Independence (Kansas City, MO)
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Health Care Cost
Chris Campbell (Farmers )
Health Insurance Cost

 

Facts on the Cost of Health Care


Introduction

By several measures, health care spending continues to rise at the fastest rate in our history.

In 2005 (the latest year data are available), total national health expenditures rose 6.9 percent -- two times the rate of inflation. Total spending was $2 TRILLION in 2005, or $6,700 per person. Total health care spending represented 16 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4 TRILLION in 2015, or 20 percent of GDP.

In 2006, employer health insurance premiums increased by 7.7 percent - two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $11,500. The annual premium for single coverage averaged over $4,200.

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.


National Health Care Spending

  • In 2005, health care spending in the United States reached $2 trillion, and was projected to reach $2.9 trillion in 2009. Health care spending is projected to reach $4 trillion by 2015.
  • Health care spending is 4.3 times the amount spent on national defense.
  • In 2005, the United States spent 16 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent in the next decade.
  • Although nearly 47 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.
  • Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.

Employer and Employee Health Insurance Costs

  • Premiums for employer-based health insurance rose by 7.7 percent in 2006. Small employers saw their premiums, on average, increase 8.8 percent. Firms with less than 24 workers, experienced an increase of 10.5 percent
  • The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $11,500 in 2006. Workers contributed nearly $3,000, or 10 percent more than they did in 2005 .The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712).
  • Workers are now paying $1,094 more in premiums annually for family coverage than they did in 2000.
  • Since 2000, employment-based health insurance premiums have increased 87 percent, compared to cumulative inflation of 18 percent and cumulative wage growth of 20 percent during the same period.
  • Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by 2008.
  • According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers' earnings since 2000.
  • The average employee contribution to company-provided health insurance has increased more than 143 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.
  • The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3 percent in 1996 to 43.1 percent in 2003 - a 16 percent increase.

The Impact of Rising Health Care Costs

  • National surveys show that the primary reason people are uninsured is the high cost of health insurance coverage.
  • Economists have found that rising health care costs correlate to drops in health insurance coverage.
  • Nearly one-quarter (23 percent) of the uninsured reported changing their way of life significantly in order to pay medical bills.
  • Almost 50 percent of the American public say they are very worried about having to pay more for their health care or health insurance, while 42 percent report they are very worried about not being able to afford health care services.
  • In a poll conducted by the Harvard School of Public Health, 43 percent of respondents named high costs as one of the two most important health care issues for government to address.
  • In a USA Today/ABC News survey, 80 percent of Americans said that they were dissatisfied (60 percent were very dissatisfied) with high national health care spending.
  • One in four Americans say their family has had a problem paying for medical care during the past year, up 7 percentage points over the past nine years. Nearly 30 percent say someone in their family has delayed medical care in the past year, a new high based on recent polling. Most say the medical condition was at least somewhat serious.
  • A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses. Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
  • One half of workers in the lowest-compensation jobs and one-half of workers in mid-range-compensation jobs either had problems with medical bills in a 12-month period or were paying off accrued debt. One-quarter of workers in higher-compensated positions also reported problems with medical bills or were paying off accrued debt.
  • If one member of a family is uninsured and has an accident, a hospital stay, or a costly medical treatment, the resulting medical bills can affect the economic stability of the whole family.
  • A new survey shows that more than 25 percent said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.
  • A survey of Iowa consumers found that in order to cope with rising health insurance costs, 86 percent said they had cut back on how much they could save, and 44 percent said that they have cut back on food and heating expenses.
  • Retiring elderly couples will need $200,000 in savings just to pay for the most basic medical coverage. Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.

Time for Action on Reining in Health Care Costs

Policymakers and government officials agree that health care costs must be controlled. But they disagree on the best ways to address rapidly escalating health spending and health insurance premiums. Some favor price controls and imposing strict budgets on health care spending. Others believe free market competition is the best way to solve the problems. Public health advocates believe that if all Americans adopted healthy lifestyles, health care costs would decrease as people required less medical care.

There appears to be no agreement on a single solution to health care's high price tag. Many approaches may be used to control costs. What we do know is if the rate of escalation in health care spending and health insurance premiums continues at current trends, the cost of inaction will severely affect employer's bottom lines and consumer's pocketbooks.

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The Importance of Life Insurance
Chris Campbell (Farmers )

 

Life insurance may sound like something you only have to think about when you get older, but there are a variety of benefits to buying life insurance early on in your working career. Even if you don't have a family that is dependent on you, or if you feel that your employer's life insurance policy is adequate for your needs, there are many reasons why you should consider taking out your own life insurance policy.

If your employer provides you with a life insurance policy, you shouldn't necessarily rely on it. While many companies may offer life insurance as one of the key benefits of a job, the figure often doesn't cover enough to be of adequate benefit to your family - especially in the event of your death. For instance, many firms may offer life insurance that is one or two times the amount of your annual salary; but most financial planners will recommend replacing that with life insurance that covers up to 10 times your annual salary.

Furthermore, it is always important for consumers to be aware of types of life insurance they can choose from: essentially, there are two types of life insurance: term insurance or investment type insurance. Term insurance will provide benefits to your family or your dependents if you die during the proposed period covered by your policy. Investment-type life insurance, also known as, "permanent insurance", will include endowment policies and "whole of life" policies. This type of life insurance remains in effect for as long as you continue to pay your premium. Essentially, part of this premium will go to an investment account; so, as well as paying out in the event of your death, it will build up in investment value - which you can actually cash in before you die. This is a great reason to invest in life insurance when you're younger - the earlier you buy, the higher the investment value that will accumulate during your lifetime, and the more you may be able to reclaim when you're older.

Perhaps the most crucial piece of information to keep in mind during your search for life insurance, however, is the importance of shopping around. It is vital to ensure that the insurance you eventually invest in is the most suitable for your particular needs; so, as well as thinking about how much you can afford to pay, it is essential to think about what you actually need from life insurance cover. There are many consumer life insurance comparison sites that exist on the web which provide this valuable service. By utilising such services, as well as vital sources of information like the FSA Check Firm Service and the Citizens Advice Bureau, you will be armed with a hefty arsenal of consumer information so you can reach the right decision when it comes to buying life insurance.

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