Factors that Impact the Cost of Your Health Insurance

The rise in health care costs is the result of incredible consumer demand for expensive new drugs, technologies and treatments. As people demand these they want their insurance carriers to include them and the health insurance carrier must pass on the costs to the insured. In addition, the cost of health care coverage for you and your particular group is a function of:

• Demographics such as age and gender:For example, young men tend to have a very low need for health care. Women of child-bearing age and older persons tend to require more care and thus higher insurance rates.
• Plan Design: This is simply an issue of who pays what ... stipulated in the structure of deductibles, co-pays and maximum out of pocket expenses. The more you and your employees are willing to pay, the lower your insurance rates will be. Keep in mind that the real purpose of insurance is to protect the insured from large, unforeseen or unpredictable costs. If one attempts to have insurance pay for frequent or predictable medical expenses, higher premium charges can be expected.
• Benefits: You get what you pay for. If you want better benefits - more flexibility and fewer exclusions - your premiums will be higher.
• Industry:Different industries have different health care expense records. For example, health expense norms may be far different in the construction industry compared to the legal profession. As such, carriers vary rates based on industry norms.
• Geography:Like most things, health care costs fluctuate by geography. Many factors enter into this such as the cost of living, cost of real estate, general health of the population, litigation levels, state laws and mandates, etc.
• Medical Condition of People in Group: Of course, if your workforce is generally healthy, your health care benefits will cost less.

To the extent that you can influence these factors you can influence the cost of your group health plan.

The following health insurance experts generously contributed their expertise to this article series:

Dale Bresee and Diane Stallcup of Henderson Benefits Group, Mr. Bresee can be reached at dale.bresee@GoHenderson.com

Stuart K. Hawley, president of The Hawley Group, Inc. Mr. Hawley can be reached at Stuart@thehawleygroup.com