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Why are health insurance costs rising so fast?

Health insurance costs are rising fast and couple strugglesHealth insurance costs are rising and rising quickly for a number of reasons that include uninsured patients, the cost of bringing new drugs to market, and the unhealthy habits of Americans.

Usually, the healthcare system refers to private insurance companies, which insure about 85% of Americans, according to the United States Census Bureau.

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About 60% of that 85% get their insurance policy through their employer’s group health insurance plan. Only 9% purchase health insurance outright. The government speculates that about 15% of the working population is currently living without health insurance.

Is cheap healthcare the problem?

Some commentators and industry sources will tell you that the cost of uninsured patients is what is driving up the cost of premiums. Medical sources suggest that the cost of healthcare, on average, is jumping up to four times the rate of inflation. This line of reasoning suggests that when uninsured Americans do not pay for their health care services, the price of health insurance increases for everyone.

Allegedly, on the occasion that uninsured Americans do pay, they never approach the real price of treatment. This takes its toll on the medical economy. When a family is not insured, this removes personal accountability and some people start taking advantage of the system.

Eventually, this turns into what is called “overconsumption.” This is a valid theory because effective medical treatment is directly related to cost, whether we would like to admit that or not. The NCPA (National Center for Policy Analysis) states that for every one dollar of hospital care that the average patient receives, he or she will only pay three cents. The rest of that dollar is covered by the employer, the insurer or non-profit government services.

Other sources in the medical profession, believe that paying insured patients hold more accountability than uninsured patients. Some medical professionals state that insured patients and even doctors cause healthcare increases by taking advantage of “covered treatment” and ordering more tests and procedures than they can actually pay for. Other reasons cited for the increase in insurance include the release of new pharmaceutical drugs and new medical equipment.

What are other contributing factors?

The fact that people are slowly but surely getting unhealthier cannot be helping the problem. There are more cases of obesity, disease, medication needs and natural aging being reported every year and they are affecting a great number of the baby boomer population.

The price of certain procedures, like cosmetic surgery prices, is also increasing, and unlike other medical procedures, plastic surgery is a treatment usually paid by patients out of pocket. Within the last 10 years, cosmetic procedures have increased by 26%.

You also have to consider competition in the industry. Not only are some doctors increasing their wages because of economic demands, but they are also facing greater competition because of Internet marketing. Now, doctors all over the nation have easy access to a worldwide audience of patients willing to travel for expenses. There are even reverse auction websites where doctors can bid on surgeries!

There is certainly no exception to the rule when it comes to group insurance. Employer cost is also going up (some surveys suggest as high as 60%). One possible reason for the increase is that some employers are switching from co-pay to co-insurance. This means that instead of paying a fixed price, patients are now paying a percentage of the entire doctor’s bill.

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Universal Healthcare: a solution or another problem?

Where does the subject of universal health care fit in? Most proponents of the Democratic universal health care proposal suggest that adopting such a policy would be good for the economy and medical industry, because uninsured patient bills are shared by all; therefore, increasing the cost for all Americans. The universal healthcare—in theory—would lower the cost of medical coverage and improve quality.

Naturally, opponents of the plan state that American citizens should have the right to choose their own health care system, or even opt-out of health care, if it is their choice. Studies have been presented suggesting that self-employed individuals do not lead significantly different lives than those who are insured.

One thing is for sure: the largest health insurance providers in the country reported a 56% gain in profit from the previous year. This means that though more people are paying for health insurance, and are paying more money for treatment, all of that money is going towards filling out the “dollar”, which is quickly eaten up every time we go to the doctor. The medical industry, as a whole, is still far from becoming a profitable industry when you consider all the figures.

The best way to protect your self from the rising costs and questionable future of the health care industry is to be your own advocate. Obtain multiple insurance quotes from providers in your area, and check those rates at least once a year. Consumers who are the most aware and proactive make the best decisions.

To use the third party rate tool provided at no charge on this page, just type in your zip code and compare the health insurance quotes you’ll receive!

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