I wrote Hacking Healthcare for O'Reilly, I've managed hospital systems and group practices, I've been a patient with a life threatening illness. This is a really low effort article, it doesn't even really define what it considers "healthcare". In the US healthcare is 1/5 or more of the entire economy, so who profits from 1/5 of all US economic activity is a silly premise.
The US doesn't have one healthcare system, it has 50+ (or 51, ...59, is healthcare in Puerto Rico part of the US healthcare system?, how about American Samoa?). Contrary to many peoples opinions the "healthcare system" is not operated or overseen primarily at a federal level. The federal government is one of the largest buyers of healthcare as an insurance provider, that is true.
Comparisons to other countries that are much much smaller than the US are sort of silly to me. Europe does not have one healthcare system. Subsidized education and price controls in foreign systems also make comparisons excruciating. I think it is usually a canard. OECD data is, in a word, "garbage", as it relates to healthcare. Just one example: In the US, eyewear for seeing purposes is healthcare. In almost no other countries do you need a prescription for eyeglasses. Prescription eyewear in the US is a 20-30 billion dollar market, depending on how you want to count it.
I think the mechanisms for paying for healthcare in the US are really inefficient and involve too many intermediaries. This is a result of a lot of accidents of history. America is a very physically large country with a lot of people all over it, we expect very high standards of care, we consume a tremendous amount of pharmaceuticals, we have wildy abundant and relatively inexpensive food that seems to be correlated to our being much more overweight than a lot of other peoples, we engage in a lot of dangerous activities at a rate that far exceeds what a lot of other peoples do that seems to correlated with our culture, on and on.
Instead of hand wringing about differences between ourselves and other cultures we would be better served looking at boring things like medicares 3 million pages of medical claim guidelines, clearing house operations and conflicts of interest, better incentives for state level responsibility, antitrust litigation, lots of practical things that don't make click bait headlines.
> Comparisons to other countries that are much much smaller than the US are sort of silly to me. Europe does not have one healthcare system.
True, Europe does not have one healthcare system. And yet, thanks to the EHIC (European Health Insurance Card) [0], citizens of the 27 countries in the EU, Switzerland, the UK, and the EEA (Iceland, Liechtenstein and Norway), can use the healthcare systems from any other of the 31/28 [1] participant countries if they need healthcare on a temporary visit under the same conditions as the local resident citizens. The expenses incurred are reimbursed to the system providing the healthcare by the healthcare system of the citizen who is receiving it. This is done transparently to the patient, all they need to do is provide their EHIC card.
This means that each of these 32 different healthcare systems, with their own particularities (e.g. free at the point of use vs. copay), can be considered one single universal healthcare system.
If 32 different countries, with their own legal systems, legislation, languages, and healthcare system design (insurance based or state funded) can cover approximately 500 million citizens, then 50 US states under one single federal government should have no problem doing the same for their 333 million citizens.
We have a friend that had a ski accident in Switzerland (broken arm, open fracture). The EHIC was next to useless. They had to pay a "few" grand CHF out of pocket for the surgery. I think the private insurance covered some of that after many phonecalls and a few months. Needless to say, I won't be going skiing in Switzerland anytime soon.
Meanwhile in France my friend broke her arm skiing and payed with the spare change in her pockets. It wasn't enough to cover the cost of ambulance, cast, etc, but the people at the clinic basically said "whatever" and sent her home a few hours later.
I live in Switzerland and had never heard of the EHIC before. Switzerland not being part of the European Union means that some of those international cooperations don't always work as well as they should.
On the other hand, if you are a Swiss resident and employed for more than 8 hours per week, you're insured from accidents by your employer(=totally free to go to the hospital in case of an accident).
If you work less than that, the accident insurance premium is not that high(less than 50 CHF per month).
> Instead of hand wringing about differences between ourselves and other cultures we would be better served looking at boring things like medicares 3 million pages of medical claim guidelines, clearing house operations and conflicts of interest, better incentives for state level responsibility, antitrust litigation, lots of practical things that don't make click bait headlines.
This is literally what we've been doing for years. It doesn't work because we're trying to apply bandaids to a problem of fundamental rot within our healthcare system. Look at how many states and politicians blew up over the ACA and attempted to stonewall it. I'm old enough to remember my mother being denied healthcare by her insurance provider because she had a stroke and that counted as a preexisting condition. Our solution to this rot is trying to solve a problem after it occurs, rather than prevent it in the first place.
we would be better served looking at boring things like medicares 3 million pages of medical claim guidelines, clearing house operations and conflicts of interest, better incentives for state level responsibility, antitrust litigation, lots of practical things that don't make click bait headlines.
My opinion about the FDA is that it suffers from two major faults, it is always regulating the "last war" and it has the standard federal government incentive structure for policy making which is "do not do anything that according to civil service regulations can get me fired".
In defense of the FDA, which I promise is not an instituion I have much affection for, they are asked to strike an impossible balance. More or less the same regulatory impulse that allowed Richard Sackler to build an empire on the killing of millions of americans is the same one that allows very sick people to access very, at times dubious, drugs and trials that sometimes save their lives.
Most of medicine is very centrally built around the "first do no harm" approach, even at the cost of lives by non-intervention sometimes. With the FDA most people want a "do some harm, some of the time for the greater good" approach which is a really difficult thing for a federal agency to put into practice. I think they do an especially awful job with it but I appreaciate that it is a really hard balance to strike.
This is not really a good argument, there are many things that kill a lot of people , The manner and type of lives lost is important also the nature of impact.
People aren’t dying very young with tobacco addiction for the most part. There is cancer in youth sure , but tobacco is not the leading cause of that .
People who die of tobacco related illnesses are functioning adults and contributing members of society for the vast majority of their lives .
The disruption to the lives of drug addicts and their friends and family far exceeds those faced by tobacco addicts.
Not everything is a conspiracy or corruption people only react to what they see, the impact of drugs is far more visceral and immediate than tobacco or say obesity which kills even more, so pressure for legislation is higher
If tobacco killed because the of one wrongly cut cigarette you smoked , it would require prescription too
Do people die from prescription opioids that often? I assumed that most of the deaths occur when people who are addicted lose access to legal sources and are forced to buy illegally (so risk of overdose and other complications is much higher)?
That is exactly why legal sources which are prescription exists, because it is easy to kill oneself by taking a illegal pill of unknown quality, such risks are not common with tobacco.
The regulation is a function of that, not how many people are killed by one item or other, it is merely just how easy is it die of OD with a poorly sourced drug, is why we have FDA and regulations etc is my point.
Interesting theory. I would guess that's rare and that more often than not, people are overdosing on prescriptions that they lied to obtain and then abused, or purchased on the street from someone who received the prescriptions but didn't need them.
I'm speaking from personal experiences, but of course, it's anecdotal.
The FDA doesn't have jurisdiction over "many things".
I personally think the FDA shouldn't exist, or should not have power to regulate (and should be a toothless advisory/certification authority). That said, if they are to exist, they should do their job. They're not. We're paying the bill but not getting the service.
Same goes with OSHA. Every casino in Las Vegas demands their employees work in rooms filled with tobacco smoke. Why? Money. It's pure corruption.
We have the rules, they're just not enforced, because if you have enough cash flow, you get a special carve-out so that the rules that apply to everyone else don't apply to you.
Big Tobacco gets it from the FDA. Big Telecom gets it from the FCC. Boeing gets it from the FAA. It's everywhere, and once you see it, you can't unsee it. We're paying billions and billions for these huge bureaucracies and they're only pretending to provide us with the service they exist to provide.
> The FDA doesn't have jurisdiction over "many things".
The FDA has jurisdiction over tobacco[2] and various food products contributing to obesity and those are the only two examples highlighted by OP or me in the thread.
> We're paying the bill but not getting the service.
Don't think we are, there is very little money for Food part of FDA, in the last 5-6 years the money for food has gone from 1,037M(2018) to 1,145(2022)[1] which in real terms considering inflation means it has gone down and last 30 years it has been similar story.
Last Week Tonight had a recent in depth segment on how little resource we have for food enforcement[3] sometimes as little as singe digit inspectors for an entire industry.
We don't really enforce food regulations, because we don't fund the regulatory body for food safety.
How did you get “I don’t think we should have rules” from my multi-paragraph comment complaining about how the rules we have are not enforced when and where it matters?
Rules are critically important. We shouldn’t be paying the government to enforce them, because they aren’t, and such money is basically just being lit on fire.
> The US doesn't have one healthcare system, it has 50+
This may be correct to say in the de jure sense, but in the de facto sense there is a set of common norms and characteristics across all of them that makes it possible to talk and reason about them as a "system" overall (especially when talking about Federal-level policies that have potential to create nationwide changes to how Americans experience that "system", e.g. as the ACA did in a few ways).
> This is a result of a lot of accidents of history.
These are not accidents though.
For example in Puerto Rico there was a good, affordable public health care system many decades ago (El plan Arbona). This was meticulously dismantled by the insurance industry through political lobbying and support of insurance-friendly politicians. Now they have the same debacle as in the US, sky high insurance profits and terrible health care. This was very intentional, not an accident of history.
Respectfully I would say there are a lot more problems than that going on. The federal government has an incredibly dark history with Puerto Rico regarding health, the rhoads scandal alone https://en.wikipedia.org/wiki/Cornelius_P._Rhoads#Scandal but also human experimentation and other misdeeds compounded by the complex status of it as an american territory.
That's true and a part of history everyone should learn more about. But also, unrelated to the current discussion.
The insurance companies dismantling a good public system was a pretty recent action, mostly in the 90s although the damage has taken a while to propagate.
Yeah, the parent is nothing beside a long-winded appeal to American exceptionalism, which is tantamount to a defense of corrupt, rent-seeking regime that almost every other wealthy democracy has avoided. I struggle to find why anyone thinks it insightful vs. demonstrative of the tedious lengths one has to go to obfuscate and engage in these apologetics. The US is only a special case in that it is remarkably unrestrained in how much it allows the rich to harm the poor relative to other first world countries.
Well the starting premise is very different, so yes the results are also dramatically different.
US, for better or worse, is much more individualistic society, without much emotions for plight of other citizens. Sort of buddhistic/hinduistic approach - if you suffer now, you must have done terrible things in your past life to deserve it, and why should I interfere.
This results in tons of wonderful things in economy but messes up quite a bit too and brings some bad incentives where they shouldn't be. You don't want to be below average/median income (and say have some health issues on top of that), the quality of life is significantly worse than similarly-positioned peers in say Western Europe. But everybody looks at the top 0.1%, which fares, at least financially better.
Strange place and setup for me and not in a good way, but maybe our more egalitarian and friendly/helpful approach is too naive and harsher society is more robust. We shall see.
> But everybody looks at the top 0.1%, which fares, at least financially better.
Let's be fair it's at the very least 10% (maybe up to 30-40% if not more) that are doing better financially than they would in Europe under similar circumstances (education, career etc. wise). In certain sectors like tech it's not even close.
e.g. real estate even in SF, NY, San Jose is significantly cheaper than for instance in Munich, Rome, Paris, Milan, London etc. when compared to median income.
Also it's not that obvious to me that Americans are that much less likely to care about 'the plight' of others on an individual level. For instances Americans donate many times more to charity on average than Europeans do (which makes sense if you expect the government to take care of everyone, but let's not equate that with intervening directly...)
> e.g. real estate even in SF, NY, San Jose is significantly cheaper than for instance in Munich, Rome, Paris, Milan, London etc. when compared to median income.
You are just hiding in complexities of real life and reducing it into few trivial numbers that are easy to compare. Count in good education for say 2 kids (500k-1 million per head?) which is free here, count in healthcare costs if you live long enough to start accumulating health problems that are basically unsolvable by today's medicine. Free here.
I don't know the actual numbers, and they are very individual so what you say may be actually true for you, but it certainly isn't true for me for example. Also, personal freedom is higher in Western Europe (debatable, but for me what I define as personal freedom is severely lacking in US). High criminality. Basically police state. Effectively a caste society based on your wealth/income. Your taxes sometimes pay for killing innocent poor people half around the world (true for few european states too, but definitely not mine). And so on. But its nigh impossible to put some simple numbers on those things we generally call quality of life.
> Count in good education for say 2 kids (500k-1 million per head?)
That seems like a very high number. There are very expensive private schools in Europe too if you chose to send your children there.
> healthcare costs
Yes, it depends on your income and insurance. The fact that it's tied to your job is a huge issue if you develop serious health problems and are unable to work. But that "only" applies to a subset of the population and being able to save an extra $30-100k per year might still provide a form of "insurance" and if not you'll end up being significantly richer than your European counterparts when your retire (assuming you're in the top 20% or so).
> Also, personal freedom is higher in Western Europe
> Basically police state
Can you give some examples? I mean the proposed EU wide encryption ban could pretty much turn the EU into East Germany with universal state surveillance (obviously an exaggeration and hopefully it will never pass but the fact that some EU bureaucrats are even considering it and that some states actually support the proposal should be extremely shocking to everyone who cares about "personal freedom" even the tiniest bit).
> Effectively a caste society based on your wealth/income.
Considering how expensive real estate is these days and that a significant proportion (most?) of wealth is inherited I'm not sure that's particularly different in the EU.
> High criminality
Definitely true, although it largely depends on where you live. Some areas are pretty much as safe as anywhere in Europe.
> But its nigh impossible to put some simple numbers on those things we generally call quality of life.
> You are just hiding in complexities
Yes, however you can't expect me to provide you with an in-depth analysis here it's just one example. It largely depends on many factors, however Europe is not some fairyland. Some things are better than in the US, some are just as bad or worse; median income, youth unemployment, unaffordable real estate, wealth inequality etc.).
IMHO the biggest issue Europe is facing is widespread economic stagnation over the last 10-15 year that combined with aging population might mean that "free"* healthcare and other social services might soon become unaffordable (in this context I find the slight superiority complex exhibited by some Europeans slightly baffling)
* it's not really free though. You still pay ~10% in taxes for it and many countries have mostly (or entirely) privatized healthcare systems (even if they are much better regulated than those in the US)
And all European Union countries and Iceland, Liechtenstein, Norway and Switzerland or the United Kingdom offer a European healthcare card when traveling.
https://ec.europa.eu/social/main.jsp?catId=559
- there is a big debate if doctors should serve 24 hours without break (non stop) in hospital.
- doctors may be forced to operate after 24 hours of non stop work. I know for fact anesthesiologist who did so. We have VERY strict regulations for truck drivers to only drive 8 hours per day...
