A new poll by Harris Interactive surveyed 2119 US adults about their views on who’s to blame for spiraling health care costs. Not surprisingly, health insurance companies took the brunt of it, with 41% of the respondents pegging health insurance carriers as the root of the problem. Bringing up a distant second was pharmaceutical companies and the government (16% each) with hospitals and physicians being seen in a much better light (6% and 4% respectively).
I’m going to assume that the people who were polled were not actively involved in the health insurance or health care industries. They’re just normal people, dealing with our expensive and somewhat fragmented health care system, and this is their perception. As someone in the health insurance industry, I see it a little differently, but I can absolutely understand the responses given in this poll.
Can you tell me off the top of your head how much your doctor charges for a routine physical? What about the retail price of a prescription that you take on a regular basis? How about the dollar amount that your local hospital charges to deliver a baby? Or for a night in ICU? How about the amount that your health insurance carrier charges to cover your family’s health care for a month? If you’re self-employed or purchase individual health insurance, you probably know the answer to that last one down to the penny. If you work for an employer who provides health insurance, it’s likely that you know exactly how much your portion of the premiums are, although you might still be surprised to see how much your employer is kicking in. But what about those first few questions? Unless you really pay attention to your EOBs, or shop around for your health care (which might be the case if you have an HSA-qualified plan), you might have a hard time coming up with accurate numbers.
Comprehensive health insurance policies with low deductibles and consistent copays for office visits and prescriptions have insulated consumers from the actual cost of health care. The advent of HSAs a few years ago has given rise to a group of people who do shop around for health care, although that’s not always the easiest process. While we don’t often see the true cost of health care, we can’t help but notice when our health insurance premiums go up, or when our out of pocket expenses increase. And it’s easy to blame the health insurance carrier, since that’s where we send our premiums. But while it’s easy to argue that health insurance carriers could be more efficient and have lower overhead costs, an increase in premiums is just a reaction to an increase in the cost of paying claims, which follows from an increase in the underlying cost of health care.
Since most Americans have health insurance, most health care costs are paid by health insurance companies. And in most states there are numerous health insurance companies competing for business (Colorado has an extensive list of carriers in the individual health insurance market, all vying for the same clients). In order to attract applicants, health insurance carriers have to keep their prices competitive. But what about a pharmaceutical company that patents a new brand name drug, for which there is no generic alternative, and no other company with a similar drug? Since the pharmaceutical company knows that health insurance companies (rather than individual patients) will be paying for most of the doses, what incentive do they have to keep their prices down? But because most people get their prescriptions with just a copay due at the pharmacy, the true cost of the drug doesn’t register as a reason for increasing health care costs.
I think this survey is interesting in that it shows the perceptions people hold with regards to the health care industry. But I think it’s also indicative of the lack of transparency in health care pricing, and a lack of exposure to the actual costs of health care that occurs when most medical bills are funneled through the health insurance system.
