Why your health insurance costs so much

Posted on 2009-11-14 18:14

We recently had a full physical for one of our kids at the pediatrician. It was a well visit (we get one free a year so theres no co-pay for that), she got two shots, we filled out a questionnaire, they took urinalysis, did a visual test and a hearing test. Oh yeah, they weighed her too. We had an hour wait in the waiting room (our pediatrician has a well room and a sick room which is nice), then she got 20 minutes with nurses and 3 minutes of a doctor's time. There was a billing mistake so we got to see the bill the doctor sent to the insurance company (normally you wouldn't see this as it all happens behind the scenes. They billed insurance $685. We know that the insurance will probably pay something less than that, and that the doctors will write off what they didn't get as a loss - but here's the problem - the consumer never knows what actually got paid for the service they received, the payer never knows what actual services were performed (or were really required) because they have to take the word of the person billing them, and the provider of the service has an incentive to bill as high as possible because they know the payer is going to negotiate down. This whole system is BROKEN. The first thing we need is transparency so these shenanigans end as soon as possible, but I'm also a staunch advocate for a uniform, government run, single payer system to replace the existing insurance company paradigm.

(a follow up I wrote to a comment on Facebook where this post also appears)

A state-run insurance like Canada has doesn't look much different to our own system from the consumer's perspective. The system is paid for by income taxes (federal taxes) and a modest fixed monthly premium ($60 a month or so). Interestingly, I just found out that if I could make the same yearly salary I make now in Canada, I'd end up paying less... Read More federal taxes up there! They have a progressive taxation system (you pay no taxes on less than 10 grand / you pay 29% if you make over 126 grand) and that covers health, pension, employee, and parental insurance. I'm not arguing for a public option, I don't want it to be optional at all! I actually want a state run insurance system that does away with private insurance entirely. This isn't about socialism - Insurance companies are just a middle man between the buyer and the provider - doctors will still compete for business as in any free market system. May the best practice win! The difference is that the money we WASTE today on making insurance companies rich (profits) would go to the folks who actually provide the service (doctors and hospitals) instead.