There are a number of factors that go into determining the health insurance premium customers must pay. One factor that is often overlooked has nothing to do with a patient’s health.
How Location Affects Health Premiums
The cost of healthcare varies greatly among different locations throughout the nation. Insurance companies must take into account the cost of healthcare providers and services for any given area. For example, Miami medical care is much more expensive than any other part of the nation. As such, residents of this area can expect to pay higher insurance premiums. Premiums not only vary from state to state, but from zip code to zip code.
High Risk Areas
Some locations in the United States are more dangerous to live in than others. Cities such as Detroit and Baltimore have higher crime rates than other U.S. residential areas. Naturally, these crime rates result in higher numbers of injuries that require medical attention. A higher mortality rate is also seen in “dangerous” residential areas. Residents of these risky cities will statistically require more health care. Premiums can be high for residents of areas deemed unsafe.
Suburbs Versus Urban Areas
A recent study in California did a close examination of health insurance premiums over 3,000 zip codes. Results showed that those living in suburbs can pay up to 25% less than residents of urban areas. More specifically, those who live within 25 to 40 miles of a city can end up paying less than their neighbors. Those within 25 miles of a city typically end up paying just 13.5% less. This conclusion is based on the perceived risk of the areas. Suburbs are typically deemed safer places to live than cities.
Healthcare is expensive. The cost of healthcare providers and available services is comprised of factors such as experience, expertise, and location. Different services such as baby delivery and cancer patient care can all add up to operating costs of hospitals and outpatient care. These costs are a deciding variable when negotiating coverage with insurance policy providers. The result is that some areas simply see higher premiums because of the operating costs of the resident providers and hospital. Taxes and political events also play a role in costs facing healthcare providers.
Public Facility and Program Availability
Non-profit and government sponsored health clinics and services vary in levels of support. While some clinics may successfully meet operating costs because of donations and local support, others struggle with paying debts. The support of local programs that offer free common health services plays a determining role in how high insurance premiums for an area are.
Area Specific Wealth or Poverty
How many insured persons living in an area also play a role in health insurance premiums. More people covered by a provider means the provider can more easily turn a profit and can afford to lower premiums. However, a high number of uninsured residents can result in high premium payments for those few residents with health insurance. How much customers can afford based on their individual wealth is also taken into consideration.
There is little you can do to affect the insurance premiums for a specific area. If you are in good health standing and are desperate for lower premiums, you can consider relocating to a “safer” residence.