Health-Insurance Costs to Rise 6.5% or More Next Year
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Here's your money briefing for Friday, September 8th. I'm J.R. Whelan for The Wall Street Journal. Health insurance costs are among the biggest expenses for many American families. Come next year, they're going to have to dig a little deeper to pay their monthly premiums, which are expected to rise 6.5% or more.
It's a sort of delayed reaction to the inflation that we've been seeing all over the economy for a few years now. Hospitals and other health care providers have seen their own costs going up over the last few years, particularly for nurses and other staffing.
We'll talk to Wall Street Journal reporter Ana Wildey Matthews after the break.
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Health insurance costs are expected to rise 6.5% or more next year, the largest increase in years. Wall Street Journal reporter Anna Wildey-Matthews is here to discuss. So Anna, why is such a large increase happening now? And what's causing these rates to rise so much?
Well, partly it's a sort of delayed reaction to the inflation that we've been seeing all over the economy for a few years now. Hospitals and other health care providers have seen their own costs going up over the last few years, particularly for nurses and other staffing, and they want to pass that along to health insurers in the form of higher rates paid to the hospitals. But their contracts with health insurers typically run over a few years, often three. So they had to wait until those contracts came up for renegotiation to come in and say, hey, we need a big increase to cover our increased costs. So it's a little bit of a domino effect that moved a little more slowly in this portion of the economy, but now really is kicking in.
Another big driver is the cost of drugs, which is something I think all consumers, all listeners are aware of at this point. emergence of new specialty medications that can be very efficacious but often come with a really high price tag. And one particularly important category there is the diabetes and weight loss drugs known as GLP-1s. So that's Wigovi and Ozempic and Munjaro, which have shown to be very effective but are also in high demand and are not cheap.
How about people that didn't go to the doctor or go for checkups during the pandemic, and now they're back in the habit of doing that? Is that contributing to this as well?
There's a bit of that, but honestly, what I heard from experts is that the bigger drivers here are more the rising prices for healthcare, the inflationary pressures, and it's not driven so much by utilization, as they call it, although there is some of that, some rebound and Maybe, unfortunately, some people discovering things that they didn't discover a few years ago when they were supposed to get that mammogram or colonoscopy.
So who's going to be affected by these price increases?
So we're primarily talking about employers, employer-provided insurance, private insurance. We're not talking about government programs like Medicare and Medicaid. So that affects employers, and it also affects their workers, who often pay a portion of the premium or the premium equivalent out of their paychecks and also, of course, often face out-of-pocket charges such as deductibles.
And for companies, the amount they ask employees to contribute to their health insurance coverage is in many cases a significant piece of their benefits package.
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