Medical Malpractice

Most of your health insurance premiums pay for actual health care services - not profits, admin costs, etc. Seriously, it's about 80% of your premium. The 20% of us who have the most health care costs use up about 80% of the amount spent on health services. Six percent of the people are in the 80% every year, and 14% of those could be any one of us - a birth, a broken leg, an appendectomy all put you in the 20% group. You pay a premium to protect you for the times you are in the 20%.

Lack of real competition in the health insurance market is an issue. A few large insurance companies that control the market have been created by how doctors and hospitals charge for their services. Try finding out what it costs to have a baby at the local hospital. Princeton healthcare economist Uwe Reinhardt tried to call local hospitals and got nowhere. You can't compare cost and quality when you're buying health services if you can't figure out how much care costs.

It's not that complex. Doctors set up fixed price arrangements all the time - fee schedules, case rates, per diems etc. with the big insurance companies. It's time doctors stopped bleeding consumers to make up for the low fees given to big insurance carriers.

Doctor and hospital charges are fictitious numbers unless you don't have health insurance, or are not the major carrier with the good discounts. In some markets they are 5 times more than what they accept from the major insurance company in your area.

This prevents all health insurance companies from competing and makes your premiums much higher than they have to be. If everyone paid the same amount for health care services, health insurance premiums would drop dramatically.

Lawsuits are another issue, particularly malpractice costs, defensive medicine and the impact on the morale of the medical community. And let's not forget the quality of care issue. Statistics indicate that the effect of poor quality health services costs over $1,300 a year for every employee covered by health insurance.

Consider this as well--every time a new drug or new technology is introduced, the cost of health care shoots up. You might want to call that inflation, just like doctors who promote medical inflation - meaning they (and the hospitals) keep charging more for the same services. And this will make you blanch. The rate they're charging has been about 150% of the overall inflation rate.

The conundrum is what to do to solve these problems.