‘Free market’ rules don’t work for health care

For those Americans who have a religious faith in the free market, health care is a frustrating test of that faith. It doesn’t comform to supposed free market dictates. Competition doesn’t decrease costs.

For the better part of two decades, health care costs have been rising at more than the rate of inflation — straining the federal budget, eroding workers’ wage increases and even forcing some small businesses to drop health care coverage for their employees.

This year, businesses plan to pass more of the cost increase on to their employees, according to The Wall Street Journal:

Employers passed health-insurance costs onto employees at a sharply higher rate this year, and businesses’ premiums grew more slowly than they have in a decade, according to an annual survey of companies.

The increased cost-shifting reflected an acceleration of a trend that has been on the rise for years. (Emphasis added.) As companies struggle to cut costs amid difficult economic times, more of them are reducing benefits they offer workers or making workers pay more for them. Still, companies are paying nearly three-quarters of workers’ health-care premiums.

Employees paid an average of about $4,000 toward their family coverage this year, up 14% from last year, according to a report by the Kaiser Family Foundation and the Health Research and Educational Trust. But total insurance premiums paid by the employer and the employee rose just 3% for a family plan—the slowest rate of growth in 10 years, according to the data.

The chart below shows how rising health care costs have affected business costs and employee salaries.
Average Heath Insurance Premiums for Family Coverage 2005-20102

Meanwhile, some health insurance companies, continuing their practice of hiking premiums, are blaming the new health care reform law, according to the WSJ:

Health insurers say they plan to raise premiums for some Americans as a direct result of the health overhaul in coming weeks, complicating Democrats’ efforts to trumpet their signature achievement before the midterm elections.
Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators.

These and other insurers say Congress’s landmark refashioning of U.S. health coverage, which passed in March after a brutal fight, is causing them to pass on more costs to consumers than Democrats predicted.

The rate increases largely apply to policies for individuals and small businesses and don’t include people covered by a big employer or Medicare.

About 9% of Americans buy coverage through the individual market, according to the Census Bureau, and roughly one-fifth of people who get coverage through their employer work at companies with 50 or fewer employees, according to the Kaiser Family Foundation. People in both groups are likely to feel the effects of the proposed increases, even as they see new benefits under the law, such as the elimination of lifetime and certain annual coverage caps. . .
Aetna, one of the nation’s largest health insurers, said the extra benefits forced it to seek rate increases for new individual plans of 5.4% to 7.4% in California and 5.5% to 6.8% in Nevada after Sept. 23. Similar steps are planned across the country, according to Aetna.

Regence BlueCross BlueShield of Oregon said the cost of providing additional benefits under the health law will account on average for 3.4 percentage points of a 17.1% premium rise for a small-employer health plan. It asked regulators last month to approve the increase.

In Wisconsin and North Carolina, Celtic Insurance Co. says half of the 18% increase it is seeking comes from complying with health-law mandates.

The White House says insurers are using the law as an excuse to raise rates and predicts that state regulators will block some of the large increases.

“I would have real deep concerns that the kinds of rate increases that you’re quoting… are justified,” said Nancy-Ann DeParle, the White House’s top health official. She said that for insurers, raising rates was “already their modus operandi before the bill” passed. “We believe consumers will see through this,” she said.

Previously the administration had calculated that the batch of changes taking effect this fall would raise premiums no more than 1% to 2%, on average.

(Note that insurers are raising their premiums more than the amount they suggest is necessary because of the health care law.)

The greatest failure of the new health care reform law is that it fails to restrain costs, as advertised. Despite what opponents say, the law raises costs only marginally. From The Wapo:

The average annual growth in health care spending will be just two-tenths of 1 percentage point higher through 2019 with Obama’s remake, said the analysis. And that’s with more than 32 million uninsured gaining coverage because of the new law.

“The impact is moderate,” said economist Andrea Sisko of Medicare’s Office of the Actuary, the nonpartisan unit that prepared the report.

Factoring in the law, Americans will spend an average of $13,652 per person a year on health care in 2019, according to the actuary’s office. Without the law, the corresponding number would be $13,387.

