Why is health insurance expensive?
Administrative Overhead: Health insurers often have substantial administrative overhead, including marketing, underwriting, and claims processing. These costs are passed on to consumers in the form of higher premiums, which can contribute to overall healthcare expenditure.
If you don't have health insurance, those stories can sure get you thinking, Do I need health insurance? The answer—yes! Health insurance has a reputation for being expensive and confusing, but it can also be the only thing standing between you and financial disaster if you ever need medical care.
Apply for Medi-Cal or Covered California insurance at www.coveredca.com or at your local county social services office. Note: The rules about whether your job's insurance is “affordable” apply even if you do not sign up for it.
The cost of health care can lead some to put off needed care. One in four adults say that in the past 12 months they have skipped or postponed getting health care they needed because of the cost. Notably six in ten uninsured adults (61%) say they went without needed care because of the cost.
If you don't have health insurance, you're at much greater risk of accumulating medical bills that you may not be able to pay. In a worst-case scenario, you could be sued and have your wages garnished.
Uninsured families pay for a higher proportion of their total health care costs out of pocket than do insured families, however, and are more likely to have high medical expenses relative to income (IOM, 2002b).
| HEALTH INSURANCE TYPE | AVERAGE ANNUAL PREMIUM | AVERAGE DEDUCTIBLE |
|---|---|---|
| Employer- sponsored coverage | $8,435 ($1,401 is the average employee portion) | $1,992 |
| Health Insurance Marketplace coverage | $5,724 | $2,825 |
There are many possible reasons for that increase in healthcare prices: The introduction of new, innovative healthcare technology can lead to better, more expensive procedures and products. The complexity of the U.S. healthcare system can lead to administrative waste in the insurance and provider payment systems.
The Affordable Care Act (ACA) created government subsidies to help low- and middle-income people pay for health insurance. They help offset the cost of monthly plan premiums, coinsurance, copays and deductibles.
| Household size | Min. income | Typical max. income |
|---|---|---|
| 2 | $19,720 | $78,880 |
| 3 | $24,860 | $99,440 |
| 4 | $30,000 | $120,000 |
| 5 | $35,140 | $140,560 |
Why is healthcare so unaffordable?
Important factors underlying the price problem include high levels of health care industry consolidation coupled with limited oversight of prices, and the high degree of administrative complexity in our U.S. health care system.
one way of thinking about it is the United States has quite a fragmented health insurance system, where really you have people insured through so many different plans, some people are insured through plans like the VA or Medicare that are operated primarily federally, some are insured through programs like Medicaid or ...
In many households, health care costs take up so much of monthly budgets that they affect the ability of people to pay for other living expenses. And the reverse can also be true: when the cost of other living expenses rises, it can affect families' ability to pay for their health care.
This project found that health care debt is a wide-reaching problem in the United States and that 41% of U.S. adults currently have some type of debt due to medical or dental bills from their own or someone else's care, including about a quarter of adults (24%) who say they have medical or dental bills that are past ...
Fifty-one percent of working-age Americans struggle to afford their health care and about one of three (32%) are saddled with medical debt, according to findings from a Commonwealth Fund survey released today.
Ten states have uninsured rates below 5 percent.
People without insurance pay, on average, twice as much for care. This means when you use a network provider you pay less for the same services than someone who doesn't have coverage – even before you meet your deductible. Sometimes these savings are small.
A universal healthcare system could save over $450 billion per year, according to a 2022 Yale study. This could help many, since polls have found that nearly 4 out of 10 Americans have delayed or gone without healthcare because of costs.
Financial consequences
Without health insurance you may get charged much more for care that would otherwise be covered by your plan. This is because no one—usually the insurance company—will be subsidizing your cost of care. As a result, you may have to pay higher charges for the same services.
How much does health insurance cost in California? The average cost of health insurance in California is $600 per month in 2024. That's for a 40-year-old with a Silver plan. Bronze plans usually have cheaper rates, but they also have less coverage.
How much of your monthly income should go to health insurance?
A good rule of thumb for how much you spend on health insurance is 10% of your annual income. However, there are many factors to consider when deciding how much to spend on health insurance, including your income, age, health status, and eligibility restrictions.
Platinum health insurance is the most expensive type of health care coverage you can purchase. You pay low out-of-pocket expenses for appointments and services, but high monthly premiums. Plans typically feature a small deductible or no deductible and cheap copays or coinsurance.
The Share of Americans without Health Insurance in 2022 Matched a Record Low. In 2022, 26 million people — or 7.9 percent of the population – were uninsured, according to a report in September 2023 from the Census Bureau.
Since 2008, the average cost of a family health insurance premium has risen 75% compared to a 42% increase in average hourly wages and a 26% increase in inflation. “Many workers probably don't realize that family premiums have exceeded $20,000 a year.
