Why Is Health Insurance So Expensive?
Edward Neeman | Published: June 14, 2018
In the US, everyone has access to healthcare, but what happens if you can’t afford the monthly payments? Health insurance prices have seen an increase every year, and don’t show any sign of slowing down, even with the Affordable Care Act.
What’s Driving the Prices Up?
Health insurance companies used to determine how much your premium would be based on your medical history. For example, if you were older, or had any pre-existing conditions, you would end up paying more than someone who is young and healthy. The Affordable Care Act stopped that practice. So why are health insurance prices so expensive?
One issue that relates to the total cost is any of the administrative finances incurred by the insurer, such as salaries and commissions paid to employees. Other operational costs, such as office space and technical requirements also drive health insurance costs up.
You may be familiar with some of the major health insurance carriers because of a commercial you’ve seen on TV or heard on the radio. The world of health insurance is extremely competitive, so it’s not uncommon for larger companies to drop hundreds of millions of dollars on marketing efforts. The money spent on advertising directly affects your pockets.
That yearly checkup that you get for free, or next to free, is paid for by your health insurance company. Preventive care includes trips to doctors for health screenings, regular testing for diseases, and programs that insurers offer to help patients learn about certain conditions.
Teaching patients how to identify the symptoms, causes, and risk factors of those diseases can reduce the amount of money spent on medical services down the road, but the upfront cost is seen in your increased monthly premiums.
How the US Measures Up
The United States has the highest per capita spending in the world and spends more than $9,000 per year on medical costs. Second to the United States is Switzerland, which spends more than $6,000 per year per person, and Germany lands in the third spot with a per capita total of just over $5,000 per person.
Countries that rank the lowest among health care costs are Japan, the United Kingdom, and Italy. Each country spends less than $4,200 per year per resident. The United Kingdom is one of many countries that now offer socialized health care. While residents can pay for private health coverage, they get free health coverage through the government.
Prices Under Obamacare
The purpose of Obamacare was to create a health insurance marketplace with affordable health insurance for all. Obamacare offered federal and state subsidies based on your income, which means your coverage could be free. Obamacare also stopped allowing health insurance companies to use your medical history to determine prices. The aim was to have one giant pool of money where the healthy offset the costs of the sick.
So why have prices continued to rise? Well, a lot of people are opting to not purchase health insurance, and instead pay the penalty, or file for an exemption. This left more people in the health pool who were sick, and the health insurance companies ended up footing the bill. To help with their bottom lines, health carriers were forced to up their prices to pay for the increased costs. Unless you qualify for a subsidy, expect to see health insurance prices to maintain their upward trend.
Finding Affordable Health Insurance
Finding affordable health insurance is easier than you might think. Whether you are in good health or have one or more pre-existing conditions, you can still find reasonably priced plans that fit your needs.
Comparison shopping is the best way to save. You can use the web to check out what others are saying about major health carriers, and use free tools to compare health insurance quotes.