Did health insurance make healthcare more expensive? The short answer is yes. When the third party payer system was introduced, it encouraged doctors and hospitals to raise their prices, because as long as someone is paying those expenses, whether consumer or carrier, why not charge an arm and a leg? Patients are only paying a percentage anyways.
To understand how this happened, here is a brief history of insurance and healthcare..
1930’s
Post-depression priorities changed, and American healthcare improved.
1940’s
President Truman proposes a single, national health plan system that includes all of America. During this time, adequate medical care is now offered. Truman’s proposal is seen as radical, and only the wealthy can afford medical care.
1950’s
There are now welfare services for the poor, and only the wealthy can afford private insurance. This is where we see a boom in the insurance industry, as well as inflation in medical care costs.
1960’s
The price of healthcare has doubled, nearly half the population cannot afford medical care. Preventive services are expensive, and the importance of preventative care is not fully understood.
1980’s
This is when we see doctors and hospitals charging a fee-for-service, causing contention with insurance companies as they complain about exploitation.
1990’s
Health care costs rise at double the rate of inflation. An expansion of managed care helps to moderate increases in healthcare costs.
2008
The recession causes incomes to drop, unemployment rates to rise, and employment-offered health insurance to be halted.
2010
The ACA is passed causing health insurance to become more affordable.
All of these factors combined have given us the health insurance industry, and the prices we have today. However, health insurance isn’t the only thing to blame for the rise in cost. Lack of knowledge about healthcare and health insurance as well as lack of transparency and not prioritizing preventative care all factor into the prices affecting us today.
When doctors and hospitals charged a fee-for-service, they received payment up front.
Once insurance companies were introduced to the equation, doctors and hospitals knew they would get paid, so they racked up the prices and continued to raise them. Consumers only pay a percentage of their health care expenses, so whatever doctors and hospitals charge is what they will get paid, whether from the consumer or the carrier.
Well this doesn’t seem fair to the consumer, it's not their fault they can’t afford the expensive medical care. And there was a time when insurance was a federal mandate! Why should I be paying into the health insurance system when it's essentially making my medical care more expensive?
These are all valid points. Health insurance is important to have because the cost of healthcare is so high. Based on income and family size, you can qualify for a tax credit that can give you a discount that could possibly save you hundreds of dollars a month.
This is also why it’s important to understand enrollment periods and how important preventative care is. During open enrollment you should take the time to understand your insurance so that you can get the most out of your health insurance. To understand more about enrollment periods see this article here.
We assists small groups and individuals in providing and understanding health insurance plans. We have built our business on helping property & casualty agents and financial advisers consult with their clients to have clear health care coverage for their clients.
At our agency, we take your privacy seriously. Unlike big insurance agencies that sell your information to high-pressure agents, we only use it to connect with you personally. This way, we can ensure that you get a plan that's tailored specially for you.
