How Insurers Obscure Healthcare Costs

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      If you look at how that graphic has changed over time, you’ll notice that some of the categories swell while others shrink. A bigger chunk of our premium dollar now goes to buying prescription drugs—21.5 cents now compared to 14 cents in 2012 (when I wrote about how insurers tried to fool Congress with fuzzy math)—according to AHIP/PwC. The higher drug spend is not necessarily surprising when you consider that many medications are quite expensive. Because these drugs are likely keeping more people out of the hospital, reducing the overall cost of care, this isn’t without some benefit to patients. To insurers’ delight, the growth in spending on prescription medications is why lawmakers have drug makers, and not them, in their sights at the moment.

      If you’re wise to what AHIP and PwC are up to, you’ll notice how they now cleverly break into pieces the portion of the dollar insurers grab and keep for themselves and their shareholders. You have to go to the trouble of adding up those pieces to see that close to a fifth of our premium dollars goes not to keeping us well but to covering insurers’ profits, taxes and overhead expenses. When you compare the 2021 version of AHIP/PwC’s chopped up bill to the 2012 version, you’ll see that insurance companies are getting more of your dollar than they did in 2012.

      Some employers appear to be catching on to the industry’s sleight of hand and could be on the verge of publicly questioning insurers’ value proposition. A recent survey of CEOs of several big companies, conducted by the Kaiser Family Foundation and the Purchaser Business Group on Health (PBGH), showed that a huge majority say the expense of the current system is not sustainable for their businesses, not even in the short term. Not only are they sick and tired of devoting more and more of their revenues to health insurance premiums, but they also hate having to saddle their employees with insurers’ out-of-pocket requirements, which are now far beyond what many workers can afford.

      A few weeks after that survey was released, PBGH and the Colorado Business Group on Health (CBGH) announced a partnership to find ways for their member companies to contract directly with hospital systems and disintermediate the middleman, as Boeing has been doing with considerable success for a few years now. That will only work for employers with a lot of workers in one market, but many of PBGH’s and CBGH’s member companies are big enough to pull it off. Meanwhile, the consulting firm Health Rosetta is helping employers of all sizes reduce their healthcare costs and improve employee health and satisfaction by sidelining the middleman in various ways.

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

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