Healthcare Headache

Yesterday I got the statement from my insurance company regarding my recent trip to the emergency room (some kidney stones simply require IV drugs). It left me asking myself the same two questions I often find myself thinking with regards to health insurance.

1. If the hospital can bill my insurance $515 for a service, how is it that my insurance company only needs to pay them $159?

Of course, I don't really want the insurance company explanation for how they have negotiated this special rate with the hospital, or my doctor, or the lab, or any number of providers that will accept less money than their billed rate. I want to know why they can't just provide the lower rate to everyone--insurance or not. I can't help but feel that one of the main reasons for the high cost of healthcare stems from the fact that, by-and-large, the consumer has no direct contact with the price being charged. In a free market, the consumer will shop around and find the provider with the best price. This competition helps to keep prices reasonable. In the healthcare system, the price is being artificially set through bureaucratic negotiations between two providers and no consumers. How can we help but expect an aspirin administered to you in the hospital to cost less than $10 when this is the way price is managed?

2. Why on earth does health insurance work this way anyway?

I have homeowners insurance and automobile insurance. When I need to put gas in my car or need to make home repairs, I pay for these things myself. If I were to ask my insurance company to pay all or part of those costs, they would laugh me out of the room. And yet, we all expect our health insurance to pay for routine care. How much more affordable would health insurance be if it worked like other insurance--covering the calamities only? How much more selective would we be in the services we choose to receive if we were paying for them ourselves? And, with lowered demand on routine services, how much would those costs drop to a level that would be more affordable for everyone?

I just paid $25 for a $267 visit with a urologist, during which he gave me a list of foods I should avoid, told me how much water I should be drinking, and asked me to come back for further testing after my pregnancy has ended. The doctor was very nice and helpful, but I have to admit, if I had been paying that $267 amount, I would have opted out of the whole visit.

There is so much talk among conservatives right now about how our country will become socialist under Barack Obama. I have to say that I think we've moved a lot farther in that direction already than we realize. It is the capitalist ideals that we've already abandoned little by little that have the potential to truly reform the healthcare system. Unfortunately, I am starting to get the feeling that too few of us buy into those ideals anymore.