Does insurance make health care more expensive?

[ElNono]

It's really a Catch-22. Doctors are afraid of getting sued, so they run lots of expensive tests that aren't necessary. This drives up the price.

If they DON'T order all these tests, and something comes up, they face the possibility of being sued.

So then, the person only pays a small co-pay for a large amount of expensive tests, which get billed to the insurance co. They in turn raise rates... etc etc, until insurance is ridiculously expensive.

As bad as it sounds, I only see two ways of getting around the issue:

1) Making consumers face the real cost, and choose how much they wish to be tested - This seems a bit inhumane, as poor people might get screwed

2) Putting people on the government dole, but setting strict cost limits, or as idiots would call them, "death panels" - Extra cost for the taxpayer, but increases the chances that poor people could be given adequate tests to determine sickness

The very first reform on tort should be 'loser pays'. That right there would stop a barrage of lawsuits that are nothing more than a fishing expedition, plus it would recoup a doctor's money spent on defending himself.
It would also keep the valid lawsuits standing and able to get proper relief.
There always will be some instance of some lawsuit decided by a technicality that would throw off the fairness of it all a bit, but if we trust our justice system to be fair (and there's no indication that it isn't), then those should be the minority.

That said, I invite you to read the reports I posted in a previous post. You'll see that malpractice lawsuits and it's associated costs (defensive medicine, payments) really contribute minimally in the overall cost of healthcare. Certainly less than people think.

[RandomGuy]

Works so well that we have one of the most expensive healthcare systems in the world that has diminished results to show for it.
It's so great that we have millions of people excluded from proper coverage!
If the free market is so great, why do they need to dump old people that are most likely to require the most coverage to a public funded system?
Perhaps the Free Market doesn't work that well for healthcare?

There is a useful term/concept for anyone grappling with the concept of health insurance, or any other insurance for that matter.

"Adverse selection"

Basically the people who tend to need any type of insurance the most will be the ones most likely to buy that type of insurance.

Insurance companies, for their part will tend to control their losses (i.e. payouts) insofar as possible to maximize their profitability. This means:

"Aggressively" closing claims by paying as little as they can get away with, regardless of what is fair/reasonable.

"Recission" of policies, i.e. claiming the policy contract was "fraudulent on its face" and thus completely invalid, due to some minor oversight in the application that they magically find the instant you make a claim, but ignored for the six years you were paying them premiums.

[RandomGuy]

The very first reform on tort should be 'loser pays'.

You get injured in an accident at work.

You make a good faith claim on the workers' compensation insurance company.

They have millions of dollars to spend on lawyers, and deny your claim. You are now unemployed, unable to work, and bankrupt from medical bills.

How do you then enforce the perfectly valid contract? Sue them?

Beware of the Law of Unintended Consequences.

The problem with that particular reform is that the party with more resources to spend at trial WILL win eventually.

The deck is already stacked in favor of the party with more money.

[ElNono]

You get injured in an accident at work.

You make a good faith claim on the workers' compensation insurance company.

They have millions of dollars to spend on lawyers, and deny your claim. You are now unemployed, unable to work, and bankrupt from medical bills.

How do you then enforce the perfectly valid contract? Sue them?

Beware of the Law of Unintended Consequences.

The problem with that particular reform is that the party with more resources to spend at trial WILL win eventually.

The deck is already stacked in favor of the party with more money.

If you have a valid and legitimate case, there's no reason why your claim should be denied, or enforced by a judge when you sue.
You should take a look at the rich history of loser-pays abroad (or the "English rule" if you're in the UK). If it's just a way for the rich to abuse the poor, then why is it that social democracies in places like the Netherlands and Sweden use it? If it's so unfair to the middle class, why does people from Toronto all the way to Sydney put up with it?

There has been ample attempts to do away with it, specially in countries where the influence of american legal academics are stronger (mostly English-speaking countries). But they consciously reject the well known american alternative over and over again. Which really points to the durability of the rule.

The reality is that loser-pay discourages unnecessary litigation. It also does away with the extortion that is no longer so thinly veiled of strong-arming opponents into a settlement because of the prospective costs of the process or the risk of a fluke outcome. It also forces the parties to size up their prospects more realistically before suing.

It's by no means a perfect system. But it's a system that penalizes heavily frivolous lawsuits, and it's a more fair system overall.

[boutons_deux]

"Simply putting caps on the price of drugs"

The Repugs explicitly made it illegal for the feds as a single-buyer to negotiate drug prices with BigPharma. The business-friendly Repugs never met a consumer or citizen or employee they wouldn't over to enrich or protect businesses.

"making it illegal for insurance companies to make a profit on basic care would be enough"

Operating health insurers as regulated public utilities in the interest of public welfare (as electricity and water used to be before deregulation ed that up, too) makes a lot of sense. Making sense is adult, ain't go no ing adults in DC. Health care and insurance are privileges to those rich enough to be raped by it, they aren't human rights.

[boutons_deux]

"lawsuits that are nothing more than a fishing expedition"

give us some "fishing expedition" stats in the context of the all medical malpractice suits, or STFU. Injury lawyers work on contingency, won't waste their time on fishing.

Thanks to TX tort reform (aka screw the injured/dead patient), lawyers in TX won't touch many (legit, and most are legit as all stats show. 90K avoidable medical error deaths/year) medical malpractice claims now because they work on 30% contingency, and 1/3 of $250K isn't worth their time. Effectively, TX tort reform has slammed the courthouse door on legit victims.

