What Are the Cost Drivers in Health Insurance?

The Premium that Members pay is for the purpose of paying medical costs. It is these medical costs that determine how much the premium has to be. Costs for individual health care services are usually negotiated lower by insurance companies in advance.

Profits of the 1300 insurance companies in the United States last year were only about 2 percent. Most companies are small single state or regional companies. There are only a handful of large national health insurance companies. Executive salaries are usually available on State Insurance Department websites.


	Medical costs are driven by several factors.
	Processing requests for medical records, pre–authorizations and handling billing.
	Excess administration requirements required by government programs.
Increases in medical costs cause premiums to increase.	Normal good medical practice, tests and support services.
	State mandated benefits to cover special programs or interests.
	Excessive Emergency Room Utilization.
	Charity Care.
	Fraud, abuse and waste.
	Malpractice medicine requiring additional tests just to protect against lawsuits and excessive settlements.
	High liability insurance premiums.
	Profits.

This site authored by John – The Plumber Insurance Agent