oralloy wrote: "My plan last year and this coming year has a $750 deductible, then I pay a 20% co-pay until I've paid an additional $2,250, for an out-of-pocket maximum of $3,000 per year."
The 20% sounds more like co-insurance than co-pay: the latter is a fixed fee (dollar amount) rather than a percentages. This makes it very clear:
According to the link, some plans with deductibles pay for some services without applying the deductible. Sounds like something I'd want to research if I were insurance shopping.
Apparently the lower the co-insurance, the higher the monthly premium.
I have to admit that all of this is a lot worse than I thought and that I've learned something in this thread.
Here's my take on the big picture:
Any service that is a universal necessity of life, requires highly specialized skills to practice, and has large investment costs to practitioners (hospitals, drug companies, doctors), will tend to have a limited number of practitioners; and because of the essential nature of the services, they will thus be in a position to gouge users of those services without worrying about competition by new entrants to the field undercutting profits (i.e., oligopoly). This is also true for gatekeeper organizations like physician networks that function as a agents for practitioners.
The medical oligopoly then drives insurance costs, which in turn are passed through to the consumer of the services.
Requiring insurers to provide universal coverage while imposing price ceilings on insurance costs while simultaneously allowing medical service providers to price their services at what the market will bear, will cut into insurance companies' profits. In response, they will use cost shifting loopholes to maintain profits: for example, in response to caps on annual growth in premium costs to consumers, they will increase deductibles, co-insurance, and copay costs to consumers.
Effective closure of the loopholes used by insurance companies would either drive them out of business or else force them to negotiate lower prices with medical service providers (which, however, they already do through managed provider networks).
The conclusion seems to be that since costs are ultimately driven by medical service providers (hospitals, pharmaceutical companies, and doctors), that is where effective price controls must be implemented.
That said, costs could be reduced by putting health insurance on a non-profit basis so that premiums pay only the cost of benefits plus basic administration; also by streamlining administration to eliminate duplication in organizational overhead (e.g. only one insurance company instead of many, billing only service providers and not consumers, and standardizing/simplifying the claims filing procedure so that all claims involve a single, simple format submitted electronically to a single company).
In addition, by combining all medical service consumers into a single insurance pool, cost sharing is spread over a wider population and thus is less of a burden to any single consumer household. Access to such a large pool of potential customers would also be very attractive to medical service providers, which would make it easier to negotiate lower costs.
Finally, if the one insurance company is the only game in town, medical service providers don't have any choice but to play ball.
Of course, this is single-payer. In the Canadian system, the government is the payer, but medical service providers are not government employees.