Greenbeard
Gold Member
Whatever the answer to your question, the fact remians - the aspirin costs that much because the third party is willing to pay that much.Is an insurance company a rational actor? Does it seek to maximize profit?The aspirin costs $5 because a third party will pay that much.
And I'm curious why you think that is.
The argument against third party payment is that it insulates the end user--i.e. the patient--from the price of the services rendered, leading to higher utilization and a lack of cost-consciousness when "comparison shopping" for health services (though obviously the actual nature of the provider market muddies the waters).
But that doesn't explain why the actual payer for the bulk of services--the insurer--would be indifferent to prices and thus willingly accept outrageous reimbursement rates or otherwise overpay. Are health insurance companies simply the most poorly or irrationally run corporations in recorded history? Or is there something else going on here that has important implications for any payment structure proposal?