A more ambitious reform would have waded into health care practices to force new incentives into the system. But that proved politically impossible. Republicans even objected to a plan to study the best procedures to see what actually works.

359 comments Add your comment

Dan

September 9th, 2010
2:18 pm

I work for a major insurance company. My Health benefits usually increased by about 2 to 4 dollars a year. This year they increased 40 dollars, reason – directly tied to Obama Care per my company statement. Thanks but no thanks OBama.

jimbo

September 9th, 2010
2:23 pm

sorry, I meant to say barry soetoro has many hidden agendas -

Freedom Gator

September 9th, 2010
2:25 pm

Didn’t Nancy Pelosi say “we have to pass this bill so we will know whats in it”.God for bid if Sarah Palin had said anything so stupid.

mmm, mmm, mmm, Barack the LIAR Obama - BEND OVER, Here comes the CHANGE!

September 9th, 2010
2:28 pm

It was probably part of Obamacare…WASHINGTON — An aide to Democratic Sen. Barbara Boxer has been arrested on charges that he brought marijuana into a Senate office building.

mmm,mmm, mmm, munchies

Pablo

September 9th, 2010
2:32 pm

Democrats had control of the House, the Senate and the White House and still had to resort to ramming this health care monstrosity down the throats of Americans under the cover of night. Had they allowed true free market solutions to bear on the problem, the costs would have already started to come down, and they could take credit for that for this coming November. The problem is that they seem incapable of doing anything that removes government from the lives of people, and to fix what is not broken they are hell bent on passing legislation and THEN finding out what it really does.

Nothing Is Free

September 9th, 2010
2:34 pm

I saw where some one said that x-rays for a broken leg can be 3 grand.

Try This Tell the desk person that you are paying out of your own pocket. Then see what they charge. If you pay over 300 bucks, I would be really surprised. I have heard stories of patients having their bills reduced by as much as 90% if you pay cash. Get the insurance companies and the billing companies and the collections out of the mix and all that crap and flipping the switch on an already-paid-for piece of medical equipment will cost much less.

Kamchak

September 9th, 2010
2:38 pm

…resort to ramming this health care monstrosity down the throats of Americans…

I have found that those that complain most about having something shoved down their throats, are the same ones who will swallow just about anything

Joel

September 9th, 2010
2:42 pm

dumbcrkr, i hear paris hilton gets to best blow!

Some People are stupid

September 9th, 2010
2:47 pm

Nothing is Free-

I heard someone else say that as well. Heres my problem, if I pay a premium every month…and then have a procedure that is paid for 100% by my insurance, why would I pay out of pocket for it. Even if it did only cost 300, my premium is 250 monthly…im shelling out 550 for that one month.

casual observer

September 9th, 2010
2:51 pm

Will all Libs please pray to the almighty GOVERNMENT 5 times a day? The Messiah will take care of all your needs. He will rob all the Producers in America and give you “your fair share”. We know only 10% of America pays 82% percent of the Federal Income Taxes in this country. BUT Obama is going to take more and give to you so that you can have “Healthcare” and free lunches at school and Foodstamps and SSI and unemployment for 99 weeks. He will borrow over a Trillion dollars for you and waste it on Give away programs that don’t do anything for anybody except put us further into debt. And indanger our whole country.

WHAT A FRIGGING IDIOT. !!

TruthBe

September 9th, 2010
2:55 pm

First of all Cynthia Tucker is nothing but a progressive liberal democrat RACIST hired by the DNC to promote their socialist takeover of free market systems. So that they and obama can transform our Country into somekind of a socialist european country. The ajc is part of their propaganda machine. Vote for a straight Republican ticket so that we can remove these socialist democrat progressive liberal LIARS. And start to repair our broken Nation. Obama and company are anti-America and anti-Constutition.

Pablo

September 9th, 2010
2:58 pm

Kamchack:

If the Democrat’s plan is so good, they would not have resorted to a dishonest, underhanded political tactic to make it pass. Am I glad that they were the ones that would clean the “culture of corruption” in Washington. (That was sarcasm.)

jimbo

September 9th, 2010
3:07 pm

@ casual observer
well said.
I might add only that barry’s idiot wife is also out to control all the ct types so she can hire even more “little” people to do her nails while they wait to see what nancy peonlosi’s new jet will cost.

