By Cliff Montgomery – Mar. 20th, 2010
A Congressional Research Service study released in November 2009 reveals that the U.S. insurance industryis directly responsible for much of the explosion in America’s health care costs.
It’s therefore absurd to expect the private health insurance industry to serve as a solution to these spiralingcosts, as they helped create the current economic drain on average American citizens.
Below the American Spark prints several of the most telling quotes from the report:
“Congress is now considering several proposals to reform the U.S. health care system and address the twinchallenges of constraining rapid growth of health care costs and expanding access to high-quality health care.”[…]
“Health care costs in the United States, which have risen rapidly in real terms in the last few decades, havestrained state and federal budgets. Future growth in health care costs is projected to threaten the fiscalposition of state and federal governments unless major policy changes occur.
“Additionally, for many Americans, the lack of health insurance coverage complicates access to health care.According to the U.S. Census Bureau, 46.3 million or 15.4% of the people in the United States lack healthinsurance coverage.
“Furthermore, even families with health insurance may become vulnerable to the financial burdens of a serioushealth condition or illness either because of the narrowness of plan benefits or the unpredictability of decisionsabout what care is covered. Increases in health insurance premiums, according to some research, hasdegraded access to health care.
“Health insurance markets are often highly concentrated with one insurer accounting for over 50% of themarket. Concerns about concentration in health insurance markets are linked to wider concerns about thecost, quality, and availability of health care.” […]
“The health insurance market has many features that can hinder markets, lead to concentrated markets, andproduce inefficient outcomes.
“Furthermore, the health insurance market is tightly interrelated with other parts of the health care system.Health insurers are intermediaries in the transaction of the provision of health care between patients andproviders: reimbursing providers on behalf of patients, exercising some control over the number and types ofservices covered, and negotiating contracts with providers on the payments for health services. Consequently,policies affecting health insurers will likely affect the other parts of the health care sector.
“Evidence suggests that health insurance markets are highly concentrated in many local areas. Many largefirms that offer health insurance benefits to their employees have self-insured, which may put somecompetitive pressure on insurers, although this is unlikely to improve market conditions for other consumers.
“The exercise of market power by firms in concentrated markets generally leads to higher prices and reducedoutput—high premiums and limited access to health insurance—combined with high profits [for the insurancecompanies].
“Many other characteristics of the health insurance markets, however, also contribute to rising costs andlimited access to affordable health insurance. Rising health care costs, in particular, play a key role in risinghealth insurance costs.
“Health costs appear to have increased over time in large part because of complex interactions among healthinsurance, health care providers, employers, pharmaceutical manufacturers, tax policy, and the medicaltechnology industry. Reducing the growth trajectory of health care costs may require policies that affect theseinteractions.
“Policies focused only on health insurance sector reform may yield some results, but are unlikely to solve largercost growth and limited access problems.”
