The reason medical care costs today are so high is because the government has become more involved in the industry and has raised the cost for all of us.
Before WWII and for all of American history before that, people paid their own medical bills with for the most part no problem. At least there was no crisis as we have today. There will always be poor people and they can and should turn to charity for help. In the old days there was no such thing as health insurance. People paid their doctor bills. Health insurance came about as a way for people not to pay their doctor bills but to recover wages lost during times they were sick. Lost time from work was a bigger financial problem than the bills themselves. Originally, “health insurance” was more like what today would be called disability insurance.
During WWII, FDR and the federal government instituted price and wage controls. This meant that employers could not increase salaries. So, employers started offering “fringe benefits” as a way to attract the best people. This is when employers started paying for health insurance for employees. In the 1950’s, congress made it so that employers could deduct health care insurance paid on behalf of employees. Since so many employers were now paying these costs health insurance was very popular in America.
Then in 1965, LBJ and congress passed Medicare making the federal government the largest “payor” of health care costs. In 1973, Congress passed the HMO Act, requiring larger employers to provide HMO’s for employees. Since then, there have been numerous regulations and interference by the federal government which has pushed up costs to the health care industry. Even before the ACA, the federal government is by far the largest payor of health care expenses, and HMO’s are next largest. Together, they dominate the terms of what they will pay for health care expenses.
Since the individual usually does not pay for their medical expenses, doctors make more money doing multiple tests. They get paid more for that, too. But the government and HMO’s often refuse to pay the full price. So, doctors get paid less than they expected on the procedures they do, and so they look to everybody else to pick up the difference. This difference is paid for by individuals with their own health insurance and those who pay cash. It is estimated that people paying cash pay 2- 3 times the amount that the federal government does for the same things. And this more than anything else is why health care costs are so high today.
In our medical system one side dictates the terms, and the other side must take it or leave it. But the terms are not known up front. So, the person taking it has no idea what they are taking. Most medical bills are not contracts at all. A contract requires a “meeting of the minds.” If a doctor does not tell a patient (a) what will be done or (b) how much it will cost, then there is no meeting of the minds. Today, there are more and more clinics actually publishing their rates. A person could use those prices as a good faith method of determining a fair price to pay. One doctor running such a clinic stated that he originally thought his costs would be 1/2 of what other doctors were charging. He really had no idea because he never had control over costs. What he found was that his costs are actually 1/8 of the costs of doctors who get paid by traditional means. So, the health care industry is costing 8 times what would be the case in a free market.
The federal government has created this mess with more and more intrusion into the health care industry over the past fifty plus years. The solution, of course, is to repeal such laws including the prohibition of selling insurance across state lines. Let the free market return to the health care industry and the problems will begin to be solved. The answer to our health care crisis isn’t more government involvement it’s to get the government out of the business. Then truly we may have a real affordable health care act.