We brought our current problems with health care on ourselves, mostly by expecting third parties to pay for the health care we do receive. The persons buying the services (patients) are not the same people that pay (either the bills remain unpaid and/or someone else (our employer) pays for the insurance). Of course if we do have insurance, when we need health care we want the Cadillac and not the basic Ford. We will go to the emergency room for a cold instead of a family doctor. We insist on the private hospital room. After all someone else will actually foot the bill. Finally, we eat, drink, and smoke ourselves into sickness.
The groups that do pay for the care (insurance companies) are not in business to buy the best health care for the least price. They are in the business to collect the most premiums and pay out the least in benefits. The premiums are subject to the free market. Cost cutting measures such as limited provider networks or corporate policies of delaying or denying claims and portions of claims as part of a numbers game are less subject to the market. If I deny the last days stay in the hospital who can afford to fight that decision? Multiply that last day by the hundreds of thousands of hospital visits the company must cover and you are talking real money. Use of those procedures is less likely to damage an insurance companies' ability to sell policies in the first place. Add market power given by consolidation of the insurance industry and the problem magnifies.
Finally, the health care providers themselves contribute, although to a lesser degree. Often since insurance companies will be the payor for the services, there is less incentive to keep costs down. Except for cosmetic or other purely voluntary procedures that are uninsured, have you ever seen a hospital or doctor advertise rates for basic procedures? Have you ever tried to obtain that information? Pharmaceutical companies also sell identical drugs in other countries at much cheaper prices then spend fortunes keeping those drugs from flowing back into the US. Doctors (most often the specialists) and hospitals also encourage procedure after procedure (particularly in end of life situations) even though the probabilities of success may be minimal. Of coarse the family who’s loved one has terminal cancer but will not be paying the bills often insist on those procedures hoping for a miracle. Further, collections at many hospitals are less than thirty-five percent (35%). Those patients that do pay must also pay for the sixty five percent (65%) that do not pay. I know of no other business that could succeed with collection rates that low. To compound the problem, hospitals often want to tack on 18% interest to the persons that do want to pay the uninsured portions of their bill. While ten thousand dollars to pay a high deductible is very hard for most Americans to pay back, add 18% interest to it and it appears hopeless. Why even try to do something that is hopeless, particularly when you can still get treatment next time you need it. (I have known uninsured people that, when in the hospital to give birth, received greater benefits than those with insurance).
What is the solution? Many people, including apparently Roger Moore, want a government/single provider system. Take one look at (i) the recent controversy surrounding services at Walter Reed; (ii) the problems we have educating children in our inner cities; or (iii) police or other public services in many large urban cities and ask yourself if you really want a single provider type system (whether it is a single provider of medical insurance or medical services). Ask yourselves, if Canada or other similar systems provide better health care, why do those persons that can afford to come to the US for treatment do come so often. People travel from all over the world to obtain medical services in the US. Well heeled individuals will still be able to afford insurance or health care services that are not part of the "single provider system" to insure that they receive the treatment they want.
What might help the problem? Consider this. Whenever you have multiple sellers of goods or services selling a virtually identical product to many consumers in a situation where the consumer can easily compare one seller’s product to another seller’s product the price invariably drops. Think about the simple computer or the price of many basic foods or other commodities.
If you are going to have government action, why not act in those areas that will help the free market system work?
Invest more money into medical schools and more money into grants, loans and other devices to help create more qualified doctors. Who can afford to go to medical school when the cost is expensive as it currently is? What does a doctor have to charge for his services if he owes $150,000 to $200,000 in tuition loans when he gets out of school? What would happen to doctors’ rates if we made it less expensive to go to medical school and doubled our output of qualified doctors in this country? According to published reports the national average of cardiologist salaries in 2006 was $342,000.00 per year.
Create tax laws that give the tax benefits (i.e. a tax credit for money spent on basic health insurance and tax deductions for health care) to individuals that will be buying such insurance and health care. Create a basic, fungible format of health insurance policy that provides essential coverage (at least for unexpected and unanticipated illness) for which the premium is a full tax credit. This does not need to provide dream coverage or provide for every check up at the doctors office. It can provide basic protection for catastrophic unexpected events. If the basic form policies are all the same, each consumer can simply compare prices on that policy. If consumers want to add bells and whistles to the basic policy, if can be on their own dime.
Create a system for individuals to easily transfer from one insurer to another to be able to keep shopping for the lowest rate. An insurance company should not be allowed to cancel a policy or increase its premium to drive an individual that it currently insures out of coverage because an event that occurred during its policy period will result in that individual having increased medical needs in the future. Design the system such that the person buying the insurance has some incentives to have payment of benefits handled in a fair and expeditious manner. If the consumer of the insurance had to deal with the nightmare of collecting benefits, insurance companies would be more responsive to benefits payment procedures. Reduce the overhead physicians and hospitals must devote to deal with and collect from insurance companies.
Allow insurance companies to price the policies based on risk factors. There is no logical reason that a person who chooses to excessively smoke and overeat or engage in other risky behavior should expect to pay the same premium as person who lives a healthy safety conscious lifestyle. There is no logical reason that a young healthy individual should pay the same premium as an older person that is more subject to health issues.
Create incentives for individuals to spend their money on the basic policy (rather than take their chances) or mandate the basic insurance. I personally know of families that earn in excess of forty thousand dollars a year yet never buy medical insurance even though they never seem to have a shortage of beer money. Create incentives for individuals to actually pay for uninsured (i.e., deductibles or planned/expected events) portions of their health care. Make the costs of providing medical and hospital services more transparent. Mandate price lists or other means for individuals and insurance companies to compare prices.
No single system will provide everything for everybody. There will still be individuals that cannot afford the basic insurance. As a society I doubt we are willing to deny them any kind of medical services. However, history has proven that when the free market system is allowed to work it works the best.
