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How come people are always blaming insurance companies for the high cost of healthcare?

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Health insurance companies are widely regarded as the primary cause of the rise of health insurance. This is because it is the health insurance company which sets rates, and the insurance company which receives regular payments from the patient. The fact is that insurance companies are only partially to blame for the rising cost of health insurance, and are not the biggest source of the increased costs.

The healthcare industry is the single largest source of increased healthcare costs. Doctors are now required to carry, for example, malpractice insurance, and that cost is passed back to the patient, typically through their health insurance coverage. Similarly, the cost of equipment increases based on new standards, the overlying economy, and the degree of specialty involved. For the patient, this cost appears to be a higher insurance cost, because the patient is cut off from how the procedure is actually billed.

With the passage of the ACA, health insurance providers have found themselves with a new dilemma to solve. The law requires health insurers to accept people with preexisting medical conditions, and that means that more and more new policyholders are going to have higher initial health care costs. To compensate, insurance companies have been forced to increase rates, deductibles, and copays for patients. For healthy policyholders, the increase seems to have no meaning, but the truth is that requiring insurance companies to insure everyone means that all policyholders have to bear a higher portion of the costs. Insurance companies are not in business to take a loss, and increasing their rates is the only method they have of preventing that.

Health insurance is expensive, but it is a lot less costly than paying for medical care out of pocket. Even though it may appear that your costs have skyrocketed, compare your health insurance premiums with the actual cost of the care you receive, and it will be immediately clear that your premiums are only sufficient to pay a fraction of what your actual medical costs are.

answered Aug 24, 2015 by anonymous
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