Amy Traub

Another Insurance Industry Boondoggle

Why is health care so much more expensive in the United States than other economically-advanced countries? One reason is our system of private insurance, which piles the cost of administrative red tape and billions of dollars in profit on top of the cost of actually providing medical care.

An article in today's New York Times vividly illustrates how the red tape impacts costs. The gist is that denying or delaying payment of legitimate claims is built into the way insurance companies do business. Late payments and outright refusal to pay claims can add as much as 20 percent to doctors' overhead costs. And of course, as Dr. William F. Jessee is quoted as saying "it winds up getting passed on to consumers and employers who purchase health insurance."

How can we reign in these costs? The New York Times suggests the disinfecting power of sunlight, in the form of a website which will periodically report on the best and worst insurance companies on various measures of processing claims. That's great as far as it goes, but regulation of insurance company claims practices is potentially more effective. And overhauling the entire system of privately-financed and insured health care could be more successful still.

Amy Traub: Author Bio | Other Posts
Posted at 5:40 PM, May 25, 2006 in Health Care | Insurance Industry
Permalink | Email to Friend