Thursday, February 7, 2013

Why health insurance plans are so expensive


Doctors only receive a fraction of billable costs
The monetization of insurance over time raised insuree costs

By Jessica Myers

Health insurance is one of those necessary evils. Many Americans can’t afford it, however, and are left uninsured and at-risk for having to pay high medical bills. Obamacare has instituted a plethora of changes - with more changes to go into effect soon - that aims to lower the cost of health insurance and make it accessible to everyone.

What happened, however, to get us to this sorry state of affairs? In other parts of the world, health insurance is given to everyone free, as part of them paying their taxes. Health care is much more inexpensive, even for the same or better quality care. Why do Americans have to pay health insurance premiums and medical bills that are so high? Why is health insurance so expensive? Here are just some of the reasons.

History


Health insurance companies were originally ran by doctors and hospitals, and it was simply a means of helping people pay for their bills. Back then, it was with good intentions, and it helped a lot of people who had poor health and lots of bills. Eventually, however, finance professionals took over health insurance companies, and that’s when things began getting a lot more complicated. Insurance companies knew they had the potential to make a lot of money, and they started finding ways to do it. Health insurance wasn’t just about helping people anymore.

Profit over care


Unfortunately, health insurance still isn’t really about helping people. The insurance companies will try to tell you differently, of course, but what they’re most concerned about is their bottom line. If someone needs expensive procedures in order to survive or vastly improve the quality of life, they have to jump through hoops to get it approved by insurance companies who want to deny it simply because they might not earn as much money because of it. People who really need care often go without it because health insurance companies have profit-motivated policies. If this seems absurd, it is.

Inflated costs


In order to make it seem like you’re saving a ton of money with your health insurance, billing charges are almost always highly inflated. A 10-minute visit to the doctor may be billed for $200. A procedure that costs $1,000 may be billed as $10,000. With health insurance, you pay only a copay or a portion of the bill, and you feel like you’re saving a ton of money. In reality, no one is paying that much for the services. The doctor that billed your insurance company $200 might receive half of that.

Preexisting conditions


Another reason health insurance costs so much money is that your premium costs rely on your health condition. Obamacare will change some of these things, but in the past, you might not even be able to get health insurance when you’re sick. If you do get it, they might not cover your preexisting conditions at all, and they’ll charge you a lot more than a healthy person. In addition, costs for healthy people will rise simply to help cover the costs to insurance companies for covering sicker people.


About the author: Jessica Myers is a retired insurance professional and freelance writer that shares tips to help decipher insurance and their complicated policy details.

Image license: US-PDGov

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