While the health care reform fight proceeds to the Senate, considerations over the cost of legislation are very important. Supporters of reform allege that cost-effective health insurance is within reach if waste in the health care industry is decreased.
They may have a point; a recent study shows that health care companies which are in the Standard & Poor’s 500 have, on average, tripled their profits in the last ten years.
There were considerable losses in most economic markets during a 10-year period. Health care costs have, however, steadily increased since 2000 because of the demand of having to visit a doctor or hospital every time people get sick or injured.
These increased costs have really made health care insurance much less budget friendly for a lot of people.
The expensive health plans have increased the profits of the health insurance companies. Statistics show that the six health insurance companies which are included in the S&P 500 have made over $10 billion profit.
It would seem that these massive profits are standing in the way of affordable health insurance. However, insurance companies are actually one of the least profitable sectors of the healthcare industry. Their profits are less than anticipated, because sales of health insurance increased almost as much as profits.
If the insurers aren’t mainly responsible for the shortage of affordable health insurance in the U.S., who is? Medical suppliers and medical device makers saw the most growth over the past decade. The former saw their profits increase by 17% since 2000, and the last mentioned had margins of 15%.
The margins of pharmaceutical firms have increased their margins to 25% and they have doubled their profits too. These industries have been exclusively responsible for the advances in medicine. At the same time, they have increased the costs of insurance on the same period of time.
What can be done about this? Explicit price controls are extremely unlikely, but regulations enacted as part of a health care reform bill could nudge the health care industry towards reducing its costs. Affordable health insurance will be more plentiful if individual health insurance payers don’t need to pay exorbitant rates for the majority of their supplies and services.