Health Insurance Origins

This is a suprisingly good article on health insurance, health care costs, and solutions.

From the Dallas Morning News.

Comments

[Cash Foley]

Good Article.

However, it misses the PRIMARY restriction in market competitiveness: Prices are fixed by the Government!

This is the dirty little secret of the Medical Industry. It is all driven by Medicare rules.

1) Medicare sets the Standard Rate for a Diagnosis or Procedure.

2) If you are a Physician who accepts Medicare Patients or are affiliated with a practice of physicians or a hospital who accepts Medicare Patients, you must charge the same Standard Rate to all patients.

3) Medicare actually pays a percentage of the Standard Rate. It is called the Negotiated Rate. The Negotiated Rate can be a small fraction of the Standard Rate. This is the "effective" price set by the government.

4) Medical Providers can charge the Negotiated rate with specific Insurance Companies by contract. If they don't have a contract, they must charge the Standard Rate.

These combined rules eliminate competition and volatility in pricing. A Doctor CANNOT offer discounted services!

This also explains all of the "Out of Network" charges and oppressively high charges for non-covered services. The Doctor is required to charge you the Standard Rate!

These conditions allow Health-care providers to get a "kick" above Negotiated Rates and it locks everyone into needing Insurance. Between Medicare, Health-care providers, and Insurance Companies, there is a lot of pressure to protect the current system.

If the get rid of rule #2, we get the chaos of a free market.