How Health Insurance Is Priced: Underwriters Use Stuff You Know Well

#012 – Learn what everyday stuff underwriters use to price your health insurance.

Control what you can and forget the stuff that underwriters use, everyday stuff, like your age, sex and ZIP code, that is arbitrary and you cannot change.

If you live in New York or California, your rates are likely to be much higher than the person that lives in Nebraska or Mississippi. It's not your fault, just an economic reality. If you live in a low cost state, expect lower claims cost….if most of the employees live in a low cost state.

If your company is full of accountants or actuaries, expect a lower rate, in general, than if your company is a high performance racing team that participates in speed games. Truth is that I worked for a company whose Chief Actuary spent his leisure time as a driver racing at Watkins Glen….so it is not always a perfect assumption!

And, as for profit, which we discussed in Doxcost Episode 11, here is a link to a report on a publicly traded company, which owns hospitals, that announced its financial results for 2020. The company announced over $500 Million in profit in 2020 on nearly $12 Billion in revenue (aka the claims you incur and that the insurance company pays and reserves for).

CHS sheds 18 hospitals, swings to $511M profit

Also, I did like this author's characterization of Not For Profit companies…..Not For Profit sounds nice, but don't be fooled. Read the post here:

How Non-Profit Hospitals Are Driving Up The Cost of Health Care

Thanks, as always, for your support. It's all about Knowledge Experience Education and Information. Tell your family, friends and coworkers about Doxcost!

Next episode we will tie together all of the aspects of pricing so that you understand how what the actuaries and underwriters consider affects the price you pay for your health insurance.

I appreciate you very much!