The cost of health insurance has been steadily rising over the past several decades and it is partly due to the the rising cost of health care. New technologies like the MRI and CAT scan are now routinely used during medical examinations. It is unarguably the cost of these and other advanced technologies that have raised the price of medical care. Fewer employers offer group health policies to their employees and the number of uninsured Americans is rising, which further drives up medical costs and health insurance rates
Factors Affecting Insurance Rates for Individuals
Individual health insurance rates are based on a number of factors, some which can be controlled and some which cannot. Primary factors typically include age, weight, smoking, alcohol and drug use, family medical history, and occupation. All of these factors have an impact on an individual’s health and may increase the provider’s risk of paying a substantial claim. Otherwise healthy individuals with a strong family history of cancer or diabetes will pay higher rates than those with no significant health risks in their family history.
Group Health Insurance Rates
The factors affecting group health insurance rates include the size of the group, the median age of its members, and health risks that may be associated with a particular group. Large employers who provide health insurance to hundreds of employees pay lower rates per employee than employers who insure fifty employees. This is because the risk of a single large claim is spread over a greater number of people. The average age of the group and occupational diseases associated with various jobs also affect rates being paid.
The Impact of the Uninsured
Uninsured individuals often have the highest health care costs since they are likely to receive their primary care from hospital emergency rooms. Those who have no insurance are also more likely to postpone routine examinations and therefore have more serious healthcare issues. The cost of caring for patients who are not able pay their own medical expenses is passed along in higher costs to paying patients and insurance companies. Although it does not seem fair, this results in higher health insurance premiums for everyone.
The increasing number of medical malpractice lawsuits has raised the cost of malpractice insurance, which also raises overall medical costs. Hospitals are businesses and they raise their rates to cover medical malpractice premiums which pose a significant expense. The price of drugs is also affected by the costs of defending legal actions. These higher costs are passed along to health insurance providers which then charge higher rates to their clients.
Some states have moved to place government health insurance programs like medicaid into the private sector. The federal government has also allowed private insurers to receive funds for operating alternatives to federal Medicare insurance which covers senior citizens. The additional premiums received from the government may lower health insurance costs for employers and individuals. This is due to the fact that it increases the number of people in the insurance pool.
The health insurance industry is competitive and employers or individuals may be able to limit the cost of their policies by comparing rates from different individual health insurance providers. Individuals can also lower their insurance rates by lowering their risk factors by not smoking or by losing weight. Many factors affect health insurance rates, and as mentioned, some of them cannot be changed. However, some can be controlled by individuals or by employers who provide wellness programs to employees in their group health plan.