Frequently Asked Questions

  • Health Insurance California
  • ABOUT 4-10

  • About Us
  • Contact Us
  • Privacy Policy

  • Health Insurance Plans

  • Group Benefit Plans

  • FAQ
  • Useful Links

  • FAQ
  • Useful Links

    Why Individual Rates Are Increasing Now?

    In 2002, the United States spent approximately $1.5 trillion on health care expenses – that's more than we spent on national defense and housing put together.   Savvy insurance companies decided to meet the challenges to the industry while offering their customers affordable health coverage designed to meet their changing needs and expectations.

    What is driving the growing cost of health care?

    • Escalating regulatory requirements: More than 20% of new health care spending has been driven by mandates, regulation and litigation.
    • Rising pharmaceutical cost: Prescription drugs are increasingly utilized to treat chronic diseases, manage long-care conditions and avoid hospitalization.   Pharmacy spending rose 13.8% in 2001.   It is predicted that between 2001 and 2011, drug spending growth will exceed overall spending by 5% per year.
    • Increased expenses for physician services: The number of physicians has increased steadily over the years, primarily due to an increase in the number of specialists.   Specialist charges average more than twice those of Primary Care Physicians, and are escalating at a faster pace.
    • Greater hospital cost:   Hospital spending makes up 37% of total health care cost increases, and rose 16.3% in 2001.   The rate of increase in hospital services utilization was 8% in 2001

    Why are health care costs rising?

    • "Increasing at a rate that is five times the inflation rate, health care spending continues to rise at the fastest rate in our history." National Coalition on Health Care: Facts About Heath Care, 2005
    • " In trying to explain the ever-rising cost of healthcare...what matters most is progress. Technology gets better, science finds a way to deliver that technology to more people, and our bills go up." Charles Stein, The Boston Globe, January 30, 2005
    • "Law makers and experts in health care quickly admit there is no silver bullet that will fix the rapid inflation in medical costs." Brandon Larrabee, The Florida Times-Union, December 13, 2004
    • "Physician utilization is expected to be significantly impacted by the Baby Boomer population; individuals aged 45-65 and seniors aged 65+ make an additional 1.3 and 4.2 ambulatory visits per year, respectively, than individuals under 45." BCBS Association, Medical Cost Reference Guide, June 2003 – which cites National Center for Health Statistics.

    The population is aging. People are living longer. According to the U. S. Census Bureau, the population aged 65 or older will continue to increase – from 12.4 percent in 2000 to nearly 20 percent by 2030. As this group ages, they need more medical care, and health care providers have to spend more to keep up with the demand.

    Drug costs keep going up. As more medical conditions become controllable with prescription drugs, overall spending on medications is increasing. In 2003, total U.S. spending on prescriptions drugs increased 9.1 percent from 2002 – a rate more than twice as fast as the overall economy. And to get new medications to you, drug companies are spending more than ever on research - $330 billion in 2003, a 7 percent increase from 2002, according to the Pharmaceutical Research and Manufacturers of America. To offset their pharmacy costs, health insurers must raise their rates for pharmacy benefits. The result – consumers pay higher premiums, co-payments, or coinsurance.

    Cost are rising for chronic conditions.The number of people with chronic, or long-term, conditions, such as diabetes, asthma, high blood pressure, and depression, is growing rapidly. According to the Centers for Disease Control and Prevention, chronic diseases account for nearly 75 percent of the $1 trillion spent on health care each year in the United States – that's about $750 billion. Factors affecting this cost include an aging population and advances in medicine that have enabled people with chronic conditions to live longer. In addition, more that half of all Americans are overweight or obese. Obesity contributes to many chronic conditions, including diabetes, heart disease, and high blood pressure.

    California seismic requirements are putting a strain on hospital budgets. California hospitals must meet seismic safety requirements established by Senate Bill 1953, which means that many hospitals must be rebuilt or renovated. To make the improvements, many hospitals will have to raise money by charging more for services.

    Those without health insurance affect everyone. According to the California Healthcare Foundation, approximately 20 percent of the state's population have no health insurance. (The nationwide average of the uninsured, according to the Census Bureau, is about 15 percent.) When hospitals and physicians care for the uninsured, they sometimes lose money. To make up for the loss of income, some hospitals and physicians increase cost to patients with insurance.

    We hope this information answers why rates continue to increase – Let us help you select a plan that fits your needs, life style, and budget.


    ©2005 4-10 Insurance Agency - CA License # 0B51314