Answers (1)
Here's the way it works. When most people pay their own medical bills, the doctor sits down with the patient and they discuss options and costs and decide what to do. When most people have insurance, that discussion does not take place. Tests and second opinions that would otherwise have been optional are automatic. The doctor hires more staff to fill out the insurance forms and keep extensive records. The doctor has to have the latest equipment to be sure his diagnoses are legally defensible. Everybody knows the bills are covered, and services are assumed to be competent. All of this, the extra tests, the second opinions, the documentation, the equipment, has to be paid for, and the cost goes on the patient's bill. The insurance company's only concern is that charges are necessary and reasonable.
Please notice that I have not suggested any form of deception. All of this is normal, honest, and unavoidable. Increased medical costs are automatic when most people have insurance.
But normal market forces are still at work. Demand is limitless, but services are scarce. In a normal market, demand is controlled by costs. When that restraint is removed some other method must be found to keep demand equal to supply. One way to limit demand is to make patients wait. When there aren't enough doctors to treat people as fast as they come in, patients must wait. Those that can't or won't wait go away. Travel to a treatment center has the same effect. When the market is controlled by costs, people who really need treatment can get it by paying the cost. When the market is controlled by some other method, individuals are prevented from making their own decisions about what they really need. They can only get treatment by waiting, or by obtaining some sort of official approval or professional reference, that is to say, by political influence.