Merritt Personal Lines Manual: The Mechanics of Health Care
Health care -- and health insurance -- have changed radically during the last 40 years.
It all started with skyrocketing medical costs. According to the Washington Insurance Council, in 1969, per capita expenditures for health care were $268 per year in this country. By 1990, the figure had increased to $2,567. During the same 20-year period, health expenditures grew from 5.3 percent of the gross national product (GNP) to 12.2 percent.
By the year 2000, the Health Care Financing Administration projects the annual per capita expense will be $5,712 -- and the national health expenditure will be $1,616 trillion a year or approximately 16.4 percent of the GNP.
Health insurers have had to pay for much of these costs -- and they've had to contend with ever-increasing fees for doctors, lab tests, prescription drugs and hospitals. These growing costs meant insurers either needed to keep increasing their premiums or they needed to find another way. To some degree, they did both.
They certainly have passed along increasing costs to their customers for years. But there comes a time in every business's life when it realizes it can't just pass along its costs any longer. It has to do something else to remain competitive. It has to cut the costs themselves.
Today, we have HMOs, PPOs, generic drugs, lists of doctors insurance companies say we can and can't see, treatments we are allowed -- but only after two or three doctors agree they're necessary.
What have insurance companies done to cut costs? They've set up agreements with doctors or health provider organizations that enabled them to standardize fees for various services. They've limited your choices to generic drugs, if they're available. And, they've limited you to a select group of doctors in your area or only to one primary care physician. Want to see somebody else? You'll need permission -- or you'll have to pay the bills yourself.
