Why is health insurance so expensive now?
There are many factors that contribute to the high cost of healthcare in the country. These include wasteful systems, rising drug costs, medical professional salaries, profit-driven healthcare centers, the type of medical practices, and health-related pricing.
“Inefficient regulatory environments in states like California, New Jersey and New York, combined with inflation and increased catastrophic losses, have left consumers with fewer choices of insurers and higher costs,” he said.
Health insurance can help reduce your risk of racking up medical debt. Only a handful of states enforce financial penalties if you don't have health insurance but it's still wise to have the financial protection.
Increases in rates are caused by changes in medical inflation (health care services cost more), demographics (aging population), changes in benefits, technology, and utilization.
Since 2008, the average cost of a family health insurance premium has risen 75% compared to a 42% increase in average hourly wages and a 26% increase in inflation. “Many workers probably don't realize that family premiums have exceeded $20,000 a year.
Health spending in California shot up 60% in 10 years, reaching $10,299 per person in 2020. This includes what private insurers, public programs and individuals pay for care and prescriptions.
| The Average Cost of Health Insurance in 2024 | ||
|---|---|---|
| State | 2024 cost | % change |
| California | $600 | 11 % |
| Utah | $599 | 7 % |
| Oklahoma | $596 | -6 % |
People in poverty pay more because they experience different risks. Some lower income individuals are considered to face higher or more costly risks than others. The market charges insurance premiums that are higher to reflect these increased risks.
New data out on Wednesday from the Bureau of Labor Statistics showed auto insurance costs last month were 22.2% higher than they were a year ago and increased from February's 20.6% year-over-year gain. March's rise in insurance costs is the largest gain since December 1976, when prices rose 22.4% over the prior year.
There are many factors that contribute to the high cost of healthcare in the country. These include wasteful systems, rising drug costs, medical professional salaries, profit-driven healthcare centers, the type of medical practices, and health-related pricing.
Is it smart to not have health insurance?
Financial consequences
Without health insurance you may get charged much more for care that would otherwise be covered by your plan. This is because no one—usually the insurance company—will be subsidizing your cost of care. As a result, you may have to pay higher charges for the same services.
The cost is one of the main limitations of private health insurance. While affordable private insurance options do exist, private plans tend to have higher prices compared to public options. This makes them often less affordable for certain individuals, especially those with lower incomes.
Platinum health insurance is the most expensive type of health care coverage you can purchase. You pay low out-of-pocket expenses for appointments and services, but high monthly premiums. Plans typically feature a small deductible or no deductible and cheap copays or coinsurance.
The biggest, UnitedHealth Group, made $324bn in revenues last year, behind only Walmart, Amazon, Apple and ExxonMobil, and $25bn in pre-tax profit. Its 151m customers represent nearly half of all Americans.
Individuals enrolled in group health plans paid an average annual premium of $8,435 in 2023 (about $703 per month), according to data from independent health and medical research firm KFF. For families, the total annual premium averaged at $23,968 — or about $1,997 per month.
The federal government provides the majority of Medi-Cal funding, and about nine in ten Covered California enrollees rely on federal subsidies.
Network Strength: A Decisive Factor. Blue Cross Blue Shield boasts an extensive network of healthcare providers, giving policyholders the flexibility to choose from a myriad of doctors, specialists, and hospitals. This network strength, while beneficial, contributes to the overall cost of the insurance plans.
Health insurance without a subsidy can be expensive, but you can qualify for a subsidy that can help you cover the cost of health insurance. Essentially, a subsidy covers a portion of your health insurance expenses, making the total cost much more affordable.
WASHINGTON, D.C. — Mar. 31, 2022 — An estimated 112 million (44%) American adults are struggling to pay for healthcare, and more than double that number (93%) feel that what they do pay is not worth the cost.
The Share of Americans without Health Insurance in 2022 Matched a Record Low. In 2022, 26 million people — or 7.9 percent of the population – were uninsured, according to a report in September 2023 from the Census Bureau.
How to solve rising healthcare costs?
- Reducing Administrative Costs.
- Focus on Preventive Care.
- Eliminate Unnecessary Tests and Procedures.
- Controlling the Costs of Prescription Drugs.
- Linked Article.
A separate report by WTW, released in November, found that insurers said they expect medical costs to increase by about 9% in the U.S. this year. Insurers cited forgone preventive care throughout the pandemic, expensive new drugs and over-treatment by providers as reasons for the upward march.
Similarly, health insurance rates can increase depending on zip code, cost of medical care in the area and population health factors, such as the local obesity rate.
HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket. PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral. Out-of-pocket medical costs can also run higher with a PPO plan.
| Health insurance plan member | Average monthly cost for an HMO plan | Average monthly cost for a PPO plan |
|---|---|---|
| Adult individual age 21 | $342 | $404 |
| Adult individual age 27 | $361 | $423 |
| Adult individual age 30 | $390 | $458 |
| Adult individual age 40 | $438 | $516 |
