Does insurance make health care more expensive?

[DarrinS]

[Yonivore]

[George Gervin's Afro]

You guys are right. I mean if the cost of a liver transplant was open to the free market it wouldn't cost the 700,000 dollars it costs today. It would only cost 250,000 dollars.

[Yonivore]

You guys are right. I mean if the cost of a liver transplant was open to the free market it wouldn't cost the 700,000 dollars it costs today. It would only cost 250,000 dollars.

Your point?

Do you know of anyone that was denied placement on a transplant list or denied a transplant because of their inability to pay?

This debate isn't about the provision of health care, it's about who's going to pay for the health care people are already getting.

I don't know about you but, $450,000 is quite a savings.

[DarrinS]

You guys are right. I mean if the cost of a liver transplant was open to the free market it wouldn't cost the 700,000 dollars it costs today. It would only cost 250,000 dollars.

Hey dummy, that's the kind of thing for which insurance was originally intended. Are you really equating a transplant with routine heath care like a physical or a flu shot?

[George Gervin's Afro]

Hey dummy, that's the kind of thing for which insurance was originally intended. Are you really equating a transplant with routine heath care like a physical or a flu shot?

So this won't happen then?

[101A]

You guys are right. I mean if the cost of a liver transplant was open to the free market it wouldn't cost the 700,000 dollars it costs today. It would only cost 250,000 dollars.

I can get liver's transplanted all day long for $70K.

I shopped around.

[101A]

BTW; Good piece. Stossel's genius - he agrees with me:

Pass a regulation, not controlling prices; but making pricing by providers transparent (doctors/hospitals/labs); they must post their charges publicly; and must charge everyone the same price

[TeyshaBlue]

You guys are right. I mean if the cost of a liver transplant was open to the free market it wouldn't cost the 700,000 dollars it costs today. It would only cost 250,000 dollars.

That's irrelevant to the discussion regarding insurance's role. Prices would likely fall, but still be in the zone where insurance was originally designed to function...as...ummm...insurance against catastrophic cir stances.

[jacobdrj]

That is why doctors and other health care professionals should be forced to disclose all prices and costs in the same way a grocery store is forced to show their prices...

Again, the country needs reform. Badly. Any system where someone pays for a service and does not get what they paid for is a broken system.

At the very least, if an insurance company cuts someone ex post facto on a preexisting condition, they should be forced to refund the payments to that insurance customer, with interest, lump sum, tax free...

I would have no problem pay 50% of my income on insurance if I could guarantee the company I am s ing out that income will give me my coverage when I need it. But since I can't guarantee that, I am not going to waste my money on it.

[TDMVPDPOY]

why waste ur time on that , when u can get it cheaper done in a foreign country

[Duff McCartney]

http://www.pbs.org/wgbh/pages/frontl...aroundamerica/

[nkdlunch]

holy how stupid some ppl are. it's scary

[DarrinS]

holy how stupid some ppl are. it's scary

[nkdlunch]

exhibit A ^

[boutons_deux]

There's NO incentive for commercial insurers to worry about costs of treatment.

1) if they don't like the price, they tell the client, "we pay what we want to "allow" for this treatment/device/drug, you, you pay the rest."

2) at the end of the year, the insurer will always markup his treatment payouts to cover overheads, so the higher his payouts, the higher his markups, the higher his profits.

Other advanced countries with national health systems have controlled costs to 50% of US's by taking commercialism out of the insurance market. The US has to do the same.

Public option & single payer is the best (proven) way to control costs.

Anything less, eg the current health reform bill, will not "bend the curve down" of health care costs.

[RandomGuy]

Hmmm...

Unsupported claim #1:

"Prices drop [for Lasik eye surgery] because, without insurance payments, patients shop around to get the best deal." (claim at 3:00 or so)

This is a good example of over-simplification.

Let's add some perspective:

This is a rather high-dollar procedure, where it is worth your time to shop around. Would the same hold true for a quick office visits where the differences in price would be much less drastic? How much time/effort would you spend to save $10 bucks on an office visit that you might only use once or twice a year?

Collective bargaining is something the insurance companies do with provider pools. They do the shopping around already, so I kind of doubt the savings that Stossel implies in having everybody instantly drop insurance would mean that we would get our savings from this avenue. There is savings to be had, but not in the way he seems to think.

Lasik is not a life-preserving measure. You cannot go to a hospital emergency room and get this done.

Lasik procedures do not suffer from the same cost-shifting that other procedures do. Lasik providers do not have to worry about every 3rd or 4th patient not paying, so they do not have to raise prices to cover the indigent.

Any economist will tell you that Lasik prices have dropped because both the people who manufacture the equipment, and the doctors that provide them have met their fixed costs through sheer sales volume and can offer the procedure/machines at lower unit prices.

Example:
fixed costs = costs that must be paid no matter how many things you sell, i.e. rent.
activity costs = costs that vary directly per unit produced, i.e. materials, electricity, etc.

Fixed costs of producer = 100
per unit activity costs = 10

If producer only sells one item, to break even he/she must sell at $100 + $10 = $110
If producer sells two units, the price instantly comes down.
100 + (2*10) = 120
120/2 = $60

The benefits of each new sale get smaller and smaller, so selling 100 units:
100 + (100*10) = 1100
1100/100 = $11

In this example, prices have come down 90% compared to the initial cost.

This is basic micro-economics, and the most, if not all, of reduced prices for Lasik would be easily be explained by this well-understood mechanism.

[RandomGuy]

There's NO incentive for commercial insurers to worry about costs of treatment.

False.

Profit motive encourages insurers to shop around. If they can get a procedure cheaper, they get to keep more of each premium dollar.

