Milliman Medical Index. This dollar amount reflects the annual cost of healthcare for a family covered by an employer-sponsored preferred provider plan. That’s the total cost of insurance, not just the cost of premiums.
Since 2015, the average cost of healthcare for a typical family of four has risen 4.68%. But in the 15 years that Milliman has created this annual index, this is the smallest yearly increase in average healthcare costs.
Of course, not everyone gets their health insurance through their employer. And in many cases, getting healthcare through the marketplace can be cheaper. A report from the Urban Institute found that on average, insurance premiums for folks covered by their employers’ plans cost $516 per month versus $464 for people who bought insurance through the marketplace but didn’t qualify for a government subsidy.
As you age, healthcare costs increase. Data from eHealth’s Health Insurance Price Index Report says that the average annual cost of premiums for people between the ages of 18 and 24 is $2,124 (for folks with individual coverage). For people between the ages of 55 and 64, premiums for individual plans cost $6,960 annually.
Healthcare costs also vary depending on the type of insurance plan you have. The average cost of monthly premiums for individual catastrophic and bronze plans are $153 and $315, respectively (according to eHealth’s index). For individual gold and platinum plans, monthly premiums cost $420 and $498, on average. Average annual deductibles for folks with individual plans and family plans are $4,358 and $7,983, respectively.
Rising Healthcare Premiums
Critics of the Affordable Care Act say that it makes health insurance unaffordable for many individuals and their families. They argue that rising healthcare premiums prove that the healthcare law is ineffective.
In 2017, premiums are expected to increase substantially for people in a number of places across the country. In the states on the federal marketplace exchange, they’re supposed to climb 25%, on average. The Department of Health and Human Services predicts that marketplace premiums in 2017 will cost $5,586 annually, on average.
In some states, people who need health insurance will have few options. That’s because some insurers are leaving the marketplace altogether. When there are fewer insurance companies in a particular area, there’s less competition and less of an incentive for insurers to keep healthcare costs low.
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But premium price increases will only affect people with individual insurance policies. Most Americans are covered by government-sponsored insurance plans like Medicaid or employer-sponsored plans. And many of the people who buy their own insurance through the marketplace can qualify for a tax break that’ll reduce what they pay out of pocket.
What’s more, the rising cost of premiums was somewhat unavoidable. Many insurance companies that offer plans through the health insurance marketplace didn’t charge as much as they could have when the Affordable Care Act initially went into effect.
The healthcare cost increases for 2017 line up with what the Congressional Budget Office expected back in 2009. But the federal government believes that some of the rate hikes are unjustified. In fact, the Obama administration recently put pressure on states, asking them to ensure that insurance companies couldn’t raise premiums arbitrarily. Under the Affordable Care Act, insurers are supposed to submit to rate reviews at the state level but not all states have been successful at regulating prices.
How to Keep Healthcare Costs Low
Premiums aren’t the only kind of healthcare expense that has become more expensive. Prescription drug prices have gone up as well. So what can Americans do to avoid spending so much money on medical costs?
If you’re not getting insurance through your job or a program like Medicare, comparing insurance plans within your state’s healthcare exchange is one of the best ways to find coverage that’s more affordable. Finding out whether you qualify for the premium tax credit is also a good idea since it’ll lower your monthly health insurance payment if you claim it throughout the year. If you claim the credit when you file your taxes, you can reduce the size of your income tax bill.
If you need prescription drugs, you can save money by buying generic brands instead of brand name products. If you can buy medications in bulk and have them mailed to you, that might reduce your healthcare costs as well. You could also try putting money in an account with tax benefits (like a health savings account) that you can tap into when you need money to pay medical bills.
Another option is to consider enrolling in a high-deductible insurance plan. Your premiums will be lower. But if you get sick or you’re seriously injured, you might have to cough up a lot of cash before your insurer pays for anything.
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Healthcare costs are increasing and it’s hard to say whether that’ll change in the future. With the recent election of Donald Trump and enough leaders to give Republicans control over Congress, the Affordable Care Act as we know it could either disappear or be completely revamped.
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