Down in Albany

September 9th, 2010
3:08 pm

Single-digit increases? Try 43%. That was the amount Aetna increased our premiums on August 1st. Obama said costs would go down. I say mark that down as another one of his lies.

Nothing Is Free

September 9th, 2010
3:10 pm

Some people are stupid

Totally depends on your co-pay. Mine is $500 for big procedures, but (knock on wood), I’ve never used anything related to health insurance. i had great insurance for years that I was paying a fortune for it but after my divorce I dropped it and got a cheaper, larger co-pay and started paying my ex’s portion of her company insurance to cover the kids which all worked out to be about half of what I was paying, the kids are still insured and it saved my ex a boatload of money.

I was bit by a dog a couple of years ago (trying to break up a dog fight. Lesson learned) and went for a tetanus shot at my ex’s doctor’s office. They sent me to a public health clinic (you can have all the public health care you want. It sucks) it still cost 50 bucks but it would have cost 300 at the doctor’s office.

Price transparency is the key. Check with your insurer and see if they are offering a doctor’s data base so you can find the best doctors for the lowest price. That’s the key to all of this. Doctors might have a slick office in Buckhead and still be horrible doctors but expect to pay for that nice atrium and stain glass windows. I don’t even want to get into the problems my GF has had with the billing after a car wreck. The doctor that charged her for treatment at the ER wasn’t even in the state. He literally called it in and wanted 2 grand for prescribing two tylenol. I started looking up his past and he had ben chased out of NIGERIA for malpractice and is now making a fortune being the physician on call for hospitals all over the South.

With transparency, you may be driving to East Point to a little office attached to a house and get one of the best doctors in the area.

Sea to Shining

September 9th, 2010
3:13 pm

Cynthia,
Nice work over the weekend of playing the race card on TV. Painful. Even after the United States elected a half black man to lead (down the tubes) the country. Pathetic.

Mike K

September 9th, 2010
3:15 pm

@Kamchak
CT—-
still waiting—-are you there?

Accept it sport, she’s just not that into you.
——————————————————————
Please show where the poster stated that he though Cynthia was “into” him.

Libertarian

September 9th, 2010
3:17 pm

@Down in Albany

My company’s premiums went up 37% this year. This is my 8th year with BCBS and every year they increase an average of 12%…but this year 37%? Sorry if the correlation I see is that Obamacare was passed this year.

Anyone else wanting a new topic?

USMC DAWG

September 9th, 2010
3:22 pm

There are no guarantees for healthcare in the U.S. Constitution.

This is a “made up” human rights issue by Leftwing Communist Wackos like Cynthia Tucker.

dumbcrkr

September 9th, 2010
3:25 pm

Casual observer. There are typo’s and then there’s just bad reading and writing skills. Check yourself. And are you in that 82%?

smooveb

September 9th, 2010
3:31 pm

Professor Joseph Olson of Hamline University School of Law in St. Paul, Minnesota, points out some interesting facts concerning last November’s Presidential election:
o Number of States won by: Obama: 19 McCain: 29
o Square miles of land won by: Obama: 580,000 McCain: 2,427,000
o Population of counties won by: Obama: 127 million McCain: 143 million
o Murder rate per 100,000 residents in counties won by: Obama: 13.2 McCain: 2.1
Professor Olson adds: “In aggregate, the map of the territory McCain won was mostly the land owned by the taxpaying citizens of the country.

Obama territory mostly encompassed those citizens living in low income tenements and living off various forms of government welfare…”

Olson believes the United States is now somewhere between the “complacency and apathy” phase of Professor Tyler’s definition of democracy, with some forty percent of the nation’s population already having reached the “governmental dependency” phase.

If Congress grants amnesty and citizenship to twenty million criminal invaders called illegals – and they vote – then we can say goodbye to the USA in fewer than five years.

Billybob

September 9th, 2010
3:35 pm

Tucker,

You don’t like/agree with the free market? Then admit you like/agree with socialism/statism and be done with it. Quit trying to hide who and what you really are…..and ask Obama to do the same. Time and time again liberals always run as centrists to get elected, because if they told people the truth about who they really are, they wouldn’t get elected. Tell me I am wrong…..

