Ohio health insurance premiums are rising, even for those who do not use a lot of health care services. According to a survey conducted by Kaiser Family Foundation and the Health Research & Educational Trust, premiums have increased nationally by 97% in less than a decade, about three times as fast as wages and inflation.
This is a worrying trend because more Ohioans are looking to purchase coverage to meet the requirements of the Individual Mandate. Moreover, spending more on health insurance would mean having less to spend on essentials like food and gasoline. Understanding and controlling the factors that contribute to rising costs of health care can help slow down the rise in premiums to some extent.
Factors Contributing to Increased Expenses on Health Care
Ohio health insurance companies fix premiums based on age, location, InspireCulture
and the costs to pay for members’ claims. According to leading health insurer Anthem Blue Cross Blue Shield, 87% of premiums are used to pay for medical services and products, 10% goes to cover administrative costs, and 3% to health insurer profits. It is the costs to pay for the claims of the insured that are going up and causing Ohio health insurance premiums to increase. Here are the main reasons why health care costs keep rising:
- Use of advanced medical technology: The more frequent use of costly technology and high-tech procedures is one of the main reasons for the rise in health care expenditure. While some procedures or lab tests may be necessary and improve the quality of care, others are not. Ohio health insurance claims for new, advanced procedures are naturally higher.
- Increasing use of prescription drugs: It is estimated that about two-thirds of Americans fill in a prescription every year. Prescription drugs are costly. The use of prescription drugs is increasing among Ohio adults with drug coverage. Though generic equivalents cost less, they take time to come into the market.
- Detrimental lifestyles: Chronic diseases are responsible for up to 75% of the yearly expenditure on health care in the U.S. Many Ohioans lead unhealthy lifestyles which contribute to problems such as obesity and heart disease, raising the burden on the health care system. The U.S. Centers for Disease Control reported that in 2011, up to 29. 6 percent of Ohioans were obese. According to a recent study, up to 59.8 of Ohio’s adult population could be obese by 2030.
- Repeat tests and unnecessary healthcare services: A new study by the Dartmouth Institute for Health Policy and Clinical Practice shows that many Medicare beneficiaries are subject to repeat medical tests, leading to over-diagnosis and unnecessary treatment. Such repeat tests and unwarranted use of healthcare services including emergency rooms are driving up healthcare costs.
- Health insurance fraud: Instances of Ohio health insurance fraud include inflating claims, submitting wrong facts in order to obtain insurance coverage or lower premiums, submitting false claims, or filing claims for health care services not received. Health insurance fraud ruins the victim financially. When insurer costs increase, it results in rising health care premiums for everyone.
- Costs of compliance with laws by Ohio health insurance companies: Anthem reports that private health insurers in the U.S. spend about $339 billion a year to comply with federal rules and regulations. These expenses are for screenings, filing, and reporting. Insurers raise premiums to factor in these costs.
- Cost shifting: Medicaid and Medicare rates are lower than those offered by private insurers. Lower coverage by these public programs result in shifting of health care costs to private insurers. This raises premiums for individuals and employers who rely on private insurers to pay for their medical expenses.
Role of Health Reform and Ohio Health Insurance Companies
Health reform aims to control health insurance costs. Ohio will soon have a federally-run health insurance exchange where individuals and small businesses can purchase affordable coverage. Health care law has provisions aimed at checking insurance fraud, patient outcome-based reimbursement for physicians, and more.
Ohio health insurance carriers such as Anthem are working to help members save expenses on care by helping them get discounts from service providers, encouraging use of generic drugs, encouraging healthier life styles, and fighting fraud. Insurers are also striving to reduce their own costs so that they can provide health insurance Ohio at more cost-effective rates.