I recently read a small hand book called “Why Health Care Costs So Much, The Solution: Consumers” by Greg Dattilo and Dave Racer (http://www.freemarkethealthcare.com/).  They have an interesting point of view to the health care system and I thought it would be worthwhile to share some of these points with you, considering the events taking place in our country.    

The authors put things into a different perspective by having the auto insurance industry add co-pays for service.  It starts out that most of the maintenance is free for the consumer while paying premiums.  Each year the insurance company has to raise the premiums to offset the usage.  Now that people were paying more for it they felt they were entitled to get services done even though they didn’t need the service.  No matter how much premiums go up people keep their co-pays in the plan so they can get services done that are paid for by the insurance company.  In turn, this creates waste.  The book elaborates on how networks are started and more negotiation occurs to stabilize premiums.   

The authors stated that in 1960 Americans paid for 48 percent of their healthcare, i.e. doctors and hospital bills, and the insurance company paid the rest of the bill.  However, in 2006, the number dropped to 12 percent of those Americans paying for the health care.  Those who had health insurance back then remember that health insurance premiums were not a problem.  No one complained about paying out of pocket for services they needed.  This led to asking what it cost, shopping around, and making sure the services were actually needed.  It was what people were used to.  

As time went on, insurance companies added in pre-paid maintenance programs, or co-pays.  You paid a little more in your premiums but in return you were able to go to the doctors and not have to pay out of pocket for the whole bill.  As time goes on the insurance companies have to keep raising the premiums more drastically just to cover the costs. 

Some people think that insurance companies are like the oil companies.  They believe that more the price goes up the more the profits are.  However, that it couldn’t be further from the truth.  There was a report done by Wellpoint that indicated that on the average insurance companies only make 3% in profits.  I’ll discuss that more in detail in another blog post. 

The book went on to explain in a little more detail.  Towards the end of the book they noted that in 2007 $725 billion for health care were paid for by private insurance companies.  There are a lot of zeros after that number.  If Americans choose to do away with private health insurance and move into a government-run health system, where would $725 billion come from?  That $725 billion will eventually exceed $1 Trillion.  Do you think raising all of our taxes will be a good solution?  If that’s the case eventually we will pay more in taxes for our healthcare than it would have cost just paying our own premiums.

Butch Zemar
www.EliteBenefits.net