Cost Plus Health Plans Draw Fire


DALLAS — The cost-plus basis under which most public and private health insurance plans are set up is forcing business to discard conventional health insurance plans and adopt self-insured programs at a considerable saving, recent research indicates.

A study by the National Center for Policy Analysis, a privately funded research group in Dallas, concluded: “An insurance system designed to make sure that hospitals cover their costs is inherently adverse to the interests of those who are insured.

See article here –

Editor’s Note: If the  cost plus insurance scheme gains too much market share, will costs go up? Hospitals will have no incentive to reduce costs. The higher their costs the more they make under a Cost Plus Insurance plan. This 1985 article warns readers about the fallacy of cost plus driven pricing that still holds true 29 years later.