Insurance is a fact of life in America, and sometimes the premiums take a fairly large bite out of our monthly budget. While some costs are unavoidable, others are the result of circumstances beyond our control. Fact is, the United States spends up to three times what other developed countries spend on healthcare – and we have worse outcomes.
So why does the average American pay so much on medical insurance? Here is some insight.
Medical Insurance Pricing Factors
Americans actually go to the doctor less than people in other countries, and are hospitalized less often as well. Not only that, with so much money going into health care the United States was rated last on the list of the top 11 industrialized nations as to the quality of our care; and 37th on the list overall (source: World Heath Organization)
So why do we pay so much for our insurance premiums?
Administration: Because of the paperwork and red tape involved in processing insurance claims – especially in the area of coding – reports are showing that the administration of medical insurance claims actually represents a full 25% of the costs passed onto the consumer.
More Advanced Equipment and Technology: Although we go to the doctor less, the medical technology which is available to us when we do go is state-of-the-art. The United States is cutting edge with medical technology – and the cost of obtaining the equipment, training the personnel, and making the procedures available is quite high.
Drug Costs: A significant difference in health costs between the U.S. and every other developed nation is the cost of drugs. In most other countries, the government can negotiate prices with the drug manufacturers, but in the U.S., Medicare Part D specifically denies Medicare the right to use its influence to negotiate drug prices. (The Veteran’s Administration and Medicaid, which still have the ability to negotiate drug prices, offer the lowest drug prices.)
Defensive Medicine: We live in a litigious society, and doctors are afraid of being sued. Therefore, even if they are certain of a diagnosis, they may order multiple additional tests to back up their conclusion. It is estimated that up to $650 million per year is spent on tests ordered for this purpose, and those costs are then passed along – appearing as higher insurance premiums, co-pays, and out-of-pocket costs to the consumer. Defensive medicine also affects the amount of tax payer dollars which will be needed to pay for government healthcare programs.
Medical Insurance Fraud: In retail, prices are driven up because stores have to recoup the losses due to shoplifting and theft. The healthcare industry is no different – unfortunately, costs are often driven up by the bad actors who commit fraud. Medical insurance fraud is more prevalent than ever, with the FBI reporting over $2 billion in fraud in 2018. Health insurance fraud occurs when a company or an individual defrauds an insurer or government health care program, such as Medicare or equivalent. Some of the more flagrant instances of medical insurance fraud include Simple Health Plans and Alliance Insurance Group.
It is easy to see why our society contributes to higher medical insurance costs. But if you are looking for lower insurance costs, call a local Sarasota insurance agent. We can help you to navigate the coverages available, as well as explain your options in the new health care environment.
Whether you need insurance for your health, home, car or business – Anderson & Associates Insurance Group is your best call in Parrish and Bradenton. Call us today for advice, information, or a complimentary rate quote.
