Earlier in the year, circumstances put us between insurance and, naturally, the baby got sick. The cash bill was something like $65, though I think we got a fairly substantial discount because we were long term patients of the doctor. The desk did make clear though that cash patients got charged less than the total bill for insurance since there's less administrative work.
Of course, with insurance, I'm paying $25 regardless of whatever squabbles the doctor and Blue Cross want to get into.
Except for the cost of the insurance itself, right? You, I, and everyone else paying into the health care system pays for that extra cost. The fact that your copay is lower than it would cost to just walk in directly and pay cash is irrelevant when discussing the total cost of the care. And that total cost is necessarily higher because of the use of an insurance mechanism.
Um... And the cash and carry costs are higher as well, even if you don't see it directly. When the costs of a good or service go up, everything related to the good or service increases in price. So if the proliferation of pay by insurance results in ballooning costs, some of those costs will affect people who are not paying via insurance. The costs of the materials, medicine, and salaries are all based on an inflated industry cost for the end product.
The problem, as I've explained dozens of times in the past, is that once you create sufficient layers of middlemen between the buyer of a product and the seller of a product, the cost of that product will increase. The layers themselves will cause that to happen, but also inefficiency and pure human greed will as well. If it costs you $25 for a doctor visit regardless of what the doctor does, why not have him use the most expensive materials and perform the most expensive tests? And if the doctor gets paid the same amount from his employer, why not do those more expensive things as well? And if you're the company selling the testing equipment and the medicine to the hospital, why not charge more money for it? And if the hospital can pass that cost on to the insurer, why not pay those higher costs? And if the insurer can pass that cost on to the employer, why not pay it as well? And the employer? Well, he kinda takes it in the shorts, but he can treat is as a benefit and count it as part of his employees compensation.
The end result is that even though the buyer thinks he's getting a good deal, he's really getting screwed. But because in many cases the true cost of the insurance he's buying is hidden from him, he doesn't realize it. And this process most definitely inflates the cost of all the goods and services in the entire health care industry. And that absolutely affects the amount of money it will cost even a cash and carry health care consumer.
Insurance only makes sense if the thing you are insuring is rare and prohibitively expensive. Most of the health care the average person receives over the course of their life is neither of those things. By paying for them via insurance though, we grossly inflate the costs not just to ourselves, but to everyone else as well. That's why health care has gradually become priced out of reach of so many people when it didn't use to be. Obamacare basically doubles down on the same failed model. It mandates additional costs that insurers must bear and instead of giving people more freedom to not have to use insurance for their health care does exactly the opposite by requiring that *everyone* pay into the system.
The cost effects of this should be very predictable. Edited, Sep 7th 2011 5:40pm by gbaji