Saturday, August 22, 2009

Are insurance companies really to blame for high medical costs?

Democrats like to blame the health insurance industry for the high cost of health care. According to Nancy Pelosi,
"They are the villains in this," Speaker Nancy Pelosi told reporters. She labeled industry practices as "immoral."

The truth is insurers are actually holding down costs. Most insurance companies send a statement to clients after they use health care services. Check your statement and you will see the insurance company is getting a 40% to 50% discount for services. A PricewaterhouseCoopers study of 2008 costs indicates 87% of insurance premiums go to pay for health care services. Only 3% are insurance company profits.

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Considering the bureaucracy and inefficiency of the Federal Government, the waste from a public option would likely be far in excess of 3%. Other proposed changes, such as eliminating preexisting conditions, will dramatically drive up costs to insurers.

1 comment:

Anonymous said...

I have been working in the insurance industry for some time now. I see many different statistics.
One of the most significant statistics to look at when looking for someone to blame should be the percentage of premium dollars that actually gets paid back out to healthcare providers.
For insurance companies this is about 87 percent. So 87 cents of every premium dollar goes out to pay for services. The other 13 cents pays workers and executive salaries. Perhaps this 13 percent is too high? The recent healthcare bill set the rate ironically at 85 percent to be paid out.
Some may know that this is better than some charities!
The insurance companies are rich in that they are a few that handles a lot of money.
So it is a profitable, But… If you were to cause all the people in the industry to work at poverty levels or even for free, IT WOULD NOT SOLVE THE PROBLEM.

The real problem that no one likes to talk about is UTILIZATION. This increases premiums. Sure costs for medical services are going up, but utilization is skyrocketing. Why? We have an aging population and not enough young people to even out the costs. Without immigration we would have negative population growth. (Immigrants aren’t brought into the system to contribute to the premium pool) We have not welcomed new life. Too many children have been aborted.
But all that I said does not sit well with people who want a villain.
So ignore the truth, all the politicians do