Why does health insurance cost so much?

Question

Just wondering why the cost of healthcare is so high and why it continues to rise year after year

Answer 1

Not only is health care inherently expensive (have you tried to buy an MRI machine recently?), but liability insurance premiums take a huge bite. An Ob-Gyn can expect to be paying $100,000 a year for insurance; some other trades cost even more. That money is making the lawyers rich whenever anyone has an even remotely credible malpractice claim.

Answer 2

The short answer is this. Insurance companies charge more becaue providers charge more. Medical providers charge more because they have higher costs, significantly malpractice insurance. Malpractice insurance is so high because there are so many lawyers trying to get people to sue their providers for every little mistake (or sometimes not even). Lawyers try to get people to sue by taking the cases on contingency, which means if they lose, the people don't pay, but if they win, the lawyer gets a big cut. So what's there to lose for the patient?
Another reason is that the drug companies only have so many years of patent protection to recover, not only the R&D costs of the new drug they are selling, but the costs for the 25 other drugs that failed. This makes new drugs extremely expensive in the first 7 years or so, driving up insurance costs.

OK, so it wasn't so short.

Answer 3

Insurance premiums are high because we demand a high level of immediate, exceptional service. No one wants to hear that they can't have the expensive tests their doctor ordered, or they can't take that new drug that's going for $3,000/month.

And as long as people insist on running to the doctor and demanding some kind of drug(s) for every little sniffle, we'll have the same problem.

This is actually why Health Savings Accounts and the associated high-deductible health plans were created. Because having to meet a high deductible discourages people from using their health care benefits frivilously, as those with the "cadillac" plans may choose to do. (After all, if your company paid 100% for your health insurance with a $10 copayment for pretty much everything and no deductible, why WOULDN'T you go running to the doctor and/or ER at the slightest provocation?)

Sure, you can blame the health insurance companies; it's a popular thing to do, after all. But in the end, we're ALL the reason our health care costs are so expensive. And no health insurance company is ever going to price themselves out of business. So, as long as health care consumers demand expensive services and prescription drugs, the health insurance companies will continue to charge more.

Answer 4

That's not an easy question to answer. Part of the reason is liability for providers--when the AMA was policing itself, they didn't do a very good job, so lawsuits became a profitable business. New technology costs money to install and train personnel to run it, so health care providers charge more. Most regulations are written by the special interest group representatives to the state and federal legislatures where they lobby our representatives to introduce this "reform" bill to become law. Insurance companies charge what the law allows and get to determine who is "high risk". High risk people get charged more. Insurance companies also negotiate with providers to set a fee lower than the uninsured pay, so if your doctor's not on their list, he can charge more, but you'll pay more out of your own pocket. Health care costs are due to doctors wanting to earn a living, technology, insurance premiums, and lawsuits.

Answer 5

ISO is exactly right. In addition to that, those that have insurance help offset the expense of those that do not have health insurance. Also, prescription drug companies are making a record profit of about 800%. Where do you think their money comes from? Health insurance companies, of course!

Answer 6

Because we keep spending more and more on health care benefits. More outgo menas more has to come in.

We're living longer, getting fatter, visiting doctors more often, and taking A LOT more prescription maintenance drugs. We have fancier tests, more surgical procedures, and want insurance companies to pay for everything - while forgetting where insurance companies get their money from.

Answer 7

I'm sorry csucdart that you lay the blame of your high insurance premiums on the
old folks, but what you may not know is that they also must pay the same premiums and more.
Let's lay the blame where it really originates. Insurance companies are
now mega-billion dollar corporations
who trade on the stock market. They
must make a high profit. Check out
the profits of insurance companies,
pharmaceuticals,medical equipment,
etc. The premiums far outway the
delivery costs.
Our Government will put no cap on
what any of them can charge. In Canada there are caps. The government pays the cost so they
structure the fees. Whoever has the
most control and dominance--gets the bucks. (In any consumer field.)

Answer 8

The short story is so many doctors and patients have abused the system over the years that it makes costs rise. There are people who rush to the Emergency Room for every burp and fart and demand every test under the sun, instead of coordinating care with a primary doctor. There are also doctors who order and/or perform all these tests - most of which aren't necessary - to pad their bill. Because of such abuses, costs rise, and it trickles down to the consumer.

Answer 9

it is not true the health insurance or the mediclaim has a very less cost for a year or the annual premium for Rs 1000. with this small premium you can forgo major medical expenses such as ICU , surgery etc

Answer 10

It's expencive because when you get into accidents like breaking your arm you need health insurence to get treatment.