Why is the Cost of Health Insurance Rising So Fast?
When people try to explain why health insurance premiums are rising so fast, the common explanation you’ll get is that the cost of healthcare is rising. And, yes, this does have something to do with the reason health insurance premiums are increasing. But it’s not the reason health insurance premiums are so out of control. So you’re asking, what is the main reason then…?
We’re too fat and we overuse our healthcare system
According to a recent study in the New England Journal of Medicine, our country is about to experience the first ever drop in life expectancy.
“we see a threatening storm — obesity —that will, if unchecked, have a negative effect on life expectancy.”
Why are we so fat compared with other countries? More of us have cars to get us around and food is faster and easier to get, and there is more of it. The rest of the world is starting to catch up with us because they also enjoy salty, fatty food and the luxury of motorized transportation, but they just can’t keep pace because they don’t quite have the same access to those things that we do.
Oh yes, I know, fast food is just an easy target, but there’s a reason. According to the Worldwatch Institute:
In the United States, an estimated 65 percent of adults are overweight or obese, leading to an annual loss of 300,000 lives and to at least $117 billion in health care costs in 1999.
That’s a loss of .1% of our current population (as of tuesday) annually because of obesity! Not to mention the expensive healthcare bill. Combine that with the fact that the sickest 10 percent of people account for 70 percent of the cost outlay for healthcare, according to Karen Davis of The Commonwealth Fund, and you can see how much of a burden it is on our system.
We’re getting fatter; we have the wrong idea of what health insurance is to be used for and usage of the system has increased dramatically.
I read articles in the Denver Post saying ”Insurance Costs Outpace Wage Growth“ and you hear people asking: “How can the insurance companies justify the rising of premiums when what they pay to the health providers do not go up. Also saw a chart recently that show over a 30 year period premiums rose about 70% where wages only increase about 30%, where is the justification?“ – Answer: wages and premiums aren’t correlated.
The most eloquent explanation I’ve seen is from a comment on InsureBlog:
Last month I bought a rake at the hardware store and paid 12.00 for it. This month my son and daughter in law came to visit and I bought two more rakes for 12.00 each. Well, I just got my mail and doggone it my rake bill this month is 24.00! 24.00 is twice what I paid last month. How can the hardware store justify the rising of the cost for rakes when what they charge for rakes did not go up!!??
tags: healthcare health insurance premiums
Oct 22nd, 2006 at 8:43 pm
[...] This is a follow up to our last post about how obesity has a huge impact on health care usage, and therefore contributes heavily to skyrocketing health insurance premiums. Most Americans with health insurance get their coverage through their employers. Group health insurance through an employer is required to cover all qualified employees, regardless of medical history. An employer can set certain standards, such as number of hours worked per week, but then anyone who meets the employer’s requirements and enrolls with the health insurance policy will automatically be covered. Employers are required to pay a portion of the premiums, but as rates go up, they are increasing the amount that they require the employee to pay for coverage. [...]
Apr 27th, 2007 at 10:51 am
[...] Now that there aren’t any employer sponsored health insurance plans and everybody is an individual or family, everybody will be required to purchase an option from their state’s Health Help Agency (HHA). The HHA will offer a variety of plans which are required to be as good as or better than the Blue Cross Blue Shield Standard Plan used by Congress. All of the plans will be community rated by state, eliminating adverse selection and problems for people with pre-existing conditions. The only rating variables health insurance companies can apply are geography, family size, and smoking status (although I’d like to see obesity added). The government will subsidize those earning up to 400% of the poverty level and fully subsidize those at or below the poverty line. There are more details, but that’s the gist of it. [...]
Oct 23rd, 2007 at 11:20 am
[...] experts love to talk about the problems that obesity is causing (especially in the health insurance industry). But the messages are very mixed. Pick up any health-oriented magazine and you’ll find an [...]
Jan 19th, 2010 at 11:43 am
[...] Colorado health insurance insider (the only U.S. state <19% obesity) states: “the main reason health insurance premia are out of control: we’re too fat and we overuse our healthcare system.” Ouch. Off the couch! [...]