Why Is Healthcare So Expensive?
As the focus shifts from quality concerns to cost issues, the state legislature continues to search for ways to make healthcare more affordable.
However, it is difficult to address those issues for individuals and employers without understanding the real factors driving rising costs.
While Connecticut offers a relatively high quality of care, it also has the sixth highest annual healthcare spending in the country.
According to the Kaiser Family Foundation, per capita healthcare spending in the United States averages $8,045 annually.
In Connecticut, healthcare spending averages $9,859 per person annually—$1,814 more than the national average.
What is different in Connecticut that our healthcare spending is almost 20% higher than the rest of the country?
State government plays a major role.
Assessments, Mandates, Taxes
State assessments, taxes, and mandates add an extra $2,248.41 in premium costs annually to every Connecticut health insurance plan.
The state legislature and Connecticut Department of Insurance impose laws and regulations that drive up the cost of coverage.
In 2019, assessments alone totaled $100 million and included the public health assessment, contributions to the general fund, and support for Access Health CT, the state-run health insurance exchange.
The premium tax collected from insurance carriers totaled $209 million last year.
Assessments and taxes imposed on carriers affect costs because those increases are passed directly to consumers.
Mandates also directly increase coverage costs because the more devices or services insurance companies are mandated to provide, the more premium costs rise.
The true cost of a benefit mandate often goes unknown until the mandate is implemented.
The legislature does not conduct a cost-benefit analysis prior to approving a mandate. The business community, concerned with rising costs for employers and employees, has repeatedly called for such analyses.
These state government levied costs make up 23% of overall healthcare spending for individuals in Connecticut.
While lawmakers say lowering healthcare costs is a priority, they continue to drive up costs by imposing assessments, mandates, and taxes.
If lawmakers want to make healthcare more affordable, they must stop approving new mandates, assessments, and taxes, and focus on reducing the cost of care.
For more information, contact CBIA’s Michelle Rakebrand (860.244.1921) | @MRakebrand
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