Driving Trends for Health Insurance Premiums

[vc_row][vc_column][vc_column_text]By Julie Munkelwitz, Senior Benefits Advisor with Kraus-Anderson Insurance

Understanding the Factors Influencing Costs

Health insurance premiums are a critical aspect of the healthcare system, influencing both the affordability and accessibility of medical services. Several key trends drive these premiums, reflecting broader economic, demographic, and technological changes.

The primary driver of health insurance premiums is the overall cost of healthcare services. As inflation rises, so do the prices of medical procedures, hospital stays, pharmaceuticals, wages, etc. This, in turn, causes insurance companies to increase premiums to cover these higher costs. The relationship between inflation and healthcare costs is complex, with healthcare often experiencing higher inflation rates than other sectors.

The prevalence of chronic diseases, such as diabetes, heart disease, and obesity, is on the rise, partly due to lifestyle choices like poor diet, lack of exercise, and smoking. Managing these chronic conditions requires ongoing medical attention and medication, leading to increased healthcare costs and, consequently, higher insurance premiums. Chronic conditions and their prevention should be a primary focus within our overall health care system, for not only the purpose of mitigating the exorbitant costs associated with chronic disease, but to enable people to live healthier, more satisfying lives.

Legislation and Regulatory Changes

Legislation and regulatory changes recently have had a significant impact on health insurance premium. For example, in recent years we’ve seen mandates requiring insurers to cover specific benefits, such as unlimited mental health services, pre-existing conditions, full maternity care, and more. These mandates play a part in the increasing cost of providing insurance. Additionally, changes in government healthcare programs, like Medicare and Medicaid, tend to shift costs to private insurers, influencing premium rates for everyone.

Technology Advancements

Advancements in medical technology, while improving the quality of care, come with a high price tag. New treatments, diagnostic tools, and medical devices are expensive to develop and implement and are an additional factor influencing the increasing health insurance costs.

Alternatively, we’ve recently witnessed a surge in technology, specifically through telemedicine, which has proven to deliver more efficient and less costly care on all fronts, including more efficient medical records management.

The Current Biggest Driver

The current biggest driver in increased utilization and cost is prescription drugs. While pharmaceutical companies continue to develop and offer new medications, they are reimbursed for their Research and Development costs with very long-term patents, which prevent others from offering lower-cost equivalents for many years. Breakthrough and specialty drugs can improve patient outcomes, but these medications have a very significant effect on health insurance costs. Continuing to invest in preventive measures, embracing generic drug alternatives, and fostering competition in the pharmaceutical industry are essential to balance benefits and costs, as we try to maintain affordable premiums. Personalized medicine may also enhance treatment efficacy and minimizes side effects, improving long-term outcomes.

Preventative Measures

Health insurance premiums are influenced by all of these factors and many others. But what we spend less time and energy discussing is the preventive measures we all can take to avoid the need for chronic condition care and pharmaceutical intervention, thereby lowering overall spend in those categories of health care. Being aware of our daily habits, including diet, exercise, and other healthy living measures can have a major impact on our healthcare needs in the near and distant future.

As we look to the future it is essential to monitor the driving forces and adapt to changes in order to maintain a sustainable and equitable healthcare system. By addressing the underlying causes of rising premiums, we as stakeholders are able to work together to develop innovative solutions that ensure the long-term viability of health insurance and the well-being of those it serves.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][/vc_column][/vc_row]