Consumer
Knowledge
Knowledge
Health insurance costs a lot of money for the employer who has a health insurance plan for their employees, for those employees, for the self-employed and the unemployed who have health insurance. Health insurance costs a lot of money. It is a large part out of our paychecks and monthly income.
There are differing opinions on why health care insurance is so high depending on whom you listen to and read. People who work for large companies might say that their health insurance costs really are low. And they actually are. After talking to some friends of mine who work for either large companies or for a government entity, I am jealous that their monthly health insurance is low compared to mine. But those large companies are more able to pass those costs on to customers and for the government, that’s our tax dollars.
The reasons given for the rapid increase in health insurance are:
We need research and development and new technologies and we can’t really stop people from using their health insurance when they want to. Americans see so many drug and pharmaceutical ads on television that they demand their doctor write them a prescription for the hot drug of the month. According to AARP, Americans spend $500 billion annually on unnecessary care.
Frivolous lawsuits; trial lawyers really push for these and one solution usually mentioned is to make the loser pay all court costs and legal fees, which would stop these frivolous lawsuits. Personally I am against that since like most of you, I have heard some horror stories where someone has a legitimate claim, but if the law were changed, they would be afraid to pursue it in court. Another solution would be preferable. Doctors will do unnecessary tests to stop the lawsuits since some doctors believe that if a patient thinks the doctor did everything possible they are less likely to talk to a lawyer. Are we being lawyered to death?
Bureaucratic costs are another area that needs to be looked into and fixed. It was recently reported that 31 percent of health care costs went for the bureaucracy, the paper pushing.
Prescription drug costs have risen dramatically in the last ten years and one reason is the cost of marketing and advertising. Prior to 1997 drug companies weren’t allowed to advertise on television. As soon as the FDA made it legal we were bombarded with drug ads of all kinds. Today, many prescription drugs such as Viagra, Cialis, Lipitor, Levitra, Claritin, ZYRTEC and Zoloft are common household names with well-known athletes advertising them. The other night I saw an ad with little kids dressed up as bees asking their mom for some allergy medicine. Advertising is just that, trying to sell a product. People see it and then go and ask or demand their doctor give them a prescription whether they need it or not. Should prescription medicine be advertised like children’s cereal or dish soap?
According to the Government Accountability Office (GAO), “In the past decade, drug companies have quadrupled expenditures on ads aimed at consumers. Spending on direct-to-consumer advertising increased by 296.4% from 1997 to 2005, during which time spending on promotion to physicians increased by 86.0% and spending on pharmaceutical research and development increased by 103.3%.”1
Government mandated coverage. Government could be the biggest reason that health insurance costs are skyrocketing. Each state has its own laws regarding health insurance and what different types of coverage have to be offered.
Mandated health insurance coverage is a legislative law that requires an insurance company or health plan to offer coverage of common and not so common ailments and procedures. Each state has different laws. Some states have mandated coverage for drug abuse, psychiatric care, mental health, maternity coverage, marriage therapist and alcohol abuse just to name a few. The Council of Affordable Health Insurance estimates that these mandates increase the cost of basic health insurance by 20 percent to over 50 percent depending on the state and type of mandates. In the 1960s there were just a few of these mandates and at last count there were over 1,900 of them.
Health insurers might leave states that have a higher number of mandates, which lowers the competition, which raises the cost of health insurance. In many states it is illegal for someone in one state to buy health insurance in another state with lower prices. There was recently talk in Colorado to let Coloradans buy their health insurance in Kansas, which has a lower number of mandates, but that idea faded away. Every one of these mandates has their own group of lobbyist pushing for their type of coverage to be added to the growing list of mandated benefits on health insurance policies.
The biggest complaint is why would some 55-year-old male need maternity or pregnancy coverage. Why would many people need or want to pay for drug abuse programs. Yet with mandated coverage that is what you pay for. This is like going into a McDonalds and ordering just a large fries and the person tells you that you have to order and pay for everything on the menu to get the large fries. It should be if you want to add a milkshake you can and pay the extra for it, not be forced to.
America used to have the best health care coverage in the world and suddenly we don’t. Costs need to be kept lower and government needs to stop interfering are the most common heard solutions, yet it seems the opposite is all that is talked about by our politicians. The most talked about solution to our health insurance problem is to allow health insurance companies to compete in all 50 states. But the government doesn't seem to want to allow that.
© 2009 Sam Montana
Resources
AARP
The Council of Affordable Health Insurance
Sourcewatch.org
When my son was a student in France, covered by the college health insurance there, he received the best care for an unbelievably low cost (to the college) for an emergency appendectomy - when he had doctor's visits and a need for medication, there was very little cost, very small fees, and very little waiting to see the doctor. This can't compare his experience to any he's had here (mainly negative in terms of cost, fees, waiting) - the Europeans seem to have the better plan (politics aside, it works!)
Lobbyists are highly paid and very pushy salesman. Our politicians seem to buy everything they are being sold. I am certain though that the politicians get something (legally) back in return. I don’t know much about health care in Europe except their taxes are different and higher than ours in the US. I assume that’s how they are able to have health care as they do. I remember back in the 1960s and 1970s when I was a kid, health insurance was always there, didn’t seem to be a problem and we always had the same doctor. If you had to go you made an appointment and you went. And we keep hearing about how expensive medicine is, yesterday (5/14/09) Pfizer came out and said that they were going to give prescriptions free to anyone who has lost their job for up to a year. Our health care and health insurance is a mess, it reminds be of a very tangled ball of string. And the more they mess with it the more tangled it will get. Starting over might be the best solution. Look back to simpler times and remember the Keep It Simple rule and maybe they can get it right.
Thanks for explaining so much about why insurance is so high.
Sam, this was outstanding! Thanks! Clairsie, my hand is raised. I'm glad "lifestyle" disease was mentioned in this piece. Why is it not possible to qualify for a group plan that only includes non-overweight, non-smoking, noin-addicted people that practice a regimen of every form of preventative medicine known from exercise to regular screenings? Could they at least form one big study group just to prove how low health coverage could be if as a group we all took responsibility for our own health?