The American Healthcare Conundrum

https://github.com/rexrodeo/american-healthcare-conundrum

by rexroad • 4 months ago

523 648 4 months ago

rexroad26• 4 months ago

Author here. The 254% figure comes from RAND Round 5.1. I built a Python pipeline on CMS HCRIS cost reports (FY2023, 3,193 hospitals) to compute cost-to-charge ratios by ownership type. The surprising finding: nonprofit hospitals have a median markup of 3.96x actual costs. All scripts are in the repo. Happy to discuss methodology.

fblp• 4 months ago

Thank you for doing this analysis! I'd suggest adding some charts to better represent some of the issues you've found!

rexroad26• 4 months ago

Thank you for the feedback and support! I've added some charts to the repo and have charts in the substack.

cmiles82• 4 months ago

Challenge is the whole system is just a mess. Medicare probably lays too little. Commercial insurers have formed a mountain of red tape and bureaucracy and arguably pay too much, although individual bills (EOBs) are rarely logically defensible against any scrutiny.

Healthcare providers try and combat all this by literally just making up pricing and trying to negotiate something while also having bloated administrative structures that raise costs for all.

Nothing about the current state of the healthcare system makes much sense to anyone that tries to peel back the onion.

shigawire2• 4 months ago

Nothing about the current state of the healthcare system makes much sense to anyone that tries to peel back the onion.

I'd offer a slight tweak. None makes sense in a vacuum or solely considering efficiency. It all makes sense seeing the evolution over time and the misaligned incentives.

mexicocitinluez6• 4 months ago

Medicare probably lays too little.

What's wild, is that at least in the slice of healthcare I'm in, Medicare is one of our best most reliable payors. In fact, in some cases, our contracts with private insurers have them promise to pay at least 80-85% of what Medicare would reimburse us.

The other benefit with Medicare is that they just give us a lump sum of money and let us do what we want with it as long as we get good outcomes. Which means we don't have to fight for every visit we make to the patient. And they base it off of a public formula that we have access to (unlike with the private insurers).

paulddraper4• 4 months ago

This is a believable result. Meta-analysis is 141-259% [1].

Three reasons:

1. Medicare has quasi-monopolistic negotiation power that private insurers can only dream of -- Medicare spend two-thirds of all the private insurers combined. That's why private insurers would combine in a heartbeat if the FTC allowed it.

2. Moreover, that Medicare volume is concentrated in a specific segment of the market. If many providers dropped expensive United contracts, the insured people/companies might move to a new insurer. But Medicare's base will never leave.

3. Since Medicare covers older individuals, often on a fixed income, there is natural discriminatory pricing. (Think of the "senior discount" at your local entertainment venue.)

[1] https://www.kff.org/medicare/how-much-more-than-medicare-do-...

observationist• 4 months ago

Look at hearing aids. 50,000% markup or higher, even up in the 70k% range in some examples. Old people don't know what to be skeptical of, or at least haven't been nearly skeptical enough, and some industries are getting away with terrible exploitation, all blessed and sanctioned by the FDA.

levocardia• 4 months ago

Also, commercial insurers are essentially cross-subsidizing Medicare: the higher revenue from commercial insurers is partly why Medicare can be paid less. Similar dynamics exist with drug prices: the high US cost is a cross-subsidy to other countries. Maybe this is good (someone's got to fund R&D), maybe this is bad (it's a net wealth transfer to the elderly), but it's an important part of the dynamic either way.

piva002• 4 months ago

Would like sources about the pharmaceutical sector being "subsidised" by the American system, heard it many times but haven't seen it substantiated.

rexroad26• 4 months ago

The cross-subsidy argument is one hospitals use to justify high commercial rates: "Medicare underpays, so we have to make it up on commercial." The HCRIS data lets you test this. If cross-subsidization were the full story, you'd expect cost-to-charge ratios to be tight — hospitals would charge commercial just enough to cover the Medicare shortfall. Instead, the median markup is 2.6x across all hospitals, and 3.96x for nonprofits. That's not cross-subsidy. That's pricing power in a concentrated market.

rexroad26• 4 months ago

Thanks for the meta-analysis reference. The 141-259% range tracks with what I see in the HCRIS data. The variance across hospitals is enormous — even within the same bed-size category, the P75/P25 ratio for cost-to-charge is 2.5-3.4x. Hospitals in the same peer group are charging wildly different amounts for equivalent services. All the scripts are in the repo if you want to dig into the hospital-level data: github.com/rexrodeo/american-healthcare-conundrum

timtim51251• 4 months ago

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits.

Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money.

Several doctor friends have told me this as well.

skybrian• 4 months ago

I was under the impression that some companies that provide insurance also provide healthcare?

shdudns• 4 months ago

This. It's hard to believe that the Obama team could have been this financially incompetent.

bmcahren• 4 months ago

It's easy with hindsight to believe you could have capped expense at 200% medicare but getting what we got passed was nearly impossible at the time. Before Affordable Care Act, insurers had every tool available to deny care, maximize profits, and skim more than 20% off the top. It's great we're getting closer to the point that it feels to you like incompetence that these things aren't fixed today but your anger with the medical lobby is clearly misplaced here.

Every major piece of legislation needs revisions to chase circumvention and we're well past due on updates but no legitimate bills have been presented that cover these topics and that's not a one-party issue.

vjvjvjvjghv• 4 months ago

Obamacare was totally subverted by the medical lobby during its creation. They had a lot of great ideas but there were way too many politicians in Congress who had sold out to the lobby (Lieberman, Baucus on the democrat side) and would block anything that would reduce cost.

And since then it has been a fight for survival without much chance for improvement. The republican refuse anything that could improve it but want to “repeal and replace” but are struggling a little with the “replace” part. And the democrats are too timid to make another push.

So we end up with the worst of all worlds. Super expensive, overall results not very good and super complex.

raw_anon_111111• 4 months ago

It was the best they could do to get 60 votes because universal health care was too radical even though every industrialized country in the world does it.

watersb• 4 months ago

It's almost as if no healthcare legislation gets passed before private insurers have figured out how to extract shareholder value.

(Which makes the system worse. The fiction of a fiduciary responsibility to extract top dollar from a business regardless of consequences is the opposite of "capitalism". Which derives its name from the practice of sound investment to build something of lasting value.

