Some individuals blame the high cost of healthcare on greedy insurance corporations that seek profit at the expense of hard-pressed American households. Others blame high healthcare expenses on a separate set of corporate villains: drug firms, device manufacturers, hospitals, physicians, and others that charge exorbitant prices for their goods and services, leading insurance companies to charge excessive premiums. But are those the reasons for high insurance coverage?
Is Increase In Health Care Cost Leading To Higher Insurance Coverage?
Premiums for health insurance rise in lockstep with inflation, but they also regularly rise out of step with inflation. This is due to a variety of reasons.
New, complex, and expensive technology aids in identifying and treating medical conditions, while specialist pharmaceuticals can extend the lives of people suffering from diseases such as cancer. The high expense of these diagnostic and treatment choices makes everyone’s health insurance costs higher.
Why increase in Health Care Cost
Government Policy: In the United States, private health insurance is provided by companies. To assist those without insurance, the government established programs such as Medicare and Medicaid. These initiatives increased the need for healthcare services. As a result, providers were able to hike prices. Also, according to a study published in Health Affairs co-authored by Princeton University health economist Uwe Reinhardt, Americans utilize the same amount of health care as inhabitants of other countries. They simply pay a higher price for them.
For example, hospital costs in the United States are 60 percent more than in Europe. Efforts by the government to reform health care and cut expenses ultimately increased them.
Chronic diseases: Chronic illnesses, such as diabetes and heart disease, have become more prevalent. Health-care costs for patients with at least one chronic disease accounted for more than 85% of total healthcare spending in 2010. Also, more than half of all adults in the United States have one chronic disease. They are both costly and difficult to cure. As a result, the sickest 5% of the population accounts for half of all healthcare spending. The healthiest half of the population accounts for barely 3% of total healthcare spending in the United States. The majority of these patients are on Medicare. The medical profession in the United States saves lives in a heroic manner. However, there is a price to pay.
Utilization: The more we use something, the more money it costs us. It will cost far less to drive a car five miles per day than it will to drive it 500 miles per day. When a society uses health care infrequently, it costs less; when it is used frequently, it costs more.
Many of today’s social ills have negative health consequences for individuals. This means that health care will be used more frequently, at a higher cost to society. Increased premiums are how health insurance companies share the rising expense of health care with their subscribers.
As a result, we are all responsible for the costs of societal bad habits and the resulting bad health conditions. Consider the health expenses of drug misuse, alcoholism, cigarettes, violent crime, pollution, obesity, sedentary lives, and accidents, all of which are exacerbated by the failure to wear seat belts or helmets. Then there are crack-addicted newborns, fetal alcohol syndrome, HIV, and so forth. When insured persons have health problems resulting from such events, we all pay for their treatment through our monthly insurance premiums.
Other societal considerations, such as the cost of caring for an aging population’s health demands and the fact that people are living longer, cannot be avoided.
How does it affect your Insurance Coverage?
Insurers calculate the cost of providing healthcare to their insured lives and their operating costs each year. Even non-profit organizations pay their executives and employees, and these salaries are included in their operating expenses. Your premium is the money you pay to health insurers to cover all of these expenses.
Your health insurer figures out how much it will cost to pay for healthcare by creating profiles of their customers and then calculating how much each patient type would cost. One profile, for example, could be for male toddlers aged 2 to 6. The insurer will calculate the average number of doctor visits each child will require, as well as the number of immunizations he will require, the number of times he will fall and require sutures, and so on.
Another profile could be for women in their fifties and mid-fifties. The average woman will require a checkup, mammography, and possibly a colonoscopy or a bone scan in this age range. A blood test for diabetes or cholesterol will be required. Even though she appears to be in good health, she may need to take one or more prescription medications.
For each of its profiled patient categories, the insurer will also determine the number of operations, medical tests, accidents, and other possible medical needs.
The insurer can estimate its expenses by multiplying those profiles by the number of patients they intend to insure for each profile. Additional sums for expenses and profit. They’ll then perform the arithmetic to figure out what the average cost per patient or family is. Your annual premium will be that amount.
Most individuals pay for insurance, especially health insurance, with the hope of never having to use it. Your health insurance, on the other hand, might cover your preventative care and screening tests. If you’re young and healthy, you may not require or be entitled to much preventative care or screening; however, if you’re older, your insurance may cover diagnostic screening tests automatically.
With healthcare rates on the rise, you may want to save money by opting for a lower-cost plan if you don’t expect to need much medical attention throughout the year. However, because there is no way to forecast the future, you will have to choose the correct plan and premium price point, then re-evaluate your needs when it comes time to renew your coverage.