Why insurers don't control costs

The US insurance system is not set up to control costs. It is either "one-size-fits-all" employer paid group insurance or expensive individual policies where anybody with risk cannot get a policy.

Two signfiicant changes need to be made.

1. Insurers need to be able to differentiate co-pays for more expensive procedures that do not appear to be particularly necessary or there are cheaper alternatives.

2. Even in a group plan, insurers should be able to increase or decrease an individual's premium by some nominal amount (say 20%) from the average by specific risk factors or chronic usage.

Auto insurance is actually a fairly good control on behaviors that cause claims because the policies are variable based on initial risk and then proven risk (accidents and traffic tickets increase your premiums). Health care insurance needs to be able to get closer to the auto insurance model.

I wish congress would analyze health care costs instead of playing political games with health care.

Insurance companies are NOT the only cost in health care. They are one cost in many.

No doubt insurance companies play games as I had a problem with them when I went on Cobra and had to contact the Department of Labor.

I do medical research on AIDS. This is an area which of cause creates costs.

What is interesting that recently Nobuto Yamamoto came up with a treatment with DBP-MAF that seems to normalize blood counts on HIV patients. The problem is that it is a natural treatment and not the requires creating normal drug development. This creates patent problem and the problem of getting financial money in order to go though the three phases required by the FDA. But it also creates a situation where it is used outside of the power of the FDA. Which is not good because there are medical questions that need to be answered.

In other words you can create a cure but the cure must of O.Ked by the FDA which cost millions or hundreds of millions of dollars. As doctors are restricted by law to use only what has been approved. All this is to protect the patient. But the patient is so protected the cure for whatever disease can not be used unless of cause it makes lots of money.

It is a very costly system and sometimes results in nonsense. So not only does nonsense costs lots of money and may also cost lives. In other words you pay for politics. This has more to do with politicans than insurance companies. But politicans are not going to blame themselves anymore than the economic crash they helped create but will blame the banks for everything as they were also involved.

Systems fail because people fail so there is shafting the blame in this case its all the insurance company fault as if they are the only thing in the medical system. To call the bill health care reform is some more nonsense coming out of Washington. Still we can say that congress has the best people that money can buy!

As an employee benefits broker for 30 years, I can add some needed perspective to this post.

Over 80% of the denials from health insurers is due to a lack of info from the provider of services, i.e. garbage in / garbage out. Insurers have every incentive to pay claims according to the contract and often have in place "prompt pay" discounts with providers. The savvy broker successfully works as an advocate for the employee when there is a delay in claim payment.

The notion that employees don't care much about their payroll-deducted cost is absurd. When I conduct annual employee meetings to roll out benefit changes and new employer-subsidized cost I often feel like the goalie for the dart team. Every nickel charged to employees is crucial, especially to blue collar companies. There is rage and consternation at both the employer and employee levels.

Congress and this President are spending way too much time addressing Access to care, and no time in Affordability and Quality. In fact, the Senate bill tries to accomplish some social reengineering by fundamentally changing the employer/employee relationship because of the perverse subsidies offered to employees on a company plan versus an Exchange. The bottom line on that issue is that under that bill it behooves employers to change the relationship with the employee from a W-2 to a 1099 independent contractor; and the employee loses many positives (Life, Disability, Dental, 401k, Earned Time, etc.) when that change is made. John Goodman has done a solid job of summing up this nasty proposition.

Incremental change stressing provider cost and inflation adjustments are the real issue here. Health insurers are not screwups like the AIGs of the world, instead they are a direct reflection of the claims costs they encounter.

Congress and the media, while well-intentioned, have no true idea of the subtle complexities that rule our healthcare system. The current approach by Congress is, to say the least, bombastic.

Oh right- it's just that simple! How naive can you get?
all I know is the only insurance I can afford has a huge deductible. Then even when I make my deductible- there are so many things that are not covered. I have an unidentified blood disease that is potentially fatal. Why is it unidentified? Insurance would not pay for the testing even after a near death experience.