- there are no basic medications in pharmacy, like penicillin or anti fever sirup for kids
- you pay 8% medical income tax (it is called insurance), but there is no chance to find dentist or GP. So you go private an pay it out of pocket
- no chance to sue doctor or hospital for mistreatment. I could tell stories about tampons and tools forgotten inside patient...
- we have highest numbers of doctors per capita in Europe, yet system is very inefficient
- doctors spend about 40% of their time with paperwork
- base salary for doctor (without overtimes) is very low, they would not even qualify for mortgage..
- once I waited 12 hours at emergency room in public hospital (with life threatening condition), at end I gave up, and went to private clinic. I took second job to pay it...
Why is there so much overtime and wait time with so many doctors per capita? In Poland wait times can be significant and overtime is rampant but sill lower than what you said but we have one of the lowest number of doctors and nurses per capita in EU.
This seems obvious, but choosing a poorer EU country when the commenter already left room for exceptions when the said “pretty much” to compare to the US is not an argument in good faith.
Well it's not exactly Massachusetts but it seems to be on par with Florida, Vermont, Michigan, Maine etc. if you look at GDP per capita (relatively). I don't think Czechia is somehow exceptionally poor (of course on the whole the EU is much poorer on average).
> there with a straight face that Czechia is basically like Florida or Michigan
Compared to the median EU country Czechia is basically like Florida or Michigan (e.g. it's GDP per capita is closer to that of the Netherlands the Michigan's is to Massachusetts etc.).
> Go tell someone who’s been there with a straight face that Czechia
The problem is that the EU is significantly poorer on the whole.
> It seems to squarely fall within the provided exception.
I don't agree.
> This is pointless.
I'm really not quite sure what are you trying to say. Economically only Switzerland, Norway and Ireland(*) really have a higher GDP per capita than the US only one of them is even in the EU. Denmark, Netherlands and Sweden (only 39 mil people in total) are not that far off, so are we supposed to ignore all the other countries in the EU because of that?
This GDP argument is useless. Before war Russia had GDP comparable to Italy, it should collapse in a few days after sanctions, and we all know how it went!
You can look at median disposable household income, rent/real estate to income ratio and many other indicator which tell a similar story. GDP per capita is just a proxy.
> Before war Russia had GDP
Well.. Russia had 2.3 times higher population than Italy so it's not particularly surprising. Also it wasn't really that poor compared to most other EE countries (about on par with the Baltic states prior to 2014).
> The US doesn't have one healthcare system, it has 50+
This is a fact that people, non-US but also many US Americans ourselves, have a really hard time in understanding. The vast majority of laws are left to the states. It's just incredibly hard to get national laws, and as a consequence, we have relatively few national laws. For example, there isn't a national standard for murder, there are 50+. Well, there is one if you commit the murder in a post office, but outside the post office, you're in the other 50 definitions.
It's a miracle even the half-baked ACA got passed in this context.
> It's a miracle even the half-baked ACA got passed in this context.
Federal law trumps state law. And, in fact, we do have 3 national healthcare implementations, Medicare, Medicaid, and Vertaren Affairs healthcare.
Socializing healthcare could be done easily under the commerce clause of the constitution, but that doesn't happen because it's not popular among elected officials (it's only popular among the most progressive Democrats, for everyone else it's a no).
ACA was so half baked and all over the board because there was a lot of carve outs to win over centrist Democrats. A much simpler "Medicare for all" could be implemented simply by changing the Medicare statute's enrollment age to 0.
The reason national laws are so hard is the filibuster in the Senate and the fact that Republicans are pretty much universally opposed to expanding government healthcare. It's got nothing to do with there being 50 states.
This is overly-simplified. I’ve worked in healthcare IT, specifically billing and coding. The reforms needed are much, much more than simply setting Medicare’s enrollment age to 0, especially with the thousands of pages of weird exclusions and conditions enshrined into Medicare over the years.
Also this is slightly pedantic, but your examples are NOT national health systems. The closest thing in the U.S. is military medicine, which is (mostly) federally funded with doctors working for and paid by the government.
Not really. The comment I was responding to argued there couldn't be a national healthcare system in the US. I wasn't arguing that those systems are perfect.
> The reforms needed are much, much more than simply setting Medicare’s enrollment age to 0
Agree
> especially with the thousands of pages of weird exclusions and conditions enshrined into Medicare over the years.
I agree to an extent. The thing is, healthcare is messy regardless. I simply could not imagine any healthcare payment system that wasn't fairly complex to code out.
> Also this is slightly pedantic, but your examples are NOT national health systems. The closest thing in the U.S. is military medicine, which is (mostly) federally funded with doctors working for and paid by the government.
Agree, and honestly if I had my way I'd nationalize healthcare top to bottom. Capitalism is a race to the bottom with healthcare. There's no real incentive to produce quality (you have a captured market). That incentive is to raise prices as high as possible and cut staff as lean as possible.
> argued there couldn't be a national healthcare system in the US.
That is an strange and reactionary misconstruction. My whole comment was talking about the misunderstanding of US Federalism. Healthcare was a flippant comment as an example in the closing sentence.
> The reason national laws are so hard is the filibuster in the Senate and the fact that Republicans are pretty much universally opposed to expanding government healthcare. It's got nothing to do with there being 50 states.
That's a very narrow historical view. Look at any landmark laws passed that have significance on an average person's life - ACA, 2008 Bank Bailout, Patriot Act, AWB. They are few and far between compared to other Western democracies.
I probably read too much into your earlier comment, but it seemed like your discussion of state laws meant national ones would be harder to pass.
To the rest of your comment.
Federal laws have been historically a lot easier to pass, the gridlock of DC is (semi) recent history that started around the 90s.
Regan kicked the Republicans down a path of deregulation and privatization of the gov. Bush Srs loss from "no new taxes" started the "never compromise" attitude of Republicans. Newt Gingrich codified that under Clinton. And with Obama we saw basically the end of any sort of major across the isle legislation.
I don't know why you are saying this is a narrow view. From roughly Eisenhower to Regan, major federal laws were fairly common. national highways, NLRB, social security, Medicare, EPA, CCC, OSHA, various federal law enforcement, etc. These all have pretty high impacts on day to day life.
Agree. This is a pretty terrible article. Random "facts" that quote big revenue numbers tell you almost nothing. Vertical integration tells you nothing.
It's a relatively old analysis (2009), but McKinsey did some research that I think highlights some pretty important differences in the US healthcare system that actually points to where the money is going.
If you look at Exhibit 2, page 4, they basically compare US spending, as a percentage of GDP, and breaks down the difference between price and volume. The result are some very interesting facts that run counter to common belief:
- health administration and insurance is a tiny contribution to high costs, accounting for about 5% of excess spending
- spending on pharmaceuticals and "non-durable" (supplies) is pretty small and only contributes to 5% of excess spending
- in-patient care (where the patient stays in the hospital overnight) spending is only 10% higher than the OECD average relative to GDP
- 68% of the higher spending is out-patient care (where the patient doesn't stay in the hospital overnight); price is a factor here, but in reality, Americans get way more out-patient procedures than other countries
From a policy standpoint this is an easy thing to say, however tens of millions of americans get a pretty sweet deal as a result of this. To change it you need to make losers out of them so you can make winners out of others. These games of winners and losers is what makes health policy making very very difficult and resistant to change.
Yes I've had various flavors of ACA insurance for the last 9 years. Family of 4. Most of the time you can get cost reductions via tax credits, unless your income is quite high. However you may live in a state which is hostile to the ACA. I suppose that does matter. In NY, OR, and VT it has been solid for us.
the average American cannot afford a sudden $500 expense. you think they can afford to pay for healthcare? plus the quality of coverage, while better than nothing, may still bankrupt them if they need something major
Note that if you are insured by your employer, you are still likely both paying a significant portion of the cost directly, and what your employer is paying is part of your compensation so that's money you would have in your pocket if your employer weren't insuring you.
It's not necessarily. If you live long enough you die of things like Alzheimer's or diabetes, chronic lived disease, e.g which are incredibly expensive.
Yeah I actually looked up whether preventive is cheaper, and while it may be in some cases not in all. It does sound overall BETTER though because it will result in better health outcomes. but the aging population is obviously a massive drain on medical costs and theres not much we can do
As a fellow author who found themselves in charge of IT and Development at a Healthcare organization. I’d like to read your book. I want to make sure I’m buying the right one and make sure you’re getting the most proceeds.
There is not one silver bullet or even hundred or thousands of bullets that are going to magically re-engineer 1/5 of the US economy. Measuring costs is really hard, measuring outcomes is even that much harder -- maybe more or less impossible in the aggregate.
The heart of the question comes back to what you actually want to fix. I don't know you. A lot of people would just like to pay less for the thing they currently receive which is a nice sentiment but often hard to resolve. A large set of those people are actually upset because they have been led to believe they are paying a lot more than other people for the same thing, which I do not believe to be actually true.
One solution that does seem palatable to a lot of people, not me, but a lot, is "I would like like to appear to pay less for what I receive while the real costs are hidden and subsidized in a way that is much less visible to me". While popular this view is not popular enough to adopt legislation to that effect.
In practical terms detailed policy legislation that makes losers out of a lot of low value transactional middle men would see some very meaningful across the board cost reductions, probably 7-10% (500 billion or more). Top of that list would be intelligent standardization and regulation of transactional medical billing process. This would/could look a little bit like how we regulate banking between financial institutions. Very sexy I know.
I think One "silver bullet" would be to give the patient more skin in the game when selecting treatments and balancing cost/benefit.
The current system is a tragedy of the commons. Costs are opaque and distributed. Patients have insurance and may as well buy the most expensive treatment (everybody else is doing it). There is nobody in the entire health system with incentives to trade 1% less benefit for 99% cost reduction.
In Europe, this is often handled by government purchasing discretion (not price caps as many simplistically believe). If X treatment is too expensive, it simply isnt covered. If generics medication get 99% of the job done, that is what you get.
This might mean replacing employee healthcarecare with employee payments, MORE copays, and more transparent pricing (there has already been some improvement in this area).
If a CT cost is 10x at one hospital, and 1x at the other, the patient needs an incentive to seek out the 1X cost. Similar, if one cancer drug is 10k and the other 100k, with a life extension of X days, the patient is the only one that can really make the call.
The way this should work is that providers have to publish their prices for each service and then insurers publish how much they pay regardless of where you go, which might be something like 90% of the median price, i.e. the equivalent of a 10% copay.
But then the patient can go to whichever provider they want. The one across the street from you charges $3000 more than the one which is a two hour drive away? It's your $3000 and it's your two hours each way.
You might even find a provider that charges less than your insurance pays, and then you could put the balance in your HSA for the next time it isn't.
We keep trying to pretend that some important price negotiation is happening between bureaucracies that has to be preserved, but a CT scan for example is a standard service. If the prices had to be published and put in a database where patients can see them, you don't need anyone to negotiate anything, people would just choose the one with the best price absent some specific reason to do otherwise, which would exert a downward pressure on prices that doesn't currently exist.
> In Europe, this is often handled by government purchasing discretion (not price caps as many simplistically believe). If X treatment is too expensive, it simply isnt covered. If generics medication get 99% of the job done, that is what you get.
The amount of times I’ve proposed this only to be responded with “government death panels” is astounding.
> If a CT cost is 10x at one hospital, and 1x at the other, the patient needs an incentive to seek out the 1X cost.
Healthcare is weird because the demand is inelastic and you aren’t always in a place to price shop. However, I agree with your broader point.
I think that that demand is more elastic than most give it credit for being. There are often many ways to treat an issue, with different costs and efficacy, and the demand for which and how many depends on who's footing the bill.
Similarly, I think most people vastly overestimate how much of Healthcare expenses involves an ambulance ride or emergency room
The trump administration did an executive order that forces hospitals to list all their prices. Imo easily his best move. Now, the current implementation does not work for a myriad of reasons that are mostly "hospitals have good lawyers and don't want to reveal prices" but the law can be fixed. A working implementation would make price shopping easy as someone would build a centralized site and you could have your health care provider put in the treatment needed along with your location and distance willing to travel.
> Top of that list would be intelligent standardization and regulation of transactional medical billing process.
Medical coding being different between every system, seems like the mechanism used to negotiate prices. Is that correct? Would standardizing on the VA medical coding[1] help, or just force the problem onto doctors to change their coding.
Interesting points. The Economist is great (so long as you read it with an eye open for their normal media bias).
Nitpick:
> In almost no other countries do you need a prescription for eyeglasses.
In New Zealand the eye details from your optician are called a prescription. Opticians and eyewear is mostly paid for privately (except people on government benefits and children get theirs paid for by the public). I'm not sure if private insurance offers a glass coverage option.
Mostly, this article is pointing out emergent behaviours of a set of rules. How can we design self-optimising economic systems that are better than capitalism & democracy?
I don't mean this to offer any political commentary one way or another but as someone who has worked at length with Medicare, HHS, CMS, VA, HRSA, and more or less every alphabet soup federal appendage remotely related to healthcare and medicine. No, I do not think any version of "medicare for all" is a remotely plausible solution to any healthcare problem other than getting healthcare lobbyists much larger yachts.
So what are practical solutions for the US? The rest of the developed world has already shown that socialized medicine is the only way. Details like private/public mix or not don’t really matter as long as there’s a guarantee of free-at-service healthcare for everyone.
The main question is how do you actually go about making the change in the US with so many entrenched vested interests in keeping the status quo? How do you get people to agree to effectively fire millions of admin and health insurance actuaries? Seems like an impossible problem, especially given the political state of the country.
You’re mistaken about what the European systems have in common. It’s not being “socialized,” and it’s certainly not “free at service.” France, for example, requires 30% co-insurance, and most people get private insurance to cover that. Obamacare is structurally very similar to the Dutch and Swiss healthcare systems.
What the European systems have in common is price controls. The major difference between the Dutch and Swiss systems and Obamacare is that the Dutch and Swiss systems directly regulate the price of services.
Very useful comment, thanks. I’ll need to read up a Wikipedia article to get the details but the emphasis on price controls is noteworthy.
Besides my lazy and misleading usage of the term “socialized,” I guess the question still stands: how do we change our system to more closely reflect these other systems? Highly discouraging to think about.
We have two or three systems that already work more like this, for the elderly, the poor, and the military. To me it seems the easiest way would be to gradually improve and expand one or all three. This can be done with minimal fear from the general public because you aren't ending the previous system so much as building a better alternative. I don't follow any of this closely, but I know there is a bill to expand coverage for the poor and elderly to include vision and dental. As for price controls, the recent Inflation Reduction Act allows Medicare to negotiate drug prices like European systems.
