Understanding Rising Health And Medical Costs For International Insurance

I would almost like to add to Will Rogers’ statement that there are two things certain in life: death and taxes – and also increases in insurance rates! The minute you take out insurance just remind yourself that next year the rates WILL INCREASE.

Rates on individual plans always increase when you move into a new age bracket. Usually the brackets are from 20-24, 25-29, 30-34, etc., but not always. So if you move from age 34 to 35 be assured that your premium will be increased. Also rates go up due to inflation. When we speak of inflation, we are not just talking about general inflation but inflation of medical costs. General inflation may be running at three percent per year, whereas medical inflation is nine percent. If that is the case, you will get the nine percent increase.

Then there may be an added increase in premium because the plan you are on was priced too low and the company is now losing money on that “Book of Business.” The claims of all the people on the plan you took out were so great that the company had a losing year on that plan; therefore, they increase the rates on everyone on the plan to get out of the red.

But, in spite of the above, do remember that your rates will not increase because of your individual medical condition or your claims alone.

A study by the U.S. Department of Health and Human Service’s Agency for Healthcare Research and Quality, in a new study, reported that American consumers and their health insurance providers pay nearly $800 billion a year in hospital bills, while health insurance premiums are rising twice as fast as wages. The nation’s cumulative hospital bill represents the total amount charged for 39 million hospital stays.

One-fifth of the national hospital bill was for treatment of five conditions: coronary arteriosclerosis, mother’s pregnancy and delivery, newborn infants, acute myocardial infarction, and congestive heart failure. Hospital stays for coronary arteriosclerosis incurred the highest charges ($44 billion); mother’s pregnancy and delivery had the second highest charges ($41 billion).

The average family health insurance premium rose 7.7 percent in 2006, marking the third year employer healthcare cost increases have slowed since soaring nearly 14 percent in 2003. After several years of costs rising steeply, the cost for family coverage under an employer health plan is now $11,480. This cost is well over the annual wage of a full-time, minimum-wage worker–more than many small businesses and their employees can afford.

All agree that insurance rates are rising too fast and are a great burden, for workers in America and around the world. Individuals here in the USA are also feeling the weight of ever-increasing rates due to the Affordable Care Act. Here is a short comparison of monthly rates between a standard international career policy and a USA policy for the state of Arizona if an employer isn’t paying half, or all, of the worker’s health premium, monthly:

1. Family of four: husband 35, wife 34, two children ages 3 & 8: Arizona is $600, international is $300 (without maternity)   and $450 (incl. maternity)
2. Single woman age 28: Arizona is $180, international is $81
3. Single male age 61: Arizona is $450, international is $380
4. Couple male age 54 and wife aged 50: Arizona is $600, international is $350

Of course, these are standard rates. We specialize in finding the best insurance carrier with the best rates given your age, family, etc. and know where to go so you don’t have to waste time shopping around and applying to all the carriers repeatedly.

Sometimes rising health care costs outside of the USA are influenced by rates inside the USA. Here is some information on this matter gleaned from the Wall Street Journal on March 12, 2001: After a period of moderate increases a study by the Health Care Financing Administration found that spending on health care is rising fast. Spending rose 8.3 percent in 2000 and is expected to grow 8.6 percent this year. By comparison, it rose 5.6 percent in 1999. In 1999 spending on prescription drugs jumped 17 percent. During the next four years drug costs are expected to rise about 15 percent annually.

Joe Manning, a correspondent for the Milwaukee Journal Sentinel, on Sept. 25, 2000, adds to the above by listing specific reasons for the increases as follows: Prescription drugs are being promoted with mass marketing; people are also going to the doctor more, often unnecessarily; diagnostic tests such as magnetic resonance imaging scans (MRIS) are being used more routinely; people are demanding more health care; an aging population demanding access to expensive new technologies and medicines; and premiums have been held down artificially.

It may not sound reasonable, but international insurance rates are influenced by domestic rates in the USA. Also, many Americans who work overseas still get most of their medical work done in the USA while they are on furlough.

