How does the presence of insurance factor into healthcare? Are costs higher because it exists?

Question

How does the presence of insurance factor into healthcare? Are costs higher because it exists?

In: 1

Answer 1

It definitely depends on the general healthcare system, regulation and mandates.

If everyone is required by law to be insured, the insurance companies get leverage for negotiations. And prices won’t change much and be more expensive than real cost only by profit margin.

If (part of) insurance is optional, there is less leverage and insurance will lead to generally higher costs

These are two simple examples in a reasonably regulated medical sector.