These statements are chilling! This is why many people, in their desperation, feel that the government needs to offer guaranteed health care to the citizens of the United States.   Canada’s plan is often suggested as a model for the United States’ plan. If you think health care is expensive now, wait until it is free.

However, not all health care prices are rising. Although health care inflation is robust for those services paid by third-party insurance, prices are rising only moderately for services patients buy directly. For example, the real (inflation-adjusted) price of cosmetic surgery fell over the past decade. There has been a huge increase in demand and considerable innovation in the cosmetic surgery field . . . more about this later.

The increase in spending has occurred because someone else, a third-party, an insurance company, is paying the bill.  (What does “third-party” mean?   When we purchase health insurance, we contract with a third-party, the insurance company, to pay our medical bills. )

Why should the involvement of a third-party make a difference? Imagine that it is necessary for you to visit a hospital to have your appendix removed. Do you think you will be concerned about what they charge for their services? Will you be checking the accuracy of the bill? No. Your concern is that they perform their jobs correctly and that the medical procedure is a success.

Now imagine that you are admitted for the same appendix operation, but you have to pay the bill, i.e., without and insurance company involved. Economic studies and common sense confirm that you will be a prudent, careful shopper. When you are paying your own medical bills, you are conservative a consumer. You would ask questions, compare doctors, compare costs and fees, and probably scour the bill for mistakes and overcharges.

If you were going through a cafeteria line and you could have anything you wanted without any concern for cost, would you overeat? Most people would . . . it is just human nature.
For the health care system as a whole, every time we consume $1 in services, we pay only 18 cents out of pocket. This is evidence of a strong third-party payer system.

Cosmetic surgery is a good example of market forces affecting price and availability of services.  What explains the price stability in cosmetic surgery?  

One reason is patient behavior. When patients pay with their own money, they have an incentive to be savvy consumers.

A second reason is supply. As more people demanded the procedures, more surgeons began to provide them. Since almost any licensed medical doctor may obtain training and perform cosmetic procedures, entry into the field is relatively easy. Doctors are attracted by the lure of not having the extra administrative costs of dealing with insurance companies, paperwork, negotiated maximum charges and other impediments to providing efficient health care.

A third reason is efficiency. Many providers have operating facilities located in their offices. This is a less expensive alternative to outpatient surgery at a hospital. Surgeons generally adjust their fees to stay competitive and usually quote patients a package price, again reducing the costs to the patient. Absent are the gatekeepers, prior authorization and large medical office billing staffs needed when third-party insurance pays the fees.

A fourth reason is the emergence of substitute products. Innovation, creativity, and experimentation caused the costs to go down because medical prosthetics suppliers and other suppliers are constantly improving their products.

In summary, we can see that when market forces are allowed to operate, health care costs can be contained. Cosmetic surgery is an excellent example for all of us to study. We need to revamp our health care system to make it so that the patient pays for the smaller items with their own money – with the knowledge that the catastrophic costs will be covered by the insurance.

The Health Savings Account type of solution is beginning to have a good effect. If the population, as a whole, were to adopt this type of plan, the rate of increase in health care costs would likely abate.  It is important that you consider the HSA or Heallth Savings Account as a possible family solution to NC health plan costs. Blue Cross and Blue Shield of North Carolina® has one of the finest, most complete, affordable, health savings account plans available anywhere.