The Canadian system has very basic insurance provided by the government, funded by sales tax and income tax, overseen by each province. Very basic, and 8% of their GNP as opposed to ours being 16%. If a person wants to add to the coverage, he or she purchases with his or her own money, a supplimental insurance which would cover whatever they were selling - dental, eye, drug plan etc. The purchaser is involved and feels the pinch. The provincially managed plans do indeed limit what they are wlling to do but are also willing to pay for preventative stuff - mammograms etc. But our American insurance companies also have to draw a line on what they will pay for - or pass a larger premium on to us. What we need is to accept that we may have to compromise to not go broke. 43 million uninsured people ARE getting health care - at our Emergency Rooms at the hospitals at a very high cost to the rest of us. Americans are so paranoid about their government they'd rather trust the for profit insurance companies to dictate everything?The insured are already paying for the uninsured...let's bring down those costs and observe how other countries do it.Don't kid yourself - the only people who hate the universal coverage in Canada are various Americans. Canadians may grumble, but they sure appreciate it when they need it and they wouldn't get rid of it. Tommy Douglas, who started it in Saskatchewan in the 1960's, was recently voted in Canada as the most important person ever in Canadian history.

At what point does a policy debate morph into something much bigger, with enormous stakes?
At what point does a policy debate split a congress, and the country it represents?
At what point does a policy debate become a rhetorical war of words, full of half-truths and hate?
At what point does a policy debate turn into a political fix, with pay-offs and trade-offs at its base?
At what point does a policy debate offer no principles or morals, only escalating debt?
At what point does a policy debate become not worth it, and is better solved another way?

Saying no is A way to hold costs down, not the only way.

How about modernizing the claim process, computerizing records, a little Six Sigma or Lean Methodology -- all those things that the rest of the world has had to do to compete on costs!

Sheesh Ezra, and every economist who ever looked at the issue would tell you it's because we're trying to take care of a disproportional number of old people. Obviously you can't deny old people coverage without seeming heartless and discriminatory.

Worst analysis ever.

well, GreenGoddess, as long as our population continues to become less healthy(because of demographic and lifestyle trends), and as long as the biggest health insurer in the country (Uncle Sam) continues use public-to-private cost shifting to disguise the unsustainable nature of the great progressive health insurance entitlements, and blue states keep mandating that more and more things be covered by insurance policies marketed in those states, costs are not going to go down in the private market place anytime soon.

as a result, the insured are certain to feel the effects of price increases in their wages, and this democratic health care bill is not going to do anything to change that.

Why do we call our current system of health care financing “insurance?” Every other type of insurance I’ve ever bought (car, homeowner’s, life, etc.) I purchased with the hope of never having to use it. It was simply a backstop, risk management, just-in-case. However, health insurance is purchased, for the most part, with an eye on the best payouts because we intend to use it early and often. We buy health care insurance because we’re led to believe it saves us money, but too often it only saves money to those who use it a lot, have serious and expensive illnesses, or somehow get away without having to pay for their health care -- at the expense of others.

When I was a kid, my parents didn’t have comprehensive health insurance; only catastrophic hospitalization coverage. They paid for the family’s health care out of the regular family budget, yet they were able to afford it. Back then my parents were able to make deals directly with their doctor for better care at price both sides could live with; but now there are too many players in the mix – patient, doctor, employers, insurance companies, governments, unions, lawyers, lobbyists, etc. In no other fiscal enterprise in this country do we have such a convoluted system. Perhaps if we went back to an old-school health care payment system – CASH – we could really affect true health care cost savings. But that would cut off the special interest bloodsuckers that benefit from the existing system. We can’t have that now, can we?

As a retired health actuary, I think you've hit the nail on the head here. We went through a period where employers and individuals was willing to put up with some insurance company intervention in exchange for a lower premium. But that worm turned some years back. Also don't forget that most large employers self-insure, using an insurance company to administer the plan. To the extent that their employees understand this, the employer takes some of the heat when the employees think there is too much intervention, and that can drive a change in philosophy.

That I am afraid is the most simplistic explanation of a very complex issue. I urge you to read Money Driven Medicine by Maggie Mahar or Surviving Your Doctor to understand the complexities as to why health care costs are escalating.

Insurers have an interest in keeping costs down as it affects their bottom line. It has NOTHING do do with the Insured. They love individual and small businesses as they can gouge them to compensate for the losses they take on Big Biz. That said Big biz is starting to suffer from those Cadillac plans as well.

And in turn wages are declining. Do you honestly think a company will give you substantial pay when they have huge premiums to pay? No. Then those with Insurance will finally feel the burden that a large part of America feels.

Insurers are not paying for anything. If anything they are refusing basic needs because of the escalating costs. Their fear is a Govt sponsored plan to take their money. Costs for care not an issue in the least.