To say nothing of the social deviance of for-profit healthcare.)

dboreham2• 4 months ago

Obama had nothing to do with what's in the ACA. It was ideas from moderate Republicans (previously prototyped in Massachusetts under governor Mitt Romney), advanced on the basis that it would receive bipartisan support as a result. But it didn't, so it was heavily amended until John McCain provided the last vote to get it through.

genthree• 4 months ago

These limits don’t apply to self-funded programs that are administered by big insurance companies (most large employers’ plans, then) or plans less than two years old (whether there are measures in place to prevent simply rotating plans often to exploit this, I do not know)

cogman103• 4 months ago

This seems like we need similar price caps for healthcare providers, medical equipment providers, pharmaceuticals, etc. Done just in isolation for 1 part of the healthcare industry results in this obvious bad effect.

Removing the rule wouldn't help things.

nradov25• 4 months ago

Price caps always and everywhere cause shortages, including long queues for certain types of care. This may be acceptable but we need to understand the trade-offs when making any changes.

laughing_man• 4 months ago

That would break the system completely. The only reason any of this holds together at all is medical providers shift costs from one patient to another. Medicare doesn't pay enough for the care patients are provided, so hospitals charge private patients extra. If you introduced price caps either hospitals would start to go out of business or they'd stop accepting Medicare entirely.

raw_anon_111111• 4 months ago

So I happen to be in Costa Rica for the month. Just like every other 1st world country, it has managed to have universal health care that is better and cheaper without private insurance.

Even if you do get private insurance for quicker access, it’s still much cheaper than the US.

I just spoke to someone who flew down here to save $30K on dental work.

The problem isn’t the ACA, it’s the ass backwards American health care system. I was at a meetup of American ex-pats here and half of them said they established residency here to join CAJA - the health care system

nostrebored2• 4 months ago

ACA enshrined the worst parts of the American healthcare system for years to come. It is a politicized victory that is the best solution for no American citizens. Places I’ve been with fully privatized healthcare or single payer are both significantly better for consumers.

Insurance companies have raised prices to restore profit, were briefly a mandatory expense, and will exist for years to come.

SV_BubbleTime3• 4 months ago

Costa Rica is a beautiful country. But it is in no way “first world”.

It has no military, and is effectively dependent of the US and in best cases neighboring countries. It has excellent weather and soil which account for its fruits exports… and outside of some niche industry, is mostly reliant on tourism which means importing money.

I love that country and have been many times. But if it were god forbid wiped off the face of the earth, it would be sad and annoying at best.

Costa Rica has “free healthcare” / healcare from taxes because it has 5 million people, about 1/2 of New Jersey.

This isn’t some mechanism that the US just refuses to use. It’s a matter of scale. You either don’t know and should remain silent on the topic, or do know it and lack the honor to not state it.

hibikir• 4 months ago

It's a difficult fix, because the real issue here isn't who pays, but how much it's paid, total. If the cost of care in the US was the same as the cost in, say, Spain, the vast majority of people would have little problem paying out of pocket, and having just high deductible insurance for really big ticket items. At the same time, it'd be easy to have the government pay for it all. The US system is just very expensive in general, so it's a problem regardless of who pays for it.

Most of the costs are ultimately salaries to Americans, and money handed to American companies, so most savings would come from someone's livelihood. That's why we cannot reform: The party that actually cuts costs will build resentment for decades, and create a blip of unemployment. Nobody wants to do that, and therefore you aren't going to be a serious, relentless attempt at cutting costs. We've seen how the attempts that the ACA made were counteracted by consolidation at all levels.

Serious cuts have to have no mother. Say, if we ever did have an AI that worked well enough at this, and outcompeted primary care physicians. Foreign pharmacies bypassing all controls and being able to hand you much discounted drugs the day after. Telemedicine and cheap travel put together to make surgery that didn't involve an ER visit just as easy and much cheaper than using the US system. Straight out disruption, because the incentives are such we sure aren't getting improvements in regulation.

phil217• 4 months ago

In a vacuum sure. But insurance companies operate the only part of the healthcare system that is moderately competitive. In the end employers are the ones largely paying and they are professional negotiators enough to put price pressure on insurance plans. 20% of $0 is $0.

As such, as light of an incentive it is - it’s the only party in the entire system that is incentivized in any way whatsoever to keep costs down.

Insurance providers also rarely operate at the full freight 20% either way though. So they are at least at this time incentivized to control costs at some level since every dollar saved is a dollar added to the profit line. Otherwise they would not be known for denying claims so often.

This is ignoring a whole lot of very important complexities as well - such as self funded insurance plans that most major companies utilize. There the insurance company is simply a plan administrator getting paid the same either way.

It’s one of those tropes that has a source of truth behind it but the actual reality is far less satisfying of an answer. Makes for great sound bites and ability to shut down further thought on the subject though. The uncomfortable truth is that there is no simple fix and no one bad actor that is the cause of all the insanity.

cogman103• 4 months ago

It's such a small market that it's really not competitive. Further, because medicine is so expensive, it means there aren't going to be newcomers to the market who can shake thing up. It requires way too much startup capital to start a new insurance company. The agencies with the most negotiation power don't because it negatively affects their bottom line.

This is why there needs to be a real second option. A public option like medicare for all would be the way to go. Let everyone choose between either private insurance or public insurance. Then you'd actually see some real competition.

Retric6• 4 months ago

part of the healthcare system that is moderately competitive.

That’s only half the story though insurance companies also try and reject way more claims, cover fewer people, and are just harder to get money from than Medicare.

This means hospitals can’t afford to give them cheaper rates as they just require vastly more work from staff for the same procedure.

The industry isn’t blind to this effect, but has little reason to change.

rexroad26• 4 months ago

You're right that there's no single bad actor, and that's exactly the framing of this series. Each issue isolates one mechanism with one savings estimate. The 254% figure is RAND's. What I added is the HCRIS cost-to-charge analysis across 3,193 hospitals showing the variance by ownership type.

The surprise was nonprofit hospitals: median markup of 3.96x actual operating costs, versus 2.39x for for-profit and 1.87x for government hospitals. That's hard to square with the narrative that nonprofits deserve their tax exemptions ($28-37B/year) because they serve charitable purposes.

On the self-funded employer point — you're correct that self-funded plans have more negotiating latitude, and thousands of them already use reference pricing (capping hospital payments at a percentage of Medicare). That's actually the policy fix this analysis proposes. Montana Medicaid implemented it and saved $47.8M. The question is why it isn't the default.

franktankbank• 4 months ago

More like kickbacks to the dipshit in HR who signs the dotted-line.

digi59404• 4 months ago

What OP said is true. You’re forgetting that health insurers are just one organization in the corporate chart. They often work to own the providers as well to funnel money to parent corporations.

So if United is the insurer they’re owned by an umbrella, that umbrella takes 20% or less. However United makes special deals and steers people to providers owned by the Umbrella. So that the Umbrella makes more money as well. This is true for medicine as well. For example Cigna requires all maintenance medication be purchased through express scripts as a means to retain or increase profit.

