Insurance and the health care system started changing for the worse in the early 70's with the advent of HMO's (Health Maintenance Organizations). Prior to that time, much of the insurance industry was not-for-profit and every town of any size had a charity hospital run by the Catholic Church or some other religious or charitable foundation. People paid their basic expenses such as doctor's visits and minor procedures like mole removals, and broken arms, etc. out of pocket. That means that they cared what the providers charged and if they thought it was too much, they try to find someone else for non-emergencies.
I grew up poor but that didn't stop my parents from taking me or my siblings for medical care and somehow, they managed to pay for it. I needed some special surgery when I was 7 and it was performed by St Francis hospital in Hartford at a very low cost. We were poor, not destitute so it wasn't free. Nuns were the nurses and I don't remember being frightened by being away from home for a few days.
Like many ideas that sound good on paper but end up having bad side effects, we have HMO's The idea was that the plan would cover all "normal" care plus offer wellness care for "free" and other costs would have a co-pay that usually was less than 20%. Prior to this time, insurance was divided into short term and long term and they were separate policies. People paid for "normal" doctor visits and most prescriptions out of pocket. short term care policies covered things like broken legs, short hospitalizations for pneumonia, etc. Long term care was for more serious illnesses such as cancer or heart attacks. So, HMO's consolidated all insurance under one roof but they restricted you to a group of doctors and other providers who had negotiated with the HMO for specific rates for services. As long as you had an "in plan" option, the cost was covered. If you were out of plan, ie. two states away visiting grandma, you could be out of luck although there was certain emergency coverage for accidents. Ultimately what happened was that people stopped paying attention to what their doctor charged for a visit. As long as it was covered or the co-pay was small enough, no one cared. Once the scale tipped and very few people were paying out of pocket for medical care, the prices started creeping up and now we get to the problem. The insurance companies had no reason to push to keep rates down. When their costs rose, they raised their premiums and we had to pay them. That turned out to be a boon for the insurance industry because, even if they left their profit margin the same, 10% of $100 for an office visit = $10 but 10 % of $50 was only $5. So their profits rose in direct proportion to the raise in the cost to provide services. So, from their perspective, rising provider costs was actually a good thing.
Today, no one has a clue what their doctor charges for a 10 minute office visit but worse than that is they don't care and they don't understand why they even should care.
The Affordable Health Care Act (Obamacare), like all legislation with well-meaning names did nothing to make health care more affordable for the majority of Americans. It did provide free or low cost coverage for some but no where near the numbers promised and for the bulk of Americans, their cost of health care has been rising dramatically ever since. In the two years I lived under Obamacare before I was eligible for Medicare, my costs for insurance went from $600 per month to $1200. That doesn't seem very affordable to me.
One thing that the bill promised but never delivered was transparency. Why should the public not know up front what their doctor charged for specific services so they could easily shop around for a doctor that they could afford? Why should insurers not know what rates other insurance companies negotiated with my doctor. For a visit to my doctor, he might be paid $75, $90, $100, or $150 (for the uninsured) Medicaid would pay $75, Medicare would pay $90, most insurance companies would negotiate something around $100 and the poor sucker who didn't have insurance would be charged $150 and sued if he didn't pay his bill.
Hospitals are even worse. I had an accident a few years ago that involved an ambulance trip to the emergency room, stitches, and a variety of x-rays and MRI's to determine if I had any brain or back damage. I was conscious when I arrived at the hospital so the first question was "do you have insurance". The answer was yes so they called in a plastic surgeon to sew up my face rather than letting the hack on duty do it. As I was reviewing the bill the following month - my insurance at the time provided a complete statement of who billed what and how much they paid for it and I was aghast. The hospital billed $5,000 each for the two MRI's they took of my head and neck but the insurance company (which happened to be Medicaid) paid ~ $400 each. And on top of the charge for the use of the MRI machine, each MRI had to be read by some doctor in India and they charged ~ $1500 each for that so it was $13,000!!!! just for the MRI's. I'd had an MRI for my knee the year before and it was done at the local "imaging" center. They charged ~ $600 including the reading and Medicaid paid ~ $500 at that time. So, the total bill approached $35,000 for the ambulance, tests, stitches, and the use of the emergency room. Medicare paid < $4,000. I was so incensed, I actually called the hospital billing department and told them I needed to rent the machines not buy them.
One of the big pushes for Obamacare was the amount of money hospitals were "loosing" due to the uninsured using emergency rooms for services that they shouldn't be used for. So, using the grotesquely overpriced rack rate for services rather than what they actually got paid most of the time, they convinced a very gullible Congress that Obamacare would fix the problem. Which of course it didn't because Congress never got a grip on the actual problem.
It is still pretty tough to get a price for something before you commit to it and due to the vast differences in rates around the country, some insurances are offering incentives to their members if they agree to have certain covered but not emergency procedures done in a low cost area rather than in their local town.
