Rational Approach to Health Care
The ability of private health insurance companies to limit lifetime cost and deny coverage of preexisting conditions is the prime factor in the overly expensive health care costs in the United States. The web of cost and payment systems is built on these two lee ways.
The limits on lifetime costs creates many instances where a person who begins a lifetime of medical intervention exhausts their available payments. Once that threshold is reached, the person and his/her family must beg for services and utilize the ER system in order to receive urgent care. They must seek out philanthropic sources to obtain treatment which cannot be had from an Emergency room visit. Many times the medical facility must write off the costs to the actual patient and instead allocate them to overhead and charge the insurance providers a higher amount. This is why a $2 bag of saline is charged at $800. As long as the insurance provider is in the loop the medical facility gets paid. This scenario of cost allocation puts an undue burden on people who do not have coverage and are similarly charged the $800 amount.
In the mix of who pays for what, the insurance company gets to limit their exposure to payouts and doesn’t have an incentive to contain the costs.
By being able to exclude high risk patients and high cost procedures and medications the insurance companies shift the costs over to charitable, philanthropic and public assistance budgets such as Medicaid, SCHIP and Medicare Disability coverages. The exclusions for unfavorable items such as abortions, contraceptives, mental health, dental and elective surgeries likewise drive up the costs to people who do not have coverage.
As long as certain people can be excluded and certain procedures and therapies not covered there will be inequities and cost shifting rather than true cost containment.
Medicare, for instance, is prohibited from negotiating with the pharmaceutical industry for bulk buying prices. For the people who are covered by private insurance they do not need to worry (for the most part) about the costs. For people who are covered by Medicare or Medicaid the co-pay amounts can be prohibitive. The ostensible reason for co-pays is to make the patient partly responsible for limiting the demand for medications. The real reason is the funding sources for drugs will only pay a certain amount and the…