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What Causes Medical Insurance to Raise in Price?

Every year, you can expect the cost of living to go up. Medical insurance rates are no exception. As the American population ages and new laws and reforms are introduced, there are plenty of reasons why your rates could increase. If you want to lower your rates, stay as healthy as you can.

  1. Health Reforms

    • According to the Congressional Budget Office, under health-care reforms signed into law in March 2010, premiums will rise for many people who buy insurance on their own as individuals -- part of what is called the "nongroup" market. This group will account for 17 percent of the insurance market in 2016, according to the CBO. Average premiums for the nongroup market would rise 10 to 13 percent under the reforms because of a 27 to 30 percent increase in covered health-care services. At the same time, the premium increase would be offset by lower costs incurred to deliver coverage. In addition, the CBO says government subsidies would lower costs by about two-thirds for more than half of the individuals in the nongroup market, depending on their federal poverty level. People in the small group and large group markets, which make up 13 percent and 70 percent of the total market respectively, will have a much smaller premium increase. Employment-based coverage could increase by 1 percent -- but could also decrease by 2 percent.

    Age

    • The older you get, the closer you are to reaching the end of your life expectancy. As you age, you become more prone to health problems. With baby boomers reaching the senior age group, further stresses will be put on the health-care systems, forcing an increase in rates.

    Activities

    • Your activities or even your job can be a reason why your health insurance rates increase. If you drive a motorcycle, your insurance provider could raise your rates because you could suffer more catastrophic injuries in motorcycle collisions than in car collisions. If you have a dangerous profession, say a firefighter, policeman or a skydiver, your rates can go up because there is a greater risk of making a medical claim.

    Lifestyle

    • Your lifestyle will also impact your health insurance rates. If you smoke, you are putting yourself at a greater risk for developing cancer. If you suffer from chronic conditions, like asthma or diabetes, your rates can go up because there is a risk of your making medical claims based on these conditions. The healthier you are, the less you will pay for health insurance.

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