It’s Everyone’s Fault Except The Insurance Industries… Not!
Posted by Mitch Mitchell on Dec 20, 2012
I hate when I read things like this. There's this article I've been sitting on for awhile now, waiting until I was in the mood to comment on it. That time is now. It's from the Kaiser Family Foundation, which used to be affiliated with Kaiser Permanente, is now its own entity, and yet, in my belief, still puts out articles that make it seem as though the insurance industry is the victim when it comes to rising health care costs.
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This article was written in October and it's titled Seven Factors Driving Up Your Health Care Costs, and of course there's 7 reasons they've listed as to why health care costs have been going up. Some of these are true; there's no denying that. However, what's missing is the complicity of the insurance industry in some of these. If you want more detail on what they have to say follow the link. In the meantime, I'm going to list their 7 points with my own commentary on them.
1. We pay our doctors, hospitals and other medical providers in ways that reward doing more, rather than being efficient.
While this is true, most of the problems came because of two things. One, private hospital corporations, which means they're publicly traded rather than public, non profit hospitals like what we have in New York. Two, insurance companies which made determinations a long time ago that physicians had to totally prove their diagnoses before they'd pay claims, thus forcing physicians to require a bunch of lab tests, and then deciding later on that they didn't want to pay for them.
2. We're growing older, sicker and fatter.
In other words, insurance costs are our fault. It's not because insurance companies often charge companies big dollars to cover physicals to catch nasty diseases sooner, won't cover anything for health clubs, nutritionists or other health professionals to help us learn how to take care of ourselves.
3. We want new drugs, technologies, services and procedures.
This one is true, but once again, insurance companies aren't proactive in working with technology companies upfront to produce products that will help more people with better efficiency and cost effectiveness. What happens now is companies build things, then have to work with hospitals to figure out if these new technologies will be paid. A little collaboration wouldn't hurt; what's wrong with wanting better systems to keep us healthy?
4. We get tax breaks on buying health insurance -- and the cost to patients of seeking care is often low.
Wow, really? The cost is low? I was covered under my wife's health insurance and when she changed jobs the insurance company sent a COBRA bill for $1,200 a month; does that sound low to anyone? How much do those of you without insurance have to pay, or think about paying, for your pharmaceuticals?
Truth be told, insurance rates are astronomical, and these people aren't hurting. Good thing the new health care bill forces these people to pay at least 81% of what they bring in through premiums to health care providers but all that's done is made them raise the rates even more so they can protect their stock holders. Try getting any of these people to divulge just how much money they have in holdings one day.
5. We don't have enough information to make decisions on which medical care is best for us.
I'll agree with them on this one while asking the questions of who is "us" to them.
6. Our hospitals and other providers are increasingly gaining market share and are better able to demand higher prices.
Not quite true. For profit hospitals might be able to do this but not for profit hospitals can't. Now, what's happening across the country are more mergers, which does increase market share, but often these mergers end up with the closure of a facility or two along the way, which is kind of a financial sculpting encouraged by insurance companies that believe that too many places looking for demands on their money is inefficient. They might be correct on that point, but prices don't always go up as a result of mergers and acquisitions in health care.
7. We have supply and demand problems, and legal issues that complicate efforts to slow spending.
They're correct here but incomplete. Malpractice is out of hand. I offered a solution to a local congressman who thought it had merit, then he got himself promptly voted out of office. Errors in billing and intentional fraud are major problems. However, another major problem is insurance companies determining how "not" to pay medical providers for services, which either delays payments or cancels them altogether. Trust me, as someone who oversaw billing but not authorizations for every department in a hospital, it was amazing how many procedures we performed that had to be totally written off by contract, even though the contract made no sense.
Think of it this way folks. If the insurance industry wasn't culpable for anything, would a health care plan ever have been debated in the first place?
I personally have very bad opinion about insurance companies, for me this is the biggest legal scam that it running for centuries. It is not only related to health insurance, but to any kind of insurance. There are many reasons to think this way and in most cases is because you never get what you pay for, no matter how hard try to tight up policy with what you need.
I tend to agree with you for the most part Carl, although in a way it does offer some peace of mind for families. But insurance companies have to shoulder part of the blame for how things go in the United States, especially health insurers.
I would say that it is the same in every country. I think it have started before Roman empire, insurance or protection, all the same scam. Health insurance is probably the biggest one and it is getting worse, especially when you deal with private sector.
Hmmm, I do see where you are going Carl, but maybe it helps to choose the right company? Just my two bits. Regards
I agree that the failures of the health care system in the USA are complex. Given decades of failure those with leadership positions (hospitals, doctors, politicians, insurers) all have failed. Drug companies I would put below those 4 (they mainly just take advantage of lots of weak politicians to buy bad policy that favors them). Exactly what % of the failure to put at each groups footstep is hard to judge but the collective failure is obvious.
USA health care costs twice as much as other rich countries and the results are mediocre. http://investing.curiouscatblog.net/2012/01/26/usa-spends-7960-compared-to-around-3800-for-other-rich-countries-on-health-care-with-no-better-health-results/
Big business has some responsibility but mainly they just have ignored the problem and not done anything to help (versus actually intentionally sustaining the broken system). Voters have a huge responsibility for decades of re-electing those that maintain the broken system.
Good stuff John. Actually, big business did try to help in some fashion, and it ultimately failed. Rochester NY was considered a national icon for awhile in business and health care coverage, as the two main companies, Xerox and Kodak, had revamped how they covered employees by negotiating their own insurance coverage directly with both hospitals and insurance companies. Very unique packages that worked for awhile, as I was working in that area.
What happened of course is the economy shifted, Kodak didn’t keep up, Xerox had a lot more competition, and neither company had clout anymore to demand anything. However, being on the inside (working in hospitals), I saw that it was all about to crumble anyway. If you looked at your business & the deal you were given is that you would accept payment of your costs -29%, could you survive? That’s where they were trying to take services like lab & xray and the insurance company they were working with was trying to adopt the same thing. It was ugly and I predicted what eventually happened, which was one hospital closing and the others in disarray for some time. I tried to get our administration not to go along with it but fear mentalities are hard to overcome; such be life.
I agree some did try and some made some really great attempts. But overall it was a paltry effort considering the expenses in many instances had risen to be one of the top few expenses for companies.
The whole health care system problem in the USA is extremely hard to address. Ignoring it sure was appealing – the problem was it was a huge. If your paper expense grew faster than inflation every year for 30 years who really cares – it still amounts to nothing. Ignoring that problem wouldn’t matter.
The problem is you can’t address the health care system problems successfully without addressing the primary causes which are policy based. It is a nightmare to try and deal with it. But CEOs are paid a huge amount of money. The broken health care system (for large companies) is often costing tens or hundreds of millions. Ignoring it because it is hard isn’t ok.
Trying to find local improvement is good. And lot and lots of this has gone on in the last few decades. But ignoring the big problem is not working.
Large company CEOs have to use their power to demand the entrenched special interests in health care be denied when their interests run counter to the interests of society. It is extremely difficult there are not easy answers. It will take decades to get out from the problems we have created over decades.