What makes up the cost of HEALTH INSURANCE, and why is it increasing so rapidly?

[Jeff Dieffenbach]

In recent years, school and municipal employee salaries have increased at rates close to that allowed within Proposition 2 1/2. Much larger increases have occurred in the area of non-teacher pensions, utilities including vehicle fuel, and health insurance.

I'm interested to hear from experts in the field as to why health insurance costs are increasing at double digit rates.

Q: What are the elements that make up health insurance costs? Doctor salaries? Nursing salaries? Administrative and other salaries? Pharmaceuticals? Other consumables? Equipment? R&D? Malpractice insurance? Profit? Others?

Q: What fraction of the health care dollar do each of these elements represent?

Q: What is the recent growth rate for each of these elements?

Q: What are the driving forces behind these growth rates? Aging population? More money spent on end-of-life care? More testing? Price-gouging? Other?

Most of the things that my family purchases, or that the company that I work for purchases, or that we as a town purchase, don't have prices that are increasing at double digit rates. So what is the medical industry buying that's so different?

[Jeff Dieffenbach]

A Derrick Z. Jackson column in today's Boston Globe (Saturday, 12/6) reports that health care costs have increased by 251 percent over the last quarter century. The focus of his piece, though, is higher education. Amazingly, higher education cost increases swamp that of health insurance: 439 percent over the same period. In a separate post, I ask why.

[Paul Grasso]

Most likely the cost increases are due to higher risk pools, i.e., a higher number of uninsured patients having to be compensated by those who are. Look at the number of hospitals restricting access to emergency rooms. The "cost" of health care per patient is probably not increasing that much, but the ratio of those uninsured to insured is. The recent unemployment data will not help.

[AlanJReiss]

Most likely the cost increases are due to higher risk pools, i.e., a higher number of uninsured patients having to be compensated by those who are. Look at the number of hospitals restricting access to emergency rooms. The "cost" of health care per patient is probably not increasing that much, but the ratio of those uninsured to insured is. The recent unemployment data will not help.

The deregulation of the health industry in 1973 under Nixon began the tidal wave of health care expense.

I found a web-link which was quite radical in its political comparisons but if you take our those incendiary references then the remaining data remains pretty accurate:

------------------------------------------------------------------------------------
The establishment of the Health Maintenance Organization system of health care took off in 1973, at precisely the time that the shift toward the post-industrial society, financial speculation, and depopulation occurred internationally. Operating under the seemingly benign idea of providing preventive care cheaply, the HMO system actually [did the opposite]

1. Implement cost containment in a period of `scarce resources.''

2. Establish free-market competition as the allegedly best way to contain costs. This mandated an increasing reduction of government regulation and standards, and an ever-expanding privatization of services.

3. Link provision of health care increasingly to ability to pay, thereby creating a category of persons with `lives not worthy to be lived,'' because their care would be too costly. '

As you will see below, the gradual turnover of health policy to HMOs has resulted in deliberately denying care, and therefore increasing the death rate, among especially the poor, old, and non-white sections of the American population. The trillion-dollar health-care business was turned over to financial giants, who are prepared to kill as many people as possible, in order to preserve and increase their short-term profits.
------------------------------------------------------------------------------------
Again, I've edited the text above to remove the references to national socialism but this is the full article...

http://american_almanac.tripod.com/hmotakeo.htm