Why health insurance is so expensive? Individual medical policies are like individual life insurance
policies—they generally become more expensive with age, and with health care
costs skyrocketing, so are the health insurance premiums. But that’s not
the only reason that drives the health insurance premiums up. Medical Costs are
the main factor that drives the premium of health insurance up. For example Federal
government spent 23% this year on healthcare cost and only 14% on education.
So it's no surprise that along with increased
health care cost comes increased health insurance premiums.
But why? Why health insurance and healthcare costs are so
expensive?
Let’s start with the basics.
Insurance is a bit like a
gamble between you and the insurance company. The company bets that they'll
take in more money in premiums than they have to pay out in benefits. You're paying a premium every month just in
case something happens.
If there are many sick
people that buy insurance and use the benefits, what happens is the insurance
companies have to pay more than they get in premiums. As a result, the
insurance companies have to increase the premium so they can keep up with
paying the claims.
Now, let’s look at the fact
why the healthcare costs are expensive.
There are so many reasons why health insurance is expensive, but
let’s start with the fact that the cost of medical school training and
education is ridiculous, putting up a huge barrier to entry, essentially making
it required that doctors are paid extremely well in order to
justify the high price of the education.
Other factors that make health insurance so expensive include the
demand for the latest technology and the high cost of malpractice insurance
that medical providers must purchase.
Another reason for the expensive health insurance is that
healthcare providers game the system to earn even more money than they already
do. For instance, drug companies are giving co-pay coupon cards to patients to
lower their out-of-pocket expenses so that they choose the drug companies' brand
drugs over generic prescriptions. In most cases, the patient generally chooses
the drug with the lower co-payment even though it costs the insurance company a
lot more when the patient uses name-brand drugs over generic versions, which
will eventually increase the cost of insurance premiums that these patients, or
their employers, will have to pay.
–Health insurance providers have to share the cost of
preexisting conditions. Due to the Affordable Care Act ruling, no one can be turned
away from getting health insurance due to a preexisting condition. As I mentioned
in the beginning of the video, this means the cost is distributed to everyone.
It also means that everyone need to buy health insurance. On the other hand, I personally
believe that in the long run, if everyone buys health insurance, this should normalize
the cost and stop it from going up every year.
Also, let’s face it - whether people have health
insurance or not, if they get sick where do they go? ….. Most likely to the
emergency room. Emergency care is very expensive. In most cases this is not even necessary. And
here goes the cost of health care--- up, up and up.
There are other factors that contribute to the
expensive health insurance costs. If you would like to add other reasons to the
list, please feel free to comment under the video! As always, thanks for
watching and please consider subscribing to our channel!
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