Why Health Insurance Premiums Rise, But Coverage Falls

If you’ve done any kind of cost analysis on your health insurance lately, you probably know that you are paying a lot more for less coverage.  I know that was the case for my family.  According to NBC News’ Maggie Fox in the article “Health insurance: US paying more for less, report finds,” premiums and deductibles have been increasing while coverage has declined.  Personally, our deductibles and co-pays have been increasing for years at the same time as less of our health care costs are covered.  Oh and our premiums have gone up too.  In the last eight years, health insurance premiums have actually increased 60%, according to the non-profit Commonwealth Fund.  Within eight years, average family health insurance premiums are estimated to be $25,000 a year.

Expenses rising are the main reason for the rising costs across the board.  But many of these rising expenses are unnecessary.  There is a ridiculous amount of waste in the industry.  An Institute of Medicine estimate in 2009 showed $750 billion wasted on unneeded administrative costs, services that are not necessary, fraud, and other expenses.  Both the private and public health insurance markets have to work to lower costs through better coordination of care, little to no duplication of services, and lowering administrative costs.  As sort of a double whammy on Americans, as their health insurance costs increased, their wages either stayed the same or increased at a lower level.  Most households have seen the percentage of their income taken up by health care expenses increase over the past eight years.

Adding fuel to the fire, many Americans have lost their jobs, and therefore their employer health insurance, in this same time frame.  Families are going into the insurance market on their own and comparing quotes from companies like Mercy health plans.  Only 55% or so of Americans have an employer-sponsored health insurance plan, leaving millions of Americans uninsured.  The Affordable Care Act is hoping to take some of the uninsured Americans out of the market by getting them better access to affordable health insurance, but the ACA has its opponents.  Some right wingers are worried that expenses will rise even further with the Affordable Care Act.  Regardless of what terms are used or who is supportive, the industry as a whole needs to work to eliminate this waste and lower expenses for health insurance.  It will simply not be good if everything but coverage keeps on rising.

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