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Small Business Employee Benefits and HR Blog

Is Health Insurance Broken?

is health insurance brokenI have said many times on this blog that the current healthcare system is a mess as if it's common knowledge that everyone agrees with.  This might come off as confusing because many people (particularly conservatives) are completely opposed to the idea of reform.

So this brings up the question: Is Health Insurance Broken?  Well, I think it certainly is, but not in the way that most people seem to think it is.  

Many democrats are saying that private insurance is evil and everyone should be treated exactly the same.  Republicans have responded by basically saying that there's nothing wrong with the way the insurance industry works right now.  Unfortunately, I don't think either side is arguing about what I consider to be the most important issue.

That's right, it's possible that healthcare is broken but that we don't need a single-payer system.  If that's the case, then how is it broken right now?  I think that the main problem has little to do with how much things cost, but rather it has to do with who is directly paying the costs.

Studies suggest that almost 50% of all healthcare provided in this country is completely unnecessary*.  Doesn't that mean we could cut healthcare costs in half if we limited our spending to things that we actually need?  So why don't we do that?

This is obviously a complicated issue, but if I had to give a one sentence answer, this would be it: We don't spend wisely on healthcare because the true costs are hidden behind layers of insurance, employer subsidy, and complicated tax law.  

If we could simply expose individuals to the true cost of their medical care, I think that would be a huge step in the right direction.

So let's get back to the point. Is health insurance broken?  I think so.  Does that mean that we need universal coverage?  I don't think so.  Nothing about our current problems can be tied back to flaws in a private insurance system.  If anything, the problems have been caused because our current system has strayed too far from the basic principles of capitalism.

I desperately want reform but I think a single-payer system would be a complete disaster. Does this mean I'm really liberal or really conservative?  This stuff is confusing.

Enough about me.  What do you think?  Is our current system broken?

* I'll write a post following up on this point with some real sources, but for now, I'll be lazy and link to the first Google result I got: http://healthcare-economist.com/2008/11/07/us-spends-700-billion-on-unnecessary-medical-tests/

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