This year my family joined millions of others whose health-insurance premium has become their biggest annual expense. More than our mortgage. More than our property taxes. More than our state income tax. More than our annual food or energy costs. With this year’s $194-a-month premium increase, I could roughly buy a Chevy Sonic or Ford Fiesta. Since 1999 our premiums are up 350%. Bad as this is, the story gets worse.
Each year our family is subject to paying health-insurance premiums and, if we see a doctor, deductibles and copays. Think of this total exposure as “health-care cost risk”—the sum of certain payments (premiums) plus the potential payments you could incur (copays and deductibles). Since early 1999 my family’s health-care cost risk has increased 1,190%. Over the same period, the Dow Jones Industrial Average is up about 80%, the consumer-price index is up 42%, gold is up 200%, median new home prices are up 74%, and the average cost per gigabyte of hard drive is down 99% to under three cents from $22.
Here’s the math behind my whopping increase. In 1999, having gone into business for myself, I needed health insurance for my then-young family. To enroll, I met a Blue Cross Blue Shield agent at Starbucks. (Quaint, huh?) We insured our family of four for $274 a month with a $250-per-person deductible.
Our annual health-care cost risk was $274 x 12, plus $1,000 in deductibles for a total of $4,288. My individual risk (that is, my personal share, excluding my dependents) was $1,072. By 2009, those figures had jumped to $10,716 in annual premiums for our family of four, plus $2,000 in deductibles—a threefold increase in health-care cost risk.
Since ObamaCare became law, the increase has been more than fourfold. The kids are “OTP”—off the payroll; just my wife and me now. In December 2014, I shopped on the Internet (not so quaint) for new health insurance. I bought a Bronze plan for two people that cost $1,037 a month and had a $12,600 family deductible ($6,300 each). We were blessed last year; we didn’t have perfect health but never filed a claim.
So I was shocked when my 2016 renewal notice showed a 19% monthly premium increase to $1,231—with a higher deductible. All comparable Bronze plans were within dollars of each other, so I grudgingly renewed. My individual health-care cost risk for 2016? It is $1,231 x 12, plus $12,900 in deductibles, for a grand total of $27,672. My individual share is half—$13,836. Nearly 13 times more than the $1,072 of 1999.
I accept that inflation accounts for some of this increase. And, being older, I present a higher actuarial risk. But 13 times more? The increase reflects an enormous shift of economic risk from the insurer to . . . me. One might think that this would lower my premium, not raise it. Alas, no. Risk assessment has gone kablooey.
I never thought I’d look forward to Medicare. If I were eligible today, my premium would be $122 a month, about one-tenth of my current premium. I have 21 months to go.
Many in the workforce have been shielded by their employers from the full effects of these changes. Small businesses, the self-employed, pre-Medicare retirees, part-timers and the unemployed have no shield. Who can be surprised if they go uninsured? If you can’t afford $14,000 in premiums, why pay them when all it buys is the exposure to another $14,000 (in deductibles) you don’t have?
I know the idea is that, over time, higher premiums and deductibles will lead to lower health-care prices, more competitors and better value. But “over time” reeks of the economists’ adage “in the long run”—when we’re all dead and, notably, have no health-care costs.
Meanwhile, how can we claim to have the world’s best health-care system when a healthy family’s insurance premiums are its largest household expense?
Mr. Press, a former president of Blanchard Valley Hospital in Ohio, is a health-care consultant and adjunct professor at Emory University’s Rollins School of Public Health.