Understanding Health Insurance Premiums - Why do Premiums Continuously Rise?
May 13th, 2011 Susan Hart
Many people are often confused by rising health insurance premiums. Premiums seem to be on the rise across the board for everyone, regardless of individual circumstances. This leaves some people wondering why their particular premium increases when they are relatively healthy. There are many factors involved in the continuously rising cost of health care. Though it might not seem fair to raise a perfectly healthy person's premium due to some of the factors, most people realize that everything in life is not always fair.
The first thing that can increase the cost of health insurance premiums is the cost of new technologies. New technologies and new treatments are better and everyone wants them. The cost of improving treatments and technologies is passed down to consumers. Health care provides also increase their fees causing an increase in health care premiums. Just as people desire a raise in their current position, health care providers are entitled to raises as well. Health care providers are able to obtain those raises by fee hikes, and the insured is then responsible for paying a higher health care premium.
Health insurance premiums also cost more due to uninsured patients. Hospitals are required to treat patients without insurance. In many cases, the hospitals and doctors receive no payment for that treatment. A portion of the insurance premium then goes to cover the cost of that treatment. In other words, a perfectly healthy person who has health insurance shares the cost of treating the uninsured when they get sick. Government sponsored insurance, such as Medicare or Medicaid, only pay a limited amount for certain procedures or office visits. The amount is generally less than the regular amount a doctor would charge a patient who is not on such a program. This also leads to higher premiums as the difference in the actual cost opposed to what Medicare or Medicaid actually pays is passed down to the insurance companies.
Finally, insurance companies spend more on sick people. An unhealthy lifestyle is very costly for insurance companies. Smoking and obesity are two things that increase the need for health care. A majority of health care cost is spent treating conditions relating to smoking and obesity. Both conditions are avoidable. Health insurance premiums are directly affected by these unhealthy habits. It is also not possible for an insurance company to predict who will become sick and who will not. Therefore, the cost of premiums is raised across the board.About the Author:
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