Can anyone explain to me why health insurance premiums are going up so much each year when inflation is practically nothing? Something is wrong here.
Both the healthcare profession and education are enjoying a wonderful bubble. Those in any sort of business know that staffing costs typically represent the single largest cost of business. In the case of education and healthcare, we've dramatic increases in compensation over the past couple of decades. When doctors make $250k and nurses make $80k, the costs have to be transferred to to the end user. If we contrast this with the healthcare systems of France or Japan, which are rated as superior overall to that of the US, we find considerably lower salaries. In France, doctors average about $55k, and there are more doctors per patient. The per person healthcare cost in France is also 2/3 that of the US.
But I don't want to oversimplify. Firstly, the US has taken a leadership role in medical research and advanced medicine, which comes at at cost. Other countries have been able to take advantage of that expensive research without committing their own research dollars (or euro's). And the medical profession in the US has been set up based on high compensation (one of the AMA's initial aims was to protect and increase physician income). The end user - the insured - must pay for the high cost of a medical education, the high cost of malpractice insurance (so high, that there are specialties in which physicians no longer wish to practice because rates have skyrocketed - OB/GYN's are increasingly refusing to do deliveries because the the six figure premiums) the high cost of staffing an office to do paperwork, and to offset losses from the uninsured who must be treated at a hospital.
The common refrain is to lay blame at the feet of insurance companies, but my own not-for-profit employer self-insures, with an insurance company administering the plan for a somewhat modest fee. Our own costs have grown frightenly high - we pay for 100% monthly premiums, which are now about $17k per year for family coverage. This high number is based purely on our experience rating and the expected costs of our healthcare, which equates to the consumption of roughly $1 million per year. That $1 million has to go somewhere, and the bulk of it goes into the pocket of a healthcare worker. I'm not making judgements about the income of healthcare workers, but much like taxes, if we want lower or stable health insurance premiums the costs on the back end need to be contained, and the area in which they can be contained is in the number and pay rate of the workers.
Another factor is that of the uninsured. But uninsured is something of a misnomer. It could better be described as poorly insured. Hospitals must make care available to anyone who presents themselves (within limits), regardless of ability to pay. Some of our local facilities with large immigrant and undocumented populations are in serious trouble because of the cost of treating those with no insurance or other coverage. Consequently, we've seen these cost passed onto those with coverage. About a year ago, I was having heart palpitations and weakness in my left arm and decided to go to the ER. They gave me a couple of meds, kept me on a gurney in the hallway for several hours, gave me an EKG and decided to admit me overnight. The bill - largely covered by insurance - came to nearly $7,000. I know that the bill ws padded because my insurance carrier would pay and I knew that they likely admitted me overnight because they could charge for an empty bed.
I've seen expenses rise at a rate of 3 or 4 times the rate of inflation over the past 10 or 15 years in three areas. Our local public employees have been an increasing cost of about 9% per year, education has been outpacing inflation by a rate of 4 to 1, as has healthcare. That sort of unsustainable rate of increase would be called a bubble anywhere else.
At least we have it, so no complaints.
