Joe evades a very basic “economic” question when it comes to “health insurance”, and it is a law and regulatory question.
It’s pretty simple. Why is health insurers and their insurance plans allowed to operate differently, as to who is customer and who is not, compared to automobile insurance of home insurance.
If your house develops a roof leak, you notify your home insurance company. They have the leak appraised and determine what they say they will pay to fix it. YOU talk to some roofers, letting them now the most your insurer will pay, creating the understanding you will be paying the rest “out of pocket”. Then YOU select your roofing company, have the repair done, get a bill from them, get your insurance company reimbursement and pay the balance of the repair bill. Your insurer WAS NOT the roofing company’s customer and did not negotiate their own price with the roofer. In the home insurance and home remain market that would be collusion.
You can see how auto insurance operates similar to home insurance. You are more “the customer” and the only customer in the relationship with the repair outfit, NOT your insurer. What has been the “premium increase” inflation rare of either auto insurance or home insurance? Nothing close to health insurance.
Why? The collusion of the health insurance with the health care providers has OBVIOUSLY not lowered the total costs being billed to you, in medical costs and insurance costs combined. Why? The author actually mentioned why, but then failed to mention the solution.
As he said, there are no incentives to the insurers to get lower costs TO YOU (in total medical + insurance costs), only costs relative to their own bottom line, in negotiations where there collude on pricing IN THEIR OWN business-to-business relationship (like a home insurer telling you only certain select roofers could be allowed to do your repairs).
The solution is to enforce anti-trust standards that removes insurers from establishing relationships of collusion that perpetuate a form of “insurance” that is only “insuring” the health care industrial complex is getting what money it demands.
The “insurer” has to be removed as the quasi-customer of the health care provider, and the health care provider has to accept YOUR INSURER’S PAYMENT, which is a matter that stands, regardless of what that means as far as anything else that will have to be paid “out of pocket”. Your auto and home insurance works that way and so should your health insurance. If it did, YOUR financial relationship with the health care providers, directly, would be driving the incentives to innovation and lower costs.
“You can see how auto insurance operates similar to home insurance. You are more “the customer” and the only customer in the relationship with the repair outfit, NOT your insurer.”
As it happens, Joe Flower has used taking your car to the body shop as an example of how the market for health insurance is different: