Thu 14 Nov 2013 @ 08:11 PM


How Health Insurance Drives Up Health Care Costs

This is a comment I posted to a Facebook thread after someone stated that the high cost of health care is not the fault of health insurance providers.

It is insurance fault (at least indirectly and in part). As I understand it, in the 1940s, due to wage controls in place by the government and the lack of laborers due to so many people off fighting war, potential employees were a valuable commodity (supply and demand). Not being able to offer more money in the form of salary led to offering benefits that were not controlled (at least not as severely). Health insurance (which had existed in forms previously) became a much more popular benefit at the time.

In the 1950s laws were passed making health insurance benefits non-taxable. This led (eventually, anyway) to changes from health insurance (designed to protect people from loss of property in the event of excessive medical expenses) to partially pre-paid health care (where the insurance company paid something for many or most visits to a health care provider).

Fast forward to the 1960s when Medicare and Medicaid were enacted: Huge government run insurance programs. Government deficits in the 1970s were due in part to higher than expected costs to administer Medicare.

With the huge influx of money thanks to insurance (both public and private) more and more corporations have been attracted to health care. There are high risks but also high rewards. How many health care products you see advertised in the media? Even products that are available to the patient at no cost because they'll just bill your insurance (public or private) directly! Some of them (scooters come to mind immediately) even say if they give you a scooter and your insurance won't pay in the end, you don't owe anything! Obviously they are careful to pre-quality people so they don't give away too much product, but these companies are not in business to lose money. Scooters, catheters, diabetic testing supplies, and more are available to qualifying patients at no cost because there is more than adequate money for them to make a nice profit without charging the customer anything. Most of the people that are attracted to those types of offers do not care what it costs their insurance plans, at least not enough to actually ask what the cost will be. People have a tendency to protect their own assets more effectively than others. It's human nature. Too many people don't care what medical expenses cost since someone else is paying the bill.

Note: That's exactly what's happening with Obamacare. Few seem to care how much the government is paying in the form of tax credit subsidies for the insurance, they only care about the great deal they're getting for their tiny out of pocket portion of the premium. Many don't seem to realize just how much more money they'll have to spend if they get sick due to high deductibles and co-payments / co-insurance.

Fast forward to the 1980s when laws were passed to require emergency rooms to see patients in need. They didn't have to completely cure or heal patients, but just stabilizing people can cost plenty. If they have no ability to pay, then the price everyone else must pay (often through insurance) goes up, creating a vicious cycle. Health care becomes more expensive, the poor are able to pay even less, people who can pay even more, etc.

Medicare and Medicaid benefits have been expanded over the last 48+ years. New programs have been put in place. Health care has not become more affordable at any point.

Money does not corrupt things, but the love of money? Corrupts big time.

I realize that we can't lay all the blame on insurance programs. Certainly advances in health care technology and insufficient supply of providers and malpractice claims / insurance premiums (gee, another type of insurance driving up the cost of health insurance; is that irony?) have been part of the mix, as well as other things observed above. Still, the money infused into the system from insurance plans does not help bring costs down at all. It's why I like to call the Affordable Care Act the Unaffordable Care Act. It might be affordable for some individuals thanks to tax credit subsidies, but it is hugely unaffordable to tax payers (both current and future, who will be paying off these bills for years).

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