Health Insurance Costs Expected To See Highest Increase In Over A Decade

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Will Kessler Contributor
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Employer health insurance costs are expected to increase significantly in 2024, affecting both workers and businesses as hospital operating costs rise, according to data reported by The Wall Street Journal.

Next year, the costs for health insurance coverage from employers are expected to increase by around 6.5%, which could be the biggest increase in more than a decade, according to survey data acquired by the WSJ. Driving the increase in health insurance costs are inflated labor costs for hospitals and a large demand for expensive new diabetes and obesity drugs, which are being passed down to insurance companies in new contracts with the hospitals. (RELATED: ‘It Is A Risky Proposition’: Homeowners Are Skipping Out On Insurance As Premiums Skyrocket)

“Inflation we saw a year ago is finally making its way into the contracts,” Tim Stawicki, the chief healthcare actuary at Willis Towers Watson, told the WSJ. “It’s like a delayed reaction.”

Individuals who do not receive insurance from their employer but rather through the Affordable Care Act will see their premium costs rise by about 6% next year, which is comparable to the increase this year, according to the WSJ.

Workers are likely to pay more out of pocket as employers shift some of the cost of inflation down to employees, according to the WSJ. Despite the shift, a tight labor market may push employers to shoulder a bigger share as hiring and retaining workers remain competitive.

Unemployment ticked up in August but remained relatively low at 3.8%, up from 3.5% in July. The U.S. added 187,000 nonfarm payroll jobs in a sign of a slowing job market.

In August, the Biden administration released a list of ten drugs that Medicare will negotiate prices with drug manufacturers over in an effort to reduce costs. The negotiations are set to begin later in 2023 but will not go into effect until 2026, with companies being threatened with up to a 95% tax if they do not cooperate.

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