14.3.3: Premiums
Premiums are the monthly costs of the health insurance plan, similar to a subscription for a streaming service for music or television shows. Typically these are set for a year at a time, and often insurance companies increase premiums in subsequent years to offset ongoing increases in healthcare costs. Premiums are paid by the employer, the insured, or shared by both, and are based on the number of people covered under the healthcare plan (i.e. whether a single person, their spouse and/or dependent children are covered). Premiums are not based on usage - so the premiums are the cost of the insurance regardless of how frequently the beneficiaries see the doctor or what their healthcare costs are. By collecting premiums, healthy people who visit the doctor less essentially cover the costs of sicker people who use healthcare more. If the insurance company has more healthy folks than sick folks paying premiums, then their financial risk is lower.