Thursday, October 24, 2013

Sticker Shock

The song "Take Me Out to the Ball Game" is the unofficial anthem of Major League Baseball (MLB) baseball with the chorus being sung during the middle of seventh inning as part of tradition for numerous teams.  However, the amount that it costs to actually take the family out to a ball game is quickly becoming cost prohibitive in each of the four major sports (NFL, MLB, NHL, & NBA).   A similar trend with an impact on household budgets is occurring in healthcare, where the “new normal” of health insurance is shifting towards high deductible plans that trade lower premiums for higher out-of-pocket spending in order to provide coverage for a family.

Team Marketing Report (TMR) is a company that has developed the Fan Cost Index (FCI) which calculates the average cost for a family of four to attend a major sporting event per team in each sport.  For the purposes of this metric, the FCI defines cost as four tickets at average price, two small beers, four small sodas, four hot dogs, parking, two programs and two adult caps.  As one might imagine, the FCI will vary significantly based on sport, team and market however for many it's still the kind of amount most usually need to plan ahead and factor into the family budget in order to spend.  To put these numbers into context one only needs to look at the FCI averages by sport for a family of four: NFL ($427), NHL ($355), NBA ($315), and MLB ($210).  

To illustrate highlight the variation from average and the potential price tag for a family to attend a Chicago team game consider that the FCI for this year were as follows: Chicago Bears, $577.42; Chicago Blackhawks, $396.03; Chicago Bulls, $426.60; Chicago Cubs, $298.20; Chicago White Sox, $231.18.  While Chicago has been fortunate that its teams have been relatively successful in recent years (with the exception of baseball), the challenge is that cost typically does not fluctuate with poor performance.  In fact, and this is true with almost all teams from all cities, history has shown most increase the cost of tickets prices following successful seasons and at best remain flat after disappointing ones. 

As employees that are fortunate to work for companies that provide health benefits begin to make their plan selections for the upcoming year, if they haven’t already, many will encounter a new option when they open their benefits’ packets that includes high-deductible plans.  High-deductible plans are the increasingly common kind of health insurance that has cheaper premiums than traditional plans.  However, the disadvantage to these plans, particularly for family coverage, is that the employee is usually responsible for thousands of dollars in out-of-pocket costs via copays and deductibles in addition to the contribution towards the cost of the premium that is subtracted each pay period before the insurance kicks in.

According to a Kaiser Family Foundation survey, back in 2006, just 10 percent of Americans who get health insurance through their employers had a high-deductible plan. Today, more than a third have them, and that percentage is growing exponentially each year.  It also found that premiums for the average family plan topped $16,000 for the first time, with workers paying on average $4,565 toward that cost, not counting copays and deductibles.

The benefits consultant Aon Hewitt forecasts that this trend not only to continue but that it will speed up with more workers at big U.S. companies likely to start paying a greater share of their doctor's bill because of the shift in health insurance.   They predict that high-deductible plans, or “consumer-directed health plans” as they’re also called, could become the most common form of coverage offered by companies with 500 or more workers in the next three to five years as companies continue trying to cut health-care costs.

The cost take the family “out to the ball game” will continue to rise just as the cost for healthcare coverage will increase for the conceivable future.  But for a moment, consider you have Chicago Bears season tickets and want to bring your family of four to each of the eight home games at the cost of $577 per game as identified by the Fan Cost Index (FCI).  As noted above, the Kaiser Family Foundation found workers paying on average $4,565 toward that cost of health care premiums for a family which when divided by eight; ironically comes out to $570……choice is yours.

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