Healthcare reform - the second problem

The following is the second in a series of blogs about healthcare reform.

We talked last week about how part of the current issues in healthcare reform stem from the fact that politicians and lawyers are making decisions about who receives healthcare and who doesn't. I also mentioned last week that (albeit briefly) that some of that "medical decision making" is coming from insurance companies, largely in the form of Pre-Authorizations. I figured that since said insurance companies are at the forefront of some of the new healthcare developments coming out of Washington, it would be a good time to discuss that aspect of our healthcare problem.

As a nation, the USA spends more on healthcare per capita than almost any other country in the world (we're neck and neck with East Timor), with the majority of that expense going towards paying premiums for our health insurance programs. As an industry, health insurers make over $340 billion each year, with the majority of that going towards paying physician and hospital bills, right? Wrong. Physician reimbursement accounts for around 7-10% of all health insurance costs. Hospital bills, while more expensive, still do not put a large dent in net profits. In fact, the total amount of consumer benefits (how much your insurance plan pays if you get sick) accounts for around $170 billion annually. Let's see...$340,000,000,000 in income minus $170,000,000,000 in benefit payments = $170,000,000,000 in profits. Sure, there will be other expenses (every CEO needs a yacht, right?), but nothing that will bring that number down too much.

From a corporate standpoint, it's brilliant, and it's no wonder that even in this bear economy, the insurance industry is posting record profits. When asked about how they have managed to profit in such a poor economic situation, insurance companies have turned to capitalism as a defense, stating "we're just giving the consumer what they want." Now let's think about this for a second. Do I really want to pay over $300 a month for health insurance? No, I don't, but neither do I want to be one of the millions of Americans applying for bankruptcy because a freak accident caused me to go hundreds of thousands of dollars in debt (well, hundreds of thousands of dollars more in debt, thank you very much, medical school). In addition, if this really was a capitalistic venture, shouldn't consumers be flocking towards plans with the lowest premiums, thus making other companies lower their prices in order to compete for business? Well, that makes sense, except that prices are, for the most part, fixed, regardless what plan you choose. I don't know about you, but that sounds a little like price gouging to me...shouldn't there be an anti-trust law or something against that? Oh wait, insurance companies don't have to abide by anti-trust laws. Let me repeat that again. Insurance companies don't have to abide by anti-trust laws. Don't believe me? Check this out: Health Insurance and Anti-trust regulations. Something is definitely rotten in the state of Denmark.

What I've said tonight just touches the basics of this healthcare conundrum. There are many resources out there that can provide a lot more insight than I can, and if this really interests you, you owe it to yourself to check them out. Like I said last week, these entries are rather heavy, so I'm trying to say what I think needs to be said in the shortest blog possible. If you're interested in hearing more from my perspective, send me message, and I'll post some more in the upcoming weeks.

And now for the disability quote of the day:

Me: "So what made your back start hurting?"
Man: "Well, it started after I got in a fight...when I was in prison."
Me: "Oh, what did they put you in prison for?"
Man: "Falsifying information on my worker's comp documents. I said I was disabled when I really wasn't."
Me: "...So about that back pain..."

Have a good evening,
-DD