United has a history of also squeezing organizations by forcing them into pre-payment review when they’re high volume. This causes the providers to basically not have no revenue for months on end until it gets sorted. Then they might get a chunk or settle out of court. Often they go bankrupt and are purchased by the umbrella.

In terms of Medicare/Medicaid another catch-22 is that insurance handles the claims for providers. The insurance can recode claims and pocket the difference without telling the provider. It’s on the provider to catch it.

There is a tremendous amount of dark money, shadow games, hidden corporate structures, Wyoming and NM LLCs with Anonymous owners, etc.

Insurance as a whole tries to own the entire feedback loop for healthcare. They don’t like you going out of their feedback loop.

AnthonyMouse2• 4 months ago

In the end employers are the ones largely paying and they are professional negotiators enough to put price pressure on insurance plans. 20% of $0 is $0.

That's assuming price is the only variable.

Suppose one insurance company is accepted by more providers, including ones that might be closer (but pay higher real estate costs) or have nicer rooms etc. Meanwhile employers are looking for cost/benefit rather than just cost. If they give employees a better insurance plan they could pay them less or provide less of some other benefit and still get people to work there.

So before the insurance company didn't really care if you got a $10,000 plan or a $20,000 plan if they both had a $2200 margin, or if anything would prefer the former because they make the same money with lower costs. The employer is likewise fairly ambivalent as long as the more expensive plan seems like it's buying something (even if the something is convenience/luxury). But now the insurance company isn't allowed to have a $2200 margin on the first plan and still is on the second, so that's what they market, and then what more employers choose, resulting in higher average costs.

Insurance providers also rarely operate at the full freight 20% either way though.

There are only really two options, right? Either the market is actually competitive and then a margin cap has no effect because competition would prevent margins higher than that regardless and the rule should be gotten rid of as totally redundant, or the market is less than perfectly competitive and then it does something but the something is a bad perverse incentive to raise costs to cheat the rule and it should be gotten rid of as actively harmful.

Spooky232• 4 months ago

They really aren’t. They package benefits to try to hit different price points. Obamacare accelerated consolidation of providers and most regions have a cartel of 2-4 health networks.

thaumasiotes• 4 months ago

You've identified a real issue with cost-plus pricing. But there's more to it than that. Commercial insurers have to pay more than Medicare, for the very simple reason that Medicare's pricing terms are that they get a discount beyond whatever the lowest price is that you charge anyone for the same thing.

(Is it a 60% discount? No; a 150% margin has to be explained in other ways. But the phenomenon is real and important.)

nradov25• 4 months ago

It's a bit more complicated than that. First, most large health plans regulated under the Affordable Care Act are actually subject to an 85% minimum medical loss ratio. Some of the larger payers which also have their own providers as employees within the same parent corporation are able to shift money around with internal pricing agreements so that they make larger profits on the care delivery side.

But at the same time, the business is still pretty competitive with the employers and consumers who purchase policies or rent networks being price sensitive. Employers will switch carriers to get a significant cost savings so that holds down prices (and carrier profits) to an extent. Most large employers (and unions) are now self-funded so the "insurance" company isn't actually bearing much risk, they just set up a provider network and process the claims.

Most doctors are almost completely ignorant about the broader issues of healthcare financing and medical economics so take anything you hear from your friends with a grain of salt. (And to be fair, it's not something we should expect them to be experts in.)

Aunche• 4 months ago

Most insurance is funded by employers who would switch insurers if they feel they're getting screwed by them.

So insurance companies spend more so they can collect higher premiums.

This part is still true though. Insurers want you to consume more healthcare, so they'll happily pay for your chiropractor, acupuncturist, acne treatment, and Chanel gift bag [1]. Patients are happy with their benefits. Employers are happy with increasing employee retention in a tax advantaged way. Insurers are happy with the profit. Of course, you aren't going to see much health improvement from this though.

[1] https://nypost.com/2024/07/25/lifestyle/nyc-hospital-bills-3...

dmitrygr• 4 months ago

Ding Ding Ding. We have the correct answer. And this was a predicted consequence of that profit cap.

lotsofpulp10• 4 months ago

So insurance companies spend more so they can collect higher premiums. That's how they make more money. >

If this is correct, then how come there are so many complaints about insurance denying payment for healthcare or the hoops they make patients and doctors jump through for pre authorizations?

If the path to more profit was spend more money, then there would be no reason to question a doctors’ orders? Nor threaten doctors and hospitals with leaving the network if they don’t agree to lower prices?

Yet, one often hears about so and so plan will not have so and so hospital system in network unless they come to an agreement.

Manuel_D2• 4 months ago

This is the same problem with cost-plus contracts in the military. In theory, capping profit is meant to reduce profiteering. But in practice, if your profit is fixed at 6% of the cost to built a jet fighter then you're incentivized to make that jet fighter as expensive as possible. The way to maximize profit under a cost-plus regime is to maximize the cost.

glenstein4• 4 months ago

I will piggy back off of your comment because I was going to say a very similar thing. In my state, electric utilities are guaranteed a rate of return on investment of approximately 12%, if I remember correctly. And so there's a lot of incentive for build out and maintenance that's high in total dollar amount and high in volume of work done. In some ways it's the system working as designed but the "cap" can incentivize erroneous build out, as you noted in the jet fighter example.

omgJustTest• 4 months ago

This is correct, but neglects the compounding effect.

Insurers are also adding some %+ increase on premiums every year, which is taken as a % of their yearly spend, ie 2-3%.

ie (1+inflation)^N*(base_prem+overpay_prem_increase) = new_premium. The compounding of $ returned is pretty big on this.

That being said underwriting risk, under the law and avoiding correlated risks, is tough.

djoldman• 4 months ago

This isn't the whole story. There's a lot of "legal" self-dealing going on where insurance companies essentially own providers and then pay the providers which allows the insurance companies to circumvent the medical loss ratios.

More here:

https://healthcareuncovered.substack.com/p/self-dealing-ille...

etchalon2• 4 months ago

Several doctor friends told me your doctor friends aren't real.

kshacker• 4 months ago

I remember consulting for a healthcare company in .... 2003. Very short assignment so I never got deep into it, but anyways my consulting company made me read up an in house guide about ALR and MLR (Administrative or Medical Loss Ratios). Obamacare or not, such constraints already exists. Maybe they varied by state, maybe there were other loopholes such as not supporting pre-existing conditions, but IIRC there were restraints on pure profits, so even then the same perverse incentives existed. More revenue you can get more profits.

I am going by very old memory of a few days/weeks of work, but it will be good for a medical system historian to chime in.

ropable• 4 months ago

You mean that there is a rule which prevents for-profit companies offering personal health insurance from pocketing more than 20% of revenue?

