What Affects the cost of Health Insurance?
People often ask about the cost of health insurance premiums and why these costs increase from time to time. The simple answer is that as more people claim on their health insurance having received more advanced and more expensive treatments, the cost to the insurer rises. Here we look at three factors that can impact on the price of premiums in more details.
The cost of claims
- Advanced medical treatments, particularly in the areas of oncology, orthopaedics and cardiac care are good news for patients
- Advancements in medical technologies can significantly reduce the time it takes to recover, whilst improving patient outcomes
- However, new and better technology means that the cost of providing these advanced treatments has increased significantly and this directly impacts the cost of claims
- At laya healthcare, the cost of claims climbed by 37 per cent between 2013 and 2016
- Medical inflation outpaces general economic inflation the world over. In 2014 it was estimated that medical inflation stood at 8.3% compared to 7.9% in 2013
- This means that whilst we are seeing a general decline in the cost of consumer goods (economic inflation), we are equally experiencing increases in the cost of hospital services and pharmaceutical drugs, together with a rise in the cost of medical professional fees
- This rise in medical inflation results in a rise in the cost of claims
Increase in the number of claims
- More people claimed on their health insurance in the past year than in previous years. Laya healthcare alone experienced an increase of 40 per cent in the volume of claims in 2015
- So whilst more people are being looked after and whilst better practices, high-spec technology and improved treatments are all translating into better outcomes, they are driving medical costs higher and this can have a negative impact on premiums