Friday, September 28, 2007

Health Insurance and Medical Expenses

Have you ever considered that health care costs are so out of control because of insurance? How could that be? John Stossel shows us how:

Our Crazy Health-Insurance System
[...] You have to understand something right from the start. We Americans got hooked on health insurance because the government did the insurance companies a favor during World War II. Wartime wage controls prohibited cash raises, so employers started giving noncash benefits, like health insurance, to attract workers. The tax code helped this along by treating employer-based health insurance more favorably than coverage you buy yourself. And state governments have made things worse by mandating coverage many people would never buy for themselves.

Competition also pushed companies to offer ever-more attractive policies, such as first-dollar coverage for routine ailments, like ear infections and colds, and coverage for things that are not even illnesses, like pregnancy. We came to expect insurance to cover everything.


But insurance is a lousy way to pay for things. Your premiums go not just to pay for medical care but also for fraud, paperwork and insurance-company employee salaries. This is bad for you and bad for doctors.

The average American doctor now spends 14 percent of his income on insurance paperwork. A North Carolina doctor we interviewed had to hire four people just to fill out forms. He wishes he could spend that money on caring for patients.

The paperwork is part of insurance companies' attempt to protect themselves against fraud. That's understandable. Many people do cheat. They lie about their history or demand money for unnecessary care or care that never even happened.

So there is a lot of waste in insurance -- lost money and time.

Imagine if your car insurance covered oil changes and gasoline. You wouldn't care how much gas you used, and you wouldn't care what it cost. Mechanics would sell you $100 oil changes. Prices would skyrocket.

That's how it works in health care. Patients don't ask how much a test or treatment will cost. They ask if their insurance covers it. [...]

(bold emphasis mine) That is why insurance should be for catastrophes and accidents, not every little thing people need. It's trying to use insurance to pay for EVERYTHING that has made costs go completely out of control. Paying for your health insurance is getting as costly as making mortgage payments, and it needn't be so.

I made a simple visit to my doctor in June. I've only just recently received the bill for that visit. In the interim, I've gotten several statements from the insurance company, each covering some small aspect of the visit. I don't see doctors often, yet I've got files filled with such things. The paperwork generated, and the labor costs associated with it, are ridiculous. I could have paid him right then and there, but it's not ALLOWED. Clearly, changes are needed to reduce the bureaucracy created by insurance companies and third party billing.

Stossel makes some good suggestions in that regard. It's worth reading the whole thing, it's a short article and gets right to the point.


Anonymous said...

For years I've been angry every time someone says that we need to get "Health Insurance" for everyone! NO - it's "Medical Care" we need - not another "middle-man" Finally, someone is saying something about it.

Chas said...

Health Insurance is a mixed bag at best. I've read that for Catastrophic illness and accidents, people with Health Insurance actually end up being charged less; the Insurance companies act as an advocate for the patient, arguing about prices and forcing costs down. The uninsured have no advocate, so they actually get charged more. So catastrophic insurance is probably a good thing.

But when Health Inusurance is used for everything, it just adds to the cost, becoming part of the expense. If I could have paid my doctor at the time of my last visit:

a.) He would have gotten his money 4 months sooner.

b.) I would have had to pay less, because there would have been less paper work, therefore less administrative costs.

When people talk about wanting Health Insurance for everyone, I think they see it as a better alternative than socialist medicine (like in Canada or Europe), where you can actually die while waiting for treatment.

I think we need to make a distinction between catastrophic insurance and regular health care. I think that is what Stossel was getting at, but as he points out, people have come to expect insurance for everything, and getting them out of that mindset would be no small task.

A lot of people are making money out of the current system, and will resist any attempt to reform it. Stossel has identified a big part of the problem, but how to bring about changes is a big question.