Software & Finance - Monthly Magazine Online

Volume 3 - Issue 2

February 2013

Economics - Soaring Health Care Cost in USA


Why health care is getting expensive every year?


The insurance companies always want to make profit from the group insurance plan. In fact, no company wants report loss in any quarter. If you are working in USA, your employer sponsors for the group insurance plan. When the age of average employee for the company reaches around 30 - 35, the employee will get married and will also plan for babies. Your empoyer is supposed to sponsor both your spouse and as well as family (children). Even though employer charges for higher premium for family coverage, it may not be enough for the insuarance companies to make profit, especially if most of the employees are in middle age group.


When a company employee more college graduates every year, Insurance company can make good profit since they have to cover only the employee. And since the employees are under 25, they will be healthy and the premium they pay directly mostly becomes profit for the insurance companies.


The health care cost depends on the company you work for and the average age of employee in the company. Some cash rich companies asks insurance provider to administer the plan but pay the coverage amount from their packet. Since the risk remains with the employer, it is a good deal for the insurance companies since they have no risk and they get paid a fee for adminstration and processing health care claims.


The medicines are also getting expensive due to research and people in USA do not have an option to buy the medicine directly with out doctor's prescription. OTC (Over the counter) medicines are exception.


PCP (Primary Care physicians) do a wonderful job in USA since they work very strictly Monday - Friday [9:00 AM to 5:00 PM]. In some cases, the waiting time would be couple of hours. Since the doctors are specialist, they will work only based on appointments. They will keep collecting all your medical history and insurance card before you see the doctor. If you go for a sick visit and general checkup (like lipid panel test to know you HDL / LDL levels), they will not do it on the same day because of the insurance processing. They will make two claims - one for sick visit and the second one for general check up. Even if you are sick, it is unlikely that you will get medicine on the same day. Since sometimes you have to go through blood tests to identify the root cause of the problem before doctor subscribes for prescription.


Why the system is unnecessarily complicated? Its all about money and freedom. If the doctor gives you a medicine with out doing proper test, patients have the option to sue the doctor. So doctors need protection from patients. Besides if they are running their own clinics, they also may have to pay insurance premium to protect higher risk incase any one sues the doctor.


Insurance companies are very smart enough to make money. Doctors are very well educated to protect themselves and make money. Doctors are very highly talented in USA, but the complicated system does not allow them to treat the patience in time. Even though Doctor knows very well about what is causing the problem for the patient, they want to collect the proof by doing couple of blood test and x-rays, before subscribing for prescription.


How do we correct this system?


It is much more complicated to correct this system.


1. Consider a scenario - Doctors are having freedom to treat patient and patients should not have permission to sue the doctor. This can reduce the cost for the patients. But the individual rights clearly mentions that patients can sue the doctor, in case of, mistreatment made by the doctor.


2. The other scenario is to skip the medical insurance . If the patient does not have any medical insurance, currently most doctors will not treat those patients. But in case, even if the doctors willing to treat the patient, there is no guarantee for the doctor that the patient will make the payment in time. Poor Doctors needs to follow up with patients to collect the payment and some do accept discounted payment rather than going through collection agency.


3. If the patients does not have medical insuarance, the best way get treatment for them to enter into emergency room in a hospital. The patients will get treatment but there is no guarantee that hospital can collect payments in time from the patients.


Obama Care


Obamacare is known as Patient Protection and Affordable Care Act (PPACA). It comes to effective by Jan 01, 2014, insurance companies need to take a bigger hit on their profit since Insurers are prohibited from discriminating against or charging higher rates for any individuals based on gender or pre-existing medical conditions. It is a very good scheme for the patients but not for insurance companies. When President Barack Obama signed this law on Mar 23, 2010, insurance companies wanted to make more profit until it becomes law effective Jan 01, 2014. This is one of the primary reason why the health care cost are soaring in the last couple of years.


It may get controll and can stay stable only after seeing the outcome of the expenses paid by insurance companies by next year. Obamacare is intended to good things to patients but the reaction from insurance companies are moving against this factor.


Until then we have only more questions and no clear answers. Let's wait and see what happens.