It is no secret that the cost of living has gone up significantly in the last year. With inflation at the top of everyone’s mind, we thought this would be a good opportunity to address a common question we hear at 180 Healthcare, and that is “why is health insurance so expensive?” 

Consumers in the U.S. are seeing higher prices pretty much anytime they swipe their credit card — gas stations, supermarkets, restaurants, pharmacies etc. Americans are taking a real deep dive into their finances and reevaluating their spending and cutting back wherever and whenever they can. 

As tempting as it can seem to cut back or eliminate your monthly expenses that go toward health insurance, we recommend thinking twice about that (although, looking for cheaper health insurance is always okay). It is a risky gamble in the United States where healthcare spending falls just over $3 trillion per year. In 2020, various healthcare spending was just under 19% of gross domestic product in the U.S. 

Type of Insurance Plans

Before we jump into the varying factors and fees that all add up to make health insurance so expensive, it’s important to remember that there are plenty of options out there for health insurance. 

Traditional private insurance allows you to choose from high premiums and lower deductibles, or low premiums with high deductibles. This means that you either pay a high amount monthly towards your health insurance, and a lower amount when your bills roll in, or a lower amount monthly, and typically a higher price for those healthcare bills.

Medicaid or Medicare is government-provided health insurance that is considered public health insurance. This form is funded partially or fully by taxpayer dollars.

There are also alternatives to health insurance, and at 180 Healthcare, we provide individuals the opportunity to choose the coverage that works for them, pay on a monthly basis, and cancel at any time.

So with that being said, why is health insurance so expensive? We want to break down the reasons for your monthly, quarterly, or annual insurance costs. 

Lifestyle 

You’ve probably heard the saying, “An apple a day keeps the doctor away.” Typically, it was just a cute way for our parents to trick us into eating our fruits and veggies. However, there is a lot of truth to the saying and it is just another factor that goes into why health insurance is so expensive. 

While eating one apple each day won’t actually keep us from going to the doctor’s office, there is something to be said about the choices we make day in and day out when it comes to our health. “Should I have the fries, or opt for a salad?” Maintaining a healthy and balanced lifestyle by working out and choosing the salad over the fries could set us up for some success as a whole.

Unfortunately, and this is no shame to any individual or group of people, our unhealthy lifestyle choices as a whole in the U.S. have led to chronic conditions which reflect in our monthly premiums and out-of-pocket expenses. 

Prescription Medications

While it is always easier to point a finger and blame an individual (or corporation) for the increase in prescription medications, the reality is, new drugs come on the market, and millions of dollars are spent on research, advertising, marketing, etc. All of these factors are time and money so it hikes up the prices of your prescription drugs. 

Americans are outspending other countries when it comes to the yearly expenses of prescription drugs. Americans are spending on average $1,300 per person per year and that number is expected to continue rising each year. 

There have been a lot of changes and restrictions over the years in the pharmaceutical industry which has helped slow down the rise of these prices, but there is still a steady rise year over year. A friendly tip: if it’s an option, always choose generic over name brand medications because they are almost always the more cost-effective option.

Administrative Costs

In order to run and operate a hospital or any healthcare facility, there are the heroes behind the scenes dealing with tasks like billing, coding, insurance, etc. These administrative staff members, while very much necessary, are a huge contributor to why health insurance is so expensive.

The U.S. healthcare system is so complex, it is estimated 15-30 percent of spending toward healthcare is directly linked to administrative duties like insurance, billing, scheduling, office management, and other responsibilities that are not directly linked to individuals who are interacting with patients. 

While there have been various efforts and policies that have been proposed to reduce the cost of administrative expenses, it is unclear if there will ever be a “one size fits all” solution toward lowering the costs.  

Medical Technology

You are going on a run and you sprain your ankle. You show up to your primary care provider and he tells you that you need to have an x-ray to rule out whether you broke a bone. The average x-ray in the United States can cost anywhere from $260-460.

If you need a more in-depth scan and require an MRI, those can start at $400 depending on the location of the body, and can go upwards of $11,000. This of course all depends on your insurance, the type of plan you have, and what your out-of-pocket fees are depending on your plan. 

Not only are the scans themselves expensive, but it’s helpful to note that the individuals who are assisting you during the scan are being paid more for their specialization and training. Not to mention the machines themselves are extremely expensive. In fact, some machines can cost as much as a small home. These are all factors that go into the final amount you see reflected on your medical bills. 

In Summary: Why is Health Insurance So Expensive?

There is no doubt that times are tough right now. This article isn’t meant to scare you or frustrate you, but rather just break down the reasoning for you when you question, “why is health insurance so expensive?” 

At 180 Healthcare, we want to help individuals as they determine the right health insurance options for them and their families. While we aren’t a health insurance company, our team of experts are here to present the options for an alternative to save you time and money. Call us at (573) 803-4661 or contact us today to get started.