An Absence of Controls

An absence of controls on health care/insurance costs

Health is not Health Care, and Health Care is not Health Insurance. HEALTH as defined by the World Health Organization is “a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity.” Health CARE is what we use when we are unhealthy. Health INSURANCE is simply a method we use to pay for health care. What we pay for health insurance is directly linked to how much we pay for health care.  Our current healthcare system stresses HEALTH CARE over HEALTH.  The amount we spend on health insurance/care dwarfs the amount we spend on health – a self-fulfilling prophecy and expensive predicament.

There is no market mechanism to control the cost of providing health CARE.  Accidentally, but relentlessly, America has built a healthcare system that disguises the true cost of health care and eliminates the market forces that boost efficiency and value throughout the economy.  Advances in medical technology, innovations in treatment, development of miracle drugs all tend to increase the overall cost of health care. The last fifteen years of escalating health care provider cost is proof enough that pricing competition between health care providers does not exist in a transparent, quantitative way.

There is no market mechanism to control the cost of health INSURANCE. The price we pay for health insurance will NOT be reduced by increasing competition between health insurance companies. All health insurers analyze the same set of medical claims data (or the cost of health care) and will ultimately come to the same pricing conclusion – the cost of our health care dictates the price we pay for health insurance. In the absences of “market forces”  insurance rates will continue to escalate.

There is no regulatory mechanism to control the cost of  health INSURANCE in the US  because there is no regulatory mechanism to control the cost of health CARE. The ACA addresses insurance cost indirectly with it’s Minimum Loss Ratio (MLR) and some states have the power to regulate health insurance premiums.  But, regulatory control of  private health CARE costs does not exist at either the federal or state level.

(In California, insurance companies and a “coalition” of Hospitals, Doctors and Nurses (very significant special interest groups) – spent  $43 million dollars of our premiums in 2013 to defeat  California’s Prop. 45 – a ballet initiative  that would have require health insurers to justify their rate increases. California’s insurance regulatory agencies have no authority to reject health insurance rates.In 1988, California voters passed Proposition 103 that required prior approvals of property and casualty rates, including personal auto and homeowners insurance, and changed the Insurance Commissioner from an appointee of the Governor to an independent statewide officer elected by popular vote. Proposition 103 has saved consumers tens of billions in auto and home premiums).

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