December 13, 2010
Affordable Health Insurance Blocked By Decade-Long Profits
As the healthcare reform fight moves to the Senate, concerns over the cost of legislation are paramount. Supporters of reform claim that affordable health insurance is within reach if waste in the health care industry is reduced. They may have a point; a recent study shows that health care companies which are in the Standard & Poor’s 500 have, on average, tripled their profits in the last decade. ”
There were losses in most economic sectors during a 10-year period which is really significant. Health care costs have really increased since 2000 because of the necessity of having to visit a doctor or hospital whenever people get sick or injured. This will really make health care insurance much less affordable for a lot of people.
The typical scapegoats for more expensive health plans are the health insurers themselves. There is no doubt that health insurance companies had a profitable decade. The six health insurance companies in the S&P 500 made over $10 billion in profits.
These massive profits definitely make health insurance more expensive. But insurance companies actually are the least profitable sectors in the healthcare industry. The profits they have right now are less than the expected because the sales of health insurance have increased at the same time as the profits have.
So, if the insurance companies are not the main reason of the shortage of affordable health insurance, then who is? Over the past decade, the medical device makers and medical suppliers saw the most improvement. They have increased by 17% and 15% respectively.
Pharmaceutical firms have also doubled their profits at the same time increased their margins to as high as 25%. These industries mentioned are the ones responsible for advances in medicine. But they have also resulted to the increase in insurance costs.
How can we solve this problem? Control of prices is very unlikely however; regulations enacted for the health care bill will be able to help the healthcare industry make healthcare insurance more affordable. There will definitely be more affordable health insurance if health insurers are not required to pay for exorbitant rates for their services and supplies.
The healthcare reform bill, unfortunately, has little effect on this problem which is passed by the House of Representatives. Insurance companies have significantly crafted the current legislation but seem to be non-effective.
Many sectors should share the blame for the increasing amount of insurance premiums. It is somewhat unfair that the insurance companies have been singled out. However, they still made improvements by reducing the administrative expenses.
Consumers are also partly at fault, by demanding increasing and ever-complex medical care that may be unnecessary, without regard for its cost. Price transparency could be another solution. We’ll see if the affordable health insurance market is still booming in 2019.
Charles David Rogers is an excellent writer who writes articles for Health Insurance New Mexico. He has been writing for sites such as this to share his background in health insurance with others.
Filed under Finance by