Insurance Hype

On the front page of today's Maine Sunday Telegram is an article bemoaning the 6th double-digit rate hike for Anthem subscribers in six years. That part is true. The article then goes on to blame everything except the real culprit.

The reason insurance premiums jump so high each year is not because of the cost of drugs, medical procedures or even corporate greed. It is much simpler than that.

Currently, as much as 40% or more of ALL medical care is for those on Medicare or Medicaid. And those "government run" options only pay doctors and hospitals about 60% or less of the going rate for medical costs. The problem lies in the simple fact that what Medicare and Medicaid pays is not enough to cover costs and still make a living, so doctors and hospitals are forced to raise the costs of drugs, procedures and rooms charged to any other insurance companies. This in turn results in the need for insurance companies to jack up their rates for premiums.

In simplest terms, let's assume you own a business that makes widgets. It costs you $5.00 to make a widget. Let's further assume that 40% of all widgets are purchased by the government, but they will only pay you $3 each. To stay in business, you now must add $2.00 to your cost basis for everyone else who buys a widget. So your non-government customers get hit with a huge price increase.

And that is what is happening with insurance premiums.

And that is why I firmly believe that the Health Care bills currently in Congress will increase premiums a whole lot more, because government funded health care is an extension of Medicare. To keep the government's costs down, they will not pay doctors and hospitals a fair rate, which forces them to charge insurance companies even higher prices, resulting in skyrocketing premiums.

And that is exactly what the liberals want. They want socialized medicine. Their desire is to have everyone on the government plan. And the current health care bill would eventually force every American into the government plan by forcing insurance premiums through the roof.

And when that happens, America will have the worst health care in the world instead of the best. Since the government would then be underpaying on 100% of all medical care instead of just 40%, doctors and hospitals will be forced to cut back.

Yes, we need to come up with health care reform, but only insofar as the cost. If we can bring COSTS down, we can fix what is wrong with health care. But you cannot do that by simply underpaying doctors and hospitals, because they will only have to pass those losses onto the consumers. Instead, we must deal with the reasons that costs are so high - medical malpractice insurance costs, frivolous lawsuits, state monopolies on health care which limit our choices and subsidizing the research & development for new drugs, so drug companies do not have to charge a fortune for drugs.

What we do NOT need is to tear down the entire system and start from scratch, building a "socialized" health system. Our health care is the best in the world. All we need to do is bring costs down.

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