On board member mentioned many posts ago, to the effect that, why was health care less expensive 10 years ago..
It is quite simple. Insurance. Same has happened to auto repair costs. I would even add that 30 years ago, the costs of health care considerably less than now. 30 years ago, most people paid directly and insured only for catastrophic injuries. The exception was in the government sector (gov employees including teachers)
Any time you separate the beneficiary of a program from the payer of a program.. costs will spiral out of control. The beneficiary will want the best available irregardless of cost – because they don’t have to pay.. and the payer will have to pay up. If you add in an intermediary like insurance company or government and you have disaster. The intermediary will see it as a way to make a profit (skim) off of the huge amounts of money crossing hands.. or in the case of a government, a way to hide the costs of pork, ‘special’ compensation.
As I have mentioned before, I am one of the laid-off, looking for a job people. I am also one of the ‘uninsured’. Interesting part is, I was also one of the ‘uninsured’ when I was working. It is by choice. Instead of paying the money to an insurance company, I invested it. Now that I am laid off, I still am effectively covered because of all of that money I saved up over the years. I don’t have to pay COBRA to be able to pay for doctor or hospital visits. Shortly before I was laid off, I became extremely ill and jaundiced. The cost wasn’t that bad. It turns out that I can get close to 30% discount for being a cash payer. My MRI cost less by about 36% than if it had been covered by insurance. Total cost to me for all the doctor visits and tests etc came to about $2100. Compare this to even a years worth of insurance and this one time that I was sicker than I have ever been, comes out relatively cheap compared to paying for insurance for one year. In the process, one of the doctors I was going to was ‘steering’ me to surgery, ignoring the sepsis/bacterial infection possibility and family history. It was easy for me to walk away from this doctor and pick another. I have been fine for over 1 year now.. which seems to confirm the first doctor as being wrong.
One thing I did learn from this was the surprising number of doctors that prefer dealing with insurance. It came out that with self-pays, the doctors had to justify the tests to the patient and the patient had the final say. With the insured, the doctors could rack up the tests (which in some cases have ‘paybacks’ for business) without any final say in many cases. I am not putting down all GPs here, just saying that the decisions made by some are questionable. There seems to be too much ‘overtesting’ and the surgery option comes up too quickly.
Interesting exercises:
1) Take the sum of all the health care payments with or without company co-pay over your life.. and look at the total cost vs est outlay. If you are feeling like needing a challenge, include estimated growth based upon S&P historical growth.
2) Do the same for Social Security..
In all, I found that paying directly and insuring for only catastrophic is actually the best way, even now. General insurance makes people feel ‘safe’.. but at a considerable cost. Those outstretched hands of the ‘Good Hands People’ are not there to help you, they are asking for more money…
