12 Things I Hate About U.S. Health Care
And Their Contribution to the Spiraling Cost Of It
By Montage for sub-scribe Magazine
November 2009
1. Guaranteed Issue.
State government mandates such as “guaranteed issue,” forces the insurer to offer coverage to the
applicant at any price. This increases the cost of health care for everyone because, normally, a high risk
applicant would not be offered coverage. By forcing insurers to offer coverage to anyone who applies, the
applicant will likely have to pay a higher premium. Seven states have guaranteed issue mandates in some
form or another.
Insurers should not be forced to offer coverage to unhealthy individuals. Doing so is akin to forcing State
Farm to offer fire coverage on a home that’s currently on fire.
2. Community Ratings.
Another state mandate called “community ratings,” forces the insurer to charge the same premium for
everyone in the insurance plan, regardless of the risk they bring to the insurance pool. A young healthy
applicant in this case would be subject to a higher premium because he is paying for the average risk of
everyone in the pool, including those much older and less healthier than him. This mandate is used in
some form or another by 18 states.
Insurance is a model based on risk. Car insurance is more expensive for teenage drivers because they are
a higher risk. It should be no different with health insurance.
3. Mandated Coverage.
Some states mandate insurers bundle coverage for various things in individual health insurance plans. For
example:

49 states require coverage for mammogram screenings

45 states require coverage for alcohol treatment, even if you drink responsibly or not at all

34 states require coverage for drug abuse treatment, even if you don’t do drugs

33 states require coverage for prostate cancer screenings, even if you’ve not yet reached 50 years
of age

24 states require coverage for eating disorder treatment, even if you have no eating disorder

Many states require coverage for pseudoscience such as acupuncture and chiropractic treatments
The consumer has no choice but to accept this coverage, even if they would rather pay for it themselves or
separately.
Instead, consumers should be allowed to purchase only what they think they need, not what some
bureaucrat nanny thinks they need.
4. Monopolies.
Health insurance is expensive because some states limit your choice of insurance companies and health
plans. The McCarran-Ferguson Act of 1945 allows for this and as a result many large insurance
companies control a majority portion of the market. When there is little competition, prices are high.
Even further, medical licensing prevents an adequate number of practitioners in any given area. For
example, physician anesthesiologists will use medical licensing laws to prevent nurse anesthesiologists,
who are just as capable, from doing the exact same work. Licensing may also require a certain number of
attained credit hours of education or certification. This stifles competition and keeps prices high.
When did word-of-mouth stop working when deciding who to see when something ails you? A free
market for both health insurance and medical services, where competition is allowed in full form and
from out of state insurers, could bring down the cost of health care.
5. Regulatory Compliance.
In order to stay in compliance with federal and state insurance regulations, hospitals and doctors need to
hire more staff and have plenty of space to store the extra paperwork. These costs are passed on to
consumers.
6. Negotiation.
When you see a doctor and bill insurance or Medicare, the insurer will likely negotiate with the doctor
that provided the care in order to decrease the amount the insurer is willing to pay. In turn, this either
forces these same doctors to increase the price of the services so they can be paid more after negotiation
(because the original price is their actual cost of providing service), or they may shift these costs to nonMedicare patients or patients that do not bill their insurance. And since most consumers of health care do
not have an incentive to shop around (insurance will pay for it), the doctors don’t care about shifting this
cost on to you because they doubt that you will go find someone else.
You can see how much of an effect the power of negotiation has in the few places where insurance and
Medicare is not accepted—cosmetic surgery and LASIK eye surgery. In both of these areas, costs are
going down because consumers are more price sensitive and will shop around for the best deal, since they
are paying—not someone else.
7. Health Insurance.
Health care costs are going up because you have health insurance. With insurance of any kind, people
take on more risk than if they were uninsured. You don’t really care how much a test, procedure, or
treatment will cost because someone else—your insurance or your employer—will pay for most of it.
Since you don’t care how much things cost, neither does your doctor, so they will keep increasing prices
and bill your insurance more.
“We insure our houses against loss from fire, not against
the cost of having to cut the lawn. We insure our cars
against liability to others or major damage, not against
having to pay for gasoline. Yet in medicine, it has
become common to rely on insurance to pay for regular
medical examinations and often for prescriptions.”
– Milton Friedman
8. Scientific Innovation.
New technologies, new medicines, and new procedures do not pay for themselves. Someone must be
rewarded for their research and effort to create life extending technologies and treatments that allow you
to live a happier life. Otherwise, what is the incentive? How many altruistic people in the world will
enroll in medical school, take out hundreds of thousands of dollars in school loans, and take years of
rigorous classes if they don’t intend to collect income from the product and services they make or render?
High health care costs are in part the price of innovation, and because of these scientific breakthroughs we
will live longer than previous generations.
9. Higher Life Expectancy.
As there are more Americans consuming health care, the price of health care will continue to increase.
And as Americans are expected to survive lung cancer, breast cancer, prostate cancer, and certain other
cancers (at a better rate than the U.K. and Europe), we will continue to consume more health care as a
result. Consequentially, as those who survive cancer may need to consume more health care, the price of
it will also increase.
10.
Employer-Sponsored Health Insurance.
Group health insurance is subject to additional mandates on the state level, that requires plans to cover
many types of procedures and screenings which may not be necessary for each employee. For example,
you may be a male but the cost of mammograms will be built into the premium of the group plan.
Further, there is very little choice in what company, type of coverage, and other customizations of the
policy you can choose from—further making the plans offered to employees more expensive than if they
were to buy an individual plan. Also, many group plans do not exclude pre-existing conditions, which
raises insurance premiums for everyone within the plan.
11.
Insurance Fraud.
Insurance fraud is a problem within government health programs such as Medicare and Medicaid and the
private insurance market. Omissions on health insurance applications, whether intentional or otherwise,
are seen as fraud by insurers. The insured did not pay their fair share in premiums if they left something
out on their application.
If it were my job to prevent free riders from reaping the benefits of being insured, I would make sure
applications were thoroughly and continuously investigated, and drop those who fraud the system.
12.
Medical Malpractice Lawsuits.
Malpractice lawsuits are a relatively small contributor to health care costs today, however I’ll cover it
here just for the sake of mentioning it. Damage awards on medical malpractice are not currently capped.
Damage awards will continue to increase the cost of health care without such limits. Tort reform could fix
this in a variety of ways, by instituting a “loser pays” provision, among others ways.
Sources
- Mandate information from Keiser Family Foundation State Health Facts Website
(statehealthfacts.kff.org).
- Cancer survival rates from The Business of Health (Ohsfeldt & Scheider, 2006) using 2003 data from
the U.S. National Cancer Institute.