Why Does Health Care Cost So Much

In any presidential campaign we hear quite a bit about health care and its high cost. So why does it cost so much and why is it that neither proposal on the table will fix the problem?

I believe their are a few fundamental problems with our current system.

The first problem is insurance companies themselves. They serve as a middleman between you and your care. Anytime a middleman is involved in a transaction you can rest assured that the cost of that transaction will be higher. Why? It's because you are now paying two entities that need to make a profit in order to survive. While doctors will complain that the insurance companies have hurt their business you do not see many doctors out there looking at alternative ways to do business nor do you see many doctors in the soup line so to speak. So we know that the doctors are getting their profit. That is fine in the ordinary course of business but we also have a system that requires the insurance company who is in the middle be profitable.

The next problem is how we use insurance. The system has been designed that those who have insurance use it for every one of their health care transactions. We use it for a simple office visit to a low cost prescription. This all comes with a cost. Since we have already paid our premium and the insurance company will then cover the costs we have no idea how much our care costs and if a doctor suggests additional testing or services it's no skin off of our backs. The insurance company in our mind is footing the bill.

So what can be done?

I think the perfect system would offer health insurance for big events such as cancer treatment, surgeries and other dramatic care. We would then pay for our general health care services out of pocket which would force the providers of these services to truly compete for our services. This will give us more choice in our care and should lower prices. Our insurance costs would be lowered as we would not use it except in the event of a serious health issue. We could then look at making changes to the tax code to allow people to fund health savings accounts en masse and make the out of pocket costs more affordable.

There is already an example of how the lack of insurance has helped healthcare. One needs to look at the LASIK surgery industry. Very few insurance companies will pay for this service so if you want the procedure done it will come out of your pocket. In the 5 years since I've had my procedure done I have watched prices come down and the technology improve. Why is this? I believe it's because the doctors can make their profits without having to pay the middle man insurance company. It's also because the doctor truly has to compete for your business and needs to have the latest technology and competitive prices because you as the patient will not simply go where your insurance tells you to.