Health Insurance Articles

What Proposed Budget Cuts Mean For Health Insurance Rates

2011-06-01

When it comes to budget cuts, health care and health insurance rates are a large part of the equation. When budget cuts are discussed, heath care is affected. The costs of health care have continued to rise at a steeper rate than most of the other components of our nation's economy. Budget cuts and health insurance go hand in hand. A large part of our government's spending is devoted to health care. Medicare and Medicaid and government subsidized employer provided health insurance make up a significant portion of the budget. Budget cuts mean increasing health care costs and health insurance rates.

The health insurance industry is often blamed for the problems with health care, but in reality health insurance rates are the barometer of the health care system. If the fees paid to doctors and hospitals are too low, because of Medicaid and Medicare restrictions for example, they either stop participating in the programs or try to make up the lost income by raising rates. In order to continue to provide health insurance, at some point health insurance companies must raise health insurance rates to compensate for the increasing amounts of money paid out.

When less people are insured and when Medicare and Medicaid pay less for health care and have greater restrictions, the health care industry loses money. Nobody wants to have lower income or lost jobs. In order to maintain salaries, the cost of procedures, office and emergency room visits and more continue to rise. When the health care industry gets paid less or does not get paid at all, the costs of health care goes up. The health insurance industry is the single largest income source for the health care industry. The health insurance industry is paying more and more. This means health insurance rates have to be higher to pay for escalating costs. In order to stay in business and provide much needed health insurance, health insurance companies by default must increase health insurance rates.

Budget cuts also mean less assistance in areas of food and utilities and other services provided to those already struggling. In the end this also means increasing health care costs. Without proper food, heat and medicine there is an increase in illness and the need for health care by people who cannot afford insurance and cannot pay for their health care.

Budget cuts and health insurance cannot be separated. Budget cuts mean rising health care costs, which mean increased health insurance rates. Health insurance is only one factor in the cost of health care. In this continuing circle of rising costs and rising health insurance rates, they go hand in hand.