Medical Insurance Costs Are Too High

Health
1

My monthly medical premium has skyrocketed in the last 5-8 years. For 2025 it went up $200 more per month to cover me and my daughter with a $9,000 deductible.

These medical premiums are getting out of hand and needs to be lowered and capped.

Medical insurance companies are stripping small businesses of their income! We are a small business and cannot sustain all these drastic increases every year, knowing that we are cash cows for the insurance medical companies.

Please create a policy that can address this problem by limiting how much can these corporation charge us!

4 Likes
2

Normally caps are an issue of freedom. But in this situation employers are required to provide healthcare for full time employees. Therefore, I do believe this should come with a cap since the freedom has already been taken away which detracts from the market setting a price. Since employers are required to provide the insurance the insurance industry knows that they can set the price and there is no choice but to purchase from one of the insurance companies. Therefore, the market cannot refuse to purchase something that is too costly in order to force the price to decrease.

3

That is not possible. Premiums are a function of claims. To reduce premiums you have to reduce claims or the cost of claims. When claims exceed the premium allotment premiums must go up by law. You have car insurance which protects you if you have an accident but it doesn’t pay for new tires, an oil change, new radiator, etc. Health insurance pays for known losses. Every Dr. visit is an oil change, every lab visit or x-ray a new set of tires, and so forth. It is this way bc the cost of these things is beyond most peoples’ ability to pay on demand. There is no difference in dollars between for profit & not4pofit, only the rules are different. Only clinical medicine costs less which imo is the direction we should strive for over the next 10 yrs.

4

Health insurance is not a market based commodity. Premiums are determined by the cost of claims and are set by state insurance departments and further have nothing to do with profits. Profits come from the administrative corridor also determined by the state. That said provider services could be market based but aren’t due to insurance (they set the price) and Medicare. Medicare pays less than cost so on average pvt. insurance pays 199% of medicare to make up the losses (Kaiser Foundation). So the simple truth is your employer and you pay 40-50% more than you should bc of Medicare & Medicaid. It is a very complex issue which is hard to understand if you are not familiar with the system.

5

Medicare and Medicaid have been paying that way. It has nothing to do with private insurance other than private insurance will attempt to use the same pricing if they can get away with it. Another tactic used that they have to be called out on many times to get proper payment. They don’t make up for the Medicare and Medicaid. Private Insurance also does not pay in many different ways with many tactics. They absolutley do not cover Medicare and Medicaid lack of paying. The Healthcare Provider has to take the hit. It is also not a function of claims alone which matters. Insurance Corporations make an enormous amount of profit and pay their top employees millions of dollars. In addition, not all States have the same regulations.

There is market influence.

Market Rate Influence

The market rate plays a crucial role in setting insurance premiums:

  1. Competition: Insurers compete for market share, which drives prices down. Companies offering competitive rates and services can attract more customers, increasing their market share and revenue.
  2. Regulatory Oversight: States regulate the insurance industry. They may limit how much certain factors (e.g., age, location) can affect premiums.
  3. Market Trends: Changes in market trends, such as shifts in consumer behavior or economic conditions, can influence premium rates.

Employer Contribution to Health Insurance

How making employers provide health insurance contributes to higher premiums:

  • Employer-sponsored plans are often more expensive: According to the search results, employers typically pay a larger share of the premium costs, ranging from 73% (family premium) to 83% (self-only premium). This means employers bear a significant burden, which is reflected in the overall premium cost.
  • Risk pooling and adverse selection: When employers provide health insurance, they pool employees’ risk, which can lead to adverse selection. Healthy employees may opt for lower-cost plans, leaving sicker employees in more expensive plans, increasing the overall premium cost.
  • Plan design and flexibility limitations: Employers may choose plans with higher premiums to cover a broader range of services or to attract and retain employees. This can result in higher costs for employers and, subsequently, higher premiums for employees.
  • Government regulations and taxes: The Affordable Care Act (ACA) and other regulations can drive up premium costs for employers. Additionally, taxes and fees, such as the Cadillac Tax, may be imposed on employer-sponsored plans, increasing premiums.
  • Insurance company profits: The search results mention insurance company profits as a contributing factor to premium increases. When employers provide health insurance, they are more likely to choose established insurance companies, which may charge higher premiums to maintain their profit margins.
  • Age and demographic factors: Insurance companies consider age and demographic factors when setting premiums, which can lead to higher costs for employers with older or sicker workforces.
  • Geographic area: Healthcare costs vary by region, and employers providing health insurance may face higher premiums in areas with higher costs of living or more providers.

In summary, making employers provide health insurance contributes to higher premiums due to:

  • Employer-sponsored plans being more expensive
  • Risk pooling and adverse selection
  • Plan design and flexibility limitations
  • Government regulations and taxes
  • Insurance company profits
  • Age and demographic factors
  • Geographic area

These factors collectively drive up premium costs for employers, which are then passed on to employees through higher contributions or reduced benefits.

How Insurance Premiums Are Calculated

Insurance premiums are determined by a combination of factors, including:

  1. Risk assessment: Insurance companies assess the likelihood of a policyholder making a claim based on their demographic characteristics, such as age, gender, location, and occupation.
  2. Actuarial tables: Actuaries use statistical models and historical data to estimate the average cost of claims for a specific group of policyholders. These tables help determine the premium rates for different categories of insureds.
  3. Policy coverage: The type and amount of coverage chosen by the policyholder, such as the deductible, policy limits, and coverage periods, affect the premium.
  4. Underwriting: Insurers evaluate individual policyholders’ characteristics, such as driving records, medical history, and credit scores, to determine their level of risk and adjust the premium accordingly.
  5. Industry and market factors: Economic conditions, competition, and regulatory requirements influence premium rates.
  6. Loading: Insurers add a loading factor to the pure premium to cover expenses, such as administrative costs, commissions, and profit margins.
  7. State and federal regulations: Insurance departments and federal agencies set minimum standards for premium rates, and some states have specific regulations governing rate-setting.

Profit examples of insurance:
“Health insurance companies, particularly the largest ones, have seen significant profit increases, with the top five insurers earning over $371 billion since the Affordable Care Act was enacted. UnitedHealth Group, for example, reported a nearly 400% rise in profits, largely due to reduced medical claims during the pandemic and increased premiums for consumers.”

UnitedHealth Group, for example, earned net income of $20.6 billion in 2022 (https://www.unitedhealthgroup.com/content/dam/UHG/PDF/investors/2022/UNH-Q4-2022-Release.pdf)

after making $17.3 billion in 2021 and [$15.4 billion in 2020 (https://www.unitedhealthgroup.com/content/dam/UHG/PDF/investors/2020/UNH-Q4-2020-Release.pdf).

Before the pandemic UnitedHealth made $13.8 billion in 2019. (https://www.unitedhealthgroup.com/content/dam/UHG/PDF/investors/2020/UNH-Q4-2020-Release.pdf)

The company, which operates the health insurer UnitedHealthcare and the medical care provider services business Optum, UnitedHealth, which made $5.6 billion in the first quarter of 2023.