With the growing interest in IPL all over the world and especially in UK, I wanted to share a good place to watch live IPL matches. Go to www.cric7.com and register. It is a the best quality stream out there.
Between, do not forget to vote for your favorite team!
Saturday, March 20, 2010
Tuesday, March 16, 2010
where does your health insurance dollar go?
The Obama administration is chasing a new demon (according to them) these days - the health insurance industry. After chasing and hunting down large financial institutions instead of focusing on the root cause for the problems that lead to the current economic state of this great country, the current administration is yet again making the same mistake - not solving the real problem. Instead of focusing on the real problems that lead to the credit crisis, this administration probably worsened the crisis. For example, the number one cause for the collapse of economic system was consumers spending more than they make or can afford. Instead of fixing this problem at it's root, Obama administration took the leash of lending. The lowered the interest rates, pumped billions (my money, your money, our money - tax payer money) into the economy and tasked financial institutions with lending people to actually pay off the earlier debt - default mortgages. Okay I agree not in the literal sense, but that is where more than half of the stimulus has gone - in paying previous loans. The current administration says, credit is the life line of U.S economy. That is where they got the fundamentals of economics wrong. But I will talk about why I think so later. The current post is dedicated to understanding why the Obama administration should stop blaming health insurance industry for sky rocketing health insurance premiums.
Before I go any further, I would like to state that America is one of the most unhealthy nations in the world. A simple fact - 55% of the population is diagnosed with one or more chronic conditions. The diagnoses the make up the 55% include cancers, diabetes, heart disease, hypertension, stroke, mental disorders, and pulmonary conditions. Insuring such an unhealthy population has a very high risk associated with it. Thus, as per the basics of any insurance industry - higher the risk greater the premium. Because of this 55% population, the remaining 45% has to share the risk as it has to be spread across the entire population, thus resulting in increased premiums. It also stresses the health care system due to over utilization.
Not far behind the unhealthy, adding fuel to this fire are the uninsured. The percentage of Americans that are uninsured is between 12%-16%. It is difficult to get an accurate number for the uninsured population as lot of them do not report loss of coverage. When these uninsured people go to the providers (doctors and hospitals), it stretches the threshold of our health care system. The provider fees have to come from somewhere and it adds/impacts the negotiated fees between the providers and the insurance companies. The higher the fees, higher the premiums.
And now, the number one factor that catapults health insurance premiums towards the sky - provider fees. As shown in the picture from AHIP below, 68 cents from every dollar you pay towards your premium goes to providers. Even the negotiated fees with these providers are so high that it still accounts for 68 cents from every dollar. The health insurance company profits are the lowest percentage out of your dollar. It is a mere 3 cents per dollar. That is just 3%, which is required for processing claims and carrying out day to day operations of a company. Then there is drug cost, other medical services, and government fees, etc that all suck the pennies out of your dollar.
The best part is that the last factor I am going to list for increase in premiums is a little abstract. By that I mean there is no data or numbers to support this claim. Earlier in this post we talked about the 45% population that is healthy overall. The people that make up this 45% pay high insurance premiums due to shared/spread risk. As per human nature, when you pay for something and that too as high as 1000 dollars a month for family of four, you want something in return. So what does the other 45% do? They start using the health care services available to them for no reason at all. People go to specialists for things as common as a bruise or headaches. This is a fact based on claims data. Instances such as these tip over and stretch the health care system beyond it's maximum point. It strains the system's resources which in turn results in higher demand for providers. The number of providers in this county is much lower than optimum to balance the demand and supply equation. So the higher demand (or providers) and lower supply (of providers) results in higher price (of provider fees), thus resulting in increased premiums.
Despite these obvious facts, Obama administration blatantly chooses to ignore them. They keep demonizing the health insurance industry and asking them to lower the premiums, where as the real culprit is an over utilized, over stretched and extremely strained health care system. On top of this are sky high provider fees. The providers (hospitals, doctors, etc) need to lower their fees, leaving health care as a social rather than capital profession.
Before I go any further, I would like to state that America is one of the most unhealthy nations in the world. A simple fact - 55% of the population is diagnosed with one or more chronic conditions. The diagnoses the make up the 55% include cancers, diabetes, heart disease, hypertension, stroke, mental disorders, and pulmonary conditions. Insuring such an unhealthy population has a very high risk associated with it. Thus, as per the basics of any insurance industry - higher the risk greater the premium. Because of this 55% population, the remaining 45% has to share the risk as it has to be spread across the entire population, thus resulting in increased premiums. It also stresses the health care system due to over utilization.
Not far behind the unhealthy, adding fuel to this fire are the uninsured. The percentage of Americans that are uninsured is between 12%-16%. It is difficult to get an accurate number for the uninsured population as lot of them do not report loss of coverage. When these uninsured people go to the providers (doctors and hospitals), it stretches the threshold of our health care system. The provider fees have to come from somewhere and it adds/impacts the negotiated fees between the providers and the insurance companies. The higher the fees, higher the premiums.
And now, the number one factor that catapults health insurance premiums towards the sky - provider fees. As shown in the picture from AHIP below, 68 cents from every dollar you pay towards your premium goes to providers. Even the negotiated fees with these providers are so high that it still accounts for 68 cents from every dollar. The health insurance company profits are the lowest percentage out of your dollar. It is a mere 3 cents per dollar. That is just 3%, which is required for processing claims and carrying out day to day operations of a company. Then there is drug cost, other medical services, and government fees, etc that all suck the pennies out of your dollar.
Despite these obvious facts, Obama administration blatantly chooses to ignore them. They keep demonizing the health insurance industry and asking them to lower the premiums, where as the real culprit is an over utilized, over stretched and extremely strained health care system. On top of this are sky high provider fees. The providers (hospitals, doctors, etc) need to lower their fees, leaving health care as a social rather than capital profession.
Subscribe to:
Posts (Atom)