Because insurers are paid a fixed percentage of the claims they administer, they have no incentive to hold down costs. Worse than that, they have no incentives to do their jobs with even a modicum of competence. To take one small personal example, I have reached the age of Medicare eligibility but, because I continue to work full time, have primary health insurance coverage through my employer. Blue Shield, of course, wants to be sure it doesn’t pay for any claim it doesn’t have to, so I was asked to attest to the fact that I have no other insurance. No problem there, except such attestations seem to be required on almost a monthly basis—requiring my time on the phone (and on hold) with Blue Shield’s customer service, an oxymoronic term if there ever was one, and also requiring my doctor and laboratory to call me, call Blue Shield, or both, and thus also waste their time and resources.
This story and the many others of the same sort but even worse, magnified across the millions of people subjected to private health insurance companies, is why American health care costs so much and delivers so little. Unless and until we as a society pay attention to the enormous costs and the time wasted by the current administrative arrangements, we will continue to pay much too much for health care.
I would go beyond this to say that the problem is a devotion to capitalism. The problem is greed.
The right looks at a middle man making billions of dollars off of healthcare, at the expense of the people who actually need the services, and they say, “That’s a beautiful thing–those companies making money. That’s what America was built upon.”
Conservatives are essentially morally retarded by the paint sniffing that is profit worship.
Once we address that, then we can find all the places where huge profits are made, and the incentives are not to give better services, or to do so at lower costs, but instead to RAISE costs so that stockholders and CEOs can profit.
Once we have identified those areas we can address them by moving to something more like the Mayo model, which focuses on more equal pay, bonuses based on outcomes, and eliminating waste cause by inefficiency or greed.