Ilovebenefits’s Blog

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Reasons Why Health Insurance is So Expensive

Editor’s note: This article talks to why dollars are spent on administrative costs. See my earlier posts on why the rate of increase continues to outpace general inflation.

One of the less talked about reasons why health insurance is so expensive in America is our system of insurance regulation.  It’s a system that dates back to the 19th century, and hasn’t changed very much since.

Here’s how it works.  There are 50 insurance commissioners.  They set the rules for insurance in their states, and they have a major impact.

What it means is that if you want to sell an insurance product in the United States, you have to pick a state in which to start.  You would have to comply with that state’s rules about financial stability and management.  Then, you would have to comply with the state’s mandates as to what needs to be in the product, and, depending on the state, you may have to change your price to fit what the state says you have to charge.  Its a process that can take many months or years.


September 22, 2009 - Posted by | Federal Government, healthcare | , ,

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