[RandomGuy]

1) if they don't like the price, they tell the client, "we pay what we want to "allow" for this treatment/device/drug, you, you pay the rest."

True.

Although generally this is told to the doctor submitting the claim, who then must decide how much to attempt to recover from the patient.

[RandomGuy]

2) at the end of the year, the insurer will always markup his treatment payouts to cover overheads

DING DING DING DING!!

True

Boutons wins a prize for zeroing in on the one of the biggest costs of health care/insurance, also touched on in the piece in the OP.

I gotta get to work, but more on this later.

[101A]

Hmmm...

Unsupported claim #1:

"Prices drop [for Lasik eye surgery] because, without insurance payments, patients shop around to get the best deal." (claim at 3:00 or so)

This is a good example of over-simplification.

Let's add some perspective:

This is a rather high-dollar procedure, where it is worth your time to shop around. Would the same hold true for a quick office visits where the differences in price would be much less drastic? How much time/effort would you spend to save $10 bucks on an office visit that you might only use once or twice a year?

Collective bargaining is something the insurance companies do with provider pools. They do the shopping around already, so I kind of doubt the savings that Stossel implies in having everybody instantly drop insurance would mean that we would get our savings from this avenue. There is savings to be had, but not in the way he seems to think.

Lasik is not a life-preserving measure. You cannot go to a hospital emergency room and get this done.

Lasik procedures do not suffer from the same cost-shifting that other procedures do. Lasik providers do not have to worry about every 3rd or 4th patient not paying, so they do not have to raise prices to cover the indigent.

Any economist will tell you that Lasik prices have dropped because both the people who manufacture the equipment, and the doctors that provide them have met their fixed costs through sheer sales volume and can offer the procedure/machines at lower unit prices.

Example:
fixed costs = costs that must be paid no matter how many things you sell, i.e. rent.
activity costs = costs that vary directly per unit produced, i.e. materials, electricity, etc.

Fixed costs of producer = 100
per unit activity costs = 10

If producer only sells one item, to break even he/she must sell at $100 + $10 = $110
If producer sells two units, the price instantly comes down.
100 + (2*10) = 120
120/2 = $60

The benefits of each new sale get smaller and smaller, so selling 100 units:
100 + (100*10) = 1100
1100/100 = $11

In this example, prices have come down 90% compared to the initial cost.

This is basic micro-economics, and the most, if not all, of reduced prices for Lasik would be easily be explained by this well-understood mechanism.

Even if prices per unit don't drop significantly; utilization would.

HSA's are a perfect example of this.

HSA's are illegal in Obama's legislation.

[101A]

True.

Although generally this is told to the doctor submitting the claim, who then must decide how much to attempt to recover from the patient.

What an insurance company will pay is based on contracts:

1. With providers.

2. With insured; and defined in the Contract.

If you stay in-network, and receive non-experimental treatment, 100% of the cost is allowed within the coverage as defined in the schedule of benefits.

If you choose to see an out of network provider, then the insurance company will pay up to a certain threshold of "usual and customary" charges in a given geographical area (zip code). Most plans cover at the 85% - 95% threshold per procedure, meaning they will pay up to what 85 - 95% of the provider in your area charge for that procedure this year.

Yes, there are companies that compile that data. That data costs me $10 K per year.

[DarrinS]

Hmmm...

Unsupported claim #1:

"Prices drop [for Lasik eye surgery] because, without insurance payments, patients shop around to get the best deal." (claim at 3:00 or so)

This is a good example of over-simplification.

Let's add some perspective:

This is a rather high-dollar procedure, where it is worth your time to shop around. Would the same hold true for a quick office visits where the differences in price would be much less drastic? How much time/effort would you spend to save $10 bucks on an office visit that you might only use once or twice a year?

Collective bargaining is something the insurance companies do with provider pools. They do the shopping around already, so I kind of doubt the savings that Stossel implies in having everybody instantly drop insurance would mean that we would get our savings from this avenue. There is savings to be had, but not in the way he seems to think.

Lasik is not a life-preserving measure. You cannot go to a hospital emergency room and get this done.

Lasik procedures do not suffer from the same cost-shifting that other procedures do. Lasik providers do not have to worry about every 3rd or 4th patient not paying, so they do not have to raise prices to cover the indigent.

Any economist will tell you that Lasik prices have dropped because both the people who manufacture the equipment, and the doctors that provide them have met their fixed costs through sheer sales volume and can offer the procedure/machines at lower unit prices.

Example:
fixed costs = costs that must be paid no matter how many things you sell, i.e. rent.
activity costs = costs that vary directly per unit produced, i.e. materials, electricity, etc.

Fixed costs of producer = 100
per unit activity costs = 10

If producer only sells one item, to break even he/she must sell at $100 + $10 = $110
If producer sells two units, the price instantly comes down.
100 + (2*10) = 120
120/2 = $60

The benefits of each new sale get smaller and smaller, so selling 100 units:
100 + (100*10) = 1100
1100/100 = $11

In this example, prices have come down 90% compared to the initial cost.

This is basic micro-economics, and the most, if not all, of reduced prices for Lasik would be easily be explained by this well-understood mechanism.

My sister is an opthamologist. I'll ask her if you are correct.

She's a big Obama-bot, so she may agree with you just to spite me.

[ElNono]

Even if prices per unit don't drop significantly; utilization would.
HSA's are a perfect example of this.
HSA's are illegal in Obama's legislation.

I can't wait until HSA's are outlawed. High deductible plans should follow the same route.

[Wild Cobra]

I can't wait until HSA's are outlawed. High deductible plans should follow the same route.

Authoritarian much?

What's next? You going to advocate Marxism, or Fascism?