Health Insurance Costs: Not Going Down Yet

One of the challenges with health care reform was that it was sold as a way to reduce the cost of health care in this country. Given this, consumers are expecting their health care costs to drop in the next few years. Unfortunately, since the major cost containment provisions of the act will not take place until 2014 and then on a pilot basis, it will be awhile before we see the cost curve "bent".

Some of the provisions that are now available, like tax credits for small (25 or less employees) employers are now available, However, a recent Commonwealth Fund study estimated that although more than 16 million workers are employees of businesses that will be eligible for the tax credit, only 3.4 million work for business that will take advantage of the credit to stabilize or expand coverage. This is a significant number of people, but it represents only about 2 percent of the current U.S. civilian labor force.

There are other provisions of reform that should help to lower the cost of insurance. The reinsurance program to assist employers with retiree health costs may indirectly lower costs to employees, and the high-risk pools may marginally reduce the cost shift from uncompensated care. Over the long-term, the cost-controlling provisions linked to reform of the medical delivery system should provide enormous benefits to employers and employees and taxpayers.

Although the absolute costs to employers and employees will rise, so will the value that they get for this spending due to provisions such as eliminating caps on lifetime benefits. Often overlooked in conversations about the cost of health insurance is the quality of coverage. Though the average cost of health insurance is predicted to rise in response to new regulations and people’s electing to choose more comprehensive coverage, the cost for comparable health insurance will fall. This is a subtle distinction and, as such, has been the subject of much unsubtle political debate.