Health Insurance Cost

By: EconomyWatch Content   Date: 18 February 2010

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As the federal laws become stringent on the approval process, several insurance companies are being instructed to offer coverage people with pre-existing conditions as well. These factors along with the venal approach of insurers has spiraled the price upwards. In 2009 (as per Kaiser family foundation), health insurance cost triggered an investment of around 17.6% of the total GDP of the US. The National Association of Insurance Commissioners indicated that the health insurance cost will increase at a rate of 11% to as high as 30% in different states.

Health insurance cost is increasing every year but the value of the plans remains most important to most insurance providers as there is very little that a government can do. People have very few options to fall back on.

 

Reasons behind the Increasing Health Insurance Cost

Increasing health insurance costs cannot be blamed solely on the insurance industry as external factors also influence the pricing of insurance products. In health insurance, factors such as the cost of the treatment, operational heads or administrative overheads add to the total cost.

Essential factors that affect health insurance costs are listed below:

Prescription drugs: There has been a steady increase of 20 to 30 percent in the drugs cost each year. Therefore the insurers are being asked to pay more for the coverage.

New technologies: This will replace most conventional methods but the cost of this is being borne by the insurers.

Increasing demand of health insurance due to the increasing costs:Like a vicious circle, (as the cost of medical treatments are increasing) more people are turning towards health insurance for protection. Insurers in a bid to maximize their profits are using this ramped up demand to market higher cost products.

Aging population:Insurance companies are not non profit organizations. If the elderly population is pressurizing insurance providers for more reimbursements, they are balancing it by increasing the cost of their portfolio.   

People want healthcare insurance plans to work for them. Insurance providers need to earn their trust and find effective ways to regulate the cost related fluctuations to offer people the kind of healthcare insurance plans that they want.


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