Those poor, benighted shareholders. What a socialist hellscape.

jandrewrogers• 4 months ago

There are other structural issues at work that you see across US government procurement generally, Medicare just being one example.

The unit costs of doing business with the US government are higher than with private companies even after accounting for economies of scale. The US government also requires that they pay the lowest price. Consequently, unit economics are usually worse when dealing with the government than when dealing with private companies.

The maths often don't math but the law doesn't care. Most inexplicable and bizarre pricing you see related to government procurement are structural tricks vendors use to indirectly fix the unit economics across their customers while technically staying compliant with bad regulations. Everyone else who is not the government is collateral damage of that byzantine theater.

Ideally, we would all drop the pretense that the US government deserves the lowest price just because they are very large, instead letting it reflect the true overhead cost.

Rury• 4 months ago

I'd argue it's a subsidy/incentive problem. Since every subsidy works by raising a cost somewhere which is used to subsidize a cost elsewhere, I'm inclined to believe in the Bennett hypothesis. Our government mostly subsidizes demand, and does little to incentivize productivity/outcomes. You see high prices everywhere the government funnels money: in education, healthcare, even the military - as where's the incentive to lower costs if the government is on the hook and will fund it no matter the cost?

SilverElfin• 4 months ago

The problem is the market isn’t competitive due to hidden pricing and also anti competitive aspects like insurance. The supply of doctors is itself artificially low. There is a lot more regulation needed than something as simple as Obamacare.

airstrike• 4 months ago

This would only hold empirically if prior to the ACA, commercial insurers did not pay more.

0xbadcafebee2• 4 months ago

That's not why prices continue to increase. They can't just let prices skyrocket to pad their pockets. If they try, government regulators will block premium hikes, regular people will ditch them for cheaper competitors, and big businesses that pay premiums from cash will fire them for not keeping medical bills lower.

bandofthehawk3• 4 months ago

But prices already have skyrocketed, and insurance execs have already become significantly richer. Why didn't the feedback loops work?

SV_BubbleTime3• 4 months ago

regular people will ditch them for cheaper competitors

I love the particular irony of people who advocate for regulations then attempt refutation of free market theory for what is already unquestionably and objectively not a free market.

raincole• 4 months ago

The people who design easily gameable systems belong in the lowest circle of hell.

-- Charlie Munger

jmspring• 4 months ago

Managed risk pools should not be for profit.

noelsusman• 4 months ago

You can really just say anything and get upvoted on this website.

If this were true then private insurers would have paid comparable rates to Medicare prior to the ACA passing, and that's just not the case. This fact has been a fixture of the US healthcare system since the creation of Medicare.

apical_dendrite5• 4 months ago

My understanding is that there are a number of reasons why commercial insurance companies pay more. A big one is that Medicare has enormous pricing power because people on Medicare are a huge segment of the population and also the segment that consumes the most healthcare services. Your local healthcare system can't NOT take Medicare. They're effectively stuck with the reimbursement rates that Medicare sets. On the other hand, healthcare systems have a ton of power in their local markets. A healthcare system can afford to not be in network for a particular insurer, but if that insurer loses access to the biggest healthcare system in a particular market, it can be devastating for them. A major employer is not going to be happy if their executives have to all change doctors because the big local hospital system is no longer in network.

dominotw• 4 months ago

Obamacare requiring 80% of the money they collect to be spent,

did they not write unit tests for this when it was proposed to catch obvious subversions like you mentioned.

notfried• 4 months ago

I like this. It'd be great to see such a table of the key issues with proposed solutions, to highlight how the waste isn't an insurmountable impossibility to solve. Having said that, federal lobbying by the healthcare industry was $750 million in 2024 [1], and this is the blocker that needs to be addressed first to be able to enact change.

[1] https://www.managedhealthcareexecutive.com/view/health-syste...

hardtke• 4 months ago

We rarely discuss the primary source of health care cost differences in the United States -- US doctors get paid a lot more than elsewhere. I haven't seen a credible proposal to address that. Most of the salary difference can be blamed on deliberately created shortages of doctors in many specialities. Not enough medical school slots (horror stories among my kid's friends of not getting accepted) and then also shortages of residencies that allow foreign trained doctors to work in the US. The only change in recent memory is replacing some primary care physician services with nurse practitioners.

refulgentis• 4 months ago

Idk why but I feel the need to add an empty “co-sign” comment. It is 100% this and I have so many stories from friends who are doctors and nurses that back up every detail.

One note: the doctors won’t agree or want to hear this, as they too are human, but listen to how they talk about nurses. Hit me once I had both a CRNA (advanced nursing degree in anesthesiology) and an anesthesiologist friend

Edit: glad I did add an empty cosign, right after replying, the parent is now downvoted to gray. And gets it much, much, better info than any other comment, and I read all of them. Last thing I’ll throw out to back it up is, check into who decides how many seats there are at med schools. Can’t remember the exact name but it’s basically the doctors union / professional organization. AMA?

tacticalturtle2• 4 months ago

I really don’t think doctor salaries are the primary difference when they make up less than 10 % of health care costs:

However, new research by Stanford health economist Maria Polyakova and colleagues — using unique data on physician income — shows that physicians’ personal earnings account for only 8.6 percent of national health-care spending

https://siepr.stanford.edu/news/just-how-much-do-physicians-...

rimbo789• 4 months ago

Having worked in for profit health care pricing and costing yup that makes sense.

The layering on of profit margins causes costs to grow exponentially

conductr8• 4 months ago

Medicare prices are too low to operate on. They generally factor in the bare minimum or slightly less for the variable costs of a procedure but severely under value the fixed costs of providing the same procedure. So those costs largely get pushed to commercial payors as those are the only ones who can shoulder it.

There’s plenty of arguements about waste and executive compensation but when I was a healthcare CFO we had our financials separated where I could see individual hospital performance and all the executive/corporate stuff was separate and it still was an issue as basic capex was hard to keep up with in a hospital that had a low % of commercial patients.

kstrauser4• 4 months ago

Sure you’re not thinking of Medicaid? Medicare was generally pretty good for reimbursement. When my wife treated Medicaid patients, she often lost money on the cost of the supplies used to treat them, let alone rent and paying the staff etc etc. Most doctors who see Medicaid patients do it as basically pro bono. Some figured out how to game the system with economies of scale but it’s nearly impossible do do and maintain a decent standard of care.

But Medi care was right with the commercial insurers on reimbursement.

conductr8• 4 months ago

Medicaid is usually a big loss for hospitals. It’s just a cost of doing business and another reason why someone else has to pay more. It’s completely a subsidy essentially. This is why certain areas only have a county hospital, it’s likely the same area that is a food desert and has no retail banks, the simple truth is too high of a Medicaid mix will quickly sink a for profit hospital.

