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What Causes Higher Health Insurance Premiums?

The health care industry is one of the largest and continually growing businesses in the United States. Insurance companies, hospitals, and other medical facilities continue to see increases in the rates of visits and people seeking new insurance policies. Keeping premiums for those insurance policies low is a priority of consumers as well as insurance companies though there are some cases, such as age and chronic health conditions, that will keep rates for consumers in those categories high.

  1. Insurance Fraud

    • According to nhcaa.org, the website for the National Heath Care Anti-Fraud Association, more than $68 billion (or 3 percent) of all health care spending annually is a result of health insurance fraud. These fraudulent claims inevitably translate into higher insurance premiums and reduced benefits/coverage for consumers as the industry attempts to compensate for significant financial loss. Insurance companies also need to spend time investigating unnecessary and potentially dangerous medical procedures and restore legitimate medical records that may have been compromised as the result of an insurance fraud scam.

    Age of the Insured

    • Age is an important factor in determining health insurance premiums. As a consumer ages the likelihood that he will need to utilize his health insurance benefits increases. In anticipation of these needs, an insurance company usually has a scaled rating system by which premiums increase in order to compensate for this increased dispensation of funds on the part of the insurance company to health care providers treating the policy holder. According to a a survey conducted by the AHIP Center for Policy Research, health insurance premiums for single policy holders ages 60-64 were 200 percent higher than policy holders age 18-24.

    Special Conditions

    • Policy holders with medical conditions which are ruled as chronic and life-long have higher premiums because care is expected to be continually administered. This means any health insurance company will be paying out benefits at an increased rate and will need to offset the cost through a higher monthly premium.

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