The conventional wisdom has been to regulate and attack the insurance industry. Understandable. They are the first line representing the frustration we have. After all, they are the ones to whom we pay ever increasing premiums, and they are the ones who keep raising our deductibles and out-of-pockets (although, in all honesty, if you are covered through an employer, it’s the employer deciding that, not the carrier, although the carrier certainly does dangle lower premiums out there for doing so) and they are the ones increasing burden and administration with pre-certification, restricted drug formularies, and so on and so on. But getting mad at the insurance company for these things is like yelling at the postal carrier for delivering a larger electric bill. You (or the people in your “group”) consumed it, BCBS or United is just delivering the bill. There was a recent article that indicated if we returned the entire profit of the insurance companies to the people they insure, each person would get back between $30 and $60 per year. A drop in the bucket compared to the $5,000 per person per year average in premium paid. And it was pennies if we did the same with the CEO compensation of that carrier.

Under our current health care system, providers are rewarded financially for delivering lower quality care. After all, the more inefficient they are at diagnosing the problem (in other words, the more tests they do to get to the right diagnosis) the more money they make. And if they do a procedure or even surgery that doesn’t fix the problem, they get paid again when they do the right thing. So they are rewarded for inefficiencies. You know those big fancy hospitals that have awesome amenities and the nicest patient rooms? Those are often the most inefficient and/or highest priced providers, yet we often view them as best in class. And they are often “non-profit” systems, which means you and I and every other tax payer are subsidizing their non-profit status with the taxes we pay. Hospitals are not supposed to be luxurious and chock full of amenities. They are where the sickest people should go to get well as possible as quickly as possible and then get the heck out of there! They are the most dangerous place to be!

Let me give you another example of how backwards our health care system has become. The pharmaceutical industry loves to tout that when drugs go generic, the pricing drops by 80 percent on average — and that is absolutely true. What they have failed to address, however, is why the name brand goes up in price, sometimes by 1,200 percent or more, from when it first goes to market until the patent exclusivity ends, and then, why the generic drug does the same thing as it ages. The pricing of generics usually go up faster as more manufacturers of the same generic come to market. And oftentimes, the same generic from different manufacturers cost exactly the same price, to the penny! Please show me another economic model in which 1) pricing goes up as the product ages and 2) as more competition enters the market, the pricing goes up further!

I know health insurance is low quality and high cost. I am not here defending it. But I ask this question over and over and no one has been able to deliver an answer: How can we ever have high quality, low cost and efficient health insurance, when the very thing it is paying for is low quality, high cost and highly inefficient?