As many companies will soon begin offering open enrollment for 2024 health care plans, the cost for both businesses and workers are quickly rising.
According to annual data released by KFF, the average family's health care premium cost $23,968 in 2023, marking a 7% increase over last year. In the last decade, health care costs generally rise between 3% to 5% annually.
Since 2018, health care premiums have gone up 22%, KFF said.
The average worker now contributes $6,575 annually to their family's health care plan, which is up nearly $1,000 from 2018. But during that same time, the cost for employers has gone up over $3,000 per family plan.
According to Paul Fronstin, health benefits research director with the Employee Benefit Research Institute, the trend of health care consolidation has played a major role in rising costs. Fronstin also noted some companies are catching up after COVID-19.
"There's been some consolidation among hospitals, and hospitals have been buying up doctor practices," he said. "So there's less competition among providers, giving them a little bit of more leverage than they've had in the past, and at the same time, many, many contracts between providers and health plans are multiyear contracts. So prices are locked in for a number of years and as those contracts come up for renewal, there's some catch-up being played when it comes to the cost of health care, especially related to the pandemic related to inflation."
Fronstin noted that as plans get more expensive, employers are sharing those costs with employees.
"Employers haven't been shifting the cost onto employees by asking them to pay higher premiums," he said. "But we have seen things like deductibles go up, copayments go up and a little bit of evidence that coinsurance is making a return. And I think what's going on there is employers are asking the users of health care to pay more to help cover the cost."
Fronstin says with health care consolidation continuing, costs are expected to rise, perhaps even above 7% next year. He offered advice for those choosing between low-deductible and high-deductible plans.
"You need to think about your personal situation and whether or not that high deductible makes sense," he said. "For a lot of people, it will, but for some people, it won't. You need to consider whether or not your employer is putting money into an account for you. If you have a high deductible, you might have a health reimbursement arrangement or a health savings account. That's a factor especially because the savings from the high deductible, the premium savings, can go toward covering that deductible as well as any contributions from your employer."
Justin Boggs
