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What Are The Main Reasons For The Rising Cost Of Health Insurance

2010-01-25

The cost of health insurance has risen steadily over the years with seemingly no end in sight. The cost of health insurance coverage for a healthy 25 year old male has almost doubled in the last twenty years. This increase in the cost of this fundamental service has been distressing not only for the insured but also those directly involved in the health care industry and government. There are many reasons why health insurance costs have been steadily rising year after year and can be lumped into three main reasons. These reasons are unnecessary administrative work, the overuse of medical resources by the population and the fear of malpractice suits.

The first main reason is the excessive cost associated with the vast amount of paperwork and administrative duties necessary for maintaining and providing accurate health care records and insurance filings. There is a huge cost attached to the manpower required to perform all of the administrative duties involved in collecting and filing the required paperwork. There is also the cost of all the physical paper and courier services that are needed to facilitate this process, which in addition to the administrative duties, contributes to the overall cost. The second main reason is the general population's overuse and misuse of the medical resources available for non-threatening and trivial reasons. For many people, the true cost of using an emergency room of a hospital is not apparent to them because they do not have to pay the full cost of doing so. Each time an unnecessary expensive test is given and a doctor has to waste time and resources on a trivial problem, it costs money. However, most people only have to pay a deductible, therefore the insurance company has to pay the true cost, which leads to the general increase in the rise of the health insurance rate.

The third main reason for these increased costs is that the fear of malpractice suits has caused the medical industry as a whole to perform unnecessary tests and exams to help protect nurses, doctors and medical institutions from litigation. Accidents and the inability of medical treatment to be effective are inevitable in the medical field, and as a result, many families decide to sue the doctors and hospitals for restitution. This increase in litigation has caused a costly rise in the use of unnecessary tests leading to the increase in health care costs. This increase is due to the hospitals passing these costs onto the insurance companies for payment. The average current health insurance policy is a reflection of the rising cost of health insurance and unless the reasons for these increases are addressed, the problem is likely to continue.

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