The Growing Divide: Rising Health Insurance Costs vs. Soaring Insurance Company Profits

In 2024, the financial burden on employees and employers alike continues to grow as health insurance premiums and out-of-pocket maximums reach unprecedented levels. According to the 2024 Employer Health Benefits Survey, the average annual premium for single coverage is $8,951, while family coverage averages $25,572.

The current rates translate to a monthly cost of $745 for single coverage and $2,131 for family coverage. Additionally, out-of-pocket maximums have surged, with individuals facing more than $5,000 and families over $10,000 in potential expenses.

If you compared these rates to 2020 when the average was $7,470 for single coverage and $21,342 for family coverage, it is a 19.82% increase. This is simply unsustainable.

These rising costs are forcing many employees to make difficult financial decisions, often delaying or avoiding necessary medical care due to the high out-of-pocket expenses.

Imagine having a shoulder injury you really need to get evaluated, but the cost of a specialist appointment and the fear of their recommendation to fix the problem is just too much for you to take on.

Or, what if you have a child with allergies and you really need to get allergy testing done, but the out-of-pocket costs are hundreds of dollars?

If it’s not an emergency, these individuals may choose to delay care, resulting in lifelong health issues and pain. This is the reality for many, many Americans on typical insurance plans offered by their employers.

People are forced to be reactive rather than proactive because of the high costs they’re facing. And unexpected emergency care could completely cripple their livelihood overnight.

Employers, on the other hand, are struggling to balance the need to provide comprehensive health benefits with the escalating costs, which can impact their overall financial health and competitiveness in the market.

Annually, they get new rates for their group health insurance and must make really difficult decisions on how to carry the load of the increases. They are very often being hammered with double digit increases, and companies cannot put those increases on their bottom line every year, so they are forced to increase deductibles and rates for their employees.

It really is a lose-lose situation for employers and employees alike.

In stark contrast, health insurance companies are reporting significant profits. Despite some fluctuations, the overall trend shows that these companies continue to thrive financially. For instance, the average profit margin for public health insurers rose by 1.4% from Q1 2024, although it was still 0.6% lower than Q2 2023 levels.

Companies like UnitedHealthcare and CVS Health (Aetna) have seen substantial financial gains, driven by premium rate increases tied to medical cost inflation.

This disparity highlights a troubling trend: while employees and employers bear the brunt of rising healthcare costs, insurance carriers are enjoying significant profits. The financial burden on employees is growing, with higher premiums and out-of-pocket expenses, while insurance companies benefit from increased premiums and favorable market conditions.

It's time for a change. Employers and employees alike need to advocate for more equitable healthcare solutions that do not disproportionately impact those who can least afford it. By exploring alternative models and pushing for policy changes, we can work towards a system that balances the needs of all stakeholders.

 At The Lank Group, we are passionate about solving this problem. We have walked with companies and employees as they’ve struggled with these increases for many years, and as a result, we began searching for a different way. That is how we found Health Rosetta, a new blueprint for high-performance health benefits. This proven method has saved one of our clients $2.2 million since 2019, resulting in a significant decrease in their deductible costs and added bonuses for their employees.

There is a way to overcome these rising costs without compromising the quality of care you receive. This is the future of healthcare!