High Cost of Heathcare

Running head: High Cost of Heath Care Services






High Cost of Health Care Services
James L. Wise
Class: HCA 209

High Cost of Health Care Services

There are several factors which lead to increased costs. First, the government (both federal and state) meddles in the matter; refusing, for example, to allow policies to be offered across all 50 states. Secondly, there are now just a handful of large insurers and they routinely violate contract law and antitrust law. By violating antitrust law, they drive up costs in the markets they control and reap larger profits than they should. That is compounded by their not paying legitimate claims as well; Linda Peeno, MD testified that she had often denied treatment just to save the insurance company money

Furthermore, the vast majority of health insurance policies are through for-profit stock companies. They are in the process of "shedding lives" as some term it when "undesirable" customers are lost through various means, including raising premiums and co-pays and decreasing benefits (Britt, "Health insurers getting bigger cut of medical dollars," 15 October 2004, investors.com). That same Investors Business Daily article from 2004 noted the example of Anthem, another insurance company. They said the top five executives (not just the CEO) received an average of an 817 percent increase in compensation between 2000 and 2003. The CEO, for example, had his compensation go from $2.5 million to $25 million during that time period. About $21 million of that was in stock payouts, the article noted. A 2006 article, "U.S. Health Insurance: “More Market Domination, More CEO Compensation" (hcrenewal.blogspot.com) notes that in 56 percent of 294 metropolitan areas one insurer controls more than half the business in health maintenance organization and preferred provider networks underwriting. In addition to having the most enrollees, they also are the biggest purchasers of health care and set the price and coverage terms. The results is double-digit premium increases from 2001 and 2004-peaking with a 13.9 percent jump in 2003-soaring well above inflation and wage increases. Where is all that money going? The article quotes a Wall Street Journal article looking at the compensation of the CEO of UnitedHealth Group. His salary and bonus is $8 million annually. He has benefits such as the use of a private jet. He has stock-option fortunes worth $1.6 billion. There is also the fact that of the folks who declare bankruptcy, more than half are over medical bills and 75% of those folks have insurance. So it is clear that insurance is not meeting its responsibilities because the actual purpose of it is not to pay for the "sniffles," but to be there for serious illness which can bankrupt a person.
One last insight is the Heath Care industry it is the only industry that has a lack of price transparency. The hospital cannot tell you because your healthcare insurance is a confidential contractual agreement. If you call your insurance carrier, they will say the price may be this or it may be that depending what the surgeons have to do. So in the end you do not know what it will cost you until services rendered. This makes it hard for the consumer to shop for the best value, and truly stops it from being a free market.

The answer is forth coming once you have seen all the statistics concerning the rising cost of health care. The insurance companies, as it stands, needs to be abolished. Putting all the moral issues aside which are many, the men/women that have put 12 years of academic study and all the clinical and only make 210,000 a year v. an insurance executive earning in the millions is just turned upside down in my opinion. Health care prices should be set by the government through global market research this will make it a free market “money transparency.” The pre-existing clause must go away. Insurance companies should be made into non-profit organizations, their focus changing to quality of service and financially rewarded by the government. I am in general proposing standardization and accountability in the heath care system, not to be confused with socialism. My thoughts on capitalism, well they are wavering in Today’s financial climate.

Bibliography

Dr. Peeno, Linda. (1996) The Doctor’s Testimony. Retrieved November 29, 2008 from
http://www.thenationalcoalition.org/DrPeenotestimony.html
Wally R. Smith, MD (2006) Health Care and Health Insurance. Retrieved November 29,2008 from http://www.hcrenewal.blogspot.com
Britt, (2004) Health insurers getting bigger cut of medical dollars, retrieved November 29, 2008 from http://www.investors.com