Why are Health Care Costs Still Increasing?

13 Nov Why are Health Care Costs Still Increasing?

Is this a question that you ask your health insurance broker every year? As brokers ourselves, this is by far the most asked question by our clients in all of our quarterly meetings.  While each company is different and some of the underwriting rules differ depending on the number of employees they have, following are the main factors driving health care cost increases: 

  • With the passage of health care reform, all Americans are now required to have a health insurance plan or pay a penalty on their tax returns – will cause an increase in membership, which leads to an increase in costs
  • Also, carriers are now mandated to charge fees to every single employer they provide insurance for – obviously causes increase for everyone
  • Employers are also mandated to provide “affordable” health care – employees cost for their health plan cannot exceed 9.5% of their wages – if the employer has to contribute more to ensure affordability – causes increase in cost
  • Health care trend or “inflation” is 12% – 15% – meaning if you have an average year of claims, you can expect your rates to increase by that amount
  • This is caused by advancement in technology, increasing costs from providers to the insurance carriers, etc.

While there is no simple solution, there are helpful steps employers can take with their broker.  Resource Alliance can dig deeper into your company’s “why” combined with our secret formula spreadsheet of “what if’s” to help you save some dollars on your upcoming plan year.  Call us to schedule a Benefits Summary Consultation today.


Jeff Koch, Director of Benefits & Marketing Communications for Resource Alliance.
Jeff is a consultant, not an attorney, so he shares his opinions, not legal advice, about increasing performance and limiting liability.