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A New Look at the Problem of Health Care

20 October 2009

More is Less and Somebody Else’s Money, the recent two-part series on health care by This American Life does a fantastic job of unseating what has been the primary assumption driving the health care debate – that the rising cost of goods & services, which everybody agrees is untenable,  is caused by the unchecked greed of America’s big insurance companies.

This is an assumption held by President Obama, a major voice in the debate over health care reform, who accused the insurance companies last week of wanting to maintain the statuo quo system, even as it becomes apparent that costs will continue to skyrocket.

President Obama’s argument – an argument that’s shared by much of the left – is that if left to their own devices, insurance companies will continue to raise premiums and limit coverage, because that is how they make their money. Since a few major insurance companies currently have a lock on the insurance market, the obvious solution is to introduce smaller, more cost-efficient insurers, who can keep the big companies in check. That’s the main force behind the public option – we think that it will keep costs down & big insurance companies honest by acting as good ole’ fashioned competition.

As Ira Glass and his awesome team of super sleuths have discovered, the real story is far more complicated.

More is Less asks the question: Who as at fault for the rising cost of health care in America? Are we going bankrupt because of unrealistic patient demands, greedy doctors, or overbearing insurance companies? In coming to understand the different roles we play in the health care system, it become clear that increasing coverage, and controlling costs, may be mutually exclusive goals.

Somebody Else’s Money explores  the role that health care providers – that is, doctors & hospitals – play in the overall cost of health care. As it turns out, big insurers want to control costs as much as consumers do. The more they pay in services, the more they have to charge in premiums, the less their big executives can take home at the end of the day. Health care costs aren’t set by insurance companies – they’re set by health care providers. The ability of insurance companies to bargain with major hospitals & networks of doctors solely depend on how much of the insurance market a particular company commands. If Glass is right, the only hope we have of controlling costs is by getting hospitals & doctors to agree to perform services for a lower rate, and President Obama’s plan of introducing another insurer into a game where  market share is everything can only result in higher costs for everyone.

– Shiyuan

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