Anyone with a healthcare interest watching the Democratic primary debates last week was treated to some more political ignorance about our healthcare system. It wasn’t long ago that the Republican party was putting on its own show of ignorance – with suggestions that removing “state lines” will magically reduce cost or that you can get rid of pre-existing condition exclusions, remove the individual insurance mandate and not expect adverse selection issues – but the Democratic party is now taking it’s run at the matter again. The time-honored tradition of blaming it all on the insurers.
In a well-considered article in the Intelligencer, Josh Barro makes the point that we have made repeatedly on these blog pages and which everyone in the healthcare industry understands with complete clarity – we spend a lot of money on healthcare because the prices for the services, devices and drugs are too high. Not because insurers make too much money. Certainly, one can argue that the insurers are complicit or play a supporting role in this problem but to repeat…the primary problem is that the cost of healthcare is too high. Need more evidence? See here, here and here.
Study after study will illustrate that the excess money we spend on healthcare is predominantly not going to insurers. No doubt the misalignment of incentives of our system – of which the insurers are central participants – allows for price gouging, but in order to prescribe the solution, we need to accurately diagnose the problem. And the problem is the price.
Now, one can certainly advance the argument that if healthcare is nationalized we’ll have the ability to reduce cost by creating enough centralized leverage to negotiate price. But ultimately, the doctors, hospitals, drug and device manufacturers will need to be the ones bearing the impact. Eliminating insurance profits and corporate overhead will not meaningfully address this issue.