Small Business Health Insurance Plans Quotes Prices

Why Are Premiums increasing at the Rate they Are?

   
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Why are premiums increasing at the rate they are?

There are a number of factors contributing to rate increases, including:

• Advances in medical technology and drug therapies;
• Higher hospital and physician charges;
• Greater utilization of medical services and treatments;
• Medical cost-shifting;
• Aging of the population;
• Unhealthy lifestyles;
• Adverse selection;
• State insurance taxes and fees;
• Assessments for high-risk pools; and
• Regulatory compliance.

As an industry, we spend an average of 85-90 cents of every premium dollar on covering medical services to our members. Our insurance plans cover physician services, inpatient and outpatient hospital costs, drugs and other medical services. Another 10 to 12 cents per premium dollar is spent on providing administrative services, such as call center and information technology, claims processing and wellness and disease management programs. Only three to five cents of each premium dollar represents profit (according to America’s Health Insurance Plans).

How profitable are insurance companies?
While health plan profits continue to be a point of political debate, reliable sources note that these profits are not a key factor in ever-increasing health care costs:
• Fortune 500 places the health plan industry’s profits at 2.2%, well below profits of other sectors of the health care iidustry;
• ABC News reports that health plan profits are neither as high as some sources claim, nor are they the main factor in health care costs: “…the companies’ profits still represent a miniscule percentage of the $2.5 trillion Americans spend every year on health care.”

       
         
         
     
     
     
       
       
       
       
       
       
       
       
       
       
       
       
       
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