Thursday, October 14, 2010

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Free Lunch

U.S. Economic Commentary by Reb Akiva

There’s no such thing as a free lunch.  Somebody is always gonna pay…

News: Open Insurance Season Brings Sticker Shock

The end of the year in the US is the time employees of large companies get to make changes to their health care plan and options.  It’s also the time that those plans present price changes back to the company and employees.

Benefits that are increasing under the health-care overhaul may come with financial strings attached.

May?  Companies don’t provide services for free.  Or if they do (such as free morning newspapers) it’s because they’re making their money another way (the advertising in the paper).  So while something may be free to you, if it’s provided by a business someone is paying for it.

The U.S. health care overhaul mandated no coverage limits for illnesses (previously they were usually $1 million), coverage for “children” up to age 26, no limiting entrance into plans for people with existing illnesses, and coverage of many types of services previously limited.

The bill arrives today…

- The employee's share of the average $13,770 total premium for family coverage went up 14 percent this year.

- More than a quarter of employees now face annual deductibles of at least $1,000.

- Health plans are adding coinsurance, meaning you will also pay a percentage of the charges. For example, 53 percent of plans now require coinsurance charges for hospital admissions.  Coinsurance is also on the rise for prescription drugs and emergency room visits.

- Plans are now charging for every dependent on a plan rather than including an unlimited number in a single family premium.  (This will be a very painful surprise for the orthodox Jewish community which typically has large families.)

- Another strategy to limit costs: surcharges, typically ranging from $200 to $500, for spouses who could get insurance through their own jobs.

Changing the U.S. health care system to help those in need is a very good humane charitable goal.  Just don’t pretend there’s going to be no cost.  Health insurance companies are not exceptionally profitable.  As such they’re either going to pass the cost back to YOU or go out of business. 

Either case means higher costs TO YOU.

The cost for this change?  20% increased health insurance costs (through direct increase, decreased benefits, or co-pays and surcharges) to every insured person in the United States.  For the religious Jewish family, 35% increase due to a per-dependent charge.

Serious OUCH.  Nasty surprise.

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