As baby boomers age and healthcare costs increase, Americans are paying more for health insurance. According to CNBC.com, the average health insurance costs total $3.4 trillion a year for medical care.

Tracking the Data

Health insurance costs have increased steadily from the year 2007. According to CNBC.com, the following are data related to the increasing insurance costs:

  • 2007: Americans spent an average of $7,700 on healthcare.
  • 2012: The average American spent $9,596 on healthcare.
  • 2016: Average costs are expected to exceed $10,000.

By the year 2023, experts estimate that the average cost of health insurance will be $14,944. Healthcare regularly outpaces inflation in terms of increasing costs, which is why the amount of health insurance is projected to be so high in 2023.

In addition to looking at the overall picture of health insurance costs, it’s important to consider the month-to-month costs of insurance premiums. For example, in 2013, the average health insurance premium was $232 per month, according to the U.S. Department of Health and Human Services. In 2017, this cost had increased to $476 per month, a 105 percent increase over the course of four years. While all states report increases in the cost of health insurance, Alabama reported the highest premium increase of 222 percent.

Factors That Affect Insurance Premiums

Prior to the Affordable Care Act, health insurance companies would vary their costs based on pre-existing conditions and gender. Currently, there are only a few demographics that insurance companies can legally use when determining healthcare premiums. These include:

  • Age
  • Individual or family plan
  • Location
  • Tobacco use

A person’s insurance premium is also affected by the level of plan category a person selects. For example, a platinum health coverage policy will typically offer more comprehensive coverage than a bronze plan. According to HealthMarkets.com, the greatest increase in insurance costs occurs when a person turns age 50. Tobacco smokers also have significantly higher health insurance costs because they tend to require greater medical attention. In some states, insurance companies can charge smokers as much as 50 percent more for the same insurance plan as non-smokers. Quitting smoking can be a significant way to cut a person’s average health insurance costs.

Conclusion on the Average Health Insurance Cost

Health care – and health insurance – are expensive pursuits in the United States for several reasons. One is administrative costs. According to CBS News, an estimated 25.3 percent of all healthcare spending in the United States is related to administrative costs of filing, billing, processing, and collecting bills. Also, health care is highly subsidized. This means that a portion of many healthcare costs is not paid by the actual person, but instead by employers, the federal government, grants, or private insurance. As a result, there is little incentive to decrease overall costs.

Currently, Americans pay the most for health care per capita than any other country in the world. While the average health insurance cost does not appear to be decreasing any time in the near future, programs remain that can help subsidize a person’s healthcare costs so they can receive the coverage and care they need and can afford.