Cost of Care

The last blog I wrote told the story of a client who was astonished upon learning that the surgery his wife underwent was 40% cheaper in Seattle than it was in Anchorage. This is just begging for questions, not the least of which is “why?”

As a representative of the health insurance industry, I get questioned all the time about the cost of health insurance and why is it so high. The high cost has led many people to waive insurance entirely in the hopes that they will never need it, at least while they’re uninsured. This has become such a problem in our country that the Obama administration took it on as their major initiative and passed one of the farthest reaching pieces of legislation of our time. Regardless of how you feel about it, the law will have consequences well beyond our lifetime.

What is clear to me in the question people ask is that there is a disconnect between the cost of insurance and the cost of care. Health insurance is simply a financing mechanism to help cover the cost of the actual health care services being consumed or used. This cost has a direct correlation to how much access people have to the various services, the number of people using them and the quality of the care given. If the cost of insurance is high, it’s because the cost of the product and service it covers is high rather than excessive profit among insurers.

While there were provisions in the major health care reform legislation that will have a positive impact on our society, I believe lawmakers missed this important connection. In fact, many of the provisions were targeted at reforming not the quality or cost of care, but rather the financing mechanism that supports it.

Certainly, a deeper discussion needs to be had among all the different stakeholders (physicians, insurance carriers, hospitals, pharmaceuticals, employers, consumers) to bring an understanding of the core issues and knowledge of how to effect positive change. It’s important to join the discussion now before the cost question of “why” turns into “why me?”