(Solved by MSA's - Medical Savings Accounts - Basic Supply and Demand Economics)
by Lenny Vasbinder, P.I.
(Following is a post that I made to a Healthcare Forum in response to people complaining about the high cost of Health Insurance.)
The primary reason for the high cost of Health Care in America was the removal of the basic economic principle of Supply and Demand.
Once Government Offices and Companies started providing Health Insurance Cards to their employees, or as Benefits for People feeding at the Public Trough, it took away the supply and demand aspect which kept prices low for so many years. All of a sudden there was an unlimited supply of money to pay for health care and the health care providers immediately started raising prices accordingly, because people didn't question these higher costs!
People do not even question a Doctor or Hospital about "HOW MUCH?" before they take that card out and say "CHARGE IT!" except they aren't paying the bill... it is being paid by everyone else who pays Insurance also!
Many years ago, I needed an outpatient surgery procedure and since I am self employed and only carry Hospitalization for serious matters, I started calling several Doctor Offices to ask how much they charge for the procedure and not one could easily tell me how much they charge. They were baffled that I even asked! Eventually I found one office that was less than 1/2 of the others and after checking out the surgeon, found that he was well respected in the Medical Community. At first even his office did not know how to give me an "estimate" but once they found out that I was paying out of pocket they realized why I was inquiring. That is when I first started realizing what had happened in America! Most people just pull out their Insurance Cards and worry about what part of the bill they have to pay later after the Insurance Company pays their 80%!
Steve Forbes, when he was running for President, tried to educate people about this problem by talking about the proposed MSA's (Medical Savings Accounts) which would have brought the economics of Supply and Demand back into the Healthcare Industry. Let's assume that a company pays $300.00/month for a family now. With an MSA, the money would go into the employee's MSA and the family would then buy a Hospitalization Policy and a Re-insurance Policy for the MSA which would cost much less than the $300/month to cover any major claims or claims in excess of the $3,600/year(which is what insurance should be for). Then as the family needs Healthcare, they would be able to pay the Doctor or Hospital directly from their MSA and at the end of each year, the left over money would roll over for 3 years until they have built up a 3 year cushion. Once they have a 3 year cushion, any money saved thereafter could be converted into income for the family if they chose to withdraw it. Someone who is basically healthy and does not do risky behaviors would spend very little of the $3,600/year and eventually save up a nice little nest egg. People would be motivated to shop around for their basic Healthcare needs and once people started shopping around, Doctors, Clinics and Hospitals would have to succumb to the basic principles of Supply and Demand and would have to lower their prices to compete! This is not happening right now except for elective procedures such as Child Birth, Eye Surgery, Plastic Surgery, etc., which is why you see these procedures being advertised for lower and lower prices!
Until something like this is done, Doctors, Clinics and Hospitals will keep billing higher and higher prices and Insurance Companies will pay their percentages and just raise rates to cover the claims.
Imagine if your auto-insurance paid for every ding or scratch after a $250.00 deductible per year, rather than per claim? We'd have the prettiest cars in the world and the most expensive insurance in the world because people would just use it and use it, especially once they met their annual deductible.
But the Health Insurance Industry does the same thing so there is no incentive for people to shop around and keep their costs down. Also, with most other insurances, individuals pay premiums based on risk guidelines which do not exist in the major Health Insurance Coverages with Group and Government Plans. An employee who is overweight, smokes, drinks, particpates in risky activities, etc. pays the same monthly premium as his/her co-worker who is healthy and limits their health risks.
This is just plain stupid from a business and actuarial standpoint!
The people who are higher risks or have higher claims should have to pay higher premiums and the people with lower risks and lower claims should pay lower premiums.
This may sound callous to
someone who is undergoing a serious medical condition but it's the only way to bring the costs of Healthcare back in line with the supply and demand of peoples paychecks!
Plenty more to come but I'll wait for some questions or comments.
Here are some of the comments on my post with my reply following each:
Very interesting, thoughtful post...
by JCG
... I'm still thinking through your analysis.
But one thing you don't address, but which needs to be borne in mind, is the escalation of health care costs due to "litigiophobia" - fear of lawsuits, a cancer on health care and much else in American life. It results in doctors, clinics and hospitals ordering countless expensive, unnecessary, superfluous, time- and money-wasting (not to mention stressful for many patients) tests and procedures.
You can go to the clinic with a sore hangnail and, before you know it, they've ordered an MRI, full blood work-up, EKG, chest x-ray, colonoscopy, ultrasound, and a psychiatric evaluation - just to make sure that nothing actionable at law for negligence has been neglected!
And my reply:
Litigation is an excuse...
by LennyVPI
...by Doctors, Clinics and Hospitals for running all those extra tests. But I bet the CFO's eyes sparkle at all the extra billables created by all those extra tests too!
With the ultimate decision being left to the consumer as to which tests are done, then litigation cannot be blamed any more. The Doctor can suggest a litany of tests but if I decide on only one of them and sign the forms to refuse the others, then I am responsible for my actions. It's called personal responsibility! If I have a large surplus in my MSA and want to pay for a barrage of tests, and the subsequent increase in premiums, then I can do so.
Once again, this vicious cycle needs to be broken by putting all the choices back into the hands of the consumer/patient. As long as the choices are being made by Boards at the Insurance Company or Hospital, then when something goes wrong, the patient or their family files suit!
