4 Reasons Why Health Insurance Will Be So Expensive in 2020
Why is health insurance so expensive? According to the Health System Tracker, the total health spending of a family of four with employer insurance coverage is about $22,000. Ten years ago, that number was closer to $15,000.
So what is causing these rising costs? The healthcare system is very complex, so a lot of factors come into play. From a high level, here are just a few that are driving the rise.
High Administrative Costs
The United States is a big country with a lot of people. That naturally leads to a lot of companies to support those people, including health insurance companies, hospitals, and doctors’ offices. All of these companies have to work together, but that gets complicated. For example, a hospital system has to both negotiate and execute the terms it works out with each insurance company it accepts. That takes a lot of man-hours, which leads to high costs.
It’s not just hospitals though – think about urgent care and doctors’ offices. Even though they usually have small administrative staff, they still need to spend time processing these insurance claims. That time costs the office money, which gets passed onto the patient and their insurance company.
Specialists Cost More
The great thing about healthcare in the U.S. is the high number of specialists we have. If you live close to a city, you likely have the ability to choose which specialist you want to go to. For example, you may have access to 10 different cardiologists. That’s great, as Americans like feeling in control of who they go to for health care.
There’s a downside to having so many specialists though. Doctors who focus on one thing are more expensive, increasing our overall healthcare costs. Someone has to pay the high fees these specialists charge, and those fees get passed onto the insurance companies and patients.
Drugs are Expensive
Pharmaceutical companies spend billions of dollars on research every year. They need to invest a lot of money up front to develop the next game-changing drug. When the drug finally hits the market, they charge high prices to recoup the upfront costs they had invested. That means both patients and insurance companies pay an arm and a leg for the medicine.
Some entities, such as the Veterans Administration and Medicaid, are able to negotiate lower prices of drugs. Medicare doesn’t have that ability, and it costs Americans billions of dollars a year.
People Live Longer
Perhaps the biggest driver of increasing healthcare costs boils down to this – we live longer. In 1919, the average lifespan for a female in the U.S. was 56 years old. By 1998, it was 79.
As our society grows older, it makes sense we’ll need more and more healthcare. Our bodies break down and need modern healthcare to restore them. From drugs to surgery, the miracle of living today is our ability to greatly extend the lifespan of humans. The price we pay is in healthcare costs, which expand to impact both young and old. Maybe this trend will decrease if Americans as a whole started eating and exercising better, but it’s difficult to change the culture of such a big nation.
Will health insurance be more expensive in 2020? Most likely. Nothing has changed in 2019 that shows the trend will reverse. The good news is you can improve your chances of getting a great, affordable plan if you pick the right partner. That’s where we come in.
Send us an email at info@partnersdirectins.com or give us a call at (877) 600-7347. We’d love to help you navigate the insurance world and help you get a great, affordable plan.
Courtesy of Cuselleration
