The march upwards of health insurance costs

I did a quick exercise on my health insurance costs and assumed that I would be keeping the same policy over the next fifteen years until I make it to Medicare age. I looked over the increases over the past several years and they average 20% (just a hair over, but for the sake of clean math, let’s say 20%) over the previous year.

If we start at annual premiums at $5,760 and calculate that out at 20% increase over the previous year, we end up in 2026 at $88,744. Please, double check my math. I think that is way too high.

My increases in costs year over year per year are:
2011-2012: $1,152
2012-2013: $1,382
2013-2014: $1,659
2014-2015: $1,991
2015-2016: $2,389
2016-2017: $2,867
2017-2018: $3,440
2018-2019: $4,128
2019-2020: $4,953
2020-2021: $5,944
2021-2022: $7,133
2022-2023: $8,559
2023-2024: $10,271
2024-2025: $12,326
2025-2026: $14,791

In reality, I’m not going to pay $88K in health insurance premiums. I am going to search for another provider, maybe get a lower introductory rate the first year, then increase the deductible next year and squeeze that out for about 3-4 years before switching to another provider. But as there are only a few providers worth a damn in Ohio, I will either have to move or buy something that may or may not cover me. But I will pay substantially more and get far, far less than I am today.

In 2011 alone, I have spent more than $6,000 out of pocket in medical costs that Blue Cross Blue Shield of Ohio did not cover. I don’t know why; they just didn’t. So the true cost of me having insurance is the cost of premiums PLUS the out of pocket, but for the sake of simplicity, let’s stick to just premiums.

And I look at these increases which is real money I will pay to an insurance company for a guarantee that they may or may not authorize a medical procedure that they may or may not deem medically necessary. And after 2014, while they can’t kick me off the plan for a pre-existing condition I incurred last year, they can then increase my rates so that I can no longer afford the plan. In effect, they will kick me off the plan.

I think to myself: If my TAXES were to increase this much per year and I was guaranteed medical care coverage when I needed it, would this not be a better deal? We fight against a small tax increase to cover everyone in favor of paying a private insurance company obscene premiums for something that carries no promise of delivery.

Does anyone else do these calculations? Or do we just write the check, bury our heads and believe the common mythology of private insurance is better than a “Medicare for All” solution?

Somebody please, check my math. This is kinda nutty.

7 Replies to “The march upwards of health insurance costs”

  1. Unsustainable, unconscionable and immoral. Any industry that makes money from denying medical care is doomed. Unfortunately, they’ll sink the lot of us right along with them. There are two ways out of this. Either set strict price controls on providers or do away with health insurance all together and let the market decide the price of health.

  2. Health costs are being determined by the profit expectation shareholders are expecting from health insurance companies. Period. Remove the profit expectation, you slash a ton of cost.

    It amazes me that people will continue to pay the increases in premiums year after year, but if offered a choice to pay the same amount in TAXES, all hell breaks loose. Why? Even if we only assess a small percentage to cover health care for everyone. They would happily see their household go bankrupt before increasing the federal deficit? That is like remodeling a rental unit. Who does that?

    And even in a “Medicare for All” plan, where is it written that I have to pay as much as my beer-drinkin’, 2-pack-a-day-smokin’, steak-eatin’ redneck neighbor who goes huntin’ in the Fall and fishin’ every weekend not wearing a life vest? Let’s not means test Medicare; let’s price it to lifestyle choices. If you choose to engage in unhealthy behavior, that’s your business — as long as you can pay for it. We already have ADA exemption laws in place for those whose BMI is above average for medical reasons.

    And require a physical once a year. Skip that and your Medicare rates go up 20% for the following year. If we think preventative care reduces costs, let’s cost to that. All sorts of ways we can structure this so that it has nothing to do with income. Ultimately, we need to remove the monetary value we place on human lives by determining who gets medical care and who doesn’t.

    And that is probably another blog post, not a comment 🙂

  3. okay, let me have it! Lol

    Isn’t at least one of the reasons we have such amazing medicine because it’s profitable? Doesn’t profitability lead to innovation?

    I’m cool with the ideah that the level of profitability is obscene. I’m also afraid of the idea of the government deciding how profitable any given industry should be.

    If the government takes it over and eliminates the expectation of profit then the pay rates will suffer as well.

    I work in community mental health. I’m surrounded by masters level professionals who are program directors and make less than 45k a year. Private industry pays twice that.

    So, you get to spend 60k to get your masters to make a 45k salary if you work for the government.


