What Medications Does Insurance Cover and the Evolution of Health Benefits

The extent to which insurance covers medications varies greatly depending on the plan and the specific circumstances. Generally, most insurance plans in the U.S. are required to cover the ten essential health benefits, including prescription medications. However, certain plans may not cover these essential benefits, and it is essential to verify that your plan does include prescription coverage.

Understanding Prescription Coverage in Germany

In Germany, the medication the doctor prescribes is covered as long as it is written on a pink or yellow prescription. Private insurance plans may also cover medication written on a blue prescription. Green prescriptions are not covered. The process is based on a doctor's decision and a fixed list of covered medications. This system ensures a balance between individual needs and the overall health of the populace.

The Evolution of Health Benefits in the U.S.

The concept of health benefits as we know them today began during World War II when Franklin D. Roosevelt decreed that employers could not raise wages. This led to a labor shortage as many men were fighting in Europe and the Pacific. The free market dictated that wages had to rise above the prevailing rates.

Due to the inability to raise wages, employees began to leave their jobs to seek better pay elsewhere. This high turnover posed significant problems for businesses, leading them to explore ways to retain their good workers. One of the most powerful moves was the introduction of medical insurance.

Before the introduction of this benefit, patients paid their doctors a fee for each office visit or home visit. They had "catastrophic" coverage for major expenses like surgery or long-term treatment. The new benefit included both catastrophic coverage and "pre-paid health care" for routine care, such as office visits and minor surgeries.

This practice quickly spread throughout the economy, and offering benefits became almost a necessity for any serious job. However, this change had several negative effects. Patients, who previously drove down medical prices, were replaced by insurance company bureaucracies, which often lacked the incentive to manage costs effectively.

Impact on Healthcare Costs and Practices

Medical insurance created a system where any "customary" charge became the basis for payment. Doctors, aware of their competitive advantage, adjusted their rates accordingly. Insurance companies, naturally, raised the customary threshold and continually increased premiums. As a result, doctors faced increasing costs, which had to be passed onto their patients.

The rise in costs led to an increase in administrative staff within doctor's offices. Over time, these staff members became the experts in handling insurance claims, leading to a focus on administrative tasks rather than patient care. This shift also encouraged over-prescribing and over-testing, as insurance companies required justification for paying larger expenses. In turn, more unnecessary treatments were covered to control costs.

Doctors, struggling with reduced payment per patient, increased the number of people they saw daily, reducing the time spent with each individual. This led to a decrease in the number of issues that could be addressed in a single visit. Emergency visits were often limited to a single issue to ensure the patient did not overstay their welcome.

The profit-driven nature of the healthcare system meant that doctors focused on what the insurance company would pay for, rather than what would benefit the patient. As prices increased, patients lost the ability to choose the best treatment; instead, they could only opt for what the insurance company considered "customary."

This page has highlighted the evolution of insurance coverage and its impact on the healthcare system. The rise of managed care and the emphasis on cost control have changed how doctors practice medicine. Moving towards a more patient-focused approach and exploring alternative models, such as "cost sharing" and "all cash" options, could lead to more personalized and efficient care.

For a detailed view, here are the price lists for various healthcare services:

These examples illustrate the significant cost differences between traditional insurance coverage and alternative models, highlighting the need for reform in the healthcare system.