Boner sez

September 9th, 2010
3:35 pm

I’ve already told you people you don’t need health care.

Billybob

September 9th, 2010
3:38 pm

Cynthia,

Explain why the gov’t is allowed to be the biggest health benefits denier in the country, but the evil private insurers catch all the fury from that practice……show me something today ma’am…..

At the Switch

September 9th, 2010
3:39 pm

Some are Stupid

I called myself stupid not you. I admire the fact that you actually read the blogs.

Billybob

September 9th, 2010
3:41 pm

Kamchak,

You have no class based on those type of comments. Waste of time debating someone who is at that level……

dumbcrkr

September 9th, 2010
3:41 pm

smooveb, since the black population makes up nearly 13% of the U.S. population there must be some pretty bad white neighborhoods.

Chris D.

September 9th, 2010
3:43 pm

Your column is completely irrelevant since Free Markets and competition has never been allowed in the health care industry. Take for example not allowing people to get insurance from outside their own states. If more companies were allowed to compete prcing would inevitably be lower

dumbcrkr

September 9th, 2010
3:46 pm

Chris, If there are numerous companies competing within a state why aren’t the prices reduced?

Chris

September 9th, 2010
3:54 pm

Too bad we didn’t try to use the ‘free market rules’ when the healthcare reform bill was being drafted. Let’s review the most basic free market rule: Supply and Demand. If you have an abundant supply and little demand, the price will be cheap. Conversely, if you have a limited supply and an increased demand then prices increase. Now how does this apply to healthcare? What is the supply and demand in US Healthcare? Answer: doctors, nurses, practitioners, specialists, equipment etc. So to really apply free market rules to health care, we should have provided grants, scholarships, etc. to increase the amount of people able to afford medical school or to be professionally trained. Further, building grants to increase the size of medical schools so more people are accepted into medical school. How about research grants for universities and companies to compete for to provide lower cost alternatives to current treatments including diagnostic equipment and new drug discovery. Instead of ideas like these, that would have increased the supply side of health care, the government completely punted the ball and only focused on the insurance side, and mandated that more people be covered and have access to essentially now ‘free services’ as the bill was designed. So all they did was increase the demand on an already limited supply. Why would they do this? To get votes by saying ‘we gave something to you that you didn’t have, vote fore us’.

A "Voice"

September 9th, 2010
4:04 pm

PearlJam, September 9th, 2010, 8:36 am — get your head out of the sand. You have to remember what Obama said . . . basically, that he/we “won” so in other words . . . “we’re in charge!”. The democrats wouldn’t let the republicans have any say about the healthcare bill. Remember the so-called summit that Obama had w/democrats and republicans . . . it was an absolute joke!! The republicans are the party of NO . . . that would be the democrats!!!

A "Voice"

September 9th, 2010
4:05 pm

The republicans are not the party of NO . . . that would be the democratic party!!

A "Voice"

September 9th, 2010
4:07 pm

There are lots of factors that go into the rising health care costs over the years ~~ people expecting more and more to be covered by health insurance . . state legislatures passing bills and feds passing bills to cover procedures that in the past had not been covered . . . medical law suits . . . and on and on.

Billybob

September 9th, 2010
4:11 pm

NOTICE TO ALL FAR LEFT LIBERALS:

Keep speaking your mind(at the top of your voice) for you are the Conservatives ticket to triumph in November!

Scout

September 9th, 2010
4:12 pm

To: The Leg Lamp is a “major award” much like CT’s Pulitzer and Imam Obama’s Nobel @ 2:06 :

“Afghans protest Quran burning plan, torch US flag”

“Will this action be denounced by the left lunatic apologists like Obama, Clinton, et al?”

From: Scout

No, because the one way intolerant Islamists must be appeased or they get very upset. It’s called “dhimmitude”. Look it up.

By the way, since they did torch our flag, after dinner if you want to go rioting and behead some Islamists, let me know but I have to be back in time for the Auburn vs. Mississippi State game.

