Interesting data on health care by Umair Haque at the Harvard Business Review in this article. (he actually has a lot of interesting articles in HBR.) I've been thinking that the private healthcare industry as a competitive market is pretty broken in the US. It's not really surprising to me that a competitive market works very poorly with its characteristics. For a market to work best, a purchase should have verifiable quality and needs to be repeatable or reversible, meaning you make that purchase decision again and again, or if you find a choice was bad, you can change the choice or reverse it. For example, that may mean giving back the product, or discarding it for another, or selling to someone else. Here's an example:
Suppose you buy a soda, then take a sip, and find that you hate the taste. No big deal - if its really that bad, you could stop drinking it partway through and toss it. Choose another brand next time.
Healthcare doesn't work that way. Now imagine if the only way to shop for soda is to buy a can every month and put it in the garage. If you open that soda you have to keep that can, finish the drink, finish what's in the garage, and keep buying it for a while. That's what happens if you get seriously ill and really need to lean on that health insurance. You might know how an insurer handles routine care, but you really don't know the quality of your health provider until you're in dire straits. At that point, you can't switch.
In these circumstances, is it any wonder that there is a fundamental disconnect between the profit of health insurance companies they quality they deliver. In California, there's been an ongoing fight about insurance companies cancelling policies when when serious care is needed (search for "California lawsuit health insurance cancellation" or click here. Some of insurance companies even paid employees bonuses to cancel policies of very sick people based on technicalities on their initial applications (sometimes years back). Settlements in some of those cases after the fact must be very bittersweet I'm sure that some of those patients received worse care, or suffered permanent injury or death. Finally, if you can't work, eventually you hit the end of what you're employer is willing and able to provide and you go bankrupt. This drives a suprisingly large portion of bankruptcies in the United States (article here).
I haven't even touched upon how things are even more broken because we're not even the ones shopping for this healthcare soda. Our employers are usually the one shopping for it.
I don't know how to fix things - I do like to idea of a publicly chartered competitor to private insurance, but really we need to find a way to connect up the healthcare market costs to delivered value to us, the consumers.