The existence of private insurance strongly correlates with higher health care costs

[eridani]

http://theconversation.com/creating-a-better-health-system-lessons-from-norway-and-sweden-30366

Private insurance, however, is an expensive way to fund health care. When we look at the relationship between private insurance and a nation’s total health-care costs, we find a strong positive relationship: the more a country relies on private insurance the more it pays for health care, without any extra benefit.

It’s not just the bureaucratic cost of private insurance; it’s also the distortions it introduces, for when there is a private insurer in the market, able to pay premium prices for priority access to care, prices throughout the health system rise, both for the public insurer and for those who pay for health care from their own pockets.

The graph below shows the relationship between countries’ health-care costs (as a proportion of GDP) and reliance on private insurance. These are all countries with only minor differences in their health outcomes. (For the statisticians, R Squared = 0.66.)



At one end of the scale, the United States stands out. At the other end are three countries – Sweden, Norway and Iceland, where private insurance is either absent or plays a minuscule role in funding health care. And these countries contain their total health-care costs (as does Australia for now), to around 9% of GDP. This is in spite of the fact that Sweden, the largest of these countries, has a significantly older population than Australia.

[Adam051188]

1. watch out it's math....

[BrotherIvan]

2. Winner!

Yeah, who could have possibly known?????????????? We all love our health insurance don't we?

[Doctor_J]

3. probably too advanced for the ACA fan club

"How could mandating 25% overhead charges, and a layer of greedy middlemen, increase costs? I don't get it"

[hunter]

4. The larger the money stream you control, the more you can skim off.

Duh.

[elias7]

5. Health Insurance companies = totally unnecessary

They bring nothing to the table, just skim a layer off of people's misery, and create a bunch more misery to boot.

[Recursion]

9. Then why does Medicare use them?

I don't think it's as simple as the "health insurance = evil" line people try to sell here. Medicare uses private provisioners for a reason. They're also not the ones actually skimming the real money: that's pharma and device manufacturers:

[elias7]

10. Don't know. Medicare advantage plans cost over 12% more covering the same care

as traditional Medicare.

I don't know about the yahoo business data you quote, but there is no accounting for the massive administrative costs of private vs public insurance.

The main issue for me is this: just what do these companies bring to the table? Can you explain to me why they're not just a middle man taking a cut?

[Recursion]

11. I'm not talking about Medicare advantage

I'm talking about Medicare. It uses private insurers to provision actual care. Medicaid does even more.

but there is no accounting for the massive administrative costs of private vs public insurance.

Right, but Medicare's low overhead rate only counts getting the money to the provisioning insurer. They take premiums and subsidies and give money to Blue Cross and a few other big provisioners. This takes very little overhead. The provisioners then do the actual billing and payment work, which brings me to:

just what do these companies bring to the table?

Provisioning. Something Medicare doesn't even try to do on its own.

[Princess Turandot]

12. Quick question. 'Provisioning'...

You're referring to the various 'claims processing' functions, correct? That's what those activities are usually called in the US, in my experience.

[Recursion]

14. No: keeping cash on hand and moving it from point A to point B

(Not physical cash nowadays, obviously, but still.)

Medicare pays private insurers to actually get the money to providers, because this ends up being cheaper for the government.

[nationalize the fed]

6. talk about an outlier

Almost all of the publicly traded health insurers reported big increases in revenue and profits last year. The big winners have been the top executives of those companies, led by Mark Bertolini, CEO of Aetna, the nation’s third largest health insurer. Bertolini’s total compensation of $30.7 million in 2013 was 131 percent higher than in 2012...

Centene’s CEO Micheal Neidorff saw his compensation increase 71 percent last year, from $8.5 million to $14.5 million. Even more impressive was the 140 percent raise Molina’s J. Mario Molina got. His compensation jumped from $4.95 million in 2012 to $11.9 million in 2013...
http://www.publicintegrity.org/2014/06/09/14912/skyrocketing-salaries-health-insurance-ceos

$30.7 m/yr, 14.5 m/yr for what? Shifting dollars, and squeezing "patients" dry. $30 million a year is ~2 million + per month. 2 MILLION DOLLARS A MONTH. While waitresses and landscapers have to file a return and pay taxes on a few hundred. The system is totally broken. Totally.

Profits and customers guaranteed by law. The gravy train has left the station, won't be long before other things besides "health insurance" are mandated.

[JEB]

7. Health Insurance companies are evil mother fuckers.

[Recursion]

8. I dunno. The problem right now is that they're too weak

And they can't negotiate good prices from the gougers, pharma and device manufacturers.

http://www.vox.com/2014/9/2/6089693/health-care-facts-whats-wrong-american-insurance

[RandiFan1290]

13. But wealthy Americans make retirement $$

add that to their Bush/Obama tax cuts and we could ALL retire to our beach house in Hawaii!

Mahalo!

[Orsino]

15. Freedom isn't free.

Specifically, corporate freedom to profit from our blood.