ABSTRACT
The third and fourth factors driving high costs are presented: insurance company administrative and overhead costs which add decision layers but no value, and hospital, doctor, and other healthcare provider fees which are driven upward by the third factor, high administrative costs. First a review of the overall concept of risk and how insurance companies establish their rates and pricing is explained. Included are the projection of expected claims using medical cost trends and claims experience taking into consideration incurred but not revealed claims, high claims experience, reserves, and loss ratio. These require resources to determine, which drive up insurance company overhead. Then, data are presented showing how the United States compares unfavorably with other countries in insurance overhead costs, hospital billing and administration, physicians billing-related expenses, and overall administrative costs per capita.
