calculator-385506_1920We keep hearing that health insurance¬†costs are on the rise. We also hear a number of excuses and accusations, most notably from the political sector, citing who’s to blame. So, what is it that really drives up the cost of health insurance?

Is it greedy health insurance companies? More stringent regulations? A sicker population?

A recent explanation from the American Academy of Actuaries may help shed some light on what’s actually behind the increases.

  • Medical Costs –¬†According to the Academy, medical spending is expected to be slightly higher next year. However, it’s still low compared to historical levels. Specific items driving up the cost include recently released specialty drugs, like those for cancer and hepatitis.
  • Changing Laws – When the Affordable Care Act was implemented, insurance companies were offered reinsurance in case they miscalculated how much they might end up paying out. It’s been being phased out and will end after this year. The result is a premium increase of around 4 to 7 percent.
  • Sickness – If an insurer’s customers are sicker than expected one year, the next year’s premiums will reflect that. And that’s happened for many companies. However, the data being collected under the ACA should help insurers know how to better set rates in the future.

Regardless of what’s driving up the cost of insurance, the increase is unavoidable. However, there are measures you can take to offset the additional cost of offering health insurance to your employees. Talk to us about how you can reduce your health care spending.