High Health Care Costs and the Impact on Fair Share Acts

Okay, I mentioned on Friday that I had come across some other interesting blogs and sites over the last few weeks that I wanted to pass along, and that I would do so over the next few days. I jumped off track on doing that right off the bat with this morning’s post on insurance and prior knowledge issues, but now I will return to one of those other blogs I wanted to pass along.

I have talked a lot about the Massachusetts Health Care Reform Act, and one of the things I discussed recently was Professor David Hyman’s article in which he pointed out that the "Massachusetts Health Care Reform Act has problems [unique to it] that stem from the particularly high cost of health care in Massachusetts relative to the rest of the country.” On this point, John Aloysius Cogan Jr., the Executive Assistant for Policy and Program Review for the Rhode Island Office of the Health Insurance Commissioner, recently had a terrific post on his Regulating Health Insurance blog that breaks down the component costs of health insurance and analyzes what elements are driving the high cost of health insurance. Echoing Professor Hyman’s point that it is the high cost of the health care itself that is problematic, John carefully documents that the high cost of health insurance is in fact driven by the cost of medical care itself and not, as is frequently argued and assumed by critics, by insurer profits. It’s an interesting analysis that fits well in any consideration of the merits and problems of state health insurance reform acts. Of course, the willingness of the public and the political class to accept John’s assertion that the driving factors in high health premiums are the costs of medical care itself isn’t helped by stories like this one here.
Written By:John Cogan On November 19, 2007 9:44 PM

Thanks for the kind words about my post on admin costs. You make a great point in your last sentence, with the link to the Globe story about the huge payment by Blue Cross to its chairman. While $16 million is a lot of cash, put into perspective, it is not. If my math is correct, $16 million is less than 1/2% of Blue Cross' annual revenues and not even enough to fund the medical costs of Blue Cross subscribers for a week. Yet, this is the sort of thing that politicians, the press, angry consumers and even health care providers latch on to when expressing discontent about the system. I'm not defending the payment, but you are absolutely right--this kind of thing distracts folks from recognizing where their money is really going.

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