I read a good book that says the US has many socialized medical systems. Medicare for the old is similar to Canada’s system. VA for veterans is similar to England’s system. Most salaried workers insurance is similar to Germany’s system, except the German insurers are all non-profits. (In the US, the insurers were all non-profits back in the 1970s.)
I started in tech, but went back and got an econ degree. A market for insurance works well for unpredictable things, like broken legs. But it doesn’t work well if some can predict their need, like life-long conditions. So, there is a role for non-market solutions. At that point, you need to address how to keep patients from consuming “too much” healthcare, because they’re not paying the full cost.
Many countries spend less and have longer lives. But it is hard to get the US to implement one of those systems when healthcare companies spend more than $1 million per member of Congress on lobbying and campaign donations.
The US government has to start providing a social health system that is A) cheaper than the alternative, b) better than the alternative.
Then people would stop paying crazy amounts of money for insurance and treatments. Some will continue to do it, but if the Public system becomes good enough, it will make all those private parasites disappear.
In practice most countries are mixed having private and government funded ("socialised") care, including the UK and the US I think - medicare is I think government funded?
The issue in the US seems more that the system has been corrupted by special interests. I guess the fix is maybe more fixing the political system a bit?
The whole term "socialised" is a bit indicative of the politics. You don't call other stuff that is government funded socialised like US's socialised road construction or socialised military?
Every single other developed country has 1) socialized medicine in some form or another, be that the UK-style NHS or German-style mandatory insurance with a public option, 2) better health outcomes than the United States on pretty much every measure and 3) spends less of their income on healthcare, even after taxes are included. I'm not sure what conclusion other than the GPs you can possibly reach.
> socialized medicine in some form or another, be that the UK-style NHS or German-style mandatory insurance with a public option
This is not actually true. Some other countries have private insurance and those countries also have lower costs than the US. The US system is unusually mismanaged/corrupt.
> better health outcomes than the United States on pretty much every measure
This is also not true. The main way universal systems get better numbers on some metrics is that people with no coverage often have extremely poor outcomes, which when averaged in results in poor averages. But the average for people in the US with insurance is better than it is in many systems with universal coverage, which is an important metric because the large majority of people in the US do have insurance and their own outcomes is very much a thing that they care about.
You could bring about a large improvement in average outcomes in the US merely by providing an insurance subsidy for lower income people to increase the number of people with coverage. That wouldn't affect the cost much though -- it might lower it a little if it converts some emergency care to preventative, but only for that small percentage of the population that doesn't currently have insurance. The cost issue would still remain in general.
> spends less of their income on healthcare, even after taxes are included.
This is the legitimate criticism of the US system, but it doesn't tell you what to do about it. For example, Medicare in the US still pays more for equivalent care than many other countries do, so just putting everyone on Medicare without changing anything else wouldn't resolve the high costs in the US. And might even make Medicare look even worse because Medicare is in many ways currently subsidized by the high cost of private insurance.
None of that proves that you can't address the high costs without a socialized system -- but making the necessary reforms isn't easy for the same reason that bringing about your own proposal in the US isn't easy. Either way you'd have to overcome the political influence of all the people profiting from the status quo. Doing that is the hard problem.
> But the average for people in the US with insurance is better than it is in many systems with universal coverage,
No, this is actually untrue. People who pay for insurance want to see a return on investment, so they want to see lots of testing. This is why over-testing, over-diagnosis, and over-treatment are so common in the US, and why the rates of harm from these things is so prevalent in the US.
This thought - that insured Americans do better - often comes from a misunderstanding of things like 5 year survival rates for cancer. Imagine someone who will die, no matter what you do, from a slow growing cancer at the age of 75. In many countries that cancer is detected when the person is 73 or so, and they move onto a palliative pathway. In the US that cancer may be detected when the person is 67, and their insurance is drained and then their life savings are drained and then they're eventually moved onto a palliative pathway.
> The main way universal systems get better numbers on some metrics is that people with no coverage often have extremely poor outcomes, which when averaged in results in poor averages. But the average for people in the US with insurance is better than it is in many systems with universal coverage, which is an important metric because the large majority of people in the US do have insurance and their own outcomes is very much a thing that they care about.
The large majority of people in the US might lose their insurance at any moment with no recourse, thanks to at-will employment. So they should care about the average outcomes including people without insurance.
> You could bring about a large improvement in average outcomes in the US merely by providing an insurance subsidy for lower income people to increase the number of people with coverage.
Either this wouldn't work or something has gone terribly wrong with your system, since this hasn't been done.
> The large majority of people in the US might lose their insurance at any moment with no recourse, thanks to at-will employment. So they should care about the average outcomes including people without insurance.
Employer-provided health insurance is an absurdity which is plausibly responsible for the highest proportion of US healthcare inefficiency of any one factor and should be destroyed with fire.
But it's not because you lose your insurance if you lose your job. In general the people who currently have insurance will continue to have insurance for a variety of overlapping reasons.
And you're still not addressing the issue: Something about the US system causes outcomes to be better for people with insurance than they are in most other countries. And that's while the US system is full of greedy bureaucracies fighting each other and wasting like half the money in the process. What would happen if we extracted the good part of that system and made it more efficient?
> Either this wouldn't work or something has gone terribly wrong with your system, since this hasn't been done.
It costs money. The people it impacts don't have political influence.
The main problem with US government programs can be summed up like this: One party says we would be better off with lower taxes and more money in the pockets of individuals and small businesses, but then they don't actually do this and instead give the money to corporations. The other party says we would be better off with higher taxes to provide services to the needy, but then they don't actually do this and instead give the money to corporations.
Everything makes sense once you understand this. When the US government passes a prescription drug benefit, it's not because they want to help people who can't afford prescription drugs -- the sensible way to do that would be to lower the underlying cost of prescription drugs. The real motive is because they want to increase the amount of money being transferred to drug companies.
> Something about the US system causes outcomes to be better for people with insurance than they are in most other countries.
No it doesn't? Outcomes for lower-middle to lower-upper class people (people with insurance, but without enough money for custom treatment etc.) are normal for an industrialised high-GDP country, not particularly better than comparable countries.
> The question is how to fix it.
As with so many problems in the US, maybe you could try doing what works in other countries?
> Outcomes for lower-middle to lower-upper class people (people with insurance, but without enough money for custom treatment etc.) are normal for an industrialised high-GDP country, not particularly better than comparable countries.
Basically nobody has money for "custom treatment" -- it takes years to do medical research, if not decades, with no guarantee that it will pan out before you die. If you're rich and you get diagnosed with something, you're getting the same drug as anyone else (because nothing better is known to exist), in a comfier room and possibly with marginally faster lab results. And if you did manage to spend a billion dollars to actually cure the thing, everybody else gets the cure too.
The rich people in other countries come to the US to get largely the same treatment as ordinary people in the US with insurance get, and it's not for no reason.
> As with so many problems in the US, maybe you could try doing what works in other countries?
This is a structural problem. The US constitution was drafted with the intent of having a weak federal government and doesn't include the right kinds of checks and balances to thwart corruption when there are large federal programs -- and some of the most important preexisting ones were removed, like requiring federal taxes to be apportioned and having US Senators elected by state legislatures so they would dampen federal overreach.
But it's not clear how to unscrew the pooch. Typically that sort of change happens following some turmoil, but those kinds of events can just as easily make it worse as better. You need to have someone in power who is willing to institute formal limits on their own ability to be corrupt, in a system where those currently in power are corrupt and interested in using their power to maintain that as the status quo.
Also, many other countries have equivalent problems, and some other countries have only solved them in ways that create different but at least equally undesirable problems.
> Basically nobody has money for "custom treatment" -- it takes years to do medical research, if not decades, with no guarantee that it will pan out before you die.
No-one has money for original research, sure, but there's a level that's above "going to the place you would normally be referred to for condition x" where you instead go to the best hospital in the world for condition x, get treated by the world leading expert on condition x, etc.. And that level is not generally covered by regular people's medical insurance in the US, nor by public healthcare systems in other industrialised countries.
> The rich people in other countries come to the US to get largely the same treatment as ordinary people in the US with insurance get, and it's not for no reason.
They do? Are there really more people coming to the US for medical treatment than other wealthy industrialized countries, once you control for size? (Like, I'm sure "the best hospital in the world for condition x" is in the US more often than it's in Switzerland, just as a function of there being more people and hospitals in the US, but I'd be surprised if that's still true once you control for that). And are the institutions they go to really accessible to regular people with in-network rules etc.?
To put another way, the US has more public options (Medicare, Medicaid, VA) than those countries. (Or, say, Australia, which has a public option by default but which really, really, really encourages people to go private.)
Japan has a public option, although employees opt for it at the group rather than the individual level. A given company's employees choose their health insurance provider via their union/representatives, and they always have the option of the baseline national provider. (Non-employees/dependents always have public healthcare via their local government)
WTF are you talking about? The NHS has an amazingly high approval rating for such a large organisation, and is among the most cost-efficient healthcare providers in the world.
Even if we take this unpublished study at face value, there's no evidence that the cause is incompetence - the fact that the US has the lowest level of deaths in hospital despite having a very low life expectancy for industrialised countries should be a red flag for that kind of thinking. It's far more plausible that the US has better figures on that metric because it denies many people - especially the poorest and most vulnerable people - access to medical care, so they die outside of hospital instead.
It's interesting the article doesn't directly describe or explore the actual reported profit margins of the various companies!
I work in the industry and in general you see high margin (50-75%+) in areas like outpatient surgery centers, senior primary care ACO groups (ie providers getting paid by CMS to fully manage Medicare Advantage patients), etc.
PBMs and health plans generally have lower margins (in the 5-15% range), dictated largely by state and federal MLR regulations.
Watch who the large medical insurers are buying and you will get a good feel where there is margin to be had. They can use this to generate cash flow for other activities, drive savings within their insurance book, offer more competitive group pricing to their clients(ie employers, state govts, etc),drive affordability directly to consumers or some combo based on what business goals they need to hit that quarter.
Worth getting a bit specific about terminology here... The article states that _insurance_ profits are capped, but that PBMs and other stages of care are not. That's why they're all vertically integrating - so they can steer margin to the un-regulated entities. Can't help but feel like this is a simple anti-trust issue just like you'd see in other industries. If they were truly separate companies with robust competition, we could see a lot more efficiency and less rent seeking.
It's all a shell game...sure insurance profits are capped, but it doesn't stop executives from taking lavish salaries. I worked for a Blue Cross Blue Shield affiliate in 2006-2007. The CEO was making 2.1 million dollars per year. Think about that.
I worked within the Quest Diagnostics conglomerate, mid 2000s. After capex, lab companies print money.
Some wags added a speedometer type thing to their monitoring dashboard to show "velocity" of revenue. (Actually proved pretty useful as a global system health indicator.)
You don’t want to compare companies by profit margin. (Profit/Revenue) You want to compare them by return on capital. (Profit/Capital) Some businesses have a high turnover of inventory, so revenue is large even if there was very little money invested.
Specifically, pharmacy chain Boots in the UK sells a lot more cosmetics and stuff in the front of the store relative to prescription drugs and they thought they could do the same w/ Walgreens. Except the UK has NHS and price controls whereas the U.S. has “cost disease” where certain sectors (health care) are on an entirely different scale of pricing compared to everything else. There’s that to begin with but after you have paid for your health insurance (directly, in terms of wages you didn’t get, taxes, …) and all your out of pocket expenses, you might not have much money left to buy stuff from the front of the store.
The US also has an absolute abundance of competition for the Walgreens/CVS "front of store" items - almost everything there is available at the grocery store or Walmart, and the things you need "right away" are often found at a closer gas station/convenience store.
Yeah, it feels like the drug store chains have really struggled to find their niche here. Their selection and pricing is closer to a convenience store, but it’s usually slower to get in and out, more like a grocery.
This is a bizarre comment and suggests you've never been to a CVS or Walgreens in the US. Prescription drugs are a small part of their overall sales. Most of the pharmacies in the US are more akin to small department stores - they sell not only healthcare items but hell, food, small appliances, etc.
The other thing interesting here, people rarely comparison shop pharmacies on price in the USA. If the insurance decides not to cover something people just assume the cash price is reasonable and what they need to pay. PS: if you are price sensitive, Costco and Walmart are better options than CVS/Walgreens.
In the US people gripe about prescription costs but the hospitals are the real villains. Especially if you look at what an uninsured patient would pay.
I recently had a planned, non-emergency outpatient procedure that did not involve any incisions, nor medications, lasted about 2-3 hours. Hospital billed $100K, insurance negotiated to about $20K. The actual doctor only got $2-3K.
Makes me wonder why doctors don’t build their own hospitals…
> Hospital billed $100K, insurance negotiated to about $20K
But those numbers have no relation to reality. The amount you would pay as a private individual would be something else again.
> The actual doctor only got $2-3K
Could the doctor do the procedure on the street with their bare hands? That $2k also gets taxed and pays for education (it isn't disposable). I think you are hinting that you think the worker should get much more of the profit - but I'm unsure what economic theory that is called.
> But those numbers have no relation to reality. The amount you would pay as a private individual would be something else again.
Exactly. The worst horror stories I've heard aren't of uninsured billing—self-pay individuals typically get a steep discount from what I've seen—it's the out-of-network hospital bills (especially pre-No Surprises Act) that consistently screw people over.
In those cases the hospital would bill the insane number they officially ask for from insurance companies, the insurance company says "nope" and pays the portion they consider fair, and then the patient is (or at any rate used to be) on the hook for the remainder. If they were billing as uninsured the hospital wouldn't have come up with the insane number they started with, but now that's on record and that's the number they want.
> The average salary for a Therapist is $31.40 per hour in United States
And yet my insurance is billed at $1,000/hr. They knock this down (thankfully!) to $20/h, and merrily claim to have saved me 98% of the bill! Wow! And yet … I'm paying 64% of the therapist's salary.
If I were uninsured, Google says that I would most assuredly pay nowhere near $1k/hr. I.e., the "98% saved" bit is hot, steaming bull.
Doctors used to work mostly out of their own individual or small group practices. The regulatory and administrative burdens of doing this has forced most of them into working for large corporate health organizations.
Yup, the regulatory and payment/insurance burden is extreme and basically requires outsourcing. That's why solo or private practices are dying to the extent they aren't already dead.
> Hospital billed $100K, insurance negotiated to about $20K. The actual doctor only got $2-3K.
You’re interpreting this wrong. For a hospital to be in-network, it has to have a contract in place with the insurance company that sets its reimbursement rates.