Billybob

September 9th, 2010
4:14 pm

Note to AJC:

If you want a new voice that can connect with your center/center right readers and actually give them a reason to purchase your paper…….get in touch with me….

Mallory

September 9th, 2010
4:15 pm

Ms. Tucker, earlier you created a tear-jerking account of parents unable to acquire immunizations for their children. With Georgia’s VFC (Vaccinations for Children)’s program, you can wipe that crocodile tear from your eye. $14.95 administrative fee.

Scout

September 9th, 2010
4:18 pm

Billybob :

They would rather die and go out of business.

Billybob

September 9th, 2010
4:20 pm

Good one scout……you may be right!

Scout

September 9th, 2010
4:28 pm

BEIJING (Reuters) – “Switzerland remains the world’s most competitive economy, while the United States has fallen from second to fourth after losing the top spot last year, according to the World Economic Forum’s annual rankings issued on Thursday.”

Thank you “Che” Obama

Wow, that's Pulitzer material

September 9th, 2010
4:30 pm

Ms.Tucker,

I don’t what you did, but that ROYBAMA.com add on your main page is beautiful. Keep up the good fight. lmao.

Scout

September 9th, 2010
4:33 pm

Headline (ABC) “Obama Administration Considers Calling Pastor Terry Jones to Stop the Koran Burning”

O.K., O.K., this is getting tiresome. Rev. Jones, why don’t you just change it to a “laugh at the Koran” day ?

Wow, that's Pulitzer material

September 9th, 2010
4:34 pm

@ scout,

You are my hero. I look forward to your comments, they make this communist paper worth looking at. Thank you.

MarketPrice

September 9th, 2010
4:35 pm

There is no such thing as “free market” in the health care industry. Where can I find the price of services provided by my (or others) doctor? It doesn’t exist! At least prices are not provided to the public. Prices are controlled by the insurance companies. And as a result, the insurance companies controls what you can and can’t receive in services.

Someone mentioned that most insured persons are happy with their services through insurance companies. Well, yes, they don’t know anything else because you either go through an insurance company or pay exorbitant prices without insurance. Not much of a choice!

Kamchak

September 9th, 2010
4:39 pm

I hear you knockin’ but you can’t come in, Mikey-poo

Peter Haskett

September 9th, 2010
4:42 pm

So, let me see if I can follow the Republican logic today. Jingoism can be tough to analyze.

“We can improve healthcare costs with personal responsibility”
—Love this one! So personal responsibility cures cancer and if an irresponsible person were responsible his/her germs would not be contagious to personally responsible people? Makes perfect sense. I should have told my friend who died at the age of 44 last year from brain cancer that if she hadn’t wasted her time working on her PhD while teaching in public schools and been “personally responsible” instead she wouldn’t have died.

Scout

September 9th, 2010
4:51 pm

Wow, that’s Pulitzer material :

Thank you for your encouragement.

“And so he bowed.” But I won’t ……….. and that’s what they don’t like.

“The Truth will make you free”

Wow, that's Pulitzer material

September 9th, 2010
4:52 pm

Peter, if that’s all you get from the argument by conservatives, you will never understand what causes healthcare costs to rise. Please go find another activity because thinking clearly isn’t one of your assets.

Nothing Is Free

September 9th, 2010
5:02 pm

Peter Haskett

Personal responsibility now means that one needs to heal themselves?

Wow. That’s a stretch.

Nothing Is Free

September 9th, 2010
5:08 pm

MarketPrice

:There is no such thing as “free market” in the health care industry. Where can I find the price of services provided by my (or others) doctor? It doesn’t exist! :

Actually you can. Most insurance companies are now offering a transparent price data base for their clients. I know of two more transparency Data services about to come on line that will be made available to large companies for their employees. THose companies will work with the insurers to create incentives for the consumer to do a little shopping and find the best buys while also seeing the ratings, arrest records, license problems etc. of each doctor.

But the insurance companies DO NOT set the prices. The doctors set the prices. That’s why you might pay a fortune to see a lousy doctor that has a great looking office or see one of the best in his nice little home office.

See? Capitalism ROCKS!!