Yesterday on Twitter a good friend of Mine Jayd McFerson posted the question
Can anyone link me to a solid breakdown of what elements are causing healthcare costs to increase faster than inflation? Legal? Tech? Drugs?
I believe the way the industry pays people is the reason health care costs have gotten out of control. I actually sent this message to Jayd on Facebook first. but I thought I’d put it up on my blog with a little more explanation.
The basic premise here is, “If you don’t have to pay, out of your own pocket, for something you don’t really care what it costs, and costs will get out of control.”
At first before people had insurance they paid their doctor directly. The doctor if the costs were not reasonable people would stop using his service.
Then, when costs were low, companies started to offer health coverage as a way to attract the best workers. Now people cared less about how much the doctor was getting paid because It didn’t come out of their pocket. I imagine the insurance companies are the ones that first presented the idea to businesses. They knew that they could cover way more people than would be using the services. So they started taking in money from companies and paying doctors for services.
The insurance companies had a huge pot of money. Because the doctor wasn’t asking the patient directly for money he could be a bit more bold and charge a bit more and when no one complained he charged even more, and more, and more. The insurance companies weren’t paying attention or pushing back. All they cared about was the money coming in. If the costs increased a little from doctors they just increased the cost to the company.
At this point and am going to change the perspective.
Because I not responsible for the bill I keep going to the doctor. When I went for a check up and the doctor said “I think we need to check your blood.” I say sure, what do I care what it costs. My health insurance will cover an unlimited amount of care. Right? I have no idea what that blood test is going to cost. The doctor knows he can probably get $2500 from the insurance company to run a bunch of tests on my blood. It’s only going to cost him $200 to get the test from the lab. That’s a pretty decent profit. The doctor justifies it. I spent 12 years in medical school and every other doctor in my town is charging the same thing. I deserve the $2300 for the 15 minutes it took my staff to take your blood and get it ready to ship to the lab. Plus I have to pay my $15 dollar an hour nurse to package all the stuff up. Eventually the lab finds out the doctor is billing tons and says that is not fair we are doing all work and the lab raises prices. The insurance company looks at the bill. It looks pretty close to every other blood work bill and goes ahead and pays it. But at the end of the year they have make 8% less than less year. Okay says the insurance company we are going to nead to raise premiums by 11% to cover the increases.
At some point someone pushed back but it was too late and everyone is making big money.
It seems pretty logical to me this is the way things go. The motivation is ,as it is in all free markets, to charge as much as you can for your service. If people pay then that’s what you charge and the whole time you increase the price until someone says no.
For instance I lost my insurance when I got laid off a couple of years ago. We had been going to a doctor near our house because of convenience. With insurance we had a $20 co-pay. With out insurance we went back and got charged $250 for a visit. My wife called a couple of other doctors that were close, and that were in our old list of doctors from the insurance book. There was another doctor right around the corner from our old doctor who only charged $70 for an office visit. We went to the other doctor and got basically the same service. The funny thing, under our insurance, we have have been charged the same $20 co-pay to go.
I believe a simple solution to the problem is have people pay their own insurance. Give the insurance companies the chance to make there massive amounts of money by offering catastrophic plans where every thing over $10,000 or $20,000 is covered by insurance. Then everything under that is covered by me. I get a tax free medical account that I see coming out of every check, and I see the balance go down when I go to the doctor.
It’s funny to note this sort of plan exists now and has for a long time.
But I have gotten used to the plan where I don’t have to pay attention to what the costs are and I get a little upset when my company makes me pay more for my insurance, but it was only $45 more a month than it was last year. I guess I can deal with that. And so it goes.
But like the tree falling in the forrest, I make my case in vain. No one really cares if it makes a sound.
I am too lazy to try to make a difference anyway. Plus I don’t really have the time, I have to work an extra 30 minutes a day to pay for my new health plan.
And one more strand of the flaxen chord is strung around my neck. The few that are there already aren’t that uncomfortable, not a big deal.