[boutons_deux]

"Doctors are afraid of getting sued, so they run lots of expensive tests that aren't necessary"

Doctors also mark up the test costs by 100% (LabCorp or Quest charges them $75, you pay $150), so it's in their interest to order tests (there have been cases where docs own the labs, too, but I think most states make conflict-of-interest illegal).

As I've reported earlier, I had a quote for a procedure $137K if insured, $37K non-insured. Which price do you think represents the true cost to deliver the procedure? This situation leads me to believe there is a price list when the provider can bill the insurance company, and a much lower, negotiable price for non-insured.

[101A]

Rather than reply to a specific post, just thought I'd throw this out there.

Lots of griping and discussion about insurance company profits.

Blue Cross/Blue Shield (and all iterations of them - provide insurance to 100 million Americans) are non-profit.

[boutons_deux]

"Blue Cross/Blue Shield are non-profit."

Profits aren't the only non-care costs non-govt insurers incur.

If BCBS were run as efficiently as 5%-overhead-Medicare/Medicaid/VA, then BCBS would destroy the for-profit insurers.

[101A]

"Blue Cross/Blue Shield are non-profit."

Profits aren't the only non-care costs non-govt insurers incur.

If BCBS were run as efficiently as 5%-overhead-Medicare/Medicaid/VA, then BCBS would destroy the for-profit insurers.

That 5% number is bogus.

Because of the cost of treating Sick people, vs. healthy people - percentages are a bad barometer of efficiency.

Since I own a company that processes health insurance claims, I can speak directly to this.

It doesn't cost appreciably less to adjudicate a claim for a normal live birth at a hospital ($1,500), that it does to process a "routine" heart transplant ($150,000), although there is a 10,000% difference in their prices. So, if it costs me $26 to do either; one of them is a much higher percentage of costs (and can be disingenuously used to demonstrate inefficiency).

My company adjudicates 100 X's more births than heart transplants. Medicare pays for NO births - because only people over 65 have Medicare; who have EXPENSIVE procedures all the time. On a per claim basis, private companies are more efficient than Medicare.

[coyotes_geek]

If BCBS were run as efficiently as 5%-overhead-Medicare/Medicaid/VA, then BCBS would destroy the for-profit insurers.

Yes, things would be so much better if all insurance providers could be run as "efficiently" as the program with a $40 trillion dollar unfunded liability.................

[ElNono]

"lawsuits that are nothing more than a fishing expedition"

give us some "fishing expedition" stats in the context of the all medical malpractice suits, or STFU. Injury lawyers work on contingency, won't waste their time on fishing.

According to AMA, "Physicians are found not negligent in over 90 percent of cases that go to trial"... from here

And frivolous lawsuits exist, wether you like it or not... if the fish you're after is big enough, you'll always have a lawyer willing to take the case.

[ElNono]

Rather than reply to a specific post, just thought I'd throw this out there.

Lots of griping and discussion about insurance company profits.

Blue Cross/Blue Shield (and all iterations of them - provide insurance to 100 million Americans) are non-profit.

Not since 1994, when... "the Blue Cross Blue Shield Association changed to allow its licensees to be for-profit corporations."... from here

[coyotes_geek]

I got curious about how many Americans are currently covered under non-profit insurance so I did some googling and found this.

.....according to the data from the Alliance for Advancing Non Profit Health Care, 48% of Americans with private health insurance are covered by non-profit plans.....

Given that, and that the for-profit insurance providers have profit margins in the 3%-5% range, it doesn't look like "non-profit" is going to be the answer to this problem.

[101A]

Me = pwned.

Apparently (some) are still not-for-profit; not sure which ones.

[ElNono]

I got curious about how many Americans are currently covered under non-profit insurance so I did some googling and found this.

.....according to the data from the Alliance for Advancing Non Profit Health Care, 48% of Americans with private health insurance are covered by non-profit plans.....

Given that, and that the for-profit insurance providers have profit margins in the 3%-5% range, it doesn't look like "non-profit" is going to be the answer to this problem.

Me = pwned.

Apparently (some) are still not-for-profit; not sure which ones.

101A, no big deal.

One thing that needs to be noted is that non-profit plans doesn't necessarily means that it's run by a non-profit company. A lot of these companies want to explicitly have some of the plans set to non-profit because of there are tax advantages to them. Doesn't mean that the company per se is a non-profit or doesn't have a profit motive behind it. Also, some plans are considered non-profit at the state level, but not at the federal level.

There are actually non-profit insurance companies out there if you look hard enough. Unfortunately, it's very difficult for them to compete with behemoths like Aetna, BCBS, etc because of volume and other things like advertising or even lobbying...

[coyotes_geek]

101A, no big deal.

One thing that needs to be noted is that non-profit plans doesn't necessarily means that it's run by a non-profit company. A lot of these companies want to explicitly have some of the plans set to non-profit because of there are tax advantages to them. Doesn't mean that the company per se is a non-profit or doesn't have a profit motive behind it. Also, some plans are considered non-profit at the state level, but not at the federal level.

There are actually non-profit insurance companies out there if you look hard enough. Unfortunately, it's very difficult for them to compete with behemoths like Aetna, BCBS, etc because of volume and other things like advertising or even lobbying...

Even the true non-profit insurance companies are going to operate under a profit motive. Non profits can go bankrupt just like anyone else can. The only difference between the for-profits and the non-profits are who the profits get passed along to, shareholders or policy holders.