Health insurance has become one of the largest monthly expenses for the vast majority of Americans. Not only has it become quite expensive, but for many, health insurance isn’t even available because they simply don’t make enough money to fit health insurance into the budget. This has left hundreds of thousands of Americans without adequate health coverage, including many children. For these reasons, health insurance has also become one of the biggest concerns for most people in the coming elections. So, why has health insurance become so expensive?
The first thing you need to understand about health insurance companies is that they are businesses whose sole interest is to make money by providing a service. In order to make money, these companies must turn a profit by bringing in more money than they spend. In today’s regulatory environment, along with the increased number of lawsuits related to health care, the cost of doing business in the health insurance industry has skyrocketed. These companies, in turn, have had to raise rates to accommodate those additional costs in order to keep making a profit.
That’s not to say that health insurance companies are completely honest with you about just how much health insurance is going to cost you. Most health insurance companies quote premiums based on age. You’ve seen the television ads that offer health insurance for a mere $129 per month for a 29 year old non-smoker. While that sounds like a very reasonable rate, there is more to this than meets the eye.
In order to get the rest of the story, so to speak, you’d need to look at the actual policy and the so-called “fine print.” In order to qualify for that low $129 rate, you’d have to be a perfectly healthy person whose never gotten sick in the past and have absolutely no reason to need health insurance in the first place. In short, they can offer this rate because there is little to no risk that the company will have to pay out any kind of benefit to this person.
Another thing you might not notice from just watching the advertisement is the size of the deductible. For the rate mentioned above, the deductible is likely to be somewhere around $1000. For other policies, the deductible can be as high as $5000.
So, what is a deductible, you might ask? The deductible in an insurance policy is the amount of money you must pay out of pocket before the insurance company will start paying out benefits. Usually, the deductible does not apply to all health care expenses, so you have to pay careful attention as to whether the policy is worthwhile in your particular situation. In some cases, you would spend less money just paying for health care services out-of-pocket than actually purchasing health insurance because of the deductible.
Another thing that might raise the price of insurance coverage is a pre-existing condition. This is any condition that existed before you purchase coverage with any specific health insurance company. In many cases, you may not be able to get coverage for that condition at all, unless you can prove that you have had continuous care for that condition during the time in which you had no insurance. Even if it is covered, you can be assured that it will cost you more money for it.
Because of all of these variables, most people wind up with far higher premiums than those low rates advertised on TV. In some cases, people may not even be able to get insurance at any price, due to the perceived risk to the insurance company. In many cases, the resultant premium is just simply too high to fit into an individual’s budget, and so they continue on without health coverage.
High insurance premiums are a fact of life in these times, and are likely to remain so for a long time to come. The only way to change this is to fundamentally change the approach to providing health care in this country, by socializing the health care system. This, however, comes with its own set of problems that can be worse than the current system in many respect. The bottom line is that there are no easy answers to solving the health care problems in this country. The only thing you can do is to be aware of all the issues surrounding the problem and make your decision based on facts, and not what the talking heads on television are trying to tell you.