Medicare is as I described. Every specialty and procedure has its quirks though, some even make a killing on Medicare and not commercial but the hospital kind of represents a portfolio and the overarching economics in aggregate favor the commercial insurance. I’m guessing your wife’s specialty had decent Medicare rates but it’s not always true.

There’s even some private insurance which is effectively Medicare that has different reimburse ranges (Medicare advantage plans).

Executives like to lament the lose money on Medicare but I never really saw it that way. If you look at it isolated, sure it’s true. But if you look at it as a portfolio where your fixed costs are covered by another cohort, then it’s a huge volume to add and make money at the contribution profit line. You just have to be careful not to run fixed costs as a percentage of total revenues or something like that. The extra volume Medicare brings to a hospital or network of hospitals also has tremendous negotiating power for pharma, medical supplies and devices, etc.

nradov25• 4 months ago

Generally speaking Medicaid is worse than Medicare for provider reimbursement rates. In some states, Medicaid plan members are effectively uninsured because they can't find a provider within reasonable distance who will take new patients.

mexicocitinluez6• 4 months ago

But Medi care was right with the commercial insurers on reimbursement.

As I said in another comment, I'm with a provider and Medicare is easily one of our best payors. We actually have contracts with private insurers that say they have to reimburse us at least 80-85% of what Medicare would. They also give us the money up front, with a public formula that we can count on vs. a hidden formula that requires us to go back for more auth (and thus needs more people to manage).

graemep4• 4 months ago

The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD. That gap is roughly $3 trillion per year.

The difference in life expectancy will be influenced by multiple factors and may have more to do with diet and lifestyle than with healthcare.

Japan also spends less per capita than the UK, France or Germany. The US spends a lot more than any of those so the US system is bad value for money.

hermanzegerman5• 4 months ago

We in Germany copied a lot of the stupid stuff from America (including the stupid billing system for inpatient stays), so it's not that surprising that our system is also bad value for money.

PS: Outcomes here are not worse than those of rich people in the US, because I know some idiots will claim this to cope

https://jamanetwork.com/journals/jamainternalmedicine/fullar...

legitster3• 4 months ago

Germany didn't copy the US - they just happen to share similar roots.

Both historically had private hospital systems, and just so happen to implement pension/employer-based insurance programs very early on. German's just evolved in one direction and the US evolved in the other.

graemep4• 4 months ago

Actually Germany is a lot better value for money than the US. The cost (either absolute or as a percentage of GDP) is similar to the UK or France, and from what I have been told by people who have lived in both countries, the German system is better than the British.

legitster3• 4 months ago

The US also has GDP per capita of $90k and Japan has a GDP per capita of ~ $35k.

Put another way, in both countries a hip replacement surgery is almost exactly 1/8 of someone's per capita GDP.

JKCalhoun• 4 months ago

Too bad Walmart greeter isn't making "per capita GDP".

golden-face• 4 months ago

This feels like a misleading ratio, it's just saying the cost is the same in per capita terms but says nothing about the absolute cost or more importantly cost as a percentage of income, which matters for the majority of people in the denominator of the GDP per capita calculation.

wonnage2• 4 months ago

“someone” in this case is in the 73rd percentile in the USA and ~40th in JP.

So the USA is still significantly more expensive as a portion of actual income. “GDP per capita” is a relatively useless figure

graemep4• 4 months ago

The difference that using percentage of GDP instead that Japan moves close to the European countries. The US remains a very expensive outlier.

https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS?locat...

a_victorp• 4 months ago

The median salary in the US is around $61k a year and in Japan is around $42k a year. Salary-wise the difference is not as big as GDP per capita

pjc503• 4 months ago

This is called "purchasing power parity". There's an official index for it, as well as ad hoc measures like the Economist Big Mac Index.

To some extent it's circular: the US has a higher number of GDP because it spends more on healthcare. The broken leg version of the broken window fallacy.

pif5• 4 months ago

The important question is: which fraction of people can afford it in either country?

rayiner7• 4 months ago

I suspect you would see the exact same trend comparing Japan and the U.S. in transit, education, and many other services. The U.S. spends more per capita to get less.

Aurornis• 4 months ago

The US is a wealthier country and wages are higher here than Japan.

The median equivalised household disposable income of a US household is over twice that of a household in Japan.

This is one of many reasons why it’s so misleading to compare prices across countries in a vacuum. All of the people doing the work for those education, transportation, and other services and all of their inputs aren’t going to work for Japan-equivalent pay when they’re living in the United States.

hollerith• 4 months ago

Not in iPhones!

glitchc5• 4 months ago

In domains like healthcare, education and transportation, the cost is primarily labour. A wealthier country pays its workers more, which gets passed down in higher prices to its consumers. And, while healthcare and education do not benefit from economies of scale, transportation does, so the denser population gets cheaper transportation per capita.

nradov25• 4 months ago

Japan also has the "Metabo Law" (aka fat tax). Do you think Americans would go for that?

Dylan16807• 4 months ago

"Obesity costs the US healthcare system almost $173 billion a year."

So that's about 6% of the difference? I'm not immediately saying no, but it sounds like that's not the real problem.

a3w2• 4 months ago

Metabo is a saw producer, so cut fat in half should be their motto. /JK

JumpCrisscross• 4 months ago

Japan also spends less per capita than the UK, France or Germany

These have to be purchasing power adjusted.

tjpnz• 4 months ago

The Japanese system is amazing. Cheap drugs, cheap dentistry, no wait times and reimbursements for all kinds of things (government covered more than 100% of childbirth cost - yes we got more back than we paid). But the best part IMO is the emphasis on preventative medicine. My wife and I get annual checkups which cover a whole range of things including screening for various kinds of cancer.

glitchc5• 4 months ago

Try seeing a doctor in Japan as a foreigner. Just a simple consult costs $300 USD or so, and it goes up from there. It's actually a rather expensive system.

AngryData3• 4 months ago

That doesn't seem more expensive to what I generally pay in the US.

kdheiwns2• 4 months ago

This is absolutely not true. I pay the equivalent of about $40 for X-rays and blood tests. A simple consultation is about $15, if that. I recently got diagnosed with asthma, and the whole set of tests plus a month of medicine came out to about 6000 yen, which I suppose is $40.

The only reason you would pay that much is if you're visiting a private no-insurance clinic and not using insurance. And private clinics pretty much only exist to prey on people who identify as expats and make zero attempt at learning non-English languages, aside from a few exceptions (certain speciality dentists, plastic surgery, anonymous STD treatment, some cancers).

andrekandre• 4 months ago

  > Try seeing a doctor in Japan as a foreigner.

you mean as a foreigner without insurance no?

