The radio show This American Life is a staple in every progressive’s listening schedule, and I’m no different. While occasionally there’s a show that I end up fast-forwarding through, more often than not it’s better to just pop some popcorn and listen.
This past week’s episode was the second of a two-part series the show put together on the insurance industry — apropos as Congress and the administration look at the chronic problems of health insurance in this country. The first part was informative, but not riveting. This second part, however, taught me that:
One of the drivers of insurance cost growth is the fact that rates for procedures are negotiated between insurers and hospitals. That cost can see some big variance depending on who has the upper hand. A procedure can be 10 times more expensive in an area where a hospital is dominant than in another area where the insurance carrier is dominant. That’s where Maryland’s approach comes in: the state has a Maryland Insurance Administration that sets statewide rates for procedures.
But the bottom line of the episode is summed up in the anecdote of how — by ruling that companies can take a tax deduction for providing healthcare — an unknown bureaucrat in the 1950s IRS gave us the health care system we have today. No matter the outcome of negotiations on the Hill as they overhaul the industry, it’s these incentives that will drive how our health care industry will work.
