The Impact of Rising Health Costs on the Economy Effects on Business Operations

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Abstract:

Significant increases in health care costs and in health insurance premiums are affecting Americans personally and profoundly -- and have become a major national economic problem.

Annual health care spending in the U.S.has been increasing two to fivetimes the rate of inflation since 2000. These increases translate into high and rapidly escalating health insurance costs for businesses and families. Over the past five years, employers, on average, have experienced double digit increases in their health insurance premiums. These substantial increases -- year after year -- are making it more difficult for businesses to continue health coverage for employees and retirees. Employers, on average, have seen their health insurance premiums increase nearly 120 percent since 1999.

The increases are making it much more difficult for individuals and families to pay their share of the cost of employer-sponsored coverage or to buy health insurance themselves. It is no coincidence that the number of Americans without health coverage has been climbing with nearly 8 million people losing their coverage between 2000 and 2007.