The economic crisis in America has resulted in exponential inflation in health care cost, unemployment, and a decline in the number of active health insurance policies and diminished health insurance enrollments. Statistics allege that there are more than 47 million Americans who are uninsured. Additionally, there are approximately over 30 million who are underinsured. Unequivocally, the economic crisis has negatively impacted the health insurance industry.

Insurance company premium rates have been undergone a marked increase due to the economic recession and the accompanying inflation. Medical care has not been affected by the economic crisis; medical care costs have increased exponentially. These financial encumbrances directly and indirectly affect the health insurance industry, particularly health premium rates. Undoubtedly, health insurance companies must have sufficient revenue to pay medical care costs charged by providers. Therefore, health insurance premiums are additionally higher in order to accommodate rising medical costs.

For example, higher premium rates in 2008-2009 were the direct result of the increases in medical care costs. These changes can be linked to both economic and demographic factors. In fact, the National Health Expenditures Committee reported for 2009-2010 the predicted increase would be 3%. However, due to the economic crunch and related financial constraints the health insurance industry experienced slow policy renewals and increases in payable claims. The result was intermediate increases of approximately 6% in large ESI (employee supported insurance) health insurance premiums, and a 10% increase in small company ESI premiums. However, there was an unprecedented 20% increase in individual health policy premiums in an effort to offset the recession and declining enrollments, cancellations, or lapses. Additionally, in 2010 there were even larger increases: a 9% for large firms, 20% for small companies, and 30% in individual policies.

With people living longer lives and the cost of health care continuing to increase health insurance coverage has become essential. Not all of those in our aging population can afford private insurance and instead resort to applying for state funded Medicaid for health insurance. The newly enacted Health Reform Act will provide mandatory health insurance to most Americans by 2014, but as long as prices are continuing to skyrocket, this program, even with government subsidies may conceivably be regarded as a burden rather than a blessing.

The health insurance industry is undeniable caught in a difficult position. In order to be financially able to pay the increased medical costs that are partially due to advances in medical technology and education, health insurance premiums must be increased for all policyholders. Therefore, the economic crisis and recession continues to impact the health insurance industry.