Another fallacy. Here is an excellent website written by a doctor. He gives an insider's view into our broken health care for profit over patient system.
Healthcare - Home
My goal for this website was to try to understand a system that has an enormous financial impact on everyone, but makes almost no sense to anyone. It's a system with hidden costs, enormous mark ups to discourage direct payment and a labyrinth of billing and reimbursement schedules that almost guarantee that no person directly involved could ever understand it. And we've started to see why this system is set up this way, who benefits from it, and who loses. The question is: How did it get this way?
I've only been in practice for about a decade and the system, as it is, began evolving long before my medical career began. Still, I can only guess that decades ago when insurance companies started to pay for medical costs, no one intended for it to end up like this. Insurance companies were originally run by doctors. Their idea was to spread the risk. They had a sense that getting sick usually wasn't fair, so going bankrupt because you were sick probably also wasn't fair. They had the idea that pooling people in advance made it easier on everyone, and improved access to healthcare.
It's a great irony that only a few years later, some business people (people who are very good with money, but not so interested in medicine) realized that they could make a lot of money on health insurance if they created a special insurance plan that excluded the sickest people. In other words, insurance for people who probably didn't need it, which was very different from the original idea of health insurance for everyone, but far more profitable. The idea of preexisting conditions is almost as old as health insurance itself.
Here's one way to look at how the system came to be: People usually try to find occupations that follow what they love, at least in the beginning. Hospitals can be callous in their billing, as we've seen, and doctors like money as much as anyone else, but fundamentally there was a point in their lives when they (doctors and people who run hospitals) decided to get into the profession of helping sick people. Some are genuinely compassionate. Some are biology wonks or technology wonks, or just like the action. But most of them lose interest pretty quickly when they have to start dealing with complicated financial matters like insurance payments.
The first insurance companies were started by doctors, but they couldn't stay in the game when the money professionals started showing. They couldn't compete financially, and they didn't have the mindset to try. So they did what most of us do: focus on the details that interested them (medicine), and left the tedious stuff (finances) to someone who was interested in it (insurance companies). Now the insurance companies could start building a system in their image.
As the system grew and healthcare became more complex, more people came into the health insurance industry who had a good understanding of money but little interest in healthcare. It's no secret that confused people are easier to take advantage of, so layers of confusion were slowly piled on and profits soared.
Doctors, hospitals, and other healthcare providers didn't protest as the process slowly grew away from them because, while this was happening, they too, were making money, and didn't think they needed to worry about it. As the system became less and less transparent, insurance companies were careful to make sure that all of the major players were kept very happy. But you can't keep everyone happy forever, and when things get tight, that's when you start to learn who's running the system. Now, after 30 to 40 years of slowly allowing all of our understanding of the financial transactions to erode, we are left seeing more and more money dumped into a black hole with little understanding of what happens to it.
It's rare to see a discussion about healthcare costs that isn't centered on co-pays, premiums, and deductibles. These are all indirect costs. They tell you almost nothing about the cost of the final product (the medical services that you might need). If the cost of individual components of healthcare are mentioned at all in these conversations, the price given is usually the billing charge. But the billing charge has little to do with what health care costs either. You've seen in almost every section of this discussion that the billing charge is a hugely inflated price that almost no one ever pays.
Why would anyone want us to focus on a price that's almost never paid (unless you don't have insurance, of course)? Well, one reason might be that it makes it look like all that money is really going into paying for our health care. We all know how important an MRI can be, or an Emergency Room visit, and as long as people think an MRI really costs $4,000, and an ER visit costs $4,500, maybe they'll resign themselves to paying big insurance premiums, and we can all tell ourselves that it's the only way we can continue to have "the best health care in the world."
But if these charges have nothing to do with reality, then neither do any of the discussions. MRI's and ER visits cost hundreds of dollars, not thousands! This is all a very effective diversion because, if no one ever addresses the real problem, it's unlikely a real solution will ever be proposed. And if you don't want people to find out where their money is going, it helps to have them looking in the wrong place.