Thursday, October 21, 2010

Health Care Reform?

Yesterday I was at a meeting with other small business owners. The discussion centered on elements of the Patient Protection and Affordable Care Act (Health Care Reform, Obamacare or whatever other name you might have for it). Some comments made during the discussion showed that several were speculating that some of the provisions of the new law would raise health insurance premiums.
Health insurance premiums are already unaffordable. They now average about $14,000 per year for family coverage. With annual increases of at least 10%, and some businesses have had 40% increases, the insurance premiums will nearly double in the next 5 years.

I know one small business that has had to raise deductible limits in order to maintain increases in the 20-30% range. As we age, and more of us contract chronic conditions (like heart disease and diabetes), steeper increases are inevitable. At 25%, the insurance premiums will double in 3 years. That means a single employee will have premiums close to $10,000. The employer may pick up $7,500 of it and that leaves $2,500/yr for the employee.

It gets worse for family coverage. The premiums could be over $25,000 per year. With the employer maybe picking up $15,000 of it, that leaves $10,000/yr for the employee. And...that's a high deductible plan.

In the spirit of my peers' speculations, I will predict that very few companies could afford and provide health insurance for their employees by 2014. Just in time for the mandate that everyone be covered, or we'll have to pay penalties. However, the penalties are peanuts compared to the projected costs.

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