What’s closer to what’s happening in your example is that the hospital knows that the insurer will only reimburse 20% of the “cost” of the service, so it inflated the nominal cost fivefold to ensure the actual cost of the service is covered by the insurer.
Of course that creates an awkward situation when the insurance turns out not to cover it and a private individual gets hit with the nominal cost.
But to anyone who doesn’t think to question it, it’s great for the insurance company. It looks like they stood up to some asshole hospital, they’re giving you an amazing deal, and that healthcare would be impossibly expensive without them.
Not that everyone else is jacking up their posted prices for the purpose of negotiating with the insurance companies.
> Chargemaster rates serve as baselines when negotiating the rates at which these payers will reimburse hospitals, which is why they're often much higher than actual costs. A Health Affairs study found that in 2013, the typical hospital with 50 or more beds marked up the costs contained in its chargemaster more than fourfold. Some services such as CT scans have charge-to-cost ratios of almost 30, while others like routine inpatient procedures are much lower at only 1.8.
> Insured patients do not normally pay chargemaster rates, since their payer reimburses at the negotiated rate and passes on any co-pays and below-deductible responsibilities.
You don't know why doctors don't build their own hospitals, yet feel you are knowledgeable enough to identify "hospitals" as the real villains of the whole system?
You shouldn't see a Cloudflare captcha at all, if you do then you're probably using Cloudflare as your DNS.
The guy who maintains archive.today and friends has beef with Cloudflare for leaving off certain location information from their DNS requests, so he redirects all traffic coming from their DNS servers right back to Cloudflare.
when hitting a captcha loop, temporarily deactivate any adblockers, including especially VPN-based ones such as blokada and pihole, and solve the captcha one more time.
As a contract medical device manufacturer I was incentivized to charge more. A device which costs $1 to make can only reasonably be marked up so much before it's a red flag. A $100 product can more easily be marked up to $300. So all kinds of little extra features are added when the $1 product got you 99% of the functionality. So many people are on the take there is no end in sight. The doctor sees the admins make more, the admins see the insurers make more, the product distributers, the device manufacturers... so everyone keeps asking for more.
The patient will pick the $300 device over the $1 device every time, because their copay is the same either way. However, it means insurance premiums go up next year.
The doctor, hostpital, insurance, and manufacturer all get paid more the higher the price.
There is literally nobody in the system who wants to choose the cheaper but 99% as good product.
If the American health system were a piece of software in an industrial use, no one would ever attempt to update it. Too many foundational problems are structural and have ensured that patient outcomes are disincentivized.
We would build entirely new system, and then migrate people over to that slowly
- there are companies dedicated to detecting “missing” treatment codes based on a patients chart
- companies dedicated to detecting hospitals gouging insurance companies, and deciding which instances to push back on and which to just ignore
- a whole slew of companies that essentially make awful old tooling “online enabled” by just syncing troubling amounts of data to salesforce
The companies making tons of money live in the margins and you’ll never see them. They can make one tiny thing more efficient and the hospitals are so poorly managed they’ll just add more contractor to the mix and pass the cost on.
There are no rules for hospital management and administrative reporting etc. it’s all a giant shit show
Compare the stock prices. Insurers seme to have done the best, followed by drug companies. Hospitals by comparison have done worse. Insurers have the power to raise premiums to always make a profit , but hospitals are obligated to treat unprofitable patients.
Not entirely accurate. Public for profit hospitals have done poorly. “Not for profit” hospital conglomerates have done very very well. it’s just that they’re competing with businesses that don’t pay taxes on profit and pay less taxes on property among other incentives. privately owned hospitals are a mixed bag.
The hospitals required to treat charity patients (to maintain not for profit status) as you say are actually doing the best. Hospitals get most their profits/surplus from surgery.
The article points out that the ACA caps insurer profits at 15%.
A 15% profit doesn’t begin to explain the double cost of American healthcare. The article postulates it’s all the middlemen, which, incidentally, the insurers are acquiring in search of higher profits.
I’m actually not clear that the ACA isn’t tougher than that. The ACA introduced a 85% medical loss ratio. I thought that required them to spend 85% of premiums on payouts. That limits profits to an obvious maximum of 15%, but there are other expenses (advertising and so on) that also cut into that 15%. In practice, maximum profit will be lower than 15%.
That said, I haven’t gone into this in tremendous depth, so I’m kinda hoping someone can confirm or deny my understanding.
Vertical integration helps reduce the double margin problem. Instead of each middleman needing their own profit margin, a vertically integrated company can earn e.g. 5% on the entire operation. Of course this assumes the new market power is not abused to increase prices more than they would have increased without the vertical integration, or results in damaged choice and quality.
Something like Kaiser is closer to the solution if we don’t have a government led rationalization.
Insurance company can't make more than 15% profit... OK, easy solution... just buy the hospitals.
Now you can set the prices... if a service costs you $1,000, you can advertise things cost $10,000, but only have the parent company pay some small fraction of that... and leave others to pay $7,500 out of pocket (or other insurance carriers out of network). There are all these shady deals that aren't transparent to the end user.
I think the only solution is socialized medicine.
And just remember, we'd have that today if it wasn't for Joe Lieberman. He torched the public option, then didn't even run for re-election after. This guy could have prevented so much suffering in America today. He knew it, he just wanted to side with the insurance companies in 2009.
Another perspective, my partner is a physician. She makes a pretty healthy wage, but that wage goes into paying off her $500k of student loans that got her there.
Since moving to America from the UK, 8 years ago, I am completely baffled by the whole system. You could blame capitalism but the reality is that it seems to be where the government intervenes that causes the problem, every time they try to do something they cause unintended incentives and break more of the system.
The government needs to take charge of insurance like we have in the UK, at the very least they need to stop doing stupid things that break the system.
Nothing is worse in my opinion than some sort of half capitalist, half arsed regulation, it’s the worst of all the worlds, it’s not free markets and it’s not socialist, it’s Frankenstein.
This is very true. I worked in healthcare and the US system is a bizarre mix of government regulations and half-measures that actually make the system worse.
A great example is the 340B law. It forces drug makers to give hospitals that have a high proportion of indigents (low income patients) massive discounts.
So what happened? Hospitals saw a cash cow and bought up a ton of small oncology clinics and brought them in house. The cost of providing oncology care in a hospital system is more expensive.
Basically the law did nothing for passing savings to patients and actualy drove up healthcare costs.
> The government needs to take charge of insurance like we have in the UK
Let's compare outcomes. Do you personally think the healthcare received by the average UK citizen is better than the US? It is easy to whinge about the problems. It is hard to find solutions. For all the glaring deficits of the US systems - maybe it works okay? Democracy is the worst system...
I'm in NZ. The public healthcare system has its benefits but it definitely has its costs (I've recently been dealing with expensive private healthcare providers in a situation where the public system wasn't achieving the outcomes we needed).
The US also has a huge uninsured population and a 50% higher obesity rate. Life expectancy tells us nothing about healthcare quality without correcting for confounders.
What are the top five factors for life expectancy?
How active you are?
Dietary choices?
Your childhood?
Bad life choices? Drugs, fast cars, unsafe activities?
Work environment? Shift work, lung exposure to harms?
What percentage of life expectancy is due to good healthcare?
Noticably we can get some extra years at the end, but they can be low quality years.
High quality years come from your context and life choices outside of doctoring.
> Let's compare outcomes. Do you personally think the healthcare received by the average UK citizen is better than the US? It is easy to whinge about the problems. It is hard to find solutions. For all the glaring deficits of the US systems - maybe it works okay? Democracy is the worst system...
Our life expectancy is falling (and is worse than the UK), people are afraid to go to the hospital because of bankruptcy and we pay far more than other nations on healthcare. In all aspects of outcome our healthcare system costs more for less. The only exception is if you're extremely wealthy, and the gap between wealthy and not has widened. I, as a fairly well-off software engineer could be bankrupted by healthcare costs if a hospital decides I'm out of network during an emergency.
> Do you personally think the healthcare received by the average UK citizen is better than the US?
Objectively it is. Average US healthcare outcomes are towards the bottom end of industrialized countries, comparable to Czechia or Turkey. And they pay a hell of a lot more for it. US outcomes for "I can pay as much as it takes" wealthy people are very good - but they're very good in the UK too (private medicine does exist in the UK, it's just not very popular because why waste money on something you can get for free?).
I've taken to calling it Americanism. That wraps up so many of the weird cultural issues, because it's not capitalism to have basically no monopoly abuse protection, regulated-but-not-markets, and exclusivity and non-compete agreements. It's closer to anarchy or fedualism, with a veneer of "let's not devolve into mad max" on top.
It's definitely not closer to anarchy. Feudalism is much closer. The problem is the regulations we have are the ones that prevent competition rather than preserve it, and then people want to call it capitalism but capitalism without competition is shit.
And then people don't want to pay attention to the details and pretend that the solution is some generic political ideal like "more regulation" or "less regulation" when in fact what you need is to remove the regulations that inhibit competition and preserve or bolster the ones that protect it.
Then we do the exact opposite and continue to pile on regulations that impair competition, the effects of which corporations use to justify removing ones that preserve it, the consequences of which are used by regulators to keep piling on the ones that destroy competition.
They're not all the same. It's not about "regulation" or "deregulation" -- it's about promoting competition instead of destroying it. You need to keep costs low on small businesses while inhibiting corporation consolidation.
There are a few industries where the purpose of the painfully inflated costs seems to be internally (to the managers of the US economy) justified by nothing more than "creating money", i.e., paying lots of people the wages they need to move money back and forth in the economy for the purposes of increasing GDP. Those people have jobs which allow them to participate in consumption, which makes US industry look good because they have revenue they can report as earnings.
It's real money because of the sovereign fiat nature of the US dollar, but it's not necessarily value. This is ultimately artificial inflation and the subject of Graeber's critique of the modern economic system in his essay Bullshit Jobs.
>Who profits most from America’s baffling health-care system?
>Hint: it isn’t big pharma
When the Economist - the neoliberal paper of record writes an article downplaying the profitability of a particular industry I have to say I get a little suspicious.
And I discovered that the Journal of American Medical Association apparently doesn't agree that Pharma makes mediocre profits:
While the pharmaceutical industry is grotesque in charging the captive audience of sick people as much as possible, it is a fact that drugs are not the majority of healthcare spending.
On the normative question of blaming groups, it’s like that imposter Spider-Man meme of each person pointing at the other. Hospitals charge 10x the actual market price and health insurance boasts on your explanation of benefits that they got you a 90% discount. Americans demand cutting edge maximum intervention perfectly safe treatment with no formal government rationing, or HMO rationing.
Health care is a for profit sector. Fees are paid by third parties (so patients are not directly exposed to routine costs). There is heavy quality regulation. Providers are incentivized to treat more through fee for service so the sicker you get and the more procedures they perform the more revenue they earn (perverse incentive). There is no counterweight to negotiate prices down. The end result is 7% medical inflation per year.
Hospitals make the lions share of the profits. Non-corporate hospital owners are famously poor managers and tend to spend the money not wisely until they go bankrupt, then a corporate system buys the hospital, restructures, and takes all the profit. See HCA, Tenet, Partners, Mayo, Stanford, Anthem, etc. Fun fact, HCA was cofounded by Bill Frist's father. Bill Frist became a cardiac surgeon, then a US senator for Tennessee. At one point he built another healtchare system and sold it to Anthem.
You'd think the medical schools might remain independent under their universities, but that often turns out to not be the case as well. Turns out asking for handouts from the endowment looks a lot like bankruptcy, and the rest of the university takes a dim view of it, especially considering how home addresses of their physician colleagues (hint: very large houses in the best neighborhoods). See Tulane, Georgetown, etc. The state school systems, like the UCs, tend to do better, or are at least shielded by the state budget.
If you point to Mayo, Stanford, and Partners as exceptions, I'd say they're the exceptions that prove the rule. Mayo has always been a self-sustaining business. Stanford and Partners have ready consultation with the strongest business schools in the US, if not the world, and the endowments to match.
Yeah i'm on Wegovy and the price in EU is less than 1/3 the American price. Same company sells it. They just figured that people in the U.S. are used to pay way more. It has nothing to do with insurance inflating price - it's not covered by insurance for almost anyone in either place.
Seriously what's wrong with the U.S.
Here in Europe, heating bills can bankrupt people and they have to overpay for rent because gas is so expensive they can't rent further from their jobs - their commute radius is frequently limited with gas costs that are insane - resulting in needlessly dense cities. A separate house is a thing for upper class. All of it sucks, but... no one gets bankrupted by healthcare costs here. This is simply unheard of. And health insurance costs an invisibly small amount. I guess it removes a great deal of worry for health-concerned people.
I’m actually exploring legality of shipping meds from EU to us directly to patients.
There is a compounded med that isn’t covered by insurance and I wonder if I could find a pharmacy in my homeland(Poland) to compound and ship it directly to patients. I have found some places that apparently do it but the sites are bad and don’t seem legit.
It’s illegal, just like the states that first legalized marijuana were. The federal government lays off, seizing a random few shipments. When your drug is on patent, it’s the way to go. Companies like Allergan set up identical process factories in Europe. They purposely don’t fill in the last set of paperwork that would legalize the factory output for export into the U.S. That’s the flimsy mechanism that lets Customs do some window-dressing regulation. Had a problem once, during the Trump Admin. Customs seized a box. I got a nasty, semi-form letter from them. My prescription was replaced at no cost by my mail order provider. They said, “It’s random. Don’t worry about it.” Cost of doing business.
Yes, but i live in EU and any prescription issued in EU is valid throughout it, even if the particular drug is not marketed in a country where issued (a doctor always has a right to issue a prescription, because drug approvals are always EU-wide).
> their commute radius is frequently limited with gas costs that are insane
where in the eu are you talking about? every time i visit/talk to friends there it seems to be the opposite because public transit is ubiquitous and you can get a train out to all sorts of small towns and villages.
Where in Europe are you? Even with our screwy property market, in the UK detached houses are hardly for the upper class only. Maybe in London, or somewhere like Cambridge.
That analysis is horrible. Like failing statistics 101 horrible.
It completely ignores survivorship bias. You can't just look at the profit margin of the biggest public companies. You're basically just selecting for the winners. And the entire business model of biotech is 90% are losers and of the 10% that win, they win big to make up for all the losers.
You'd need to do an analysis that looks at profitability of the entire industry. Look at all the VC backed biotechs that get $500M in funding then go belly up. Look up the multiple acquisitions in the past decade that were just written off.
