Health Insurance Costs

Report Outline
Medical Costs and Health Insurance
Practices Contributing to High Costs
Action to Cut Health Insurance Costs

Medical Costs and Health Insurance

Rising Costs as Threat to Voluntary Plans

The rising cost of medical care is pushing up health insurance premiums and putting the voluntary prepayment system to its severest test since initiation of Blue Cross hospitalization plans a quarter-century ago. Hospital operating expenses have been soaring, doctors' fees have been mounting, and medical science has been developing a constantly expanding array of expensive drugs and costly diagnostic and treatment procedures. Caught in the middle, voluntary health insurance appears to be confronted with two undesirable alternatives: Either it must cut back its policy benefits in the face of a demand for more benefits, or it must raise its premiums and run the risk of pricing itself out of the market.

With three-fourths of the population now able to depend on health insurance benefits to defray some portion of hospital or other medical expenses, the United States has advanced a long way toward the goal of assuring everyone adequate medical attention when needed. If progress of the voluntary prepayment plans should be halted or reversed, compulsory tax-supported health insurance no doubt would be revived as a political issue.

The financial crisis facing health insurance has sparked a number of investigations by state, professional, and insurance agencies to determine whether today's heavy costs are in all respects unavoidable. Charges and countercharges concerning cost-increasing factors range from inefficient hospital management to fee-padding by doctors. Airing of such complaints has heightened efforts by organized medicine to guard against intrusion of “third-party medicine” into areas considered the sole province of the medical profession.