AngryData3• 4 months ago

But also age-related care is by far the largest share of medical care costs, and Japan has no lack of very old people. Being unhealthy also often reduces the amount of procedures someone is eligible to receive. Despite the blame people throw on unhealthy people for medical costs, they ironically often cost less because of the reduced care and lower lifespan which cuts out a significant amount of age-related healthcare costs. One could argue dieing at 60 instead of 90 is a big loss socially and personally, but overall financially it is a benefit.

dv_dt4• 4 months ago

It "may be other than health care" but most (all?) other modern nations on multiple continents in multiple cultures spend less percent GDP on healthcare with longer life expectancy than the US

phyzix57612• 4 months ago

Japanese Americans have a slightly higher life expectancy in the US (87 years) vs Japanese living in Japan (85 years).

pjc503• 4 months ago

Japan has an age fraud problem which inflates its life expectancy: https://en.wikipedia.org/wiki/Sogen_Kato

"The discovery of Kato's remains sparked a search for other missing centenarians lost due to poor recordkeeping by officials. A study following the discovery of Kato's remains found that police did not know if 234,354 people over the age of 100 were still alive".

bojangleslover2• 4 months ago

The US has a high variance population. Aggregating the US into a single mean or median for that matter is a fool's errand.

helsinkiandrew2• 4 months ago

The difference in life expectancy will be influenced by multiple factors and may have more to do with diet and lifestyle than with healthcare

Less than 5% of Japanese are obese (BMI >30) compared with 36% of Americans, additionally 1 in 10 Americans are severely obese (BMI>35) whereas the number in Japan is negligible.

https://theworlddata.com/us-obesity-rate-compared-to-other-c...

etchalon2• 4 months ago

The US' refusal to move to a single-payer system, while refusing to accept a world where poor people just die if they can't afford healthcare, creates a lot of deeply weird side effects.

rybosworld2• 4 months ago

For a country that prides itself on CapItAlIsM, U.S. healthcare is the farthest thing from it.

- Doctors and hospitals don't compete on price

- Prices aren't just opaque, they are unknowable

- Shopping around is not possible

- Insurer incentive is to maximize billing (cost). They pass along cost as increased premiums to an employer. Employer passes along increased costs to employee as below-inflation wage increases

danny_codes2• 4 months ago

Capitalism doesn’t work well for goods with inelastic demand. Every other developed country understands this and has a nationalized system. The only reason we don’t have universal healthcare is basically unlucky flukes.

Jensson2• 4 months ago

The only reason we don’t have universal healthcare is basically unlucky flukes.

You think its a fluke and not intentional corruption of the system? These companies pays both parties a lot so nobody will ever fix this, that isn't a fluke that is just plain old corruption.

scotty79• 4 months ago

They are intermediary between buyers and sellers paid with percentage of the price.

They have every incentive for the price to be as high as possible.

Such entity can't be left to utilize market forces for the same reason cancer can't be left to utilize human physiology.

underlipton• 4 months ago

No debate about the viability of Medicare-For-All is made in good faith, at this point. The only valid debates are about implementation. No one should entertain any move conversations about whether we should go to a single-payer system, only how we should.

wat100002• 4 months ago

Why? I’m in favor of reform and making our system more like other developed nations. But single payer isn’t the only way it’s done, not even the most common way.

orange-mentor• 4 months ago

The reason is because Medicare for All is viable both politically and implementation-wise. It's been studied for decades and the bills are already written. Just phase it in by stepping it down: 65+, 55+, 45+, everybody.

All providers already accept Medicare.

The only disruptions will be to private insurance, which is a backdoor white-collar, make-work jobs program for millions of Americans. But most jobs are bullshit anyways. That's a broader problem and we don't need to sacrifice lives to deal with it.

profsummergig• 4 months ago

The end goal of AI + Robotics has to be robots doing surgery on humans, for a little more than the price of electricity.

Willish42• 4 months ago

I think this is a political and economic problem rather than a technological one.

I cannot think of a more important skill than surgery to continue training humans to do and to be wary of AI robotics replacing. Sure, some surgeries could likely be automated, but the entire point of specialist surgeons is to make choices and act in a timely manner in ambiguous situations with extremely high stakes.

What happens when the robot messes up? What happens when the internet is down, or the hospital is operating under abnormal circumstances? How do you teach, train, and collaborate with human medical workers and caregivers in a world where surgeons have been replaced by robots?

Most of the excess costs for healthcare and surgery aren't the humans doing the work. I think there's a lot of other areas we can optimize first, chief among those in healthcare being the cost structure around private businesses and insurers bloating the bill with administrative costs. There's a reason every other developed nation has a single-payer healthcare system and better outcomes, and I don't think an AI breakthrough is the only plausible solution to improving costs in the US. In fact, under the current system, an AI breakthrough in medicine would likely hurt the workforce more than it would improve costs.

tonymet• 4 months ago

2/3 of the costs are already wasted. Even if your robot is cheaper, the provider will hire more lawyers, admins, facilities staff, etc to keep the budget growing. Prices have been going up 15% yoy for 20 years do you think that will stop?

legitster3• 4 months ago

If you ever want to "sanewash" healthcare spending in the US, this random guy stood up an entire website to argue that per-capita healthcare spending in the US is more or less in line with expectations based on per-capita income:

https://randomcriticalanalysis.com/why-conventional-wisdom-o...

TL;DR: As people/countries get richer, a larger share of their money goes towards consumption. It's not just that Americans pay more for the same procedures (sometimes they do, sometimes it's just sticker prices) but we consume more healthcare the more money we make. So it skews costs up disproportionally. That wealth also enables chronic health and lifestyle problems that are expensive in their own right.

I'm not sure I'd buy the theory entirely, but it's very well argued and as a null hypothesis it makes a lot of sense.

dboreham2• 4 months ago

My personal experience is that people in the US feel much more entitled to consume medical services than people in the country I came from (UK). They are richer, but there's a cultural difference too.

duskdozer• 4 months ago

What are some examples?

Jensson2• 4 months ago

But USA isn't the richest country on earth yet why do they spend the most?

