How Can Health Care Costs be Reduced & Who Will Make it Happen?

August 2, 2007

Whining About Health Care Costs
I have received several emails and comments in regards to my post on health care costs that I want to address.  There are people paying 3, 4, 5, and even 7 times the amount we’ll be paying for family health coverage. Compared to these prices my rate increase seems minor and I feel somewhat ungrateful for complaining at all. 

I feel bad for everyone paying high health insurance bills and don’t mean to come across as unappreciative of having affordable coverage.  However, that doesn’t mean I’m not always looking to save money wherever I can so when one of my expenses goes up 50% I take notice. Of course taken in the broader perspective of health insurance rates across the country my new cost of doesn’t seem so bad. 

Reader Response
One reader e-mail points out those of that can afford health care are lucky since there are many that have to go without:

“My family plan costs approximately $500 per month.  Had we gone through my wife’s plan, the monthly premium would be $900.  But I don’t think we should be thankful that we pay premiums of $80, $250, $500, or whatever.  Such complacency is dangerous and obscures the fact that our health care system is broken, inequitable, and immoral and that we all suffer as a result.  Access to health care should be an inalienable right.  The fact that we have 50 million uninsured Americans and millions more underinsured worrying about adequate care while insurance companies, drug companies, and their investors prosper on their misery is inexcusible.”

Who Will Make Health Care More Affordable?
I agree that our health care system has many problems and unfortunately think it will get worse before it gets better.  I certainly hope this problem is a top priority for our next president and not just on the campaign trail.

I am not a direct investor in any hospitals, insurance companies, or drug companies but am pretty sure I hold stock in some of them through one or more mutual funds. I don’t think me not investing in them would change their behavior.  Of course if everyone stopped buying their stock that would be a different story but I don’t see that as a likely scenario.

Corporations in general exist primarily to provide a product or service for profit and these companies are no different.  Right or wrong, they base their decisions on what’s best for the bottom line.  I don’t disagree that corporations are making obscene amounts of money in the health care sector. The book Health Care On Then Less Than You Think gives some numbers for the year 2004:

– World’s 13 largest drug companies posted $62 billion in profits
– US hospitals reached aggregate profits of $26.3 billion
– Twenty largest HMOs in the US had profits of $10.8 billion
– Twelve top HMO executives earned 222.6 million in direct compensation

The problem for many people in this country is that health care just costs them more than they can afford.  Obviously the high price of care contributes to the huge income numbers above and it does seem that in order to reduce the price to consumers these companies will be faced with lower profit margins.  I don’t think these companies will change on their own so it seems to be the job of our government to provide rules and incentives that will make health care more affordable for its citizens and provide a safety net for those that still can’t afford it.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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6 Responses to How Can Health Care Costs be Reduced & Who Will Make it Happen?

  • Terri Paige

    I would like to address Ben in regarding the comment he made about “I agree that our health care system has many problems and unfortunately think it will get worse before it gets better. I certainly hope this problem is a top priority for our next president and not just on the campaign trail.” The thing is that the economy is getting mad over problems that was in the white house before Obama got in and he’s trying to clean up the mess Bush left and he left a huge mess. He went to war and we lost a lot of troops all because of him, the economy is bad all because of him, the peace treaty was broken all because of him. Take all the bad things that Bush did and measure them with the good things which Obama has done and see who comes out on top.

  • Tim

    HSAs like everything else have pros and cons so it’s best to see if you fit in a pro category if you are thinking about HSAs.

    i’m mixed on health care costs. americans are very fickle about health care. on one hand, they do not want to pay the high tax costs associated with socialized medicine; while on the other hand, they don’t want to spend money on health insurance. the fact of the matter is, most people could afford health insurance, but they choose to spend their money on cars, houses, gadgets that they do not need in lieu of it. is health care a right? I don’t think it is a right if you aren’t willing to pay into it either through taxes or through insurance. the problem is people think it is a right and do not want to pay either. It is very difficult if not impossible to determine out of all those noninsured and underinsured people how many of those really could pay but choose not to. there are lots of people who choose not to pay for car insurance or choose to have less insurance as there are lots of people who choose not to have home owner’s insurance or choose to have less insurance. given you will more likely need car insurance rather than medical insurance no one ever complains about auto insurance costs.

    i had health insurance discussion with my parents. i was actually happily surprised they opted to spend money on health insurance since they are getting on in their years rather than on stuff they didn’t really need.

  • plonkee

    I have nothing to helpful to say, but the US government spends more on healthcare than the UK government and we (Britain) have a healthcare system that is essentially free at the point of use, with small charges for prescriptions, a £6 co-pay (=$12) if the drug is on the approved list (nearly all are).

  • Ben

    That’s a good point Scott. The first question I ask the auto mechanic when I take my car in is always how much is it going to cost. If it seems high I might call around to look for lower quotes.

    If people started comparison shopping for health care I suppose it could help drive down the price. Of course if I’m having a major physical problem, I’m more likely to get treatment first then worry about billing later.

  • Scott

    Health Savings Accounts may be partially an answer. I have never asked a doctor the price they charge, I just pay the deductible and let insurance cover the rest. This attitude, in part, has what caused the inflated health insurance. In general, doctor’s do not have to be competitive with their prices causing health insurance costs to sky rocket. No other industry is like this. Health savings accounts may cause people to shop around and compare prices for doctor’s services.


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