A reader asks: "If the current bill passes are my health insurance costs likely to go up, down, or remain about the same?"
If the form that I believe most likely to pass actually passes (insurance reforms, individual mandate, weak or no public option or co-ops), I believe that they will continue to go up. There simply is nothing in the bill that would make things more affordable. In health care markets, for a convoluted nest of reasons, more competition causes prices to go up, not down.
Despite the concern and interest in health plan profits and executive salaries, most of what dictates the cost of health care insurance consists of:
- How effective are they at lining up providers willing to take a discount? That willingness depends on the ability of the health plan to say, "We've got many or most of the people in your market. If you want a lot of patients to amortize your fixed costs, you have to deal with us, and you have to cut us a good deal." Small, new insurers cannot say that.
- How effective are they at limiting what they cover?
- How effective are they at not covering sick people, either by not covering them in the first place, or by kicking them out?
- How good are they at avoiding paying the bills that people do run up?
Look these over. Health insurance reform closes the last three of these (at least somewhat). This will drive up the cost of providing insurance, since they are providing for more people, and sicker people, and being
forced to pay their bills, as well as being forced to provide some
minimal coverage (such as preventive and maintenance matters) for no
The first one means that if any new mechanism is just competing for
provider networks at market prices, they will pay more, not less.
And there is nothing in the bill about capping profits, or putting a minimum on medical loss ratios (the amount of the premium dollar that is paid out in health care resources), or capping executive salaries. So
though everyone is talking about "affordable" health care, all the reforms actually being contemplated mean higher costs, not lower.