The ability of private health insurance companies to limit lifetime cost and deny coverage of preexisting conditions is the prime factor in the overly expensive health care costs in the United States. The web of cost and payment systems is built on these two lee ways.
The limits on lifetime costs creates many instances where a person who begins a lifetime of medical intervention exhausts their available payments. Once that threshold is reached, the person and his/her family must beg for services and utilize the ER system in order to receive urgent care. They must seek out philanthropic sources to obtain treatment which cannot be had from an Emergency room visit. Many times the medical facility must write off the costs to the actual patient and instead allocate them to overhead and charge the insurance providers a higher amount. This is why a $2 bag of saline is charged at $800. As long as the insurance provider is in the loop the medical facility gets paid. This scenario of cost allocation puts an undue burden on people who do not have coverage and are similarly charged the $800 amount.
In the mix of who pays for what, the insurance company gets to limit their exposure to payouts and doesn't have an incentive to contain the costs.
By being able to exclude high risk patients and high cost procedures and medications the insurance companies shift the costs over to charitable, philanthropic and public assistance budgets such as Medicaid, SCHIP and Medicare Disability coverages. The exclusions for unfavorable items such as abortions, contraceptives, mental health, dental and elective surgeries likewise drive up the costs to people who do not have coverage.
As long as certain people can be excluded and certain procedures and therapies not covered there will be inequities and cost shifting rather than true cost containment.
Medicare, for instance, is prohibited from negotiating with the pharmaceutical industry for bulk buying prices. For the people who are covered by private insurance they do not need to worry (for the most part) about the costs. For people who are covered by Medicare or Medicaid the co-pay amounts can be prohibitive. The ostensible reason for co-pays is to make the patient partly responsible for limiting the demand for medications. The real reason is the funding sources for drugs will only pay a certain amount and the manufacturer wants more than that.
If the insurance industry could not deny a patient, charge a deductible and a copay, then they and the pharmaceutical industry would have to come to terms for the actual costs. One or both industries would have to accept a smaller profit margin.
Of course this treatise is leading in the direction of a single payer health care system for the United States. This doesn't mean the entire healthcare insurance industry would be scrapped. Someone still needs to administer the system and monitor it for efficiencies. That entity (those entities) can easily be the existing insurance corporation. It would necessarily limit the salaries and other compensation of the top executives and the ROI for investors. On the positive side, everyone would be able to receive care. When a need for facility and personnel expansion is identified building would be built, personnel would be trained. In the agglomerated mash up of services and administration there is no rational relationship between the number of doctors, nurses and technicians who are trained. The industry does not act on the attrition of personnel via retirement and career switching. The industry doesn't act on the projections of population, age demographics or emerging disease crises.
One can take as an example the number of and locations of dialysis units around the country. While any business which decides to build a facility can be assured of its full use capacity, they rarely take into consideration that getting there and home is an integral part of the treatment. Precisely where the patients live relative to the dialysis unit is an external factor as far as the dialysis provider is concerned. As long as they do not have to consider the transportation element, cost will be high and patients will have difficulty obtaining their essential treatment.
The first steps in health care justice is to not allow insurance companies to deny coverage. Then put a price limit on the "essential" coverages. They will have to work together with their vendors to buy the hardware and drugs they cover. Lastly, they would have access to public funds to make up the difference.
Yeah, you can call that socialist. It is. So are the Police Department, Fire Department, Public Works Department, Highway Department, and those pesky socialists who plow and salt the highways each winter. It is time the single largest economic cost division get in line with the remainder of the economy.
Fewer and fewer people are employed today than before due to job migration and automation. Fewer of the remaining jobs will be full-time and of a compensation level which includes health insurance. In 12 years, the last of the Baby Boom generation of 59 million people will reach age 65. Owing to the actuarial tables, there will be somewhere around 120 million Americans who are Medicare age. The planners in our society and the Legislators we elect need to take a hard look at what the future will be and devise a new system of health care delivery and payment.