  4. Profit leads to innovation as long as the sustainable revenue is there. For the health care industry, it isn’t. In the mid ’60s, the insurance companies could not attract old people at a premium rate they could turn a profit at, so they jettisoned them to the government who called it Medicare. In 2009, they could not sell their product to adults 18-26, so they jettisoned that population group to the government under the Affordable Care Act. Their market is now 26-65 and will be shrinking even further as the rates increase beyond the reach of folks 50-65 …see my blog post above.. the last option after I have exhausted reasonably-priced plans is to quit buying health insurance and take my chances with Medicaid or dumb luck… I’m not alone.

    The MARKET for health insurance is unsustainable. Any time you have a product whose profitability hinges on taking in money for services and then NOT providing the services is flawed from the start. In the early days, no problem; a lot of cash hides a lot of sins. But as time goes on and you have to eventually make good, it’s just a matter of time before you run out of reserves and can’t convince smart people to pay for something they see you deny other paying customers.

    The evidence is mounting that doctors want to practice medicine, not run a business. More and more doctors are taking salaried jobs with hospitals at a substantial pay cut than they could make in private practice. But they also don’t have to deal with the hassle of getting paid, regulation, malpractice costs, staffing, etc. I believe doctors want to practice medicine and the profit motive is moot for much of this group. I learned a long, long time ago that salary increases don’t motivate, but not enough salary demotivates. Find that balance for doctors, you find the sweet spot for good medicine. Exceptional performance is almost never an issue of money.

    I also believe medical school and training should be free, but that is an argument for another day. And if the US Gov is paying 45K and FINDING people to work at 45K instead of jumping ship to 60K, then we have found the market value of the position.

    How much control do we really think we have with private market health care? Have you spoken with your health insurance company lately? Did you get them to change their mind on anything? Did you get them to admit you weren’t getting what you paid for? How is that different from calling a government office?

    You are not the doctor’s customer anyway; the INSURANCE company is the customer. YOU are the product. I’ll be blogging that soon.

  5. As with any insurance……, car, etc. ~ insurance companies are charging more to protect their future profits and we’re the ones paying!

    In Jersey, I knew someone who was “hit” by a semi-tractor-trailer! Not their fault! Okay, the other guy’s insurance picked up the tab for the repairs, but the person hit, got hit by their insurance company ’cause they were in accident ………. their fault or not!

    Some States can’t even get companies to come into their States to do business for home insurance. The State’s Government is now in the business of Home Insurance! Yep! That Company requests high premiums, and because it’s State run……….they raise and raise and raise!

  6. I can only go by what I’ve experienced here.

    As the government moves into any industry they drive everything down. Quality, pay and work environment. People take government jobs mostly because of the security factor. If the government decides to take over an industry there isn’t anything anyone can do. No amount of money will stop them. They don’t operate within a budget. They advance, at any cost. They don’t dump ideas once they have failed (hello library). As they do this they create an environment where certain professionals have no choice but to take the jobs available at whatever price is given to them.

    There is no better example of this than the social services industry. It’s been almost completely taken over by the government and there isn’t enough funding to pay a quality wage. Your argument on the 45k vs 60k in this situation doesn’t hold water as anyone who wants to do social services has little choice than to go with a state or federal position.

    The next step is to choose a different profession. One that pays reasonable. Why would you want to take a job that works you 60hrs a week with more clients than you can handle for a less than national average wage? (okay, wage per household but single income homes are rising)

    This is exactly what the government will do with the medical side of healthcare. You will only be able to work as a physician for the government. They will give healthcare contracts to the lowest bidder and DRs will work for considerably less than they do now. I live this exact scenario every week, being in community mental health. This industry is almost completely run by non-profit companies who have to operate on a budget dictated to them by the state. They have a specific catchment area so the care they give is not rewarded or punished as people in a certain region HAVE to use our facility if they want the help.

    Okay, my brain hurts!

  7. Social services is a government function because our culture does not value humans who have developmental or mental handicaps. They are seen as throw-aways who only need warehousing until they die. If there was a way to profit from them, you can bet there would be a private industry to do it. But there isn’t. At least none that our culture is willing to pay for.

    So that is the tail wagging the dog. We don’t have poor government services because they are government, but because the government only does in America what private industry is unwilling to do. It’s why we have Medicare or the Affordable Care Act covering kids under 26; THERE IS NO PRIVATE MARKET FOR THESE GROUPS. We can’t afford young people to die from preventable causes and we can’t let granny just die in the streets. The opportunity costs for the first group and the disposal costs for the second far outweigh the costs to get them medical care.

    Bottom line, it is our CULTURE VALUES that drives crappy government services, not the other way around. We pay for what we really want. Private industry puts government out of business, but will only do what there is a profit for. (UPS, FedEx, ISPs, all putting the USPS out of business… )

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