Edit: I recognize that post now, he uses a special metric "actual individual consumption", which adds healthcare consumed by people as income. So the more expensive healthcare is, the more "actual individual consumption" you will have in the country. That is not the normal GDP metric, but using that special metric USA is on top since healthcare consumed there is so expensive.

mbbutler• 4 months ago

I especially love the quadratic fit, chosen with no justification, that brings the US within the uncertainty envelope in the second plot. Also notice how much work the Mexico and USA data points are doing to the previous linear model fit. Oh, my high leverage data point can't be an outlier because it's within uncertainty when I fit the data with the potential outlier included. This is basic linear model validation stuff.

krautburglar• 4 months ago

Not to hold the commercial insurers' balls here, but if I were a doctor, I'd probably demand more from them. The patient age distribution is not uniform. Most patients are going to be old. If medicare gives me peanuts, I just have to deal with it, for if I don't accept whatever crumbs medicare sends my way, I no longer have a practice. If a private insurer tries to throw me peanuts -- especially when that insurer's customers only make up a percent or two of my practice -- I can easily tell them where to shove those peanuts, so they had better pay well.

qwertyuiop_• 4 months ago

Its called American Medical Association racket.

programmertote• 4 months ago

Agreed. As a spouse of a specialist doctor in the US, average folks don't include doctors when they blame the exorbitant prices of the US healthcare. Sure, big pharma, insurance companies, hospital admins and everyone in between play a part in this big profit-making machine.

But doctors (a lot of them, not all) are complicit in this healthcare complex. American Medical Association is one of the top lobbying groups in D.C. They gate-keep the production of US doctors artificially low by making the candidates go through longer years of education (4 years of college before another 4 years of med school is an overkill for most doctors) compared to other developed nations, resulting in high compensations for doctors AND longer wait-time for patients (due to doctor shortage). They also put up regulation barriers and it requires a lot of certification and exams to become a doctor, so whoever becomes a doctor has the best interest to keep the system (status quo) going.

Average US doctor gets paid a lot more than their counterparts in other developed nations.

nradov25• 4 months ago

The AMA may cause some problems but you can't reasonably blame them for this one. They are not a regulatory or accreditation body. State medical boards control provider certification. Some universities have combined BS / MD programs that cut education time down to 6 years.

kart23• 4 months ago

I agree. congress actually caps the number of residency slots, which is agreed by many to be the ultimate bottleneck for the amount of doctors produced each year. There are plenty of people willing and well-qualified to go through medical school and become a doctor.

https://pmc.ncbi.nlm.nih.gov/articles/PMC12256077/

nomilk3• 4 months ago

I recently travelled to Vietnam for dental work, it's really shocking how easy to it to shop around when dentists actually publish their price lists online for easy comparison/perusal. In my native country, dentists rarely if ever publish prices online, and it's hard to get prices over the phone.

If hospitals could be forced to publish price lists, it would be game changing, allowing patients to shop and compare quality/prices.

Trump vaguely mentioned he'd try to do something like this but it's not clear what he's attempting: https://www.youtube.com/watch?v=8PQ7l905aVM&t=10h57m30s

Maybe this? https://trumprx.gov/

nradov25• 4 months ago

Hospitals are forced to publish price lists (charge master).

https://www.cms.gov/priorities/key-initiatives/hospital-pric...

But at a consumer level it's still quite difficult to predict what your total out-of-pocket expense will be for the same course of treatment at two different facilities.

nomilk3• 4 months ago

Oh wow. Appreciate the correction. I wonder what improvements in price transparency Trump has in mind. Perhaps it's that website in the parent comment.

paulmist3• 4 months ago

In the Netherlands dental service prices are set by the government [1]. Under 18 are universally covered by basic health insurance; for adults average dental for regular work + emergency is 30/month.

[1] https://puc.overheid.nl/nza/doc/PUC_789284_22/1/

nomilk3• 4 months ago

Interesting case study (video; ~2 min): https://www.tiktok.com/@thesephew/video/7476558168059809067

Sanctuary85422• 4 months ago

Not in Maryland

https://en.wikipedia.org/wiki/Maryland_hospital_payment_syst...

siliconc0w• 4 months ago

All payer is really the most viable policy direction to save the US from medical bankruptcy.

linsomniac2• 4 months ago

Yeah, but on our way to medical bankruptcy a lot of people are going to get stinking, filthy rich on it...

bawana• 4 months ago

Does anyone here remember how health care was delivered before medicare and medicaid was enacted in 1965? It was not pretty. Prices were low then because it was all private pay and charity. Why do you think so many hospitals are named after saints? The church made a significant contribution to running healthcare. But when the govt got involved in 1965, the MBAs started salivating. Now we have a system that is built around govt style procurement that we cannot afford. As our population ages, as salaries continue to remain flat, we will have hard choices to make.

0xbadcafebee2• 4 months ago

Or we could adopt universal healthcare like every other developed nation, pay less, and have a healthier nation?

linehedonist• 4 months ago

1965 was 61 years ago. Are you saying you yourself had significant experiences with the pre-1965 healthcare system?

cozzyd• 4 months ago

Chicken barter, presumably

Mistletoe• 4 months ago

I recently had a preventive CT angiogram and the cash price was $500 and the price with insurance was going to be $1000. The system we are in makes no sense at all.

WarmWash6• 4 months ago

Firey take, but health insurers are not the problem they are made out to be. They're on your team and benefit from lower prices just as much as you do. They don't make any money either, don't argue with me, buy their stocks if you are so convinced and see how that goes over.

Health care providers carry immense blame. It's full of passionless people in it for the outsized paychecks, who once inside will just seek whatever local minimum to stay employed.

DangitBobby• 4 months ago

They add an entire layer of make work and waste just for existing.

soared• 4 months ago

[flagged]

WarmWash6• 4 months ago

Exactly, ask anyone in a job for the money how their week was.

Not saying nursing is stress free, or every nurse is bad, but like tech companies in 2021, it's full of directionless people who pushed through the cert program to get paid $50/hr with $100/hr weekend shifts and be disgruntled with you that you are making them do work.

IdiocyInAction• 4 months ago

Nurses in the US are actually very highly paid. Ask anyone how their week was. They'll all say it was crap.

crazygringo3• 4 months ago

health insurers...'re on your team and benefit from lower prices just as much as you do

You're missing a very, very, very important piece here.

Which is that the lowest price of all is to deny treatment entirely.

They are not on your team, they are the opposite team. Their revenue is basically fixed, at the level of your premiums. But the more health care they pay for you to receive, the less profit they make. That's just arithmetic.

This is why there are so many horror stories of people being denied necessary treatment, or having to fight for months and years to get their treatment actually paid for. Insurance providers are incentivized to do their absolute best at taking your money and then not paying for care, through every sort of technicality and "mistake" and arbitrary judgment and limit they can come up with.

nradov25• 4 months ago

No, that's not how it works. Due to the ACA minimum medical loss ratio, most health plans have no direct financial incentive to deny treatment.

mindslight• 4 months ago

The several+ times in my life I've had to sort out billing issues, the health "insurance" agents have been helpful and friendly, stating what bills should be in no uncertain terms, even offering to conference call with billing departments to get things resolved, etc... Meanwhile provider billing departments routinely try to defraud me, even going so far as to bully me to pay those fraudulent amounts, don't follow up on things (eg filing claims) that are their responsibility and that they've said they will take care of, and generally make their problems into my problems.