I can't read the article because of the paywall, but the headline and subtitle that you quote don't attempt to quantify Big Pharma's profits, much less call them mediocre, they're very specifically asking "who profits most?" There can be (and most likely are) dozens of players who all profit enormously from our ridiculous system, but there can only be one who profits most.
Yeah, the key point the article is making is this:
> Over the past decade these firms have quietly increased their presence in America’s vast health-care industry (see chart ). They do not make drugs and have not, until recently, treated patients. They are the intermediaries—insurers, chemists, drug distributors and pharmacy-benefit managers (PBMs)—sitting between patients and their treatments. In 2022 the combined revenue of the nine biggest middlemen—call them big health—equated to nearly 45% of America’s health-care bill, up from 25% in 2013.
Their answer to the question "who profits most?" is this category of company. That's still compatible with the fact that the manufacturers of the pharmaceuticals have extremely high profit margins.
The article says Big Health, which is defines as the middle-men between providers and consumers (such as perscription benefit management system), takes the biggest slice of the cake.
I don’t know why you were downvoted, this seems like an obvious connection to call out.
A bit related but separate, one of the most compelling arguments that anti-vax has is that vax mandates translate to a built in mandatory market for manufacturers. You don’t have to agree with these but it’s an obvious factor in a follow the money type of way
Just like how mandatory sewers helps big pipe, plumbers, the utility company, and harms septic tank makers. Compulsory schooling puts scribes out of work!
My post did not ascribe a value judgement to the side, merely surfaced a factor. Do you think financial incentives don’t matter? Do you go through your entire life that way or is this the only topic where financial incentives don’t matter?
I am playing devil’s advocate. Incentives definitely matter. I am tired of anti-vaccine scams being peddled. A few years ago I noticed a sign of regulatory capture in Scott Gottlieb, Pfizer board member, who went to the media often about the Covid vaccine. He was previously FDA commissioner.
I once read of a school board member who held Pfizer shares and recused themselves from a vote on whether to nor to require it to attend class.
They were downvoted because they're addressing what they imagine the article was about, not its actual contents.
The article barely mentions Big Pharma except in this blurb at the top. It's not an attempt to downplay Pharma profits, it's an attempt to draw attention to lesser-known players with even larger profits.
Fundamentally, lawyers. As America's ruling class needs multiple massive cash piles to drain. All types of insurance directly or indirectly providing them.
Next, the insurance companies.
Last, the medical system owners (various) to include Big Pharma but also the other niches.
The better but related question is why it is such a shit show. The answer has always been that insurance was introduced into it. If medical treatment had been kept tied to market forces, then what people could generally afford would have continued to set pricing. As well as kept pathological industry motivations (harm) in check.
One of the baffling things to me is lack of price transparency and incentives for consumers to make value based choices.
Example: I just got some medication I take daily forever. Insurance will only allow it to be distributed at 90 days (qty 90) and my co-pay is $30, so 4 trips to Walgreens and $120. I just got them to fill the entire 360 pills using a GoodRx coupon and paid $53. It took a but of convincing the front clerk I knew what I was doing, he couldn't add it up
in his brain how it was cheeper not to go through insurance.
Now imagine managing your health was like running your car. Everytime you went to the gas station you would pay a fixed amount through insurance, but you're only allowed to gas up once every two weeks. Need car repair? I agine your mechanic calling your car insurance to try to get the work approved -- you need a brake job, and instead of costing $500 it will cost $5000, but since the mechanic is in-network they have pre-negotiated the rate to $600 and you pay that amount until you hit your annual deductible of $5000 for the year.
The system is built for manipulation, anti-competitive practices and fraud. Think about it. Who wins? Everyone except the consumer, who has been convinced its the only way to transact is through insurance, and if it were just bigger and more centralized it would certainly be more efficient so lets get a single-payer system! That will be the final nail in the coffin of our world-class healthcare in the US. There will be no more specialization, as the system will incentivize (if not demand) commoditization of skills and services.
This is one of those things that sounds really great - and would be helpful - but not have the significant impact that it might initially seem outside of prescription medication.
The reality is that price transparency already is federally mandated and you can get a list of every contracted rate for every procedure any doctor that is credentialed with your health plan will perform. They’re all available on every national payer’s directory in a machine readable format and updated every month. Startups have formed around making this data available to consumers. This has been the case for a while (well, the number of procedures was limited before, but the concept still existed). It made headlines years ago.
The problem is three-fold (there are multiple but these tend to be the most problematic):
1) It’s almost impossible to know, for any non-trivial visit, the actual procedures that will be performed. This makes price shopping almost impossible to begin with. Not only is it difficult to understand up front, it can (and does, with regularity) change halfway through the procedure - sometimes even after the fact if the procedure was improperly coded. To some extent this is just a result of an overly bloated and complicated billing machine, but it’s a real issue today.
2) Healthcare consumers at their most vulnerable (and, typically, most expensive) are not in a mental space to be price shopping for care. Savvy individuals might comparison shop before an orthopedic surgery, but nobody who just suffered cardiac arrest or was diagnosed with cancer will spend weeks finding the affordable doctor.
3) Healthcare is an intensely personal and emotional interaction. People don’t want to price shop for care even if they can and are in the headspace for it. You don’t want the budget doctor performing the bypass surgery, you want the good one if that’s an option for you.
This can and likely will change in the future. But today the system is broken much beyond price transparency.
> The reality is that price transparency already is federally mandated and you can get a list of every contracted rate for every procedure any doctor that is credentialed with your health plan will perform.
First, this just isn't true. Some providers are choosing to pay fines instead of releasing their prices. More importantly though, there's no standardization of codes, so you can't actually compare the prices.
These rates are mandated of payers, not providers (outside of hospitals), and essentially every national plan has published rates online for all providers they contract with. They are not the cash pay rates, because that is not how most patients consume healthcare.
Second, there is a standardization of codes for the most common procedures one would shop for, which is CPT. There are HCPS, DRG, and other codes as well - but they’re much less common among the types of care one would reasonably shop for in advance. A crosswalk between code sets is also possible for many procedures.
There is certainly not a standardization of the use of codes in all cases, which I alluded to in my message. It’s extremely challenging to know what codes you will receive. And placing provider malice aside, often times providers themselves do not even know what it will be before going in.
To this end, bundled episodes have become increasingly common for certain types of procedures. But it’s far from exhaustive and there’s much room to go.
In any case, the goal was never for this data to be directly used by patients. It was to expose the data, and make it available for third parties. Most of those efforts have fallen flat not for lack of data, but lack of a patients ability to reasonably engage with it for the reasons mentioned above.
Regulations limit profit. Profits are limited to cost + profit (as a percentage). The workaround is to make the cost so high that profits are also high. Charge $1400 for a band-aid, insurance negotiated discount of some arbitrary number (say, $1200), on the hook for $200 deductible. It is a nexus between all the players in the industry to keep costs high.
Same thing plays out with utilities, they are given a monopoly with guaranteed percentage of profit. They are incentivized to spend a lot of money. If these regulations were lifted, utilities would incentivize demand shifting instead of building more and more natural gas peaker plants. Warren Buffet owns many utilities, he invests in things that are monopolies, guaranteed to extract rents forever.
I was hoping the article would explain where the 2x cost of US healthcare comes from compared to other developed countries, but I don’t think it provided the answer. Would be nice to see the breakdown of costs per patient between all major parties: physicians, hospitals, insurance, drug makers, pharmacies, etc - in the US vs Canada vs UK vs etc.
What's really frustrating to me about this article --- someone tell me if I'm wrong and just missed what I'm looking for --- is that there's no simple chart of the dollars allocated to each of these major health care middlemen versus total health care spending. So the article firmly establishes that the market for PBMs is consolidated down to a couple huge firms. Good note! But how much do PBMs matter? Why aren't they showing me that on a graph?
Insurance > Big Pharma > Healthcare Providers > Medical Devices > Physicians > Everything else.
Saved you a read. I hope Amazon and CostPlusDrugs can disrupt. I also would love to see regulation come to insurance especially with all the horror stories of denied claims/disability/etc even with support from a team of medical professionals.
It's a classic market failure. But attacking cost is not the way forward. Improving quality is the way forward. There is a level of quality at which 17% GDP would be a bargain.
Edit: To be clear, the 17% is more a system footprint than a cost. The number we want is GDP delta with one system versus some other system, irrespective of system size.
Stop paying any bill under $1k, hospitals and healthcare networks have stopped sending these low level bills to collections. Source: I do it all the time.
yeah i pay 500/month for a shitty bronze plan ... your premiums aren't going up because of me, its because of the tens of millions of people paying zero per month.
I've made a few forays into trying to figure this out, and the best I've come up with is, "everyone involved is taking quite a bit more than they ought to, at every layer and level, which adds up to a lot of money".
Yeah. The hardest number I've seen is that if we reduced the spend on health care in the US just to the OECD average, it would reduce overall revenue in the sector by $1 Trillion every year. That's a lot of peoples salaries and livelihoods wiped out and they will fight tooth and nail to protect it.
This is why we should not accept any health care reform proposal that any of the American Medical Association, the Pharmaceutical Research and Manufacturers of America, or the American Hospital Association are generally supportive of. Whatever we try, they should be vehemently against, just like they were with Medicare.
> we should not accept any health care reform proposal that any of the American Medical Association, the Pharmaceutical Research and Manufacturers of America, or the American Hospital Association are generally supportive of.
That seems like a lot of people to piss off to get any reform done.
Wouldn't an actual smart negotiator play off one against the other, and make the doctors support the initiative at the expense of the pharma industry, or vice versa?
Coal miners, car companies, and sears catalog were not consulted when their industry was disrupted. No one is entitled to a gravy train, especially when your entire industry is cartelized.
Middle men jobs, no matter how good, need to be on the chopping block if all they do is be extractive pests. They can't both be protected from the pressures of the free market, and not have any accountability from an improved service standpoint.
As for the actual workers, Doctors can charge what they like, but they shouldn't be able to limit the supply of doctors within the nation. That is NIMBY mentality.
Those companies weren't disrupted by a democratic government for which all of their employees have a vote.
The government acts at the behest of the governed so they need to get support from at least some of those groups because a lot of families rely on someone working in one of them.
That's absolutely true, but the direction in which public policy fails the will of the govern is predictable. Reforma that hurt a few people a lot, and help most people a little, tend to fail in politics. Things like tobacco legislation are minor miracles in a long line of lobbyists winning. So the way in which the US government will keep failing to match the will of the governed here is, if anything, towards the insiders that are ruined by anything resembling health care efficiency.
I suspect that the disruption will come outside of the regulatory realm: As prices go high enough it's cheaper to get the same treatment in Mexico, or have an AI be your primary care provider, the US system will fall. It will not be this year, and probably not this decade, but eventually such level of waste crashes big.
The US government is arranged to ensure that, the Senate and Electoral College both give significant electoral weight to rural areas in the Midwest. Reading the writing from the time that's intentional and by design.
Perhaps, but this is also a great example of tyranny of a (demonstrably corrupt) minority. It’s fundamentally anti-Democratic to say “everyone has to suffer worse health outcomes and pay more money because this small group of people has established a quite profitable scam and pays politicians to keep it that way.” This is why most developed democracies don’t allow this to happen. That being said screwing over the majority people to benefit a corrupt, self-serving minority, is about as close a definition of American “democracy” as I can think of, so I expect little of this to change.
The government has been directly interfering with this industry since the ACA (“Obamacare”) was enacted; forcing everyone to purchase health insurance.
The government has been interfering in the industry since at least the imposition of wage controls during World War 2 that drove employers to offer non-cash benefits to attract and retain employees.
Before as well, of course. But prior to the ACA there was no requirement for every individual filing taxes to show they had coverage, or most businesses (even relatively small ones) to offer benefits packages.
It also changed small medical practices because suddenly everyone wanted to use this insurance they were paying for. No longer could it just be a doctor and maybe a couple of medical staff; they needed medical coders, specialized software, and so forth. Some decided to join large hospital networks (for worse, from what I have generally heard).
And this cascaded into multiple sub-industries developing around this revenue stream and the medical system. Everyone trying to sell something and grab their piece of the pie.
It was not great before, but you could go see a doctor and literally pay a small amount of cash for an appointment. Many won’t even accept anyone without insurance now.
Edit: as mburns@ pointed out, the IRS no longer asks individuals about their health insurance status since 2019.
I feel like "piss off a lot of people" is a general prerequisite to any substantial reform on any topic. Almost anything that requires reform is going to be at the point where it is being abused and (inordinately) capitalized on.
There's always winners and losers with any type of change. Look at COVID. Some companies thrived and had their best years ever and others went bankrupt and closed down.
A lot of negotiators talk about win-win agreements which may be true with just two parties. I think once you get beyond that, no true win-win agreement is possible and some people are going to lose out. Trying to appease every single interest group is what leads to a lack of progress.
> make the doctors support the initiative at the expense of the pharma industry
(Full disclosure: family member works for Big Pharma)
You might not get them to admit it out loud, but Big Pharma sees the USA as the cash cow that funds R&D for everyone on the planet. If a potential product can't or won't ever make it to market in the USA, or if there aren't enough potential patients in the USA to be prescribed said product, then it might never get off the drawing board.
Yes, a lot of people don't understand the sheer amount of labor and time that is required to bring a new drug to market. (Edit: Or the number of things that are tried but don't pan out for one reason or another. The success rate is very low.) I myself have only the vaguest understanding. Someone has to pay for it all.
We need India to get rich ASAP, so Indians can start paying for it. :-)
Surprise, surprise but a huge chunk (maybe even the majority of?) of drug research is conducted by academic institutions using government funded grants. Then the drug companies come swoop up the research, refine it, mass produce, and market. They shouldn't be able to get such a free ride from all this government funded research imo. The taxpayers already funded the research so why are they getting the short end of the stick?
Research is the least labour- and time-intensive part of the system.
Trials are punishingly expensive.
Edit: protocol development. Drug interactions. Poisonings, Doctor education -- er, marketing. Incorporation into manuals. There's a lot that happens after the research talent has strutted its stuff.
Edit edit: oh, yeah developing manufacturing and logistics as well. The 'D' part of "R & D" is usually over 95% of the total for a reason.
The challenge is that Pharma companies still spend huge sums on marketing, both to patients and to doctors. While I could probably be convinced that there's some role for spend on physician education about new drugs or spreading awareness, it should be a small fraction of the spend on R&D and manufacturing.
Frankly this system is already deep into market failure in the US and should be reformed anyway. We are not getting important drugs approved here because they can’t make it through approval despite track records of safe and efficacious use in hundreds of millions of people. That’s an intense life-wasting market failure.
