Health insurance quotes rising fast
This is a deceptively simple question and the simple answer is that the prices of medical care have been rising. The more complicated answer begins with a reminder of the definition of insurance. This is a service offered by a company. It collects premium payments and pays out when the defined events occur, i.e. you fall ill. Thus, the reason for rates rising could either be a lot more people are falling ill or the cost of the treatments is rising. Ironically, because the amount of co-payments and expenses payable by the insured has also been rising, fewer people are claiming on their policies for less serious medical problems. Fewer patients were admitted to hospital last year. So when we see a report that private health spending rose by 4.6% last year, i.e. significantly higher than inflation, the only explanation is that the insurers are passing on the full cost increases to the policyholders.
You will be pleased to know that, on average, insurers paid out almost $4,500 per patient in 2011. But this does not answer the question as to whether this was value for money. Private insurers are big buyers and they could use this buying power to negotiate price reductions. If one hospital group proposed price increases, a threat by a major insurer to move all its business to another health-care provider would focus everyone's attention on costs. Yet this does not happen. Private health insurance companies do not use their power to protect their policyholders from price increases. They simply increase the premium rates when the next round of insurance quotes is sent out.
This reflects a fundamental problem with capitalism. There's no incentive for an insurance company to protect its policyholders unless a significant percentage of the policyholders move their business to cheaper insurers. Curiously, this has never happened. Less than 10% of policyholders change insurers on renewal. This means none of the private health insurance companies will press to pay the same rates as the public insurers. Sadly, only Maryland has had government regulation of hospital prices. All other states seem to think competition will hold down prices.