Medical Insurance – Identification of the Fundamental Drivers of Increasing HealthcareCosts

This article identifies the fundamental drivers of increasing healthcare premiums and costs . A supplementary measure of breaking down how existing premium dollars are being used up is taken into account.

By specifying how health care insurance premiums are being used up as well as distinguishing the drivers and aspects of premium increases, this article endeavors to provide stakeholders and policymakers with information which can facilitate in directing efforts to address increasing healthcare costs  and enhance healthcare efficiency.

Outlined are some of the factors which affect the overall healthcare costs :

<h3>General Inflation</h3>

General inflation is one of the factors that impacts healthcare costs . The rise in the cost of healthcare beyond general inflation accounted 2.5% out of the 8.7% rise in health care insurance premiums.

<h3>Higher Priced Technologies</h3>

New technologies drive the increase in healthcare rates because they are regularly more costly than existing technologies. Older drugs as well as generic drugs tend to be replaced by newer prescription drugs. And since modern imaging technologies are being sold into the commercial market at a higher value, it has been observed that these new technology cost greatly influence the cost of health care insurance premiums.

<h3>Cost Shifting</h3>

The growth in hospital inpatient expenditure, which is the third chief constituent of health care insurance premiums, also influenced the overall premium increase. The growth in hospital inpatient spending has been alleviated by shifts and changes of services to outpatient settings, the rehabilitated introduction of disease administration programs and utilization controls programs have amplified cost sharing.

<h3>Broader-Access Networks/Provider Consolidation</h3>

The movement which was prompted by state laws and market forces towards programs in extensive provider networks has also influenced the cost of health care insurance premiums. Several programs have initiated open-access products which lessens the task of the primary care medical provider in assisting consumer access to health specialists. While various consumers have uttered an inclination for expansive provider networks, such networks apt to diminish the sum of competition in the scheme. There have been occurrences of provider consolidation which also reduced the degree of provider clash in some markets. These market directions have all contributed to health care insurance premium increases each year.

<h3>Aging Population and Increased Utilization</h3>

The most significant factor in the increase in health care insurance premiums is increased utilization. Lifestyle changes and the aging population both contribute to increased utilization. It is extensively acclaimed that the population is growing old as Baby Boomers move towards retirement. It has been established that the aging of the population registered in insurance plans greatly contributed to the rising cost of health care insurance premiums.