You should care because the person paying for coverage is ultimately you, your fellow employees and other people like you. More than 160 million Americans are covered by employer-sponsored insurance plans. Another 17 million Americans purchase insurance for themselves in the private insurance market, and about 100 million are covered by government-sponsored insurance plans. The reason anyone should care is because this is all to the benefit of the healthcare providers and insurance companies. These entities drive anti-competitive business practices. and Ultimately the public will pay either with higher premiums, higher deductibles, and higher taxes or more likely a combination of all three.
Because the insurance companies negotiate prices with the hospitals, pharmaceutical companies, pharmacies and third-party providers that are not based on market conditions but instead are based on what was negotiated between all parties along with state and federal government agencies. No other industry is able to negotiate what it charges.
The ruse that was Obamac care forced people to buy insurance from private industry or be fined. Because the government subsidized insurance premiums for those who qualified, it allowed insurance companies to continue to raise premiums and enabled the cost of healthcare to continue increasing. Obamacare did nothing to improve the public health as measured by infant mortality, life expectancy, suicide rates or homelessness.
HHI wants to advocate for specific changes (link) with the primary objective of improving public health including mental health and a secondary objective of lowering healthcare costs dramatically. We need to understand that Healthcare is a commodity that is a necessity for life just as food, clothing and shelter. The supply and demand system works well for food, clothing and shelter. It will work just as well for healthcare.
HHI wants to expose the medical and prescription drug industry to help drive reform by unmasking the ways hospitals, insurance companies and drug makers work to keep prices higher than are needed.
Hospital prices are initially determined by Medicare with the advice of an AMA committee presumably based on hospital cost. Hospital contracts with insurance companies are negotiated at a higher price than Medicare usually at 130 to 160 percent. The sticker price that the hospital charges the uninsured are literally just made up and are kept secret as are the contract prices. This is a cost-plus system with little incentive to lower costs.
The same way hospital prices are determined. It is a cost plus system.
Yes, we do. But like everything else, the incentives have to be kept within reason. We have to come up with better ways to compensate for new drugs and procedures. However, there is another form of innovation that is lacking in our current managed system. Little effort is focused on cost-effective ways to deliver better quality care. To the contrary, the emphasis is on delivering more care whether or not it actually is of benefit to patients. Hospitals hate to change anything that is working and by working i.e. making money. Any new or better, more effective, treatment that does not improve revenue goes onto the back burner.
Managed care has fostered the growth of the large hospital system. In 1977, there were over 50 independent hospitals in the Houston area. Now there are 4 hospital systems. Large providers and hedge funds have bought up physician practices and independent imaging and surgery centers. This decreases competition and results in higher prices. This is NOT the best way to deliver healthcare. Hospital executives will tell you that these changes, driven mostly by mergers and acquisitions, are all for the good of the public and allow bigger organizations to leverage their buying power for the good of the public. Great. But where is the evidence? If the free market was allowed to flourish, we would quickly find out.
The simple answer is that drug prices are by and large not governed by supply and demand. The patent system for new drugs allows the manufacturer to charge what it likes as long as insurance will pay. Insurance companies have little incentive to control costs; they just raise premiums. Patients that have insurance just have a small copay. Patients without insurance? Well… the $600 epipen. A relatively new law allows a drug company to gain a monopoly on previously grandfathered generic drugs by showing it to be safe and effective. They again can charge what they want; they have a monopoly. The government has also looked the other way when drug companies collude prices.