(CNN) – As Americans fork over more and more of their income to pay for rising premiums and deductibles on their health insurance, the major insurance companies are raking in record profits.
As inflation and pandemic hardships weigh on the wallets of Americans, healthcare costs keep climbing.
“It doesn’t cover 100% until we meet $12,000 out of pocket first,” Jessica Jones said.
For Jones and her family, that’s devastating with her son battling a chronic heart disease.
“Making choices, are we going to pay this medical bill? Are we going to keep the lights on? My husband and I had conversations about divorcing so that we could get Medicaid for our son,” she said.
The price of an employer-sponsored family policy is up 47% since 2011, outpacing wages and inflation, meaning premiums and deductibles now eat up more of the average family’s income – 11.6% as of 2020.
A December poll found 46% of insured adults struggle to afford out-of-pocket costs and 29% have not taken medicine as prescribed because it’s too expensive.
Grocery prices continue to rise and Americans are feeling it in their wallet. (Source: CNN, KDKA, WLFI, KCAL, KABC, KMIR, KULR, GENERAL MILLS, GETTY IMAGES)
“They have health insurance, but they still can’t afford to get the healthcare that they need,” said Erin Bradshaw, chief of mission delivery at Patient Advocate Foundation
Yet health insurance companies are making record profits.
For UnitedHealth, the largest insurer in the U.S., net earnings have surged since 2015, reaching $17.7 billion last year as their business has rapidly expanded into other healthcare sectors.
“(Companies are) not bringing down the cost of care and not giving people relief from premiums and out pockets, but enriching their shareholders and their top executives,” said Wendell Potter, president of Business Leaders for Health Care Transformation
The Affordable Care Act includes a rule that insurance companies must spend at least 80% of the money made from premiums on health care costs and improvements.
The other 20% can go to administration, marketing and profits.
Last year, UnitedHealth returned more than $5 billion in dividends to shareholders, and other companies have done the same.
“But if you want to talk about the drivers and why deductibles are up, health insurance company profits, they’re a piece of it but pretty small piece of it,” said Matthew Borsch, managing director of BMO Capital Markets.
It’s part of a bigger debate about healthcare spending, which has soared in recent years.
Prices set by providers like hospitals, doctors and pharmaceutical companies are going up even as fewer Americans have accessed medical services during the pandemic.
Administrative costs alone make up more than a quarter of U.S. healthcare spending.
“The for-profit companies are taking on an ever-greater role within the U.S. healthcare system,” Borsch said.
It’s a complex issue, but for Jones it’s simple: “If the cost goes up, we can lose everything at this point.”
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