Why Traditional Health Insurance Can Cost More: The Risk Pool Reality
You hit the gym, sip green smoothies, and have an enviable step count—but your health insurance premium still seems to climb higher than your personal best on the treadmill. What’s going on? The answer lies in one of the most fundamental concepts of insurance: the risk pool.
Let’s dive into why being part of a shared insurance system means your costs are tied to everyone else’s health—whether they’re running marathons or running up medical bills.
What Is the Risk Pool, Anyway?
Think of health insurance like a giant community potluck—everyone contributes, but not everyone eats the same amount. Some people bring a salad and take a small plate, while others show up ravenous and clear the buffet. The healthier you are, the more it might feel like you’re bringing more than you take, but that’s how the traditional system stays sustainable.
Why It Costs You More
1. You’re Paying for High-Cost Cases
Insurance companies don’t just cover the healthiest members; they also have to pay for individuals with chronic conditions, unexpected medical emergencies, and high-cost treatments. Since insurance is based on shared risk, the expenses of the sickest individuals are spread across the entire pool—including you.
2. You Can’t Opt Out of the Risk Pool
If only sick people bought health insurance, the costs would skyrocket, making coverage unaffordable for nearly everyone. That’s why insurers rely on a mix of healthy and high-risk individuals to keep the system balanced. Even if you rarely see a doctor, your participation helps ensure the stability of the overall pool.
3. Medical Inflation Hits Everyone
From new treatments to rising hospital costs, the price of healthcare is constantly increasing. Since insurance companies have to cover these expenses, they adjust premiums accordingly. Even if you’re not the one racking up medical bills, you’re still contributing to a system that needs to keep up with industry-wide inflation.
How Can Start Health Reduce These Costs?
Analysis of Medicare spending shows that the top 20% of beneficiaries are responsible for about 80% of spending.
In other words, if you have a group of 100 insured people that buy healthcare, 20 of those people will end up spending 80% of the total cost of the entire group.
By doing some underwriting to disqualify those top spenders, the remaining 80 people can now get the same level of care but end up spending about 1/5 of their old health insurance costs.
Becoming a member of Start Health is like a safe driver discount for your auto insurance. Because your auto insurance knows you drive a less expensive car and make smart choices on the road, you’re less likely to file expensive claims. Therefore, they can charge you less for your insurance because they’re not anticipating having to spend a lot of money to cover big claims for you. Simalarly, because Start Health knows you are generally in good health and make healthy decisions, we are able to charge more reasonable premiums than other health insurers on the market.
If Start Health doesn’t seem like a good fit for you, know that the healthcare marketplace has what’s called a guaranteed issue rule, meaning they have to cover everyone who applies regardless of what preexisting conditions they have. This is still a great option for less healthy people to get good coverage. Start Health plans aren’t designed to punish people for having poor health. We just want to offer a more affordable option for healthy people to still have comprehensive, credible coverage.
