“Original Sin” of the US Health Care Industry

A neat infographic from the Cato Institute identifies the key factor that led to so many other troublesome issues in the health care industry related to cost and efforts to contain costs.

That key factor is employer-sponsored health insurance. The federal government gave employers huge incentives to provide this benefit. This type of benefit came long before Medicare arrived on the scene.

Why was this a problem? It removed the prudence that consumers usually exercise when accessing goods and services based on cost. And it liberated health care “providers” to charge amounts that the market would never bear under ordinary circumstances. Costs have spiraled ever since; and various structures and systems have been attempted over the years to get a handle on costs that can adversely affect everyone.

Obamacare did not fix the cost problem even though it was called the “Affordable Care Act”. In fact, it exacerbated the cost problem for various reasons.

But this is a problem that was created by government.


2 thoughts on ““Original Sin” of the US Health Care Industry

  1. I have had 6 hospitalizations in the last several years. I have Medicare. The premium is taken from my SS check every month. I also have a private secondary health insurance . The premium for that from my pension each month. Following hospitalization I always get EOB from Medicare and my secondary insurance. In no instance have I had to pay anything. I do notice that the amount the hospital receives is much less than the amount billed. So my exercising prudence would, it seems, would not help the problem you describe.

    Just sayin’

    1. That situation is different because the federal government dictates what it will pay. If there was no insurance was involved, you would be exercising more prudence with respect to cost; and the charges would be lower than they would be if private insurance was paying the first dollar.

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