There are numerous factors involved in the rising cost of health insurance and one could write a book about them. Some of the most important factors are;
1) Health care costs continue to rise. Whether it is hospital services, physician care, prescription drugs or virtually any health care service you can name, their costs continue to rise from one year to the next. Health insurance rates are merely a reflection of the underlying costs of the health care services their policies cover.
2) Obamacare Taxes and Fees - buried in your health insurance premiums are taxes and fees that were created by the "Affordable Care Act". Some are direct such as a reinsurance fee that was over $5 per covered person per month in 2014 and is to be used to offset losses that insurance companies may incur from enrolling too many unhealthy members now that ObamaCare has prohibited underwriting for risk and pre-existing conditions exclusions, to the medical device tax that adds to the cost of a wide variety of medical devices such as artificial hip joints. These increased costs are, of course, passed on to the consumer.
3) Changes to how health insurance policies can be rated and issued - ObamaCare requires that health insurance policies be "guaranteed issue" (a person can't be declined for coverage) and that no pre-existing condition exclusions, limitations or waiting periods are allowed. This literally means that a person can be terminally ill or about to give birth and if they enroll during the annual open enrollment period or a special election period they are guaranteed to get coverage. Obviously, taking on a claim that can range from thousands of dollars to a million or more when the insurance company in turn may receive only a tiny fraction of that amount in premium payments from the sick or injured person creates a shortfall that has to be made up through higher premiums for other insured persons.
4) Increasing consumption of health care services. As the American population ages (with the Baby Boom generation moving into its retirement years) they naturally consume more health care services of all types. With the barriers to access to health insurance being removed and Medicaid eligibility expansion this also increases the consumption of health care services. A basic law of economics is that increased demand for something with a limited supply (there are only so many doctors, hospitals, etc.) will lead to higher prices.
While this is not a comprehensive list of the factors driving health insurance costs higher, these are some of the key ingredients.
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1) Health care costs continue to rise. Whether it is hospital services, physician care, prescription drugs or virtually any health care service you can name, their costs continue to rise from one year to the next. Health insurance rates are merely a reflection of the underlying costs of the health care services their policies cover.
2) Obamacare Taxes and Fees - buried in your health insurance premiums are taxes and fees that were created by the "Affordable Care Act". Some are direct such as a reinsurance fee that was over $5 per covered person per month in 2014 and is to be used to offset losses that insurance companies may incur from enrolling too many unhealthy members now that ObamaCare has prohibited underwriting for risk and pre-existing conditions exclusions, to the medical device tax that adds to the cost of a wide variety of medical devices such as artificial hip joints. These increased costs are, of course, passed on to the consumer.
3) Changes to how health insurance policies can be rated and issued - ObamaCare requires that health insurance policies be "guaranteed issue" (a person can't be declined for coverage) and that no pre-existing condition exclusions, limitations or waiting periods are allowed. This literally means that a person can be terminally ill or about to give birth and if they enroll during the annual open enrollment period or a special election period they are guaranteed to get coverage. Obviously, taking on a claim that can range from thousands of dollars to a million or more when the insurance company in turn may receive only a tiny fraction of that amount in premium payments from the sick or injured person creates a shortfall that has to be made up through higher premiums for other insured persons.
4) Increasing consumption of health care services. As the American population ages (with the Baby Boom generation moving into its retirement years) they naturally consume more health care services of all types. With the barriers to access to health insurance being removed and Medicaid eligibility expansion this also increases the consumption of health care services. A basic law of economics is that increased demand for something with a limited supply (there are only so many doctors, hospitals, etc.) will lead to higher prices.
While this is not a comprehensive list of the factors driving health insurance costs higher, these are some of the key ingredients.