nos-trum. pronunciation: \nos'-trum\. noun. Etymology: Latin, neuter of noster our, ours.
1. a medicine of secret composition recommended by its preparer but usually without scientific proof of its effectiveness.
2. a usually questionable remedy or scheme.
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Saturday, April 3, 2010

HC Reform Dirty Little Secret: High Insurance Costs Are Driven By Government

Government reimbursement rates that fall below the costs of delivering care are a significant driver of insurance companies' costs.

Imagine you are running a laboratory.  For each test you perform, there is an allowable charge.  You bill either the government or a private insurance company.

When you are paid by the government, the payment is 80-90% of what it costs you to do the test (these figures aren't contested).  There's no appeal; that's the rate allowed.  So how do you stay in business?

By making up the difference through higher charges to private insurance.

The irony is:

1.  Higher private insurance charges lead to higher insurance costs; the company passes on the increased cost to the private policy holder, who pays a higher premium, thus subsidizing the below cost payment of the government, and therefore paying for part of the care provided in government programs.
2.  Members of Congress and the Administration know they are doing this by capping payments at below cost, and when they demonize insurance companies for high premiums, they are engaging in duplicity (ie., lying).

But isn't that a standard political tactic:  When you're at fault, blame someone else?

The next time you write your premium check, consider how much of it goes to subsidize the government under-payment for the people it covers.

Amazing how the system works, isn't it?


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