Why there health insurance cost so much?

Answer 1

Now this is a loaded question and a bit off target. Fundamentally health insurance cost so much because insurance companies (like all companies) need to make a profit after paying for claims and adminsitrations. You can discuss the merits or evils of profit at length but it won't address the question. Likewise what is a fair profit. Similarly how insurance companies control administrative costs can be questioned but agian, does not address the issue. At the end of the day, the biggest component of health insurance cost is health care costs. So let me take a shot at that. 1. Lack of price transparency - What other poduct/service do you buy that you can not know the price before you buy it? A client of mine had two MRIs done. One cost $900 and the other $5000. When she called the insurance company they told her she could not get what the 'network price' was because that is confidential. She had to first have the service then be told what the insurance company would pay and what she had to pay. 2. Lack of preventative care - Many medical issues could cost far less if treated early instead of late. Preventative care has proven consistently to reduce the overall cost of care. Despite that, insurance companies often don't want to cover that so people put off seeing a doctor and everybody ends up paying more. 3. Too much litigation - Many doctors and hospitals over test just to protect themselves against a lawsuit. That drives up the costs because every extra test cost money. 4. Advertising - surprise! You see drug advertising all the time on TV. They do that because it drives up sales. Here is what happens. You are taking drug X for treatment. That drug is now generic and costs very little. The drug company comes out with new and improved drug X-Plus and extolls the virtue on TV. You go and ask your doctor about it. The doctor will absolutely give you the new drug even if he is convinced that it is no better for you than the cheap drug. Why, because he does not want to be sued for not giving you the latest and greatest drug if something goes wrong. Industry studies say that the return on advertising dollars for drug companies is 400%! Those are the biggies!