Wednesday, September 16, 2009

Kaiser Outlines Future of Health Ins. And It Ain't Pretty

For those who are confused about what the future means in terms of health care costs (as well as the past relative to income), you need to read the new information from Kaiser Family Foundation (if you don't know, Kaiser is the largest non-profit health care provider in California).

The first number was the average cost of a family health insurance policy in 2009: $13,375. To put that number in context, if you are an employer, you can hire an employee at the minimum wage for about $15,000 per year. If you are a consumer, you can rent an average two-bedroom apartment nationwide for $11,136 per year (though it is quite a bit more here in Menlo Park, California where our Foundation is based). You can also buy a new Chevy Aveo for $12,000, and it gets 35 miles per gallon on the highway.

Let's do some very simple arithmetic. Start with a fairly conservative assumption: If we assume that premium increases over the next ten years will average what they did over the last five (about 6.1% per year), the average premium for a family policy in 2019 will be $24,180. That's a big number. On the other hand, if we assume increases revert to the average of the last ten years—an average annual increase of about 8.7% and a very plausible scenario—premiums in 2019 will average a whopping $30,803, a very scary number (Figure 1).

Now I know some of you may not even blink at this information, but most of you will probably be aghast. When my health insurance costs would be double that of my mortgage, something is dreadfully wrong.

Here's another nifty video on United Health Group. Think their CEO will take a nice hefty pay cut just to help? Yeah... right.