I think most of the issues in the US are due to a sizeable amount of people are systematically ripping the rest off.
Healthcare? Doctors, hospitals, insurance, etc all are taking a bigger cut than they should. You'll get a ton of pissed people if you want to solve it.
Housing? Nimbys are just regular homeowners that block housing to implicitly (or explicitly) protect their property value. Solving that gets a ton of homeowners pissed.
Universities? Tons of university admins and loan programs that benefit from restricting tertiary education supply. Fixing is pissing lots of people.
So much of our economy is captured by large cohorts of people that are not explicitly conspiring to do so, but their incentives moves them to behave like that.
Hm. That’s a good point. Provide government care and it pays more than private insurance (which it should if economies of scale are employed). That would basically gut the private industry entirely.
> That's a lot of peoples salaries and livelihoods wiped out and they will fight tooth and nail to protect it.
Why? We're currently undergoing a major shift in labor wrt to automation, AI which will absolutely destroy entire sectors. Not a lot of people give a shit, it's considered good for the bottom line and for profitability. But when it comes to healthcare, the narrative is that we suddenly care about labor? People applauded the tech layoffs but the parasitic private insurance overhead is just too important? Disgusting
> AI which will absolutely destroy entire sectors. Not a lot of people give a shit,
A lot of people __do__ give a shit and this is a very common conversation among blue collar workers. I've heard about it every Christmas for the past 5 years from people who don't know how to google. Mass shifting in jobs has always been a big conversation but there's just a big divide between the working class where people aren't talking together as much.
We have coal miners complaining about "big solar" taking their jobs. We have the whole "just teach to code" fiasco. We have a lot of discussions about Amazon. And I can keep going. If you think this is a "suddenly care" type of thing then you're likely in a bubble or not paying attention (a different bubble).
What is the "the whole "just teach to code" fiasco"? I'm familiar with the idea of widespread coding education, but the fiasco part is news to me. Is it something interesting, or just another face on the same story of struggling/failing public schools?
Basically a bunch of journalists told laid off coal miners that they should just learn to code, which some people saw as callous. Then in 2019 Buzzfeed and Huffpo and a few other places laid off a bunch of journalists. People started tweeting "learn to code" at them and they weren't happy about it.
It is a bit callous to be fair. Job retraining is costly and the way it was said more comes off as blaming the person for not knowing any better (people who've been working in that field for decades and started before the 90's). Predictions that people could not have reasonably made given the information they had at the time even if obvious in hindsight. There's also plenty of historical examples where rapid industry shifts result in a lot of people being out of jobs and entering poverty even if the total economy turns out better or smooths out in the long run. Temporally local events still matter and you can't just point to long historical trends to say the people suffering now aren't a problem.
Plus, we all know code bootcamps don't make great programmers. And if we're being extra honest, LLMs have a good chance of replacing low quality coders, so now in hindsight the advice comes off as even more pejorative and low quality. Hindsight is always 20/20.
AI will hit medicine pretty hard, it seems to me. Everything about medicine that isn't research is mostly identifying symptoms and applying the correct "standard of care" which an AI should be very very good at.
We haven’t gotten rid of pharmacies and that’s the easiest part of medicine to We haven’t gotten rid of pharmacies and that’s the easiest part of medicine to automate.
I don’t think AI diagnosis is going to change costs noticeably because tests and treatment is so much more expensive and you need people to provide that.
I interpreted that comment as an observation “about the weather”: not defending it, just pointing it out.
There’s a parallel to that observation: these parasites are a major part of the S&P (not as much as the article claims, per another comment) which means if they decline it will look like a secular decline in the market (=> peoples’ retirement savings) which will cause vocal anguish.
That latter phenomenon is why bills like the IRA splash out so much money on the fossil fuel companies.
In the course of my work as an ambulance chaser, I spend a considerable amount of time reviewing medical records and bills - including all sorts of unrelated treatment.
I agree with your concerns with the AMA et al. It’s clear that we are way overpaying SOME doctors and hospitals.
It’s also clear that our demand for medical treatment is almost insatiable and about as inelastic as it gets.
Ie we need to tell some drs and hospitals, fu the gravy train is over; but we also need to tell Joe Public, no you don’t have an existential right to wegovy.
Depends on how much of that trillion goes to actual salaries or how much goes to dividends?
Worst part of the privatization of the Swedish school system is that we know that the tax-money we pay to educate our kids is being diverted to Neo-Nazi funders and Saudi oil funds.
Outside of Pharmaceuticals, most of the US health-care system is non-profit, so no dividends are allowed. High salaries are allowed, but there aren't business owners that get the surplus the business generates.
"Most" might be technically correct on some grounds. But more than 1/3 of American hospitals are for profit several of the largest health insurance providers are for profit. and basically every specialist, independent doctor practice out there is private.
> there aren't business owners that get the surplus the business generates
You don't have to be a sole proprietor for those at the top to take a ridiculous level of compensation.
> Nonprofit hospitals are under increasing scrutiny for skimping on charity care, relentlessly pursuing payments from low-income patients, and paying executives massive multi-million-dollar salaries—all while earning tax breaks totaling billions.
The OP article provides clear evidence that for-profit companies is not limited to Pharma:
> ...insurers, chemists, drug distributors and pharmacy-benefit managers (PBMs)—sitting between patients and their treatments. In 2022 the combined revenue of the nine biggest middlemen—call them big health—equated to nearly 45% of America’s health-care bill, up from 25% in 2013. Big health accounts for eight of the top 25 companies by revenue in the S&P 500 index of America’s leading stocks, compared with four for big tech and none for big pharma.
It goes on to detail their profit relative to the S&P as well.
Same for politicians. If they aren't getting shut down by the established powers they probably aren't the person you want. That doesn't necessarily work the other way, though. Trump getting opposed by many doesn't make him the right guy for the job. But Biden making his way through politics with financial and political support means he's just another one of them.
Just to put it more succinctly: you’re in favor of angering all healthcare providers (doctors, nurses, etc) to make healthcare better.
I don’t know if the outcome you want is the outcome you’re gonna get with that strategy. Might want to consider the humans actually affected and how they might react instead of treating everyone as some faceless cabal of evildoers bent on pulling money out of your pocket.
And also consider that most doctors and nurses probably don't like the way the healthcare system currently works. Certainly none of the dozen or so that I know personally do. Using "makes doctors angry" a proxy for whether a proposed reform is a good idea probably isn't one.
I just think angering the people who are supposed to be caring for me is a great way to receive subpar care, I don't care how moral and "above it all" healthcare workers are supposed to be, at the end of the day they're human and if you tell them you don't value their hard work, they may just put in a little less effort than you'd like. (just like you might do the same for a boss who belittles you and refuses to give the raise you feel deserve).
As an example, in many countries where they have socialized healthcare, nurses and doctors do often go on strike, which has always resulted in worse care during those times...
I’ve worked in billing and basically it starts with the fact there’s no competition.
Hospitals can veto any building plans of a hospital near them. This is to “keep the current hospital profitable”
The AMA artificially limits the number of doctors coming out of school (limiting supply).
FDA puts a ton of regulation around producing drugs and equipment.
Insurance companies and Medicare set the price for goods and obviously need to make a profit so they gouge. There’s a long tail there, so the average person pays FAR more than their share to cover the long tail.
When you wrap this all up, yes. But the solution is massive deregulation. Let the market drive down prices similar to Mexico or India. Socializing medicine basically just regulates it to maximize profits, which is why Europe and US has insanely expensive healthcare (I added Europe because they’re subsidized by taxes, not massively cheaper).
In addition to AMA artificially limiting number of docs coming out of school, teaching hospitals prefer to take on specialists, since they get paid more for specialists than GPs. As a result, in the US specialists represent ~70% of doctors and in other countries, specialists represent 30%.
> added Europe because they’re subsidized by taxes, not massively cheaper).
Then you don't know what you're talking about. European prices are much cheaper including tax spend. In fact, the US has about the same public spending on healthcare as European countries do. You just don't get covered by it
It’s HHS that can do that not the hospital itself. The intent is to avoid oversupplying an area with hospital services. Because individual demand is inelastic and the government directly pays for half of care (Medicare, Medicaid) adding more supply means increased aggregate healthcare spending. Of course existing firms take advantage of this regulatory process to hobble competition.
This is an emergent problem of third party payment. Normal supply and demand mechanisms are not at play.
I’ve seen first hand hospitals “justify” not letting competitors as local hospitals always give input (they need to pull records). What happens is the hospitals generate projected reports and showing they’d be bankrupt if another hospital is allowed.
The AMA has pushed for years to artificially restrict the number of physicians that universities are allowed to push out. If I recall, that number has been held steady for a couple decades or more.
They were the ones to lobby the residency bottleneck into place for that purpose, yes, but recently the problem has become so acute that they have been (at least pretending to) push to expand the cap. Their bet on systemic dysfunction payed off a bit too well and they are keenly aware that if they are seen as part of the problem they will have less say in the solution, so at the moment they are allies.
As of a few year ago, anyway. I haven't been paying attention recently and the situation may have developed.
While this is true, physician pay also accounts for less than 10% of Healthcare spending. It's Amdahls law. You could cut physician pay in half, and it would barely touch total healthcare costs. In fact, we have been cutting physician compensation - the average physician pay has not kept pace with inflation for about a decade now. (US wages overall were outpacing inflation until the COVID inflation boom.)
Again, healthcare expenditure has been going up versus inflation, and physician compensation has been going down versus inflation. So if you're looking for divers of growing healthcare costs over the past decade, physician compensation isn't it.
Most actually. As a country, we've had about a 10-year run of wage growth beating inflation. This only flipped in 2021. But the compounded wage growth from ~2013 to 2021 still beats the downward trend from 2021 to now.
My apologies because I was trying to recall trends from memory, and my timescales were off. Physician wages started to decline against inflation in the 1990s. They have been outpacing inflation for the past 10 years or so, but have still not made up for the previous decline.
According to one historical physician earnings survey [1]:
> During 1987-1990, median earnings for physicians were $143,963 (interquartile range, 96,718-175,850) compared with $157,751 (IQR, 101,279-203,281) during 2006-2010 ($13,788 increase or growth of 9.6%; P < .001).
If we take the most conservative time interval (1990 to 2006) and plug it into the Bureau of Labor Statistics CPI Inflation Calculator [2] we see that the median 1990 physician wage would be equal to 224,080 in 2006 dollars.
Median physician wages as of now are $229,300 (2022) according to the BLS [3] or $255,200 (2020) according to the US Center for Economic Studies [4]. Plug that into the CPI Inflation Calculator, and the 1990s median amounts to 291,509 in 2020 dollars. So yes, physicians have seen a sizable decline in real wages over the last 35 years. Americans overall saw a significant uptick in real wages in the same time period. Per capita healthcare expenditure has also gone up significantly in the same time period.
Also, when discussing physician compensation, it's important to remember that there is a very heavy rightward skew. Mean wages are not representative of the typical physician. According to the CES report [2], the mean physician wage is $343,600, while the median is $255,200. This is why you will see dramatically different "average" numbers on physician wages in different outlets -- you should always check if it is a mean or a median.
Because the supply of doctors is artificially constrained, and so there is incentive to chase HCOL areas where they can get paid or higher margin patients/procedures.
Fun examples -
My dentist has a waiting list of like 3-4 months to schedule a cleaning, so if you don't schedule the next one as you leave, you'll be out of luck later. HOWEVER, if you opt for any of the elective procedures (ortho/veneers/etc) they have vast availability and can take you next week. Funny that. And this is the third or fourth dentist we've used in the city, after dealing with both negligence and worse overselling elsewhere.
In my condo there's a dermatologist specialist that makes enough money to own two homes before 40 and operate his own practice in Manhattan & in the rich suburb of his second home. He always seems to be home by 6, and the last time I saw him, he was wheeling one of those coolspa coolsculpting machines around in his newest truck..
My previous GP was great but she only worked 2-3 days/week.
My GI is great but while its hard to get in to see him, he'll get you booked for a colonscopy/endoscopy ASAP at the clinic he also owns across town.. and the followup appointment to read you the results. All about that ROI and $/hr maximization.
> after dealing with both negligence and worse overselling elsewhere.
Glad that I’m not the only one who notices this drop off in practitioner quality and focus on upselling. The only thing they even discuss at dentist visits are the optional, expensive cosmetic treatments. When you make it clear you have no interest they end the conversation and leave.
It’s like they have all bought the same practice management course. Once you realize what they are doing it feels very sleezy.
> incentive to chase HCOL areas where they can get paid or higher margin patients/procedures.
I can't speak to dentistry, but physician income tends to be lower in HCOL areas because they tend to be oversaturated with physicians and thus fewer patients per physician.
It's paradoxical. It's the reverse trend of almost every other profession.
As for why for physicians to live and work in HCOL areas, it tends to be more about personal life. For example, if your spouse has a tech job, you may find yourself to the Bay Area even though your income potential as a physician there is much lower than it would be in the Central Valley. Or you might prefer the public schools in the HCOL areas. Or maybe you prefer to live in an HCOL area to be close to family. Or maybe you like to travel and prefer not to be a 5-hour drive from the nearest international airport.
> the average physician pay has not kept pace with inflation for about a decade now
This might be true for primary care and family practice. I don't think it's true for specialities. And part of why it is true for primary care is because nurse practitioners can do that job now.
The AMA shot itself in the foot, and doctors are suffering burnout. It also does a very good job of publicizing how much it wants more doctors, while not doing anything (or actively opposing attempts) to make this happen.
There are more physicians per capital now than were in 1980. The population is older now, but it’s also now far more common to see a midlevel practitioner than it was in 1980.
What has changed is most physicians no longer work for themselves or for physician owned groups. Working for private equity will burn anyone out. Physicians also spend more time overseeing cheaper midlevel practitioners. That itself could be a source of increased burnout (got into the job to treat patients not manage midlevels), but the second order effect is that their direct care patient mix has shifted higher acuity (potentially more stressful to handle) patients.
Back in the 80s and 90s, it was projected that there would be a physician surplus about 10 to 20 years down the road, so the AMA advocated cutting the number of residency positions [1, 2]. But those predictions didn't bear out, and in recent years (about the past 10 years), they have advocated increasing the number of positions [1, 3]
In my opinion, a lot of the talk about artificial physician scarcity is BS. We have more physicians per capita than the UK, Australia, or New Zealand, but fewer than most EU countries. So we are roughly in the middle of the pack for developed nations. The problem is not a lack of physicians, but the fact that the US has a much larger rural area than most other nations and that you need a certain density of physicians in those areas. But you can't fix that simply by training more physicians -- you train more, and they'll predominately move to the cities too for the same factors.
