Healthcare in this country is so expensive mostly because we have too much insurance, not too little. Insurance insulates the patient (consumer) from directly paying for their medical care (product). This separation removes a lot of healthy marked forces that are necessary to keep prices reasonable.
Insurance can also frustrate and distract doctors because dealing with insurance companies is laborious. It takes a lot of time and effort to talk to insurance companies, get authorizations, make referrals, and learn weird diagnosis codes.
Insurance creates more overhead because you need more computers, phone lines, office space and staff. In order to pay all the additional expenses, the doctor has to generate more revenue and he usually does that by seeing more patients or ordering more tests.
The patient-care process is easier and less expensive when insurance is removed form the equation. Look here and here for examples.
Have any questions? Just call 770-382-1984 or visit.
Nice post! But I have a couple questions: What exactly does an insurance company do? I never quite understood, even though everybody uses the term. And what does an insurance company do in the scenario above? Thanks!
Great questions Irene! Insurance is something you buy to transfer your risk of a loss to someone else. Insurance companies sell insurance and specialize in calculating the risk of loss to a large group of people. This is how it works: an insurance company collects a relatively small payment (premium) from a lot of people in order to make large payments (compensation) to only a few who have a major loss, like a car accident. Since most people don’t routinely have car accidents, for example, their combined premiums are able to pay for the loss of the person who does have an accident. Health insurance is (at least should be) insurance you purchase to cover against the risk of developing an expensive medical problem. Yet for various reasons “health insurance” is not really insurance anymore. Health insurance is now basically an inefficient and expensive payment system to transfer your premium to your doctor while not giving you the power to make the good choices you would make if you paid your doctor directly with your own money. Thus, health insurance acts a barrier that prevents the free market from working.