An insurance industry CEO explains why American health care costs so much

[baldguy]

There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of care. As Halvorson explained, and academics and consultancies have repeatedly confirmed, if you leave everything else the same -- the volume of procedures, the days we spend in the hospital, the number of surgeries we need -- but plug in the prices Canadians pay, our health-care spending falls by about 50 percent.

In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing. In our country, the government doesn't set those rates for private insurers, which is why the prices paid by Medicare, as you'll see on some of these graphs, are much lower than those paid by private insurers. You'll also notice that the bit showing American prices is separated into blue and yellow: That shows the spread between the average price (the top of the blue) and the 90th percentile (the top of the yellow). Other countries don't have nearly that much variation, again because their pricing is standard.

The health-care reform debate has done a good job avoiding the subject of prices. The argument over the Medicare-attached public plan was, in a way that most people didn't understand, an argument about prices, but it quickly became an argument about a public option without a pricing dimension, and never really looked back. The administration has been very interested in the finding that some states are better at providing cost-effective care than other states, but not in the finding that some countries are better at purchasing care than other countries. "A health-care debate in this country that isn't aware of the price differential is not an informed debate," says Halvorson. By that measure, we have not had a very informed debate.

more:
http://voices.washingtonpost.com/ezra-klein/2009/11/an_insurance_industry_ceo_expl.html

[Happyhippychick]

1. I'm sure it has nothing to do with insurance CEO salaries...

[MichiganVote]

4. Of course not. They're practically paupers...and we just don't appreciate them. 'sniff'

[joeybee12]

2. "We have not had a very informed debate."

UNDER-statement of the century!!!!!!!

[CurtEastPoint]

3. Isn't this an example of 'circular reasoning'?

They pay more because the suppliers can get away with charging more. It's lower in the countries cited because they can't charge more than allowed.

WTF is this guy smoking?

And now I see that Ms. Virginia Foxxxxxx (as in dumb as a...) says HCR is scarier than terrorists?
And this woman was a COLLEGE PROFESSOR?

Jeebus.

[baldguy]

8. The term we're looking for is "price controls".

[sharesunited]

5. I watched a hospital administrator tell Brian Lamb

that inadequate Medicare reimbursement was the cause.

The price charged to everyone else has to be raised exceedingly high to make up for the shortfall.

[ProleNoMore]

6. Public Option Should Be - Single Payer Medicare For All

Now, tell us all again why our congressional and administrative leadership is not supporting same?

[sharesunited]

7. The cost. They don't want to deficit finance it and they don't want to raise taxes.

[ProleNoMore]

9. Well Then We Are Screwed

eom

[Cleita]

10. Here's the real reason,

http://www.prwatch.org/node/8422#comments

The Health Care Industry vs. Health Reform
Submitted by Wendell Potter on June 24, 2009 - 12:12pm.

I'm the former insurance industry insider now speaking out about how big for-profit insurers have hijacked our health care system and turned it into a giant ATM for Wall Street investors, and how the industry is using its massive wealth and influence to determine what is (and is not) included in the health care reform legislation members of Congress are now writing.

Although by most measures I had a great career in the insurance industry (four years at Humana and nearly 15 at CIGNA), in recent years I had grown increasingly uncomfortable serving as one of the industry's top PR executives. In addition to my responsibilities at CIGNA, which included serving as the company's chief spokesman to the media on all corporate and financial matters, I also served on a lot of trade association committees and industry-financed coalitions, many of which were essentially front groups for insurers. So I was in a unique position to see not only how Wall Street analysts and investors influence decisions insurance company executives make but also how the industry has carried out behind-the-scenes PR and lobbying campaigns to kill or weaken any health care reform efforts that threatened insurers' profitability. More at link above

Also here is more:

http://www.pbs.org/moyers/journal/07102009/transcript2.html
http://www.democracynow.org/2009/9/30/insurance_industry_whistleblower_wendell_potter_blasts

[AdHocSolver]

11. What he says is true, but what he left out diminishes the impact of his statement.

Medical costs are highly inflated in this country. Huge profits in this country are made by drug companies, hospitals, clinics, and the companies that supply them because of the extreme markups that they can get away with. Foreign countries use their buying clout to negotiate better prices from these companies.

What he has avoided mentioning is that the insurance company conglomerates could use their near monopoly status to negotiate better prices, yet they don't. Why not?

Insurance companies are like deep pits filled with cash from the premiums that they collect, just like banks. They don't stuff it under their mattresses, and banks (thanks to Fed manipulation of the money supply) don't give much interest. So what is an insurance company to do? After buying our politicians off, insurance companies invest their huge pile of cash in drug company stock, for-profit hospital corporations, medical clinics, and medical supply companies.

So, when insurance company "X" pays exorbitant fees to hospital "Y", they are increasing the profits of "Y" and thereby boosting the value of their stock investment in "Y". Same for drug purchases.

That is why they really don't want price negotiations with health care providers. However, it serves to finger point elsewhere than at their own greed.