I think it belongs in the category of self-licking ice cream cone. The more bloated it gets the more stakeholders there are wanting it to get more bloated.
The same thing drives government bureaucracy growth and the ridiculous amount of administrative overhead at universities. At the root I think a lot of this kind of thing is a kind of unplanned jobs program.
I also think a related sort of dynamic might drive complexity growth in software. Every layer and every feature has stakeholders and people employed to maintain it, and all those people become defenders of all these things.
One of the factors behind “worse is better” in software and systems engineering might be that worse employs more people. Clean well thought out systems are not inefficient enough to create large communities around them because they don’t need enough babysitting.
You hit it right on the head calling it an unplanned jobs program. So many jobs are unnecessary busy work (Grabers bullshit jobs) that only exist because of this insistence that people have to earn their living by sitting at a desk all day.
The reality is that the current standard of living could be maintained or even increased with many fewer people working. Or an even better standard could be reached if those people could be doing jobs that are actually useful like construction, nursing, or basic scientific research.
Unfortunately the economic system doesn’t value those things so people only do them if they’re desperate, passionate, or independently wealthy.
I saw your comment when I was scrolling through and I wholeheartedly agree.
Our system does put a price on "well you have to earn your keep and you have to sit here all day."
I'm not sure how or if it could be done, but there is definitely enough wiggle room and waste in our current system that we could have people start doing more useful things with their time.
In France, when I go to the hospital, I get what I suspect Americans would describe as a war hospital. No separation between indoors and outdoors, blood from previous patients dragged several meters, cops in front of the doors of the surgery room (probably the same cops who did a homelessness “maraude” the same night). It takes 6hrs no matter your problem (saw a guy with a finger cut, 6hrs too) (omg saw an elderly couple whose husband was suddenly deaf, as in, probably a cerebral attack, and they WENT HOME because they couldn’t lie anywhere. Without seeing a doc. I was heartwrenched).
Let me guess, are American hospitals a bit cleaner? Are nurses underpaid? Are doctors underpaid like in France, as in, a webdeveloper earns more than a doctor?
What you're describing is probably closer to what publicly funded schools in the US have become, in terms of deviation from base expectations. But no, there is almost no such thing as a doctor who doesn't get paid in the US, and definitely no such thing as a hospital or insurance executive that doesn't get paid.
I would be cautious with any argument about higher ed that focused on student pricing. Higher Ed is full of completely opaque pricing activity, where colleges publish a ridiculous nameplate price, then give enough grants and other financial aid that the average student pays less than $2,500 per year, plus room and board:
> Since 2016-17, the average net tuition and fee price paid by
first-time full-time in-state students enrolled at public four-year
institutions has been declining after adjusting for inflation; it was
an estimated $2,250 in 2022-23.
I do not believe that the comment above is about the effectiveness, but merely stating facts here. University "sticker prices" are often inflated to maintain prestige and very often supplemented with grants and financial aid based on income. Opaque pricing is never a good thing, but there are two sides this story.
> University "sticker prices" are often inflated to maintain prestige
Another function they have is to exclude the poor and naive. Richer and more worldly students probably have higher completion rates.
Median is more important than average. A 2 or 3 variable analysis would probably be even better. I'd like to see how costs actually distribute for all students.
Just in case other Americans are surprised and dubious about these figures: remember that the vast majority of students are not attending the flagship state institutions that you might be thinking of. Public four year institutions include places like Western Michigan University and Southern Utah University, far from expensive urban areas.
Reports like those are not great for people trying to understand data and solve problems. They're for bureaucrats. They're always full of aggregation errors, which is also a common problem many people often get frustrated with from armchair experts. People __should__ be suspicious when reading that the average price paid for college is $2.5k but student debt is almost $2T and the average student debt is nearly $40k. The way the data is presented should cause people to be suspicious because the narrative doesn't make sense. The problem is with the narrative around these numbers, which is how people "lie with statistics" (because math isn't just numbers, data analysis is about stories).
A good way to think about this, and why it should reason that this data at face value isn't useful, is with a rather extreme example. If you took the average income across the globe then you'd conclude that no one could afford college. But that'd be unreasonable because the distribution of incomes is not the same as the distribution of people going to college.
Similarly, in these types of numbers there's a large difference in groups. In fact, contrary to popular belief, those straddled with the most debt are not liberal arts degrees for people with low job prospects but rather high level education of and high prospect jobs. Graduates take out more loans[0]. Medical students take out by far the most[1] -- side note: maybe we should discuss this given the doctor shortage -- followed by PhDs and then masters. Obviously these are in lower numbers though But there are a lot of variables at play here that affect things and it should be rather obvious that you can't treat all these things equally. There are also other issues where private colleges have higher debt burdens and there's also a lot of dubious institutions taking advantage of people (which do we want that happening for people who are specifically trying to become more productive members of society? The most vulnerable are also the "least productive" and even small changes can result in large outcomes).
The argument is that the same problems occur in education: take your education specific points & you can find the equivalent issues in healthcare (Healthcare is full of completely opaque pricing activity, ridiculous nameplate price, give enough grants and other financial aid).
These are probably emergent effects of capitalism. I have a systematic fix, but I can find no margin to write it.
> These are probably emergent effects of capitalism.
Regulated, subsidized capitalism. If insurance was only for catastrophic losses, and all premiums (government, employee and employer paid) were instead paid into things like health savings accounts, network and oligopolistic effects would start to disappear. Maybe not disappear entirely, but instead of locking people into networks the effort would go into marketing their networks as 'the best'.
You could also fiddle with pharmaceutical costs by allowing the patent monopolies to exist until a certain amount of revenue is collected from the patent, and then negate the patent. Instead of the current system with time-limited patents. This would massively disincentivize a lot of pharma-to-physician marketing (at least until the patent expires). Though there would still be some incentive to profit before the next drug comes out that makes yours irrelevant.
Let's do what robocat said and find a comparison with health care and school systems.
One big driver to health care costs is artificial price inflation through insurance negotiations. Where insurance brokers need to get a deal but hospitals can't give a better one, so they raise the price and give a bigger discount on that. You know, the same thing that happens on Prime day.
Schools do this too, in many different forms. Let's look at graduate student pay, for instance. A lot of graduate students don't actually pay because they're doing a lot of work for the school and bringing in a lot of money. But if you go look at the pricing of credits you'll find that it is common for graduate credits to be more expensive than undergraduate. Is this because graduate students cost more? No, they definitely cost a lot less. So why is this number high? Because it is used to validate any pay from outside the university for those graduate workers, where the school takes a large chunk of that not just for admin fees, but to cover "the student's academic costs." This too is an artificial "book keeping" number and why we should not be counting this as income (yes, some states want to do that). It also creates for weird situations when a student needs to pay for credits themselves.
Or how about business class on airplanes? Few people are paying that actual rate.
Also, I think you cherry picked form your source. They also say:
> Over the 30 years between 1992-93 and 2022-23, average
published tuition and fees increased from $2,340 to $3,860
at public two-year, from $4,870 to $10,940 at public four-year,
and from $21,860 to $39,400 at private nonprofit four-year
institutions, after adjusting for inflation.
I should also mention that the $2,500/yr claim you're making (drawing from their numbers, but your interpretation) is a clear example of an Aggregation Paradox (see Simpson's and Berkson's). If we took this number at face value the $1.63 trillion debt level wouldn't make sense. Room and board isn't that much, even if many colleges require Freshmen to stay in dorms and buy a meal plan. Given that number, clearly there's a large variance to those numbers. There's always an advantage to reporting the mean, and if we have the mean and average we know these are within one standard deviation of one another. It is interesting to see that college board is reporting averages but when they talk about incomes they are using medians (which are reported from the fed).
Averages, alone, are often a terrible metric and you need significantly more information that that to make any reasonable conclusion from data. Relying on averages alone will make you come to poor conclusions. Reports like these are for bureaucrats, not people trying to understand or solve problems.
Room and Board is a significant factor. See figure CP-9. Through the entire period, RB exceeds $10k/yr, as compared to ~$3k/yr for tuition. That's 3x the cost!
I would not say that I cherry-picked from my source; the argument expressly is that *published* tuition numbers are meaningless, because few students pay them. The correct number to use is tuition net of Grant Aid, which is also listed in figure CP-9, and hits my $2,500/yr. The $1.63 trillion debt level does make sense when most students do use loan money to pay their room and board, and do so for 4 or more years.
Obviously, some families do save money to cover college costs, so most students aren't taking out 20k+ worth of loans each here, but the driver is not the expenses of the colleges. Indeed, if you look at Figures SA-1 and CP-11A, you can see that when college affordability became newsworthy, as loan amounts went up by over 75% is exactly when states were slashing support for students, during the Great Recession, between 2006-2010. Since then, states have been restoring funding, and loans are down. Many state college tuition rates have been flat or flat in real dollars for the last decade. As an example, the UC system had completely flat tuition rates for 4 straight years, and now guarantees each student that they will not be subject to tuition increases during their undergraduate education, and will pay a flat rate.
They'd like to go to top universities because they're the best. Being private is just one more filter that stops poor people from getting the education they deserve.
It's more about capacity. There are hundreds more public universities than private. The money picture is ... messy and more complex. Some private universities are cheaper for low-income students than public schools (Harvard), some are drastically more expensive.
And not all private universities are "better" than all public universities. Think Berkeley, UT, umich, etc. All fantastic and in many areas clobber many / most private universities. There are some obvious outliers at the very top-ranked schools but, statistically, almost nobody goes to them.
It's messy and complex, but at the end of the day, the public universities educate drastically more people and generally do a good job of it; they have to be considered any time we talk about access to education.
> College is mostly about the private institutions at a national level. That's where people would like to go.
Yeah, I think this is an uninformed take, and that many students never even consider a tier-1 private university. They attend their local university, or even a community college before transferring.
I suspect the high cost of health care, education, and housing are all caused by the same thing: the enormous amount of third party money involved. People are willing to pay a lot more for a monthly payment over time than they are willing to pay in cash.
Higher Ed is being propped up by a second tier of consumer credit that basically lends extraordinary amounts of money for almost no interest, never allows defaulting and can be paid back over essentially your entire lifetime. Were it not for education lending, we would not see these prices.
I have not seen data that supports this claim. At the least, there is a strong correlation between cuts in state support for public higher ed, and increases in tuition. In the 60's many states paid 100% of the cost, and tuition was free. Room and Board in college towns is also high, as part of the overall housing affordability issues. If unlimited education lending were a factor, we would see these increases in expenditures, but we don't. Costs are higher, but tuition increases are driven by changes in the revenue mix.
Your numbers support parent's argument. It's an unsecured loan to 18 year olds, given in identical fashion at institutions where non-graduation rates are substantial.
Those rates should clearly be higher than the rates for Americam mortgages, which, after all, have down payments and are secured by the most privileged asset in the history of the world.
If they weren't protected from discharge, they would be. That's why the rates are lower, because there's no loan maturity, it just keeps generating interest until it is paid off.
If the argument is "student loan interest rates should be higher" then 1) they should be dischargable, and 2) I'm not sure I'd agree. Though I'd hope that that (and falling applications to schools) would have a downward pressure on tuition rates, I'm skeptical that would happen. So now student loans just become more expensive, and less attainable.
And some of the ones we do have might have contractual arrangements with corporations that funnel students into jobs at those corporations (possibly by contractually binding the students into a job at those corporations for a defined period of time). There are both pros and cons to that sort of apprenticeship arrangement. It would be bad, though, if the apprentice also had to monetarily pay part of the cost of attending college.
Shocking statistic for those not reading the article:
> In 2022 the combined revenue of the nine biggest middlemen—call them big health—equated to nearly 45% of America’s health-care bill, up from 25% in 2013.
That's 45% waste, and excludes other middlemen. It's unclear if the increase from 25% is due to driving other middlemen out of the industry, or due to becoming even more parasitic.
Exactly right and most of those layers are in the insurance side. There can only be so many layers in a hospital it becomes clear that someones not doing anything. But in an industry like insurance where nobody is ever expected to do anything productive at all well you can justify as many layers as your greed allows.
I've seen this pattern again and again where if something is not a luxury but a necessity then rampant capitalism sees an opportunity to absolutely wring money out of people.
> Fueled by international private equity funds, consolidating firms have been on a tear in health-professional fields, buying up practices in fields such as veterinary medicine, dental care, optometry and pharmacies and assembling them into chains
Health care is a situation where competition cannot be a spur to reasonable costs because individual consumers are simply not in the position to make the kind of "free market" choices that economists (or more often free market ideologues) expect they'll make.
Moreover, the malignant and abusive US health care system is in fact a product of layer upon layer of failed "efforts to create competition" intended to reduce cost "through competition" to the point that by now all the abusers really know the dance and will be profiting next year from any further or replacement layer you add this year. (and "no regulation then!" as the US 1900 results in doctors being just heroin dealers - like my great grand father interestingly enough).
Most other industrialized nations have a state run medical system that's far superior and cheaper than the US system. They didn't solve their problem with "competition".
There is no competition because there is no market transparency at all. There is also no pricing transparency, the prices aren’t even posted and you can’t know what anything costs before you get the bill. How can there ever be competition in that environment
Most medical decisions are not shopped. It has nothing to do with competition. Quality of care is first and foremost for me. I want to live costs be damned. Only rarely will cost come into it as a decision for me. Only on things I don't need. This is for both emergency and non-emergency care. I don't know of anyone who seriously and consistently looks at costs when making medical decisions. I usually have higher priorities.
You don't know people who live near the margins then. Cost was pretty much the primary decider for me prior to making a decent living, so much so that I put off rotator cuff surgery for 10 years because I couldn't afford to have it done, no matter how much I "shopped around".
The market is so non transparent you can’t shop for quality or cost. The system forces you into random provider to optimize allocation efficiency not cost or quality. You can resist that but it often means everything takes significantly longer
The vast majority of medical care is not life and death. It is completely routine. It's getting vaccines, it's getting checkups, it's getting antibiotics for your sinus infection, it's getting treatment for sprains and strains. You're not going to be price-conscious on any of that? Do you go to the mayo clinic for your annual physical?
Yes, I actually go to the Mayo Clinic for primary care. It is actually cheaper than the rural doctors and hospital I live near. There is no shopping around for cost. The decision is do I trust the doctor or not. I drive to Mayo because the local doctors make to many mistakes and are not familiar enough with a variety of ailments.
