To Mr. Carter’s point:

“Further, the cost should be known, accurately and entirely, to the consumer before services are provided.”

While this is fine for buying a product such as a car or washing machine, in reality, this is not possible in healthcare for most services that require a more than a trivial level of diagnosis. How can a doctor give an upfront fee to someone walking into the office with unspecified abdominal pain? Is it $50 for indigestion or $2,500 if an about-to-burst appendix – you pick what you want before the doctor will see you? I don’t see pay-one-price options for something as common as delivering a child either. Sign up for the “routine delivery” fee, and if complications develop do you do a credit card swipe before they wheel you in for a c-section?

Not trying to come across as condescending – but rather make a point that health care economics do not follow free market rules. It is impossible to price in full up front, as every patient and every condition is unique. Elective procedures such as cosmetic surgeries and Lasik are exceptions, routine preventative exams should be able to be priced out up front to some extent, but this isn’t at all applicable to urgent or non-elective episodic care.

As far as what do insurance companies do? Well, I respect the arguments against, but pooled risk and contracted price reductions for the “off the street” rates for starters. Leading employer and member based wellness programs for another. It might not get a lot of press, but many payers, particularly non-profit insurers, are as onboard with fixing the disjointed system as anyone else.

Agreed that 13 percent overhead is well within the estimated private sector range of something like 9 – 16 percent. The issue here is that Medicare is 2-3%, maybe as high 6% when you add in additional costs that are pushed onto providers. The difference of 7 cents on the healthcare dollar is a huge number when multiplied out. Of course, there is also a significant value add to the consumer for those 7 cents, which is why there should be an _option_ – if you want the better service and can afford the additional premium, then by all means buy the private insurance (I know I would!)

The other part is that one component of the high costs is that people with insurance are already subsidizing people without – use of the ER for primary care is only the most egregious of these issues: If primary care was actually available to even the poorest of legal residents via low-cost clinics and urgent care centers, the total cost for care would go down _and_ be more equitably distributed. Similar arguments apply to medicines – we pay such steep prices partially because we subsidize low costs for others.

Finally, if my taxes go up to the same degree as my insurance costs go down, why should I be unhappy? Even the most expensive of the proposed bills would likely result in lower _total_ costs for my family and my company, _and_ lessen the obvious risks associated with health-care savings accounts.

Cheers,
m

With all due respect, I believe your position obviates any appearance of impartiality. Let me tell you about myself. I entered the UoR in the Class of 1981. After my freshmen year, I was diagnosed with a lymphoma, a Hodgkin’s lymphoma Stage IIa to be precise. I was treated, graduated with the Class of 1982 and followed up as cancer free for over 15 years and then had regular check-ups ever since. However to this very day, I cannot buy health insurance. It’s not that I can’t afford it. I cannot find any insurer that will underwrite my policy AT ANY COST due to my history of cancer.

My only option is to be an employee of a company that offers a group underwritten policy. Currently, adding my contributions to those provided by my employer, my total cost for health insurance (ignoring co-pays and out of pocket expenses) is close to 10% of the total of my and my wife’s gross income (unadjusted). If I add the cost of Medicare (the public insurance we now have) and employer matches to that, it exceeds 12% of our gross income.

I have several opportunities to work as a consultant in my field at rates that would be approximately double what I am paid in total compensation by my current employer (the value of a good education demonstrated). However, I cannot take advantage of these opportunities because I would then lack any form of health insurance except the current default health plan (enjoyed by the anyone in America, citizen or not, lacking insurance, Medicare or Medicaid) which is to show up, deathly ill, at an emergency room and pray my condition has not progressed beyond a positive prognosis. The cost for conditions that progress beyond stages that can be positively identified early is the cost that those opposed to health care reform seem to always ignore.

In my opinion, we already have public health “insurance” in various forms that cost tax payers and employers significantly. If we cannot have a “public” option that allows U.S. citizens to buy into a plan structured like Medicare, then I wish to opt out of paying for others’ Medicare and Medicaid “public” insurance. It certainly is not sustainable in its present form and will also inevitably increase taxes. More importantly, its value for me is highly questionable.

I have only one question for an insurance professional like you. Why does the cost for any procedure, diagnostic test, or consultation not the same for those paying personally as those paying through third party insurer? The difference in price may be 2x to 4x greater for the uninsured health service consumer. I have heard that the providers raise the cost to the uninsured because the provider organization feels that they won’t get paid anyway. That’s certainly a self fulfilling prophecy when a procedure that cost the insurance company around $120 may be as high as $300-$400 for the uninsured.

If there is any one item that needs to be addressed in health care reform, it’s the return of the health care industry to a free market system. Costs for any procedure, test or consultation should not be based on the payer’s method of payment. Further, the cost should be known, accurately and entirely, to the consumer before services are provided.

There should be no “hidden” costs such as having a radiologist charging (in my case over $100) to review a sonogram that was ordered by my physician. I was actually insured at the time but did not have the insurance credentials as I had just started with this employer. I told the provider I would pay cash and to tell me what the amount was in order to pay in advance. I then had a sonogram test that took less than 5 minutes of actual test procedure. The technician had already established that the proper region was imaged and with adequate contrast. The “consulting” radiologist was not even aware why my physician ordered the test and yet he charged significantly to “review” it. I received his invoice by mail less than two weeks later. This was not a charge I could dispute either. My options were to pay it or face a collection agency.

Our current health care system is broken. We do not have a free market system. While we don’t have a single payer system, we can reasonably argue that we have a several payer system with a number of payers that is measured in double digits at best. It’s those payers that appear willing to do anything to thwart change. But things must change. If we do not act, then we all face the same increase in costs and taxes that Mr. Ryan Hanley would predict for taking action.

Interesting point Ryan. What can small business owners do to help lower their premiums and protect themselves from the higher costs?

Eric