Healthcare Costs: Why They Keep Skyrocketing and What You Can Do About It

Why are Medical Costs Increasing?

The Affordable Care Act (ACA), commonly known as Obamacare, has had a significant impact on the healthcare industry. One of the unintended consequences of the ACA is that it created a perverse incentive for health insurance companies to actually want medical costs to increase. The ACA establishes a Medical Loss Ratio (MLR) of 80% for health insurance plans sold on the individual and small group markets. This means that health insurance companies are required to spend at least 80% of the premiums they collect on healthcare costs. However, the ACA also allows health insurance companies to charge a profit margin of up to 20% on top of the MLR. This creates a situation where health insurance companies can actually make more money if medical costs increase.

How Does It Affect You?

The fact that health insurance companies want medical costs to rise has a direct impact on you as a consumer. When medical costs increase, health insurance companies are able to charge higher premiums to cover their costs plus their profit margin. This means that you end up paying more for health insurance, even if you’re not using more healthcare services.

What Can You Do About It?

There are a few things you can do to protect yourself from the rising costs of healthcare:

Shop around for health insurance: Don’t just stick with the first health insurance plan you find. Compare plans from different companies to find the best deal.
Choose a plan with a high deductible: A high deductible plan will have lower premiums than a plan with a low deductible. However, you’ll be responsible for paying more out-of-pocket costs if you need medical care.
Use a health savings account (HSA): An HSA is a tax-advantaged savings account that you can use to pay for qualified medical expenses. HSAs are only available to people with high-deductible health plans.
Be smart about your healthcare usage: Don’t go to the doctor or hospital for every little thing. Try to take care of yourself and avoid unnecessary medical expenses.

The Future of Healthcare Costs

It’s unclear what the future holds for healthcare costs. However, it’s clear that the current system is unsustainable. If we don’t find a way to control healthcare costs, they will eventually bankrupt the country. You can contact licensed agent for more information.