Originally Posted by Ian
I'll be honest, I didn't read the whole thing... not because I don't care about the point, but because I fundamentally disagree that this problem with rising healthcare costs in this country falling solely on the insurance industry.
I hope I didn't give the impression that rising costs are solely due to the insurance industry. As you say, it is a complex issue. If insurance or government were not the major payers for health care the cost of health care would have to go down. The cost of health care, like the cost of any product in a market economy, is dependent on the consumer's ability to pay--that old business adage of charging what the market will bare. If health care costs were dependent on the average consumer's personal ability to pay (as they were a long time ago and when health care costs were much lower), the providers could not charge what they can charge insurance companies nor, especially, what they can charge government.
It happens every time. When a rich third party assumes the costs of services, the prices WILL go up. One of the first questions a collision shop will ask you if you want an estimate to repair damage to your car is if it is an insurance claim. If you are paying out of pocket, you will get a lower quote than if your insurance company is going to pay.
I first became aware of the connection between insurance paid and out of pocket paid prices when my employer newly provided dental insurance. Dental insurance was not as widely offered or bought at that time as it is now. I was happy as a lark thinking I was not going to have to pay for dental costs. My first visit to a dentist with the new insurance was an eye opener. I needed a filling. When I got the bill, I was very disturbed that I did not save a penny. The copay (50% of cost) was for the amount that I had paid for fillings before I had insurance. And the insurance was charged the other 50%. So the dental office was making twice as much and I was paying the same as when I was not insured.
Cosmetic surgery, because it is not covered by most insurance policies, is much cheaper than health related surgeries which are covered by insurance.
Imagine what the cost of food would be if everyone had food insurance. Or of anything else that was covered by insurance.
I don't consider that the insurance companies fault. The problem is that when insurance approaches universal status, and well before that when it covers more than 50% of health consumers, health care costs will cease to be based on individuals ability to pay. Costs will then reflect what the insurance companies are able to pay. And that will also affect the price of the insurance itself. So it's an upward spiraling circle.
This is when things get really really murky, because other problems in our society come into play:
We have an existing system where the health services we all get from hospitals, doctors and clinics are really expensive. A big part of this is because these businesses keep charging more and more for their time and resources
They are really expensive because they can charge an insurance pool, or government where applicable, far more than they can charge individuals. It was doctors and hospitals who advocated for and helped create Blue Cross and Blue Shield in the first place. They thought they deserved way more than what they were able to charge their average customers. Country doctors, way back when, actually did some old fashioned barter with their farming patients. Produce for service.
(I think part of that is because those providing the service have hundreds of thousands of $$ in student loans.)
Again, the reason for the cost of college and university education is high and keeps rising is because they don't operate like your mom and pop stores. They are heavily subsidized by government. As are student loans. The universities and colleges no longer make (and haven't for a long time) reasonable tuition charges to students--charges they could reasonably afford to pay. The more government "invests" in higher education, the more expensive it gets. And the continuing PR college education gets from society and government, touting it as the way for everybody to achieve a better life, even promising by some politicians to have government totally subsidize tuition, that kind of press and recommendation if not necessity creates an artificially high demand for the education. If the demand is higher than the supply, costs go up.
This is then compounded by a payer system which has historically rubber stamped almost anything that comes by, but in reality while we try to fix the payer side of things, we should also expect to see price correction from the providers as well.
If we "fix" either one of those, the other will be fixed. They are symbiotically connected. But the "fix" requires either reverting to a free market or to total government control. Capitalism or Socialism. The greater the mix of those two, the more impossible the fix.
I don't think an insurance market with the ability to operate across state lines fixes any of that.
As we like to say, it's "a step in the right direction." A step toward market pricing and paying. If you prefer government controlled pricing, that's a different matter.
This whole issue aside, it still doesn't fix the problem that (from an actuarial standpoint) its not in the interest of any insurance company to willfully cover aging and sick populations. Each of those enrollees consumes more from the general fund than they contribute, which is what is crippling the ACA as we speak.
Asking insurance companies to insure everyone against the inevitable or against what already exists--old age or pre-existing conditions--ensures the final destruction of the notion of insurance as a private, market based, business. Which may well be the goal. The ACA was a huge step in that direction. It was the preparatory step into universal government paid health care.
And if that happens, and government pares down the price it pays, the health care industry will have to greatly pare down costs and will be far less attractive as a vocation to many who might otherwise contribute the exceptional abilities that have created an exceptional health care industry. On the other hand, government can maintain the high costs and prices and either raise our taxes considerably or just keep going into further debt. Which is not really a "fix" to the problem.
If we go to a more deregulated model with no Medicare, I can't help but see more insurance companies dropping the sick and aging because its bad business... thats why Medicare is such an important part of our society. The alternative is that local and federal taxpayers end up paying for the emergency room care given to folks who have no insurance... and that is exponentially more expensive to cover than a properly configured preventative health plan is...
It's that unfixable mix of government mandates raising costs, ergo prices. Either government should take over and just eliminate private health insurance (and privately run health care while it's at it), or just get out of the way. Certainly it should not require insurance companies to insure against old age or pre-existing conditions. If government insists on those being insured, it can take on that responsibility and let the insurance companies compete for the rest. That is, compete without massive federal government regulations.
Bottom line is that this is an extremely complex issue and I personally believe not enough honest conversations about the underlying causes have been had. Hopefully that changes when the current administration and congress realize they can't fix it either.
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