Facts Everyone Should Know About Hospital Insurance and Access to Primary Medical Care

Here are a few facts that should be understood and considered by all involved in the discussion about replacing the Affordable Care Act ("ObamaCare").

Our “health care” system is insurance-centered, not patient-centered.  “Obamacare” was designed to sell hospital insurance. So is its official Republican-sponsored replacement.

“Health care” is a made-up term coined in the 1940s after employers begin to offer hospital insurance as a benefit to get around war time wage and price controls. Until then, most Americans did not have hospital insurance.

The term “health care” conflates insurance costs with medical and hospital service costs, effectively hiding the fact that the insurance-based “Third Party Payment System” (Medicare, Medicaid, Blue Cross and Commercial Insurers) is directly responsible for at least 40% of today’s “health care” costs. Hospital insurance does not provide medical care.

The insurance-based “Third Party Payment System” (Medicare, Medicaid, Blue Cross and Commercial Insurers) has been distorting the market for more than half a century and is directly responsible for at least 40% of today’s “health care” costs. If the Third Party Payment System did not exist, the real cost of medical and hospital care would plummet.

Between 1960 and 2014, the portion of U.S. “healthcare” expenses paid:

• By consumers decreased from 48% to 11%.
• By government increased from 24% to 49%.
• By private insurance increased from 21% to 33%.

Every federal intervention in the payment system for the last 50 years has had the effect of hiding the cost of service from the people receiving that service. When potential consumers of a highly desirable service are shielded from its cost, demand for that service will increase exponentially as this graph demonstrates conclusively. 

Note: The clueless official caption proves that CMMS should not be in charge of anything.

 The average 30-year old will pay $9,156.38 out-of-pocket in premiums and deductibles per year before the insurance-based system pays one penny.

In any given year, only 1 in 4 Americans will incur medical expenses greater than what they pay for hospital insurance. For those under 50, the odds against incurring that much in medical expenses are even greater.

In a free market, when the costs of a service outweigh its benefit, consumers of that service will use other options.

The Third Party Payer System has priced itself out of the primary care market. For most people primary care insurance is a bad bet. Most would be better off to save the premium and pay out of pocket. However, everyone should be encouraged to voluntarily maintain catastrophic coverage to protect against the cost of a major illness or injury.

FJB

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