NPR's insightful series, Cost of Living: The Price We Pay, delves into the factors driving the persistent increases in prices and explores how individuals are adapting in a post-pandemic economy marked by stubborn inflation. One area of significant concern is health care. How have rising health care costs transformed your lifestyle? NPR invites you to share your experiences through their feedback form.
In the realm of health care, the United States stands out as the most expensive nation among developed countries, a situation that has only worsened in recent years. According to the health policy nonprofit KFF, the average annual premium for an employer-based health insurance plan covering a family of four exceeded $25,500 last year. This staggering figure reflects a substantial contribution from employers, averaging about $19,200, while employees contributed around $6,300. Notably, total premiums have surged over 24% since 2019, with projections indicating further increases in the coming year.
The rise in health care costs can be attributed to several interconnected factors. For-profit entities, including drug manufacturers, pharmacy benefit managers, hospitals, and insurance companies, have collectively escalated the expenses associated with accessing medical care in the U.S. Although drugmakers are introducing more effective medications, such as GLP-1 weight loss drugs and advanced cancer treatments, they are also commanding high prices for these innovations. Additionally, as more individuals return to medical facilities after pandemic-related restrictions, demand—and consequently, prices—has intensified. Mergers and consolidations among insurance companies and other profit-driven entities within the health care sector have further compounded these issues, often giving the remaining firms the leverage to increase service prices.
Despite these challenges, some innovative solutions are emerging for U.S. workers. Approximately 154 million people in the United States rely on employer-sponsored health insurance, and many may face paycheck deductions rising by 6% to 7% on average next year. While employers typically have limited control over health care costs, they do influence how much of these expenses are passed on to employees. Notably, some companies, both large and small, have chosen to absorb the entire cost of health insurance premiums for their employees.
For instance, the Boston Consulting Group (BCG) invests in its workforce by covering all insurance premiums for its approximately 10,000 U.S. employees and their families. This means that employees do not see any deductions from their paychecks for premiums. Alicia Pittman, BCG's chief people officer, emphasizes the importance of investing in the health of employees, stating, "Healthy employees make for a productive workforce." This approach not only aids in recruitment but also helps retain talent, ensuring that employees remain focused on their work rather than worrying about health-related expenses.
While it is uncommon, some smaller employers and nonprofit organizations are also stepping up to offer zero-premium health insurance options. According to benefits consultant Mercer, around 12% of large employers provide at least one medical plan with free upfront coverage for individual employees, although only 2% extend this benefit to dependents. Notably, some small businesses and startups are following suit. Oliver Kharraz, CEO of Zocdoc, a company that facilitates online doctor appointments, asserts that providing health care is essential. He acknowledges that while Zocdoc does not cover all costs associated with health insurance, it does strive to make it manageable for employees by contributing to health savings accounts.
Ryan Close, founder and CEO of Chicago-based startup Bartesian, has prioritized health care benefits since the company's inception. After moving from Canada, he encountered the harsh realities of U.S. health care costs when his family needed medication. Bartesian now covers all medical, dental, and vision premiums for its 30 employees and their families, along with an annual contribution of $1,000 to their flexible spending accounts. Close recognizes the trade-offs involved, including rising costs as the company grows, but believes that offering zero-premium health care enhances the company's ability to attract and retain talented individuals.
In summary, as the costs of health care continue to rise, both large organizations and smaller startups are exploring innovative solutions to provide affordable options for their employees. With the health care landscape evolving, the commitment to investing in employee well-being could prove beneficial for companies striving to maintain a competitive edge in today’s market.
