What do I mean when I say our system is flawed because of economics? If you go back to before World War II, very few had health insurance. They would today be called the 1%. Middle class and poor people did not have health insurance in general. In 1941 a doctor might earn $300 per month. It doesn't sound like a lot, but it was generous by the standards of the day. $300 in 1941 would be just over $4500 today or $54,000 per year. Doctors in 1941 would be considered middle class today. So in fact Doctors today earn more than their counterparts from 1941. Why is that? It is because of economics. In World War II the government froze wages, companies where not allowed to give monetary raises to employees. So how do you lure a great employee into your company? You would offer non monetary incentives, and one of the big incentives was paid health insurance.
When those employees went to the Doctor, the bill was paid by an insurance company. Still there were not that many who had insurance, and Doctors would charge between $5 and $10 for an office visit. However, those with insurance would not care what the visit cost, they were not paying for it. As the years rolled by, more and more people had insurance and by the 1960s a substantial number of people were covered by health insurance. This is when costs started escalating. As more people stopped worrying about the cost of a visit, and visited more often for colds and minor ailments, doctors started earning more money. Today less than 15% of the population is not covered by insurance. And of those, a number are healthy young people who see no need for insurance, they are not sick, some are poor and can't afford the premiums. And doctors earn at least $150,000 per year, many earn more, or at least 3 times what doctors earned in 1941. This is because economics is no longer in the doctor patient relationship. Since someone else is paying the bill, many people do not even ask the price of an office visit before setting an appointment. Would you fill your gas tank if there was no price on the pump? Doctors bill insurance companies.
At first, this was not a problem, but in the 1970s and 80s HMOs started popping up. HMOs were the insurance companies way of attempting to control costs through negotiations. Many people did not have HMOs so this was not as effective as insurance companies would like. Over the years up to today, many companies have signed agreements with a network of doctors on payments, and if you go outside their networks, you pay a higher copay. But doctors are bright people. In a hospital, maybe the hospital is in network, your doctor may be in the network, but perhaps the lab is not, or the anesthesiologist.
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Now we have the Affordable Care Act. If you read the article, and the Post is not a conservative paper, the cost of insurance will be going up, and they don't know how much. I along with others see it going up a lot. Why? Because it requires maximum participation. And older less healthy people can not be turned away, or offered a very high premium. As a result, costs will have to be shared over the entire population. When healthy people see the higher premium, they will not pay it, opting instead to pay the fine imposed by the legislation, it will be cheaper. And there will be no disincentive to do that, because if they get sick, they can't be turned down or have their condition excluded. Why pay thousands, when you can pay hundreds? So participation will not be what the government wants, and the group will share a larger burden per person, pushing premiums up. As premiums rise, participation rates will fall, causing rate to go higher.
Insurance companies, just like you deserve to earn a profit on their labor. With a near universal system like the ACA they will push costs directly through to the customer in higher premiums, preserving their profit margins. And generally corporations earn a percentage of their sales, so they make more when costs go up.
So are we just screwed? Maybe not. When the system crashes, perhaps then some sanity will enter Washington, and they will deal with the true nature of the health care problem, lack of economics. There may have to be regulation for a while, but putting the patient / consumer back in the drivers seat would seem to be the answer. Require doctors to post their fees, before the patient makes an appointment. Hold patients more accountable for what they spend, either through higher copays or other means to keep their costs down. Set the system where doctors are once again in the business of competing for patients. Which today you can see in some areas of health care like dentists or chiropractors. Those branches of medicine still have relatively lower insured patients, so their fees are more reasonable. But you are worth what someone will pay you, so the very best doctors will still command higher wages, which encourages all doctors to continue their education to see income increases.
This will also force health care manufacturers to find more productive ways of manufacturing machines and other doctor tools. Today there is little such incentive. After all, the person paying the fees (the insurance company) has little say in the purchase. If hospitals or others compete for the dollars spent in say an MRI, the costs should come down, putting pressure on hospitals to find less expensive ways to accomplish the goal. Lightened demand for high price equipment will bring those prices down. It's all economics!
Spend well!
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