Insurers not the source of high health costs, economists say

MILWAUKEE — In the final push for health care reform, health insurance companies have become an inviting target, with supporters of reform focusing on insurers imposing steep rate increases for individual insurance.

Proponents of the Democrats' proposed legislation, from grass-roots organizers to President Barack Obama, point to big rate increases for individuals as evidence that the system is broken.

Yet some health economists contend that insurance companies, while often meriting criticism for their practices, aren't to blame for high health care costs.

"You've got to have a villain," said Uwe Reinhardt, a health economist at Princeton University. "Beating up on hospitals is not a good thing because people generally like their hospital. Beating up on doctors is not a good thing because people usually like their doctor. But no one likes their insurance company."

Focusing on insurance rates, he argues, misses the point.

"What really drives it is the cost trend of health care, which is composed in part of utilization and in part of prices," Reinhardt said. "In our market-driven system, a doctor or hospital essentially charges the maximum they can get."

Another factor is the money spent on care that might do little to improve people's health or that is no more effective than less-expensive treatments. So, too, is Americans' demand for health care services.

"The primary reason that health care costs and health insurance premiums are rising so rapidly is the amount of health care that we consume," said Katherine Baicker, a professor of health economics at the Harvard School of Public Health. "Now, that is not to say there are no problems with the insurance industry."

The key to slowing the growth in costs, Baicker added, will be using health care dollars more wisely.

A segment of the population nonetheless blames the problems of the health care system on health insurers, and much has been made of the $12.2 billion in profits of the industry's five largest companies last year. But that is less than 0.5 percent of the $2.5&ensptrillion a year the country spends on health care.

For that matter, anyone who works for a fair-sized company — one with 100 or more employees — probably isn't insured by an insurance company. Most fair-sized employers and nearly all large ones self-insure, or pay the medical

Cheap Car Insurance for Students Discount Tips - car-insurance-for-students.com - by Sinhawk Media - Search - Sitemap