How the Escalating Costs of Health Insurance Premiums are Effecting Human Capital
One significant human capital issue that Correctional Medical Services (CMS) is facing today is the escalating cost of health insurance. A combination of tight labor markets, strong profits, and the somewhat moderate increases in health insurance premiums over the past several years had allowed many employers to ignore such concerns, until recently. Now, with a weaker economy, most employers are struggling with plummeting profits and are desperate to cut costs. Few are able to absorb any further increases in these premiums (Weber, 2001). ... Now employers face premium increases of 12% to 15%, with some hikes as high as 30% of total payroll costs. With this continuing double-digit rise in health insurance premiums, this situation has spiraled into a crisis (Siegel, 2003). ... “Nearly half of all Americans who filed bankruptcy last year did so because of health care expenses”, as cited by McKnight, 2002. These dramatic changes have also affected CMS, which suffered a 14% increase for health insurance premiums. The primary cause of this escalation was the rapid 18% increase in pharmaceuticals, which accounted for 10% of the overall premium costs. As cited by Wilson 2001, “the significant rise in pharmaceutical costs is driven by the development of new drugs and the evermore aggressive marketing”. ... Along with new ideas, technological innovations, research, and development, an increasing number of people are opting for elective surgeries, driving health care costs and premiums even higher.