Government

Two plus two actually does equal four … even in health care😷🤑

The general population wants lower health insurance premiums, lower out-of-pocket costs and larger (or no) provider networks for their health plan.  Presumably they also want freedom of choice, no rationing, no long waits for care and as much “free” care as possible because as we all know health care is still unaffordable. 

To have lower premiums you must have lower claim costs. 

To have lower claim costs, you must have either less health care received, less expensive health care received or higher out-of-pocket costs when health care is received. 

To have lower costs for the care received you must pay less for each unit of care received and to achieve that you must be able to negotiate lower fees from health care providers which means you need greater leverage through tighter, smaller networks so a larger number of patients can be delivered to a few number of providers.

The problem is not insurance companies or profits or even administrative costs. If you could eliminate all of that, you would only cut costs modestly and temporarily as the largest component by far, health care itself, continued to rise. This is true under any model of payment, even a Medicare for all scheme. And by the way, government managing care and setting fees that must be accepted has another set of consequences. 

If you think politicians can change this formula without serious consequences, you are wrong. 

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3 replies »

  1. No, people believe they can have “… lower health insurance premiums, lower out-of-pocket costs and larger (or no) provider networks for their health plan … freedom of choice, no rationing, no long waits for care and as much “free” care as possible because as we all know health care is still unaffordable. …”. You say: “… To have lower premiums you must have lower claim costs. …” No. Americans all know that politicians are very willing to make all of the above a reality through government mandates, and pass the bill to someone else.

    Me, take less that I am “entitled” to, that violates my “rights”! Hell no. I pay my taxes (well, some of us pay taxes). So, I am entitled to the best coverage YOUR money will buy.

    That is the solution sold to American’s by PPACA. Those who wanted “health reform” in the past, don’t care about no stinking economics. And, they believe PPACA did not go far enough.

    That is why Republican proposals always come up short, because they incorporate the economic supply and demand, cost and other provisions of a market based product/service. At the same time, Republicans are just as guilty of playing games – they may have a different playbook, but they are gaming the system just as much – look at W who gave us $10+ Trillion in new, unfunded liability by adding Medicare Part D.

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  2. Is the current financial model for health care working? Health care premiums and deductibles are rising faster than personal incomes. Yet, the CEO of Humana, Inc. is making $10.3 million sans the bonuses and the top-paid health care CEOs have salaries averaging $4-5 million. According to forbes.com, ‘The typical U.S. hospital today generates a 4 percent margin, which is needed to fund capital investments in new medical equipment and updated facilities’. What IS the answer?

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    • The fact remains that the overwhelming cause of higher premiums is spending on health care. One insurer I know of did a study to calculate what impact on premiums there would be if ALL salaries for ALL employees were removed from the cost structure. It would lower premiums by about $15.00 a YEAR.

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