Rise in medical costs is not "merely" due to increases in the cost of treatment. It's the biggest culprit in rising health care expenditures, but it's hardly the only one.
Administrative costs are lower in large coorporate plans than for small group or individual plans, the former average a little above 9% and the latter a little above 12% and 16% respectively. Large plans have bigger pools and can defray their MLRs much more effectively than smaller plans. Some states already impose MLR caps on insurance companies, and some companies try to keep them down in order to maximize capital and attract investors. A lot of the MLR in health insurance companies is however not just represented in administrative expenses, but in executive salaries and dividends, ect.
But, none of this is at what I believe is at the heart of the matter. As far as I'm concerned, health insurance should be a public utility. Why, in principle, should health insurance be a for-profit business?
Ah and hear with have the usually leftist boogieman of private Health Care's Administrative costs. The reason for these administrative costs is that private health care companies cannot afford the mistakes and waste that exist in Gov't programs. There is no perfect system and there will be no free lunch as it were.
Cost controls are sorely needed in the health insurance markets. This article implies that the private market will be able to control costs the best, but this ignores what has happened in reality for the past 20 years. Costs have been going up 10% a year and insurance becomes too expensive for families with each going year. This shouldn't be surprising for a service that has an extremely inelastic demand curve. When insurance companies raise rates they don't see a corresponding decline in demand as in other normal industries. Thus costs have to be controlled in another fashion such as mandating 80% of all expenses are spent on health care. If a company can't even do that, it is evident they are fat and bloated and wouldn't survive in any other industry and don't deserve to survive in the health insurance industry either.
The reason for the lack of competition is largely due to two primary issues.
1. The Anti-Trust Exemption which should have been removed and isn't.
2. Lack of Competition accross statelines.
Of course the private market won't compete when the gov't has basically created Health care zones and let one company operate freely within them. You have set the private insurers up to fail here.
Now don't you dare come after me, like I am some flaming libertarian or something because we have discussed this numerous times and you know perfectly well what I support, and if you can't remember then I suggest you refrain from responding to avoid making a fool out of yourself.
