Healthcare in the US is so expensive.
MLR: Medical Loss Ratio may just explain why medical costs are skyrocketing in America. MLR is the ratio of claims expense paid to premiums revenue received. The State and federal governments require the ratio to be in the 80% to 85% range: ostensibly to ‘prevent insurance companies from making too much money” by effectively mandating how much premiums can exceed costs.
So, if a procedure costs $100, it means the insurance company has $15 to cover overhead and profit. If a procedure costs $1000, they have $150 to work with; and for a $10,000 procedure, it’s $1500. Are you beginning to see how we get $1 tissues?
Under this system, who is motivated to keep costs down? It isn’t the insurance company because for them, 15% of a big number is better than 15% of a little number. It isn’t the healthcare facility, or the doctor for the same reasons. The patient doesn’t particularly care as long as their insurance covers it; and most don’t have a clue how much their medical insurance costs when it is employer-provided (60%) or government provided (28%). Less than 10% buy their own. As long as the insurance company is able to pass the costs on to the patient, they don’t care how much it costs.
In a free market, the scope and the cost of healthcare would be determined by fair and open competition. Insurance companies and healthcare providers would derive their profit by constantly driving costs lower. Lazik eye surgery is an excellent example because it is not covered by insurance. As more practitioners get into the business, competition drives the price down even as quality is continuously improved to differentiate one supplier from another in order to attract paying patients.
Without collusion between the government, healthcare and insurance interests to continually increase costs, the free market continually reduces costs while increasing quality and convenience. Because the buyer is paying for the service out of his own pocket, he is
motivated to find the best value; and as is always the case it is that which creates competition. Unfortunately this is NOT how the majority of the healthcare industry works.
How did we get to this point? Insurance companies are highly regulated by State and Federal authorities. Clearly there has been collusion between the regulators and the regulated to take advantage of the sick and infirm at their weakest and most vulnerable. The genius stroke is to do so in such a manner as the victim is duped into believing that the metric that exploits them is the vehicle by which they are separated from their funds.
It’s the classic con: fleece the pigeon but make them feel good about it.
The Medical Loss Ratio epitomizes the state of the healthcare industry in America today: runaway costs, enriching everyone but the patient while making it appear that a benevolent government is protecting their interests even as it exacts it’s share of the spoils in the form of generous political contributions to keep the con working.
Government mandated healthcare is simply a heavy-handed effort to force the entire populace to participate while simultaneously changing the rules to give the government, not insurers or the providers, the upper hand and thereby take control of this con.
This is what happens when Citizens trade liberty for the appearance of security. This is what our Constitution was originally crafted to protect us from. And this is just one example of why we must restore Constitutional governance in America.
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