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The Rising Cost of Insurance Premiums

The Rising Cost of Insurance Premiums

Do you get your health insurance coverage as part of a benefits package from your employer? Then you’ve no doubt felt the crunch caused by skyrocketing employer-based health insurance rates in the last few years. From 2001 to 2005, the average amount of money employees pay for health coverage increased about 30%. On the other side of the equation, employee incomes went up just 3% during the same period. That means the average American has seen their premiums increase at about ten times the rate of their income in recent years. Put it all together and you can see why the United States will probably be adding to its already 47 million uninsured citizens. So what exactly is causing the rising premiums?

Who’s to Blame?

It’s hard to point a finger at any one group for the ever increasing cost of policies. Obviously, employees are paying more for their coverage, at an average of $2,585 for a family policy. Employers are paying more too, as their out-of-pocket share per family rose about 28%. That’s most likely the reason why over 30,000 employers no longer offer policies to workers. The real problem might lie with the actual health care industry. Statistics show that national care costs rose about 7% in 2007, which happens to be double the rate of inflation. Has the cost of care and advances in medicine simply risen too high?

The Cost of Medical Advances

Some health care experts claim the real reason why we’ve seen premiums increase so much is simply due to increasing costs in health care. In the past several years, there have been amazing breakthroughs in the medical and prescription drug fields. Of course, these breakthroughs cost money to develop and implement, now that cost is being spread to premiums. In a way, it’s created a catch-22 in the industry – we all want the best medical services available, but not everyone can afford to pay the rising cost of insurance that medical advances require. At this point, there is no easy answer to the problem. It’s one we’ll more than likely be forced to deal with until costs come down or income increases.

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