Health insurance costs in 2024 are expected to continue rising faster than wages and inflation. Several key factors are contributing to these increasing costs, including an aging population needing more care, high prices for medical services and prescription drugs, and more expensive medical technology. However, there are ways for consumers to reduce their health insurance premiums through plan choice, tax credits, and accessing preventative care.
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Key Factors Driving Health Insurance Costs Upward
An Aging Population Needing More Care
As the baby boomer generation ages into Medicare, there is greater demand for health services. People over 65 have 4 to 5 times more healthcare costs than younger individuals, so this demographic shift is a major driver of overall spending. Chronic illnesses also increase with age, leading to more frequent medical care.
High and Rising Prices for Services and Prescription Drugs
The prices set for medical services, tests, hospital stays and prescription drugs continue rising faster than general consumer inflation. Healthcare provider consolidation into large health systems gives them more pricing power. Brand name drug makers also have patents allowing high prices.
Expensive New Medical Technology
New medical devices, equipment and tests that improve healthcare also add substantial costs. Many technologies spread rapidly, raising spending. One example is robotic surgery systems costing over $1 million to purchase. While beneficial, more utilization of these expensive innovations increases health insurance fees.
Projected Cost Increases in 2024
Higher Insurance Premiums
The average annual premium for employer-provided health insurance in 2024 is projected to rise about 5% for single coverage and 6% for family coverage. This will bring average premiums to around $8,000 for singles and $23,000 for families. Out-of-pocket costs will also go up.
Increased Government Spending
Federal and state government spending on programs including Medicaid and Medicare is estimated to grow an average of nearly 6% yearly from 2023-2024. Rapid growth in the over 65 population and healthcare prices drive this government expenditure increase. This raises taxpayer costs.
Higher Employee Contributions
As premiums increase faster than wages, more costs are being shifted to employees through higher deductibles, copays, coinsurance and workplace contributions. An average employee now pays $1,300 more per year towards their coverage than a decade ago. This financial burden is expected to keep rising.
Ways to Reduce Health Insurance Costs in 2024
While many cost drivers seem out of individual consumers’ control, there are still important ways people can reduce their health insurance costs even as prices increase rapidly:
Choose Lower Cost Plans
Choosing lower premium, higher deductible plans can substantially reduce monthly costs. Being proactive with one’s health and avoiding unnecessary services helps minimize out-of-pocket costs. Consider adding a Health Savings Account. Also use online cost comparison tools.
Leverage Tax Credits and Cost Sharing Reductions
Consumers under age 65 earning up to 4 times the Federal Poverty Level get varying levels of tax credits and other assistance to buy coverage on ACA exchanges. This can lower net insurance fees by hundreds per month.
Access Preventative Care
All plans must now cover preventative services like immunizations, cancer screenings and annual physicals without a deductible. Getting recommended precautionary care helps avoid costly medical issues down the road, and keeps premiums in check.
How Different Groups Are Affected by Rising Costs
While almost all consumers face rapidly rising health insurance costs, some groups feel the increases more acutely than others.
Middle Income Working Americans
Middle income employees have seen faster premium and cost sharing rises than those at other income levels. But they get less help affording coverage. More decide to face tax penalties rather than buy insurance.
Lower Income Uninsured
While the ACA improved access for millions, many low income individuals still aren’t covered. Medicaid isn’t offered or they don’t qualify for subsidies based on local rules. Out-of-pocket costs remain a key barrier to obtaining needed care.
Sick Patients with Preexisting Conditions
Thanks to ACA rules, those with preexisting conditions can now get comprehensive coverage without rate penalties. But rapidly rising deductibles and other cost sharing can still make managing conditions expensive for patients requiring significant care.
- Healthcare spending continues to rise much faster than general consumer prices, driven by more services for aging boomers, high medical prices and new technologies.
- Insurance premiums and out-of-pocket costs for employees and individuals are becoming increasingly expensive. More costs shift to consumers.
- Proactive choices – like picking lower cost plans, getting recommended preventative care and utilizing tax credits – are essential to control expenses.