Health Insurance Premium

Written by Stefanie Marty

In recent years health insurance premiums have raised rapidly what eat up a big part of the middle class’s income. In 2008, the average premium for family coverage was $12,298 and if premiums for employer-sponsored insurance increase in each state at the projected national rate this premium for family coverage would raise to $23,842 by 2020. This equals a 94 percent increase in 12 years. Looking in the short-term according to the Office of Personnel Management, federal employees’ health insurance premiums will raise 8.8 percent on average in January of 2010. This represents the largest increase since 2004.

You might ask yourself why the health insurance premiums are increasing that fast. One reason is the increase of medical costs. For every year the insurer estimates its costs by developing profiles of its patients and calculates the cost of that profiled patient. There are many different profiles, e.g. kids, teenagers or seniors, each with different medical needs and thus different costs. The insurer will find the average cost per patient or family, a figure that represents the premium paid the insured. Regardless of the medical condition, each individual or family will pay the same premium amount. This might seem unfair to healthy people, who pay much more in premium than they would pay in actual medical expenses. On the other hand, people who are sick or injured quite often or people who are older pay less in premium than their actual health cost would be. All these people are paying insurance premiums to not bear any risk in case of any incident.

Our population is aging what is equivalent with the fact that the whole population needs more health care. Thus the premiums increase and fewer people can’t afford this cost for health insurance. Now less people purchase insurance and the cost of health insurance is spread across the whole population what in turn leads to higher premiums again.

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