In June, 2012, the United States Supreme Court announced their decision that the Affordable Healthcare Act, nicknamed “ObamaCare,” was, in fact constitutional. It should come as no surprise that roughly half the people waiting for the decision were overjoyed by that verdict, while the other half were extremely displeased. What everyone had in common, however, was the concern that the implementation of the Act would actually make health insurance more expensive for middle-class Americans.
Here’s the reality: with or without the 2012 healthcare reform legislation, the cost of healthcare is rising, and has been rising for decades. A study released in May, 2012 says that for the first time ever, the average annual cost of insurance will top $20,000. The exact number is $20, 728, and it’s $1,335 more a year than the average cost was last year.
That’s a scary number, but it’s important to remember that most of that money does not come from out-of-pocket expenses. Instead, the average family of four on a “preferred provider organization” insurance plan (that’s when you work with a network of doctors and hospitals, but they’re not technically a coordinated HMO) will pay $5,114 in premiums (via payroll deduction for most people), and $3,470 in co-payments for doctor visits, drug prescriptions, and other out-of-pocket costs (like the patient portions of some lab tests). The rest of that $20, 728 ($12,144) is what is generally picked up by employers as part of company health plans.
What’s causing the higher cost of health care insurance? Most experts pin it on the cost of providing care at all. Is “ObamaCare” the culprit? Not really. The same report, which was issued by a company called Milliman, which consults with corporations about their benefit plans, says that the health care reform act passed in 2010 has had only a “limited effect” on the cost of health care, and also points out that, “The rate of increase is not as high as in the past but total dollar increase was still a record.”
The Milliman report also says that the amount of the increase, “…overshadows any relief consumers might derive from the slowing percentage increase.”
So, what was the increase exactly? Milliman’s numbers say that the cost of family health care grew by 6.9 percent from last year to this year, which is slower than the growth in previous years, but not slow enough to allow families to compensate for the higher cost.
In addition, Milliman says that the two biggest components of a modern family’s health care expenses will be physician services (which is increasing to an annual cost of $6,647) and hospital stays (rising to $6,531).
Finally, Milliman’s report reminds us that these projected numbers are also averages. Cities like New York and Miami are likely to have higher costs – about 20% over the national average – while Atlanta, Phoenix, and Seattle are likely to be the only major cities where the average is below the $20,000 threshold.
The bottom line? President Obama’s health care legislation doesn’t go into full effect until 2014, but so far the effect has been a slower rate of cost increases, though health care costs are still rising.