Why is Health Care Insurance so Expensive

Americans are paying more for health care costs each year. Families are going without care and treatment to avoid costs or are under-insured when they need the care. So why is health care so expensive? Experts say that this is, in part, attributed to high administrative costs, waste of resources, poorly managed patient care, excess of charges to patients, and insurance fraud.


There are many choices when it comes to health care plans. There are Health Maintenance Organizations (HMO’s), Point of Service Plans (POS’s) and Preferred Provider Organizations (PPO’s) to name a few. Plan costs vary and they vary based upon the fees charged for services, the out of pocket expenses, and the freedom of choice a patient has within the plan. So, how do you know what plan to choose? There are several considerations:

(1) Does the plan include the hospitals and doctors you want to use?

(2) Does the plan provide the types of services you need?

(3) Can you afford the monthly premiums?

(4) Can you afford the co-pays for office visits and for drug prescriptions?


Choosing a health care plan can raise concerns with costs. Each plan has a different cost dependent upon the types of services, doctors and out of pocket expenses you will incur. Some examples of these variations include:

HMO’s: typically, you will have to select a primary care physician to guide your treatment. This doctor will give you referrals for treatment and coordinate your care. Usually, this is the least expensive option but you will have to use doctors and hospitals within the network. If you choose to use services out of network, most of the costs of care will be yours.

PPO’s: this type of plan is more flexible than an HMO and will allow you to seek care from out-of-network providers but you will usually have to pay a coinsurance or the difference between the rate they would have paid an in-network provider and the higher cost of the out-of-network provider.

POS’s: this plan usually offers the benefits of the HMO, along with the flexibility of the PPO. Usually, you will have to select a primary care physician to coordinate your care but you will have the freedom of selecting from a wider range of groups or hospitals for care and treatment.


Knowing costs associated with health care can help you make informed decisions. A routine office visit costs approximately $180-$220. With most health insurance plans, you will pay only $10-$25 in copay for that visit. An emergency room visit will typically cost you approximately $580-$700 per visit. With health insurance plans, you will pay only about $50-$100 copay for that visit. Finally, delivery of a child can cost approximately $7.600-$8,800. Most insurance plans charge a one time copay of $300-$600 or no copay at all for maternity services.

Although health care costs have risen over the years, it is best to be insured. Health care costs are causing many people to file bankruptcy as a result of high costs incurred for under-insured or no insurance treatments. Along with choosing the appropriate health care plan for you, it is best to make sure you receive the care you need and avoid any unnecessary care so that you will not be part of the problem but part of the solution.

National Coalition on Health Care 2009: http://www.nchc.org/facts/cost.shtml

Agency for Health Care Research and Quality: http://www.ahrq.gov/
Insurance.Com “Understanding the Difference Between HMO, PPO, and POS” November 2008. http://www.insurance.com/article.aspx/Understanding_the_Difference_Between_HMO,_PPO,_and_POS/artid/70
“Typical Costs for Common Medical Services” Blue Cross Blue Shield of Massachusetts. 2005. http://www.bluecrossma.com/common/en_US/pdfs/SampleMedicalCosts.pdf