In Louisiana, like many States, there is liability protection for Doctors and Hospitals so their cries of "The sky is falling because of litigation" falls on deaf ears for me. I am a Private Investigator primarily working on large litigation cases and very rarely is a doctor sued unless there is clear and apparent negligence. This is because most Lawyers will not take a Medical Malpractice case unless there is extreme negligence due to the cost to the Lawyer to prosecute the civil action. The case first must go thru a Peer Review Committee and only after that Committee findings are complete can the case proceed to the Courts. Then there is the "cap" of only $500,000.00 for Medical Malpractice, regardless of the Doctors negligence, so don't let them fool you. The insurance companies may be raking the Doctors over the coals, but it is not because of Medical Malpractice cases since there are so few of them. Believe me... you can easily check the numbers in Baton Rouge where all the Peer Review Committees eminate from!
Maybe the Insurance Companies are "spreading the risk" from insuring more risky medical implants and new medicines, to the doctors who should not be sharing in these risks! It is the medical implants and medicines that some pharmaceutical companies push on us that ultimately prove to be dismal failures that result in the really large lawsuits, but they should have nothing to do with a Doctors insurance costs. Just like you and I don't pay for the Airlines insurance risks when we pay our Auto or Homeowners insurance.
Just imagine if everyone had a card to buy their everyday living expenses like Gasoline, Groceries, Electric Bills, etc. and the expenses were paid by an insurance company? Do you really think people would live within their means or be restrictive in their spending? NO WAY! Everyone would but the most expensive and excess amounts since they paid their monthly premium and have no further apparent cost to them for being wasteful! That is the primary reason of what is wrong with the Health Insurance Industry and Healthcare in general! People have this card that allows them to waste money at someone else's expense. I know my own mom (bless her soul) use to do it. She was on Medicare and we had her living a block away from us and she would call an ambulance rather than call us to take her to the hospital if she was feeling bad. She would say "Why bother you all when it is paid for by Medicare?" and I would continually try to explain to her that I, along with all the other taxpayers are paying the high costs of Medicare because so many people have that attitude!
Here's another response:
YEAH right 200 bucks a month
by broussardLa
perhaps your feeble brain has trans formed you into bill gates with 50,000 plus employees get real with your numbers and your plan on what it would cost the avarege Louisiana per month and to help ya out i will let you know the best in this state is 103.00 per month per person beyond an initial covered person at 247.00 per month so lets exclude every 1s family hopes of coverage @ 247 month you must come up with 500.00 deductible if you stay with-in the selected associations network let alone the fine print thats gonna empty your bank account faster then they swipe your visa. it has nothing to do with supply and demand as you posted if it did then all our good hearted volunteers who go beyond our borders would have no supplies to meet their demands. state side supply demmand well lets see im pretty sure every state has for a lack of a better term a charity hospital where students who are paying for a education spend tours\intern shifts at to learn and those who can LOL pay do so otherwise you go to a so called reputible hospital i call em puppet schools( wont go there) either way they are the young wanting and paying to learn and you\I\we pay them and supplies so how can this double payment get blown way out of porportian? INSURERS did you know that MANY dental colledges offer free work if you go in and let a student under supervision treat ANY including surgry dental proceedure?
And my reply:
(Sorry for my coarse reply but this guy is the board idiot! LOL!)
What part of Hospitalization ONLY...
by LennyVPI
...don't you understand!
You keep quoting Major Medical Policy (Full Coverage) Costs which cover doctors visits, out-patient and in-patient expenses, as well as Prescription Drugs.
I'm talking about just having Hospitalization for major illnesses or injuries which is less than $100.00/month.
Major Medical Policies are the reason for the high costs. They do not encourage people to save money. They just raise their rates when people use and abuse their Insurance Cards.
I wish you would read first... but since you can't spell, why did I think you could read!
I'm glad you mentioned Charity Hospital because as I've explained to others... if you want to know what Government run Healthcare would be like... just look at Charity Hospital and the VA Hospital, as compared to some of the clean, modern, less costly private Hospitals and Clinics!
You obviously are already brain washed by the tax and spend commie-lib Dems so I don't think your family has a chance until you are 6 feet under!
Your brain is like a parachute.. if it does not open, it will not work! Please open your parachute and start reading and understanding things before flying off into your liberal gobbly-gook!
The reason you are paying so much is you have failed yourself and your family by failing to learn about other far more cost effective Insurance Policies for Healthy People that do not want to have the ability to abuse the Policy, and therefore you are paying the high costs along with all the others that abuse their Health Coverage by going to the Emergency Room for the sniffles, which costs everyone $500.00 versus $80.00 or less for a Doctors Office visit. If you do not believe me, just go visit the Emergency Room or talk to an Emergency Room Admit Clerk and find out! Or maybe, you are just 1 of a 1,000 employees that DEMAND that your employer provide Cradle to Grave Coverage and if your employer doesn't, then you want the Government to provide it for you.
Because of all these frivolous claims that Insurance Companies and Doctors/Clinics/Hospitals have to process, the cost goes up even more than if they only had to handle the few claims that would result from Hospitalization Only claims.
And, with an MSA, people would be paying as they need when they go to the Doctor, so the Doctor would not have to wait 90-120+ days to be paid, file ridiculous amounts of paperwork, etc. which would further reduce his/her operating costs so they could start lowering their fees also. Prices would be lower, services would improve and you would have full coverage as long as you didn't waste your MSA on $500.00 visits to the Emergency Room for the Sniffles or a Bo-Bo! If you did waste all your MSA money, then your re-insurance would kick in so you would not be left uncovered that year, but YOUR rates would go up next year and mine would still be low! And all of this would happen before the economics of supply and demand kick in and doctors/clinics and hospitals start competing for your business which would cause prices to come down even more and you would be able to decide which doctor at which cost... but maybe this is all too confusing for you!
God... you are so pathetic!
The above two comments and my replies were the most notable but there were many shorter comments and replies.
Sincerely,
Lenny Vasbinder, P.I.
P.S.-Please feel free to e-mail me with your comments or opinions which could be added here.