• Insurance reform

    My latest Kaiser Health News column appears today. It makes a simple point. If you only remember one thing when you’re listening to health reform proposals, this may be the most important:

    Sometimes one only needs to know one simple fact. It’s this: In each of the past 50 years payment to health care providers has accounted for more than 85 percent of health insurance premiums. Thus, only a small fraction of spending on health insurance premiums is consumed as a cost of insurance.

    Read the rest of the column for the implications.

    • I still think that we should not underestimate the admin costs on the provider side. Granted, the data is hard to come by, but what is out there is suggestive of this not being negligible.


      That said, the real money is in cutting the costs of providers, especially procedures and imaging.


    • Improving provider performance will temporarily “bend the curve” in cost escalation by making the delivery system more efficient. Doing this is well worth while, but does not solve the long term problem of health care cost escalation. The single most important cost driver over the last fifty years is technological innovation. And the driver of innovation is not the health needs of the population. It is profit. The development of new medical technology will ultimately need to be regulated (by focusing innovation on areas deliberately chosen for their cost benefit to the population, and subject to prospective budgets) if health care cost escalation is to be controlled.