What forces health insurance companies to raise rates?
Many factors cause the health insurance industry to raise their rates. Some of these factors include the overall age and health of the country’s population, advanced technology, and administrative costs associated with running the physical insurance company.
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Along with these factors, potential healthcare reform laws can also affect health insurance rates. To stay up to date on any healthcare reform changes you can go to Whitehouse.gov. Staying informed about healthcare reform is also important so you can take advantage of any new programs in your area.
How does the age and health of the population affect health insurance rates?
One of the most influential things affecting healthcare costs in the United States today would have to be the baby boomer generation. Baby boomers are the generation that was born after World War II between the years of 1946 and 1964. It is called the baby boomer generation because so many more babies were born in such a short period making it a very large new generation.
Today, the majority of baby boomers are at an age where their overall health is starting to waiver. That means that this generation is reaching a point in their lives when they will have more consistent health problems that are more expensive to treat. Health insurance providers can expect to have more and more health insurance claims as this generation continues to age.
Since they are such a large generation there will be more people in hospitals, which means that hospitals will have to hire more personnel and have more procedures and surgeries to do. This added expense could cause hospitals to raise the prices of their procedures, which means health insurance providers will have to pay more to cover their end of the costs. Since the insurers have to pay more, they will raise the premium rates of their policyholders to help cover the added costs.
The overall health of the population also greatly affects health insurance costs. The main issue that is affecting health in the United States is obesity. More people are dealing with excess weight today than ever before. Being overweight causes many health problems including diabetes and heart disease. Diabetes is by far one of the most expensive issues for the healthcare world today. As a chronic disease, the cost for treatment overtime really adds up.
Obesity is not just an issue for American adults, but has also become an epidemic among children as well. This means that more kids are developing diseases that could have been prevented, mainly Type 2 diabetes. If the population as a whole were healthier, healthcare costs would be much lower.
How does advanced technology affect health insurance rates?
In the past 60 years or so there have been more advancements made in the medical community than ever before. This is mainly because of the advancements made in technology. The technology that has made cell phones and purse size laptops possible has also made full body scanning and minimally invasive surgery possible.
These advancements might be amazing, but they are also expensive. The new equipment is very expensive so the treatments that use this equipment are also expensive. When a treatment or procedure costs more and becomes more commonly used the health insurance company might raise rates to make up for that price.
There have also been amazing advancements in medication as well, cancer medications especially. In the 1950s, cancers that were caught early were often a death sentence. Today people have a better chance than ever before of being treated successfully. These medications are often more expensive, which can increase rates.
How do administrative costs affect health insurance rates?
Many people often forget that health insurance providers are like any other businesses that are in competition with each other. A large amount of health insurance company costs go to marketing and advertising. This industry is very competitive and having the right advertisements in magazines and on television can make all the difference.
As more people are filing health insurance claims, the companies need more people to process these claims. Due to the increased amount of elderly people and chronic health problems, the medical field is one of the fastest growing in the United States. This does not just apply to hospitals and clinics, but health insurance companies as well. More personnel mean more salaries to pay, which could increase the rates of the policyholders.
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