Health Insurance Should Be Illegal

Christine, health insurance companies' executives may be overpaid, but, even if insurance spent 100% of every dollar on paying the providers, health care would still cost too much.  The most ardent critics of health insurance claim that the insurer keeps 27% of the premium.  Decrease the cost of care by 27%, and it still costs way too much.

Geoff, do you really think that an insurance company can be entrusted with that responsibility?  Would they act in your best interest?  There is certainly a difference in quality of care that is not reflected in price. 

Scott, expanding the profit potential of health insurance companies will do absolutely nothing to lower health care costs.  What do you suppose happened when there were complications of a child birth prior to the advent of major medical insurance?  Cancer has certainly existed a lot longer than insurance.  Before insurance, providers still provided care, and they worked the cost out with the patient.  Insurance just made it more profitable.

Raine, exactly my point.  There is no price competition as long as there is insurance.  

Jim, if you had a catastrophic health event, do you think the health care providers would charge more or less when you had insurance?  What should be covered by insurance is answered by just which procedures you would like the provider to overcharge. Insurance benefits the providers a lot more than the policyholders.

Bo, why do you think health care costs so much more today, relative to costs for everything else on this planet?  The most ardent critics of health insurance claim that the insurance is responsible for 27% of each dollar spent on health care.  Even if we could eliminate that 27%, the cost of health care would still have risen way more than any other, including energy.  No, I don't blame doctors alone, although the AMA's attempts to limit their numbers in the US seems plausible.  There is a fair gap between doctor fees charged by clinics and the amount of dollars going to the doctor.  I don't know if doctors get paid too much or too little, but I do know that the fees charged for doctors' services seem too high.  That said, there are others in the provider stream who are more easily identified as overcharging.  Look at any itemized bill from a hospital and you'll see what they charge for things we understand like an aspirin or a band aid.  Then we have the illustrious drug manufacturers.  Try to defend their practice of charging US residents more than anyone else in the world.

If it were not for insurance companies willing to pay whatever the providers charge, the charges would be scrutinized carefully by consumers before they wrote out a check.  These charges are not the fault of insurance companies not doing a good job.  To the contrary, they are exemplary in the performance of their tasks -- collect the ransom for the providers.

Bo. in your criticism of my example, I'm not sure what you want me to provide.  I have a hospital bill from 1969 for services and four days stay for $205.  That represents about sixty hours pay for an average wage earner that year.  I have a statement from the physician who provided pre and post natal care and obstetrics for $150.  That represents about forty-five hours pay for an average wage earner that year.  Average entry level pay was about 25% less than that.  That's the basis for my three weeks wages statement.  Today, anerage pay is about six times the 1969 amount.  If we factor that into the 1969 bill, we get something around a couple thousand dollars.  Is that about what it would cost today?  Don't think so. 

Brenda, thanks for your comments.  I know of one MD in the Chicago area who had his residency terminated by a hospital because he participated in home births.  The yield management tactics of providers is something that needs examining.  More on that topic later.

Ken, I think your argument is valid and agree with most of what you have written.  The HMO type issue is as old as Blue Cross and college scholarships.  As long as there are others willing and able to make up the difference, an HMO can get away with paying providers pennies on the dollar of provider cost.  That's how athletic and other scholarships are usually funded, on the backs of the full priced students.

I still believe that the industry would be forced to charge what most patients could afford to pay if there were no health insurance.  If the government feels the need to provide sustenance for the poor, medical care should be treated the same as any other living expense.  With the size of government and the number of people on the dole, there should be no need to involve an insurance company to spread the risk.  Just make a decision to pay or not to pay based on what is reasonable and necessary.