All agree that insurance rates are rising too fast and are a great burden, for workers in America and around the world. Individuals here in the USA are also feeling the weight of ever-increasing rates due to the Affordable Care Act. Here is a short comparison of monthly rates between a standard international career policy and a USA policy for the state of Arizona if an employer isn’t paying half, or all, of the worker’s health premium, monthly:

1. Family of four: husband 35, wife 34, two children ages 3 & 8: Arizona is $600, international is $300 (without maternity)   and $450 (incl. maternity)
2. Single woman age 28: Arizona is $180, international is $81
3. Single male age 61: Arizona is $450, international is $380
4. Couple male age 54 and wife aged 50: Arizona is $600, international is $350

Of course, these are standard rates. We specialize in finding the best insurance carrier with the best rates given your age, family, etc. and know where to go so you don’t have to waste time shopping around and applying to all the carriers repeatedly.

One matter that perplexes us is why health care costs keep going up. One of the key reasons for this is “utilization.” The more use (utilization) we make of something, the more it will cost us. Driving a car five miles a day will cost much less than driving it 500 miles a day. When health care is seldom used by a society, it will automatically cost less; when used more, it will cost more.

Many of the social ills today result in harmful health conditions for individuals. This means that health care will be used more, and the cost to society will be greater. Health insurance companies share the increased cost of health care with their policyholders via increased premiums. So the cost of social ills and their resulting harmful health conditions fall on all of us. Just consider the health costs incurred by drug abuse, alcoholism, tobacco, violent crime, pollution, obesity, sedentary lifestyles, and accidents that are compounded for not wearing seat belts or helmets. Then there are babies born crack-addicted, fetal alcohol syndrome, HIV, etc. When people that are insured develop health problems because of such things, we all pay for their care through our monthly insurance premiums.

There are, of course, other social factors that cannot be avoided, like the cost of caring for the health needs of an aging population, plus the fact that people live longer.

Are you bewildered and angry at rising premiums? Why are the rates going up? Over the past three months I have read numerous articles in newspapers and trade magazines regarding this matter. Here are some reasons all industry experts agree on:

1. Rising medical care costs in the USA
2. Rising cost of drugs
3. Increased use of drugs by medical practitioners
4. Government mandates requiring conditions like alcoholism to be covered

One domestic company experienced health care cost increases at an annualized rate of about 22 percent and prescription drug costs at nearly 40 percent. Besides helping international clients, Good Neighbor Insurance also provides coverage for people living in Arizona. We write insurance for many of the large carriers like Cigna, Blue Cross, Fortis, and HealthNet. These companies have raised their rates as much as 50 percent in recent years.

People on international insurance plans know that international health insurance is different from, and less expensive than, domestic insurance, so they feel increases should not be the same for international insurance. That would be so if all the people that had international insurance got their health care outside the USA. The fact is that 80 percent of the healthcare for those on international insurance is received in the USA. Thus, the increase in international health insurance rates is also tied to the vagaries of American domestic health care costs.

This is always a question! We are not sick! We have not been to the doctor! We have not used the insurance! Yet our rates went up! Why? First of all, it is important to note that your rates will not go up even if you have used your insurance. Insurance companies do not raise the rates on individuals if they have used the insurance. So then, why do the rates go up?

There are several reasons. Insurance rates go up annually because of inflation. Medical inflation in recent years has been running around ten percent. Why that high? Because the cost of medical care has increased for various reasons, one reason being the cost of prescription drugs and another being the increased use of advanced and expensive technology.

Besides this, when you move into a higher age bracket, the rates will go up for you, because insurance rates are based on age.

Finally, if a couple of people in your age group (i.e., those between the ages of 35-39 who applied for Plan X with Company Y in 2003 when you applied for your coverage) had a serious case of cancer or a heart attack that cost hundreds of thousands of dollars, that would cause your rates to increase. The insurance company compares ?premium received? to ?claims paid? for your 35-39 age group; and if “claims paid” exceed “premium received,” then the company will increase the premiums in that age group in order to recoup its loses in the coming year.