Urban Hospitals & Health Insurance: Making It Work

Coach is Right ^ | 10/4/14 | Michael D. Shaw

[Oldpuppymax]

Have you heard about the insurance company that provides free health coverage for the poor? Me neither. What about the hospital that provides free health care services to the poor? Of course, you say. Many of them do! Indeed, some of these hospitals even go bankrupt in the process.

It is beyond the scope of this article to discern how economic values are set in a society, but rest assured that supply and demand are but one factor—especially in health care. Notably, health care is the most regulated industry in the country. With compliance comes massive additional costs, not to mention a gigantic subset of parasitic appendages, of which the health insurance companies are the largest. But, how is health insurance related to the regulation of health care?

Bear in mind that the original concept of health insurance was much like any other form of casualty insurance, such as fire insurance. The idea is that in the case of a significant loss—a structure damaging fire, for example—insurance would provide full or partial compensation. Never was there—or is there currently—the notion that this insurance would also cover all routine maintenance and repairs done on the structure.

Likewise, at the outset, health insurance was intended to cover only extraordinary situations, such as significant hospital stays. Then, in 1965, Medicare was introduced into LBJ’s Great Society. In theory, Medicare regulation was supposed to be limited to Medicare reimbursements, but within a few years, it would exert a major influence on how all health care was administered and paid for. After all, Medicare guidelines set reimbursement levels for every sort of procedure—not only those extraordinary or catastrophic matters previously covered by private health insurance.

Thus, in the late 1960s, private medical insurance carriers, sensing a golden opportunity, expanded their operating definition of “health...