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The Costs of Health Coverage
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My son will graduate from college in December, then heads to graduate school next year (after getting married). He will have made that transition to independence that we have both been working toward since he was born.

My immediate concern for him is health insurance. Until he graduates, or reaches 23 years of age, he is covered by the health insurance I get through work. At his age, I was clueless about health insurance and relatively naive about the need to have it. Now it’s a necessity that many Americans can’t afford and employers have been increasingly challenged to provide.

The Kaiser Family Foundation’s 2007 Annual Survey of Employer Health Benefits, available at http://www.kff.org/insurance/7672/upload/EHBS-2007-Full-Report-PDF.pdf, notes that employers provide health insurance for about 158 million nonelderly persons in America. On average, companies contribute about USD 8500 toward family coverage. Employees, by rough average, pay about USD 3279 toward family coverage.

The good news is that health insurance premiums only increased 6.1% between the spring of 2006 and spring of 2007. That’s less than the previous year, and the year before that, and the year before that. Unfortunately, it’s been nearly a decade since workers’ earnings (and inflation) exceeded the rate at which insurance premiums grew. For the most recent period, worker’s earnings grew 3.7%, while inflation averaged 2.6%.

Among factors surveyed companies believe contribute significantly to higher insurance costs are increased spending for prescription drugs, hospital care, and physician services. Additional factors include the aging U.S. population and higher insurance company profits.

To cope with increased costs, about 45% of employers surveyed for the Kaiser report said they will probably increase the amount employees contribute to premiums next year. Likewise, 37% said they will likely increase deductibles, 42% said they would increase the portion employees paid for office visits, and 41% said employees would likely pay more for prescription drugs.

In the coming U.S. elections, the healthcare will be one of the dominant issues influencing the choice of who voters select to be the next U.S. president. The contenders have variously proposed reform measures and coverage plans, including universal coverage. Special interests will likely limit the extent to which reforms might be implemented, but nearly everyone agrees that U.S. healthcare coverage is in serious need of renovation.

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