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Why Are Health Insurance Co-pays So High?

By Robert Fredricks Posted in Health Insurance News

How Co-pays Are Determined

In America, privatized healthcare is expensive. Co-pay rates are determined by several factors. One is the type of insurance you carry. Co-pays for an HMO might be higher than a PPO but with there is no deductible with an HMO. Another factor is how much of the overall cost your employer pays for. Every employer that provides health insurance to its employees pays the majority of the cost to insure that person.

According to the National Coalition on Healthcare, the average cost for insuring a family of four is around $13,000 in premiums per year. On average the employee pays 30% of that bill while the employer pays the remaining 70%. So the employee pays $3,900 in premiums per year while the employer pays $9,100. If an employer has 100 employees, then they pay $91,000 per year just in healthcare for its employees. Providing healthcare is very expensive and to cut their out-of-pocket expenses some employers might choose less expensive plans or put more of the cost of insuring employees into the employees’ hands. Instead of 30/70, the ratio might be 40/60 or even 50/50.

Other Factors To Consider

Another factor that determines co-pay rates is the general cost of healthcare in America. Since there is no standardized rate, with few exceptions, for specific test or how much a doctor charges for a visit, insurance companies try to protect themselves by charging a higher out-of-pocket cost. An HMO is one of the only plans that do regulate how much it will pay doctors and hospitals for tests and procedures. That is why not all doctors accept HMO covered patients. This pay schedule determines how much it will pay for an MRI or other tests.

Unfortunately, getting testing done is difficult with an HMO because doctors and hospitals know that if they perform a test that is not covered or minimally covered, they may have to make up the difference. While an MRI at one hospital costs $1500, it may cost twice that at a hospital down the road. Health insurance companies assess risk just like any other type of insurance companies. While you may have a relatively low risk of needing that MRI, your co-worker may have a higher risk and since employer-provided insurance policies do not adjust for risk, everyone shares in the cost. If you are purchasing a private insurance plan you can work with the insurance company on lowering you co-pay.

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