This certainly isn't a defense of health "insurance" companies though! I just think they're better modeled as Lovecraftian horrors animated by paperwork and compelling the creation of ever more paperwork to feed on, rather than money-grubbing cheapskates as the pop-political narrative goes. And the approaches for fixing one are much different than the approaches for fixing the other.

niij• 4 months ago

Insurers are only allowed to keep a % as profits. Higher spending increases the absolute amount of profit that can be retained.

vkou• 4 months ago

If health insurers are on my team why do they blatantly lie about their network coverage to me? Why do they list providers as in-network, when the providers consider themselves out of network?

Why aren't the executives of these insurers shilling ghost networks not in prison for mail fraud?

unclad59682• 4 months ago

Having worked in medicine, I agree about providers. People who probably got in it to help people burn out immediately and become like the rest of us looking for the best paycheck with a tolerable workplace.

Insurance companies make plenty of money though. Cigna makes $7-8B per year and pays a decent dividend.

WarmWash6• 4 months ago

They pay a 2% dividend and the stock is up 10% in 5 years.

That's a D tier stock.

calebm• 4 months ago

"We've negotiated special rates on your behalf."

kstrauser4• 4 months ago

No, they don’t. Medicare’s one of the better payers among major groups.

Source: owned a medical practice for over 20 years, and was staff engineer at a company that processed medical bills.

busterarm• 4 months ago

There's so much culturally different here that blaming just the differences in the system of health care is effectively meaningless.

Yearly physical exams are much more thorough in Japan. Unless you are optimally fit, you will be prescribed lifestyle changes to make and there is a strong expectation that you will work hard on these. Your employer will be involved. There is _tremendous_ social pressure if you are overweight.

Healthy food options are ubiquitous there with healthy and cheap meals available 24/7. Combini food certainly has bad options but nothing compared to American fast food or the American diet generally.

There are other health problems that are significantly overrepresented in Japan compared to the western world. Alcohol, smoking and stress-related illnesses. Liver & Kidney diseases. Peptic ulcers, GI problems in general.

tptacek9• 4 months ago

I buy that the locus of American overspending is in fees charged by providers (my understanding is that a further principle component of that spending is in end-of-life care).

The problem, though, with going after pharma costs, and pharma benefit managers is that pharma is a relatively small component of overall spending; it's less than 10%. That is to say, you could make all pharmaceuticals entirely free, and we'd get at best a 10% discount on what we pay. I don't think any of us would be satisfied with that!

This is data from the most recent (as of last year) CMS NHE:

https://nationalhealthspending.org/

sudopsuedo• 4 months ago

The 9.2% figure is pharma's direct share of NHE, but drugs are a net-positive externality. Cheap statins can stave off cardiac surgeries, GLP-1 can stave off bariatric surgeries, etc. It's ridiculous to conclude we would only save 9.2% on costs--this is not zero-sum.

No comment on drug pricing and its incentives, the existence of America's prescription drug markets drives the new innovative drugs that the rest of the world picks up for cheap.

tptacek9• 4 months ago

That's an interesting argument --- that massively increased access to pharmaceuticals would have knock-on impacts on other cost areas in the NHE.

I think if we dig into the numbers we're likely to find those effects, even if we maximize them, are marginal, unless we do other structural things to untangle the provider pricing system and do price transparency. Like: you could posit a material impact on CVD costs by making statins more widespread, and that should make a dent somewhere, but I don't know that CVD costs in non-Medicare-insured patients are really that big a line item, and non-Medicare is important here because people already Medicare-qualified generally have all the statins they want already. Meanwhile, providers are still ripping patients (and insurers) faces off for shoulder impingements, stents, and spinal fusions.

It's a super interesting comment. Thanks!

onraglanroad2• 4 months ago

the existence of America's prescription drug markets drives the new innovative drugs that the rest of the world picks up for cheap.

That's the ludicrous propaganda that you've been fed but you really should be intelligent enough to dismiss it.

The world would get along just fine without you overpaying for your drugs. You pay for marketing costs.

duped• 4 months ago

Even if it's 10% in aggregate it could be much higher for individuals and families that are screwed over by drug pricing.

But anyway we really do need to go after providers and end the racket that is employer provided health insurance.

tptacek9• 4 months ago

Wait, I hate employer-provided health insurance and think it's a terrible policy but what does that have to do with providers charging everyone --- including Medicare! --- way too much for services?

nativeit• 4 months ago

This is an interesting way of presenting a topic, I like it. Especially if it’s got included datasets that allow others to mess with said topic. I don’t want to suggest bloating it up with any complicated UIs, but a Jupyter notebook could be nifty. Maybe not for this specific topic, but other data-heavy subjects.

pfdietz• 4 months ago

I think the problem is the system is designed to inflate what is being done to the point it's barely affordable. This new treatment requires more equipment and time? No problem, it's x% more effective, so it gets rolled out. And as medicine expands, the opportunities to make it marginally better also increase.

If what we defined as care was constant, it would get cheaper over time. But it doesn't stay constant.

andai• 4 months ago

Is the author GPT-5?

IntrepidPig• 4 months ago

Probably so. The table heading “Key Finding” smells rankly of LLM, plus the massive overconfidence that they’ve single-handedly figured out the problem with American healthcare with a little data science that only an LLM or a schizophrenic could be capable of (I haven’t read anything beyond the first part of the README because I don’t waste my time with slop, but I’m assuming they’re ignoring the incentive structures which encourage the system to stay this way), plus the simple fact that they call out a completely meaningless $3T gap that doesn’t account for population difference at all. It’s so strange because they mention the per capita difference right before that. That’s the number that matters. But still they go on and say $3T gap, and even measure the issues in terms of a percentage of that $3T gap. It’s nonsensical, right? I’m really tired of this.

joaohaas• 4 months ago

Kinda insane no one else is talking about this.

The entire repo reeks of a "Write an extensive analysis comparing the american and japanese medical care systems" prompt.

Not saying all the findings are invalid, but most of them are just the LLM trying to justify it, like the life expectancy one.

umvi• 4 months ago

Japan spends ~$5,790 and has the highest life expectancy in the OECD

Is Japan's life expectancy because of its healthcare or culture? I'm pretty sure Americans would not live to the same age as Japanese even with Japanese healthcare because of our low nutrition high sugar diets...