They do post the prices. But how often do you actually go through and examine each code to see the prices? How do you know when you go into a hospital from an ambulance that your issue is due to say, kidney stones and not cancer?
Price transparency works in an environment where a consumer knows all of the choices they have to make. For medical issues we can often only guess when it comes to critical problems, and even other protracted issues that you are aware of can be complex and hard to navigate. If you think price transparency will help then I reckon you're someone that hasn't actually been critically ill before.
Okay if your argument is that they're lying about prices, then how is price transparency going to help? They will keep lying about the prices, or obfuscate prices further by breaking them down into smaller pieces.
Like the reason why insurance companies etc don't care about price transparency is because of the above. You're demanding something that won't work and will never work, unless the government steps in and says XYZ must cost YYY.
They aren’t lying so much as having different price tiers for everyone. The published price is the maximum price, it’s paid for only by auto insurance companies typically. Everyone else has a negotiated lower price.
Medicare prices for all would be a solution for example but doing so would both explode Medicare and bankrupt the hospitals
There is no competition because there is no market transparency at all.
Wrong, there is no competition in medical care both because in the end it's not possible for lay person to make informed decisions about the spectrum of treatments available when they are under time pressure and there is no way to have choice when you have a single hospital serving a substantial area (and other ways that health care is a "natural monopoly").
Those are additional problems in some situations. But most hospital care is not immediately life threatening and people in major cities have access to 4-5 different hospitals sometimes more
Fair, but it's a very long way to that in terms of boxing the required capabilities (ignoring regulation). So for that to have an effect on markets in pharmaceuticals will need a lot patience.
Healthcare services are not a free market. The idea that competition can drive down costs would be funny if it wasn't driven by such cynicism. Like a lawyer buying time with objections they know they will lose, the "let the market fix things" people push for price transparency, which they don't get, and then they'll push for time to let that work out. It won't because people who buy healthcare - you and me - don't shop. And we won't shop. Insurance companies don't shop either. Providers hire admins who's whole job is to game the system, which enriches the provider slightly, employs the admin, and extracts wealth from insurance companies and ultimately patients.
The hard truth is that, ultimately, providers, are to blame. Skilled professionals should NEVER say "I don't know how much it costs" to their clients and get away with it. It's your JOB to know how much it costs and to understand the experience of your patient. I get it that you don't WANT to know, that it's complicated and depressing. I get that because all patients get that. That is not an excuse for not paying attention to the details.
It is providers who regularly make their patients wait for hours after the appointment time. It's providers who order expensive and unnecessary tests for every condition, or who refer to multiple specialists. Each of these decisions increases the cost of care, the provider profit margin, and the stress on the patient. Because the provider is ultimately the one with the skill that the patient needs, I blame them for this systemic failure. If you're a doctor and you give in to the status quo, hire a large staff of billing agents and write scripts for all the tests and drugs you can, YOU are the problem. If you took your oath seriously, you'd never accept the way things are. Instead you advocate to maximize your profit margins instead of patient outcomes, and as a result you make the entire system sick. With any luck, it will get so sick it will die.
As someone who is a paramedic, we will absolutely listen to you if you say you want to go to hospital X, not Y.
If you're unable, we'll take you to the one that best is equipped to deal with your issue.
HOWEVER... the insurer. If you're talking about two hospitals in the same town or part of town, no big deal. If you want to go to the hospital 15 minutes beyond that? Your insurer will deny the ambulance bill. Their argument was that "if you were sick enough to require an ambulance, you should have been transported to the closest facility, stabilized, and then transferred to your preferred facility" versus taking a longer ambulance ride.
The principle in that case is elasticity of demand, not competition. As in, my mother always made sure to beat ambulances to us when school or sports reported us injured, because she was worried we wouldn't be confident enough to shoo them away on our own.
What you think about doesn't apply to healthcare. You cannot pick your emergency room like you might select ddifferent groceries, because if you do, you die.
It is not as if there are other nations with formidable health care systems that are way more efficient that one could look into.
Every business, every business has people who go in with the "no matter the cost" situation. But the market sets the schedule of pricing, so if either their status is not "revealed" or the business is simply not allowed to alter the price scedule from person to person, then it is literally no different than
-A rich family deciding they'll eat at the amusement park without asking prices, and no matter what, even when a small coke has reached $10
-A guy who walks into a new restaurant after his first 48 hour fast and after payday atd decides to completely ignore the prices and just order unconditionally
-A taxi driver get a flat outside of a tire shop by pure chance and it is the start of a ten hour planned shift
etc. ad Infinitum
If markets are a good way to do that, sure. But let me ask you one question:
Who do you think will negotiate better prices for any given procedure or medication:
1. A nation-wide health insurance that makes up 90% of a companies volume
2. The solitary regular Joe who is in pain and uncertainty about their health
No need to answer me, because the numbers and real world examples already exist and this is a known market dynamic (bigger buyers can negotiate better prices). This is why patients in nations that have such systems pay sometimes multiple magnitudes less than people in the US.
Now let me ask you another question: How would you structure a health care market if your goal was to extract as much money as possible and how would it differ from what you guys already have?
If you ask me, the market for healthcare in the US work as intended. Just not for the customers.
Doctors & MBAs.
MBA types running health care insurance, hospital groups, etc take the brunt of the anger because that's where we see our dollars go most directly, due to the convoluted way we pay for healthcare here.
However, doctors are very well compensated, and in HCOL often enough to underwork & choose their own hours. And there is an entire cartel system to ensure we don't produce more doctors domestically via our educational system, nor do we allow doctors to immigrate from elsewhere and start practicing. So supply is artificially limited.
The really enterprising doctors then setup all sorts of alternative income streams, like building their own clinic with other specialists to which they then refer you for all procedures.
Then you have all the doctors pushing elective procedures when you just want to talk about health.
And finally don't forget all the free golf resort trips they get in the form of "conferences" paid for by pharmaceutical reps. Basically kickbacks. The opioid crisis relied on a lot of this in order to happen, and 1000s and 1000s of doctors failed the moral test.
Plenty of doctors went into it for the right reason, are overworked, and underpaid.. and I don't exactly want to say "its a choice" but.. the option not to be certainly exists..
> The really enterprising doctors then setup all sorts of alternative income streams, like building their own clinic with other specialists to which they then refer you for all procedures.
Hah. All of the large diagnostic imaging manufacturers, Siemens, GE, Philips, have formal programs for physicians to help them set up their own imaging practice - they'll help navigate Certificate of Need bureaucracy, they'll provide fantastic financing, they'll help you get set up with practice management.
And you, as a physician, if you also own a DI provider (or a stake in one) will go on to refer your patients for DI far more often than other providers do for patients with the same ICD-10 codes.
Doctors can rack up hundreds of thousands in debt just getting to the point where they can bill. Additionally, malpractice insurance is insanely expensive, as are rents in typical medical spaces. I can't see what doctors charge going down without addressing at least some of this.
Yes. I said they get paid well but I didn’t say that it is bad or makes them bad.
Educational costs and duration means putting their life on hold well past the point your median FAANGer is taking in big bucks. So they expect the pay to start paying down that debt & lost time.
But other countries get by without their doctors accruing a mountain of educational costs and time spent in apprentice like conditions.
AMA is a cartel.
Imagine if SWEs managed to create a certification process essentially locking out H1Bs and constrained the number of new SWEs domestically minted.
For sure, restructuring how we get doctors to a point where they can begin practicing is a necessary first step to addressing cost.
Throughout the discussions on the topic, the comparison with SWEs keeps sticking with me: there's no world where someone hacking together JS scripts should make more than someone healing human bodies (in terms of "real" take home pay, ie, after fees, debt payback, etc)
Arguably you are totally correct in that assertion of relative value to society.
It may actually be the case too, on average, in the US.
Note a quick google search says theres 1M doctors in the US and the average salary is somewhere in the $250-400K range depending on source.
Meanwhile Google also returns me "The average salary for a Software Engineer is $117654 per year in United States." - Indeed. Allegedly there's 4M of us weirdos here too.
When we get out of the staff engineer FAANG & Wall St tech bubble the $250k/500k/1M TC numbers don't really exist. And there's only so many seats within the bubble making those numbers anyway, what maybe 50-100K total out of a country of 4M SWEs.
Plenty of SWEs on Wall St never make more than $250k before "getting retired" (in the Bladerunner sense).
Likewise most SWEs working in Fortune 500 companies are clearly barely entering the six figure TC range.
> Additionally, malpractice insurance is insanely expensive
It really isn't. But it's a trope that helps the AMA's argument about limiting supply of new doctors.
Anesthesiologist average salary: $410K/year, average malpractice insurance: $13K.
Family practice: $250K, $10K.
Obstetricians: $390K/year, $42K.
Not that these aren't negligible amounts, but these are well within affordability AND only going down as more and more states implement caps on malpractice lawsuit payouts.
> these are well within affordability AND only going down as more and more states implement caps on malpractice lawsuit payouts
I don't know that I'd consider 10% in many cases "affordable", but you made the same point I was making: combatting the external influences on prices requires action.
And doctors can practice anywhere there’s human settlement. Choose whatever range of lifestyle they want with a cartel endorsed golden ticket to high average pay.
SWEs are generally fenced in to a few HCOL urban areas to earn high pay.
> Doctors have to comply with additional local public health regulations artificially limiting the number of medical staff.
This is a curious way of describing the lobbying and other efforts that doctor's OWN body, the AMA, aggressively and successfully continues to do to limit physician supply.
That particular call is coming from inside the house. And based on the AMA's history, leadership, and so forth, the majority of physicians are entirely onboard.
Huh? What has the Civil War to do with anything? What's the conspiracy theory?
It is open knowledge, acknowledged by the AMA themselves, that they have worked to limit physician supply for a long time. In fact, it's only recently that they're begrudgingly acknowledging that maybe, just maybe they've created a supply problem and system built around it that will take effort to unravel.
This comment thread is full of people sharing their uninformed opinions without reading the article. It's maddening, the article is very good and worth a careful read.
Two pull quotes to whet your appetite:
> The country spends about $4.3trn a year on keeping citizens in good nick. That is equivalent to 17% of gdp, twice as much as the average in other rich economies. And yet American adults live shorter lives and American infants die more often than in similarly affluent places.
> Much less attention is paid to a small number of middlemen who extract far bigger rents from the system’s complexity.
This has been the situation my entire adult life; I've never understood why American Exceptionalism means that we seem to get screwed on healthcare (and seemingly just about everything else), but I think I've more or less come to accept it, and mostly I just try and avoid the medical system.
I did not say I succeed, sadly. I actually have a somewhat problematic hip condition that would probably best be solved by replacement, but that seems like an irreversible decision that binds me ever more deeply into the system, which is depressing.
I had a lightbulb moment when I realized the USA is not a country (or collection of states) that exists to benefit the citizens. It's not there to provide healthcare or education or food to kids and all that.
It's a system (or whatever word you want to use) designed to benefit companies and corporations. Everything is designed the way it is to create maximum profit for the owners.
Think about the whole concept of an LLC, look at tax rates and the kinds of fines a company gets when they do something bad. They profit hundreds of millions and get a $400,000 fine for breaking the law. This is not an accident.
> It's a system (or whatever word you want to use) designed to benefit companies and corporations.
You will note that this is literally the concrete political definition of "fascism". Typical definitions highlight more the cultural features of such a politics (i.e., deference to authoritarian rule, ethno-based identitarianism) but the literal organizational aspects of fascism are described well by the above quote (bundling the governmental, industrial, and cultural aspects of a nation into a singular mass directed centrally for the purpose of benefit of those at the top -- primarily high-ranking government officials and owners of massive critical industry leaders -- by support or extraction from the bottom).
Note: some have pointed out I went by weight while the article went by revenue. I don’t have a Bloomberg so can’t update this comment with ranking by revenue).
I have loved the Economist for 40 years but you have to check things sometimes:
> Big health accounts for eight of the top 25 companies by revenue in the s&p 500 index of America’s leading stocks, compared with four for big tech and none for big pharma.
Apple (AAPL): 7.05%
Microsoft (MSFT): 6.54%
Amazon (AMZN): 3.24%
NVIDIA (NVDA): 2.79%
Alphabet Class A (GOOGL): 2.13%
Tesla (TSLA): 1.95%
Alphabet Class C (GOOG): 1.83%
Berkshire Hathaway (BRK.B): 1.83%
Meta (META), formerly Facebook, Class A: 1.81%
UnitedHealth Group (UNH): 1.28%
Exxon Mobil (XOM): 1.27%
Eli Lilly (LLY): 1.21%
JPMorgan Chase (JPM): 1.18%
Johnson & Johnson (JNJ): 1.07%
Visa Class A (V): 1.05%
Procter & Gamble (PG): 0.99%
Mastercard Class A (MA): 0.93%
Broadcom (AVGO): 0.92%
Home Depot (HD): 0.85%
Chevron Corporation (CVX): 0.81%
Merck (MRK): 0.75%
AbbVie (ABBV): 0.75%
Costco (COST): 0.67%
PepsiCo (PEP): 0.67%
Adobe (ADBE): 0.65%10
The list you grabbed is ordered by market cap, while The Economist said there were 8 Big Health companies in the top 25 _by revenue_ which is a different metric.
My least favorite part of this site is all political posts that get upvoted like crazy when they have nothing to do with technology or really anything in the field
I work for a SaaS company that provides software to doctors, so it seems somewhat relevant? To answer the question of the article, I don't think it's us; we do OK, but I'm not exactly rolling in dough, and I don't think my bosses are either based on their lifestyles.
Allow everyone the freedom to own their health, see whichever doctor they want, get prescription from whomever they want and get their medicines shipped from wherever they want from around the world. Let health care compete globally. That will automatically fix this problem.
But when you need emergency in-person medical care, or even not-so-emergency ongoing care for chronic conditions, it is generally not an option to visit another country for that.
True. But emergency only insurance can be much cheaper. Local labs can still send scan/blood results globally wherever the patients want. The bulk of lab costs is a medical doctor attesting/writing the report. That can be solved.
There was a post recently about a diabetic patient not able to afford the daily medicines. Most chronic problems require chronic medicines and regular consultation which can be solved.
One issue someone might raise is the quality of doctors. I have heard tons of cases from friend I know where the doctors have messed up here. It is mostly about reviews and trust, and applies globally, and can be an individual preference.
Software can be cloned. Doctors not, and have a limited amount of time. If everybody wants to see the same doctor (a lot would do it for random reasons like appearing on a TV show or marrying a celebrity), their agendas would get stuck for months while the other wait
