Pooling on its own is not likely the primary cause of the price increase. Insurance is a risk management product whereby the customer shifts risk to the insurance company in exchange for a fee. The insurance company, if they are good, can take on this risk because they insure lots of people, not all of whom will need to collect. So, while the customer may be insulated from price increases, the insurance company is not and so will work to hold price down or have to pass the increase on to the customer.
Going back to what you said here, you mention that the insurance companies try to hold costs down. I can see how this could be effective in the case of HMOs, since with a specific network of doctors, carriers can negotiate on a large scale to try to minimize costs. Oddly, HMO premiums have gone up even faster than other healthcare plan premiums in the last few years, which seems counterintuitive. On the other hand, there seems to be some (limited) evidence that newer high deductible plans and plans with health savings accounts are proving effective at slowing the rate of increasing healthcare costs from the last few years.
Basically what I’m getting at is this: politicians from either side of the aisle are going to pass -some- kind of healthcare legislation. Neither will be willing to maintain the status quo at this point. If those on this forum were forced to pass some sort of healthcare legislation, (maintaining status quo is not an option), what would it be?
Obamacare in its current state appears to be the most damaging because it increases pooling. Previously, I would have said that single payer could have potential, since the government would be similar to a giant HMO negotiating to minimize costs… but given the failure of HMOs to minimize cost, that doesn’t seem like an attractive option either. Right now, the most effective piece of legislation that I can see would be eliminating insurance coverage for all but the most expensive healthcare services - services that really benefit from pooled risk. One option to accomplish that would be mandating extremely high deductible plans to shift the average healthcare payment back to being an out of pocket expense.
Using its power to regulate (meaning, to make regular) interstate commerce, Congress could open up the health insurance market for interstate competition. Allowing the exact same cheap health insurance plans that are sold in Kentucky to be sold in Massachusetts would significantly lower insurance costs for most Americans.
No. The states have regulated health care and health insurance since the 50s, IIRC. There is no interstate commerce in health care or health insurance, with the exception of mail-order and online pharmacies.
It isn’t counterintuitive, you just have incomplete information. HMOs are more highly regulated than PPOs and other plan types. They aren’t afforded the agility to respond to market changes like everyone else. For example, many aren’t allowed to shift additional costs onto the end user (higher co-pays, etc.). Since the consumer is the employer, not the end user (the employee), the shifted cost doesn’t matter - the amount the business has to pay matters. This amount is higher with less cost shifted to the end user.
High deductible plans and plans with health savings accounts would of course show lower growth because the end user of medical services is now paying their own money. In addition to removing the effects of pooling for smaller things, something that is forced to be covered by an insurer may be worth going to the doctor for if you have a $20 copay, but not worth it if you have to pay $800 in tests and fees. People ration to save money. No surprise there.
Well that’s easy:
Remove all regulation on insurance and remove all taxation on any sort of medical spending, research, and investment (consumer and producer side). Remove any government mandated medical practitioner licensing requirements.