8 Reasons Why Health Insurance Rates are Rising and What You Can Do About It

by | Jan 19, 2022 | Commercial Insurance, Health Insurance

In 2022, most employers in the U.S. can expect the cost of their group health plan premiums to increase by about 5 percent.

Are you worried about this price increase, possibly confused about what has caused it or how you’ll be able to afford it?

Listed below are 8 reasons why health insurance rates are going to go up in the new year.

You’ll also find some tips on how you can combat these issues and find affordable employee insurance options for your team.

1. New and Serious Illnesses

In 2020, one of the worst new illnesses arrived on the scene, and it seems to have only gotten worse over the last couple of years.

New illnesses like COVID-19 (as well as its many variants) are having a serious impact on all aspects of people’s lives, and the healthcare field is no exception.

The way healthcare facilities run has changed quite a bit since 2020, as a result, clinics have had to level up their efforts to control the spread of this deadly virus.

Don’t forget about the added expenses associated with research and testing, too.

Over the last two years, physicians, and scientists from all over the globe have been working tirelessly to research COVID-19, develop vaccines, and create effective solutions for slowing its spread.

All that research hasn’t come cheap, and lots of facilities have had to increase prices to help make up for their added expenses.

This will result in higher insurance rates for subscribers throughout the country.

2. Misunderstandings and Misuses

Health insurance is complicated. Between PPOs and deductibles, not to mention copays and coinsurance, those who oversee selecting company insurance plans often don’t understand all the ins and outs — and their employees typically don’t know what’s going on, either.

The results of one study showed that only 9 percent of respondents could accurately define 4 common health insurance terms: “Health plan deductible,” “health plan premium,” “co-insurance,” and “out-of-pocket maximum.”

When so many people don’t understand how their health insurance plan works and what options are available to them, the result can be a lot of unintentional misuses.

For example, some employees may choose expensive options like unnecessary emergency room visits, which lead to premium increases for everyone.

3. Specialty Drug Prices Rising

High prescription drug prices have been the norm for quite some time. In fact, the latest data shows that prescription drug prices have increased by 2.9 percent on average, which is more than double the general rate of inflation.

Specialty drugs, which are more expensive to manufacture than regular medications, are no exception to this rule. Even though they’re prescribed to only 1.5 to 2 percent of insurance plan enrollees, they still account for approximately 50 percent of most employers’ prescription drug expenses.

The Affordable Care Act introduced out-of-pocket spending maximums, which is great in a lot of ways for subscribers.

However, there still needs to be a sustainable way to offset the cost of specialty drugs, and raising premium prices seems to be the most effective option for most insurance providers.

4. Technological Advances

Technological advances are incredible for the healthcare world and patients across the globe. Today, conditions that were once considered untreatable, such as diabetes or AIDS, now have long-term maintenance solutions thanks to ongoing healthcare research.

These advances are great for you and your employees in a lot of ways.

They cost money, though, and raising insurance premiums is one way that healthcare providers can make up for the extra money they had to spend to develop them.

5. Fewer Healthcare Workers

The last 2 years have been very hard on members of the healthcare industry. From surgeons to nursing assistants, all healthcare workers are overworked, stressed, and in some cases, underpaid.

This severe burnout has resulted in many healthcare workers resigning from their positions altogether, and the “Great Resignation” isn’t showing signs of slowing down.

By the year 2025, experts estimate that there will be a shortage of over 400,000 home health aides and more than 29,400 nurse practitioners.

The shortage of healthcare workers has naturally resulted in higher costs for hospitals and healthcare facilities as they struggle to keep current employees happy and care for patients.

This, in turn, is contributing to higher insurance premiums for you and your employees.

6. Aging Population

A significant portion of the United States population (the Baby Boomers) is aging. In fact, by the year 2030, approximately 19 percent of the entire population will be older than 65.

As this large chunk of the population ages, their healthcare needs will surely increase. Many will require additional prescription medications, surgeries, and stays in long-term health facilities.

With the number of elderly patients going up, so will the demand for healthcare, the cost of treatment, and the cost of insurance.

7. Unhealthy Choices

Unhealthy lifestyle choices are significant contributors to rising healthcare costs. After all, almost 70 percent of healthcare spending is dedicated to treating lifestyle-related conditions, including high blood pressure, obesity, and lung disease.

Americans are more sedentary than they’ve ever been (the average adult spends more time sitting during the day than they do sleeping).

A lack of physical activity combined with unhealthy dietary choices and insufficient time spent outside have led to an increase in the prevalence of chronic illnesses (diabetes, obesity, etc.), along with increased medical needs and higher health insurance costs.

8. Higher Administrative Costs

Finally, rising administrative costs are also contributing to rising health insurance rates. When you consider how difficult medical billing is in this country, it starts to make sense why healthcare is so costly.

Currently, 7 people are responsible for handling billing for every 10 physicians in the United States, and 30 percent of the country’s healthcare costs come from administrative-related expenses.

The world of health insurance isn’t showing any signs of becoming less complicated, meaning administrative costs will likely continue to rise in 2022 and beyond. This will contribute to higher insurance premiums to make up for the added expenses.


How to Combat Rising Insurance Rates


Clearly, a lot of factors are causing group insurance rates to rise. However, there are also a lot of things you can do as a business owner to combat these increased prices without sacrificing the quality of your employees’ benefits packages.

The following are 5 of the most effective practices you can implement today:


1. Consult an Insurance Expert


The more you know about your health insurance options, the easier it is to find affordable plans that still provide your employees with adequate coverage.

Consult with a health insurance expert who can explain all of these different plans and customizations. They’ll work with you to choose one that gives your team everything they need without spending more than is necessary.


2. Provide Clear Explanations


Make sure your chosen health insurance expert explains all elements of your health care plan to you. Then, take that information and share it with your employees.

When you provide them with clear explanations of your plan type, what it does and doesn’t cover, etc., they’re less likely to misunderstand and misuse their coverage.


3. Encourage Employees to Use Generic Drugs


If you haven’t already, encourage your employees to use generic drugs whenever possible. Generic drugs are safe and cost-effective, and they lead to healthcare savings for everyone. This can help to offset the rising costs of specialty drugs and health insurance premiums in general.


4. Invest in Corporate Wellness


Remember, one of the biggest factors influencing rising health insurance costs is an increase in lifestyle-related illnesses.

By promoting a culture of wellness at your company, you can improve your employees’ overall health and help them lower their healthcare-related expenses. They’ll see the doctor less and require fewer prescription drugs and fewer emergency interventions.

Prioritizing corporate wellness helps to keep insurance premiums low and improves your employees’ quality of life. Everyone wins.


5. Offer Telehealth Options


Finally, look for plans that include telehealth options. The ability to see a physician from anywhere, including one’s own home, helps people to get treatment and preventative care more easily and consistently.

Telehealth is also more affordable than in-person healthcare visits, which produces extra savings for your employees and offsets the rising cost of insurance.


Shop for Employee Insurance Plans Today

Health insurance rates are rising, and unlikely to stop anytime soon. There’s no getting around it.

As a business owner, you might be feeling a little nervous about the added expenses associated with your employee benefits. After all, employees often make their decision to leave or stick with an employer based on the kinds of health insurance coverage they offer.

If you’re worried about how you’re going to offer great benefits without spending a fortune, Commercial Benefit Services is here to help you find a viable and cost-effective solution.

Our team has more than 30 years of experience in the world of group health insurance, and we can’t wait to talk to you about your business’s needs. Contact us today to schedule a free consultation and learn more about what we can do for you.