05 Apr Health insurance premiums – A pleasant surprise?
By Grant Dattilo
Prior to COVID-19, the average family group health insurance premium was $20,576.[i] Minnesota health insurance companies, on average, were projecting a 6.9 percent rate increase. This would increase family health insurance cost to about $22,000 – if COVID-19 had not happened.
Analyzing the insurance companies’ 12-month projected premiums through September 30, 2021, we found that after COVID-19 began to unsettle the medical marketplace, the projected annual average premium increase is just .7 percent – less than 1 percent.
The surprisingly low trend goes against the common assumption that this would be a terrible year because of folks flocking back to the doctor’s office as COVID-19 restrictions are being lifted. They expected a surge of individuals would opt for new knees, hips and other elective procedures. The actual data in the premium rate filings suggest otherwise.
What is going on? We speculate that a benefit from COVID-19 is that individuals have become more cautious about their use of the medical system. Perhaps the minor irritations that drove them to the doctor’s office before COVID-19 were not motivation enough to leave the house and risk infection, thereby helping individuals realize that most of what ails them will pass over time, with little distress.
Individuals found themselves at home, with a situation that medicine could not treat or cure. So they replaced unhealthy habits with healthy habits. They washed their hands more often, covered their nose and mouth when they coughed or sneezed, and stayed away from others when they felt ill. They tolerated minor aches and pains.
People established new habits that resulted in a healthier lifestyle and have lived with these changes for more than 13 months. We have heard it said that it takes three weeks to change a habit. So are these lifestyle habits the new normal?
On the other hand, people may go back to their old habits. There could be high demand building up that will cause premiums to spike in 2022 resulting in double-digit premium increases. For now, let’s enjoy these record low premium increases while they last.
Speculation aside, at Dattilo Consulting, Inc. we will continue to monitor these changes and adjust our strategies to fit them, providing protection and security for employees while guarding employers’ benefit budgets.
[i] Kaiser Family Foundation reported this number for average 2020 family medical insurance premium cost across the United States. Premiums will vary from state to state.