Rising Health Care Costs Drive Up Insurance Premiums

Health insurers experienced significant profit increases during the pandemic as a result of decreased patient visits and postponed elective procedures. For example, operating earnings in 2020 surged to $41.4 billion across the industry. However, as the pandemic wanes, insurance premiums are now rising noticeably due to factors such as inflation and the growing costs of new diabetes and weight loss drugs. Analysts note that the average premium increase for group health plans is at its highest in over a decade, reflecting a shift back to rising health care costs after a period of stability. Insurers are now facing pressures from the rising use of expensive medications, workforce shortages, and consolidation in the healthcare system, leading to a more challenging financial landscape for health plans moving forward.