Ezra Klein has written an insightful article about why attacking the private health insurance industry as the root of the health care crisis in America isn’t likely to accomplish much more than warm fuzzy feelings for all those who hate the health insurance industry. At the Colorado Health Insurance Insider, we’re a part of the health insurance industry, but we also try to look at health care reform from an unbiased position. We see the shortcomings in the health insurance industry, but we also see failures throughout the health care industry when it comes to controlling costs and providing affordable access to health care for everyone.
Health insurance companies are not winning any popularity contests. But part of the problem is that because health insurance companies pay most medical bills in this country, we’ve become insulated from the real costs of health care. We don’t know what health care costs (or how much it has increased over the years) but we do know how much our health insurance costs, and how much our premiums have increased each year. For those who have experienced major health problems and watched as EOBs roll in from the health insurance company, detailing what the providers charged and what the health insurance paid, the insurance policy probably seems like a pretty good deal. But for people who haven’t experienced large claims and are unfamiliar with the price tags associated with major illnesses, increasing health insurance premiums probably seem outrageous.
Besides the obvious benefit of paying claims, health insurance carriers also play a roll in keeping health care costs in check. Next time you get an EOB from your health insurance company, look closely at the numbers. You’ll probably see a significant difference between what the provider charged and what the insurance company will allow. The use of “reasonable and customary” limits on charges keeps provider prices in check to some degree. So while it’s easy to hate the insurance companies, they are playing a vital roll in our current health care system. And their profit margins are nowhere near as big as some of the other players in the system.
Don’t get me wrong – the health insurance industry has made plenty of mistakes over the 15 years since the last major attempt at health care reform. But as Ezra points out, attacking the health insurance industry doesn’t get at the root problem, which is the dramatic increase in health care costs across the board. Health insurance premiums rise in response to increasing health care costs. And until we address the problem of health care costs that are far outpacing inflation, any fix we attempt – including intensive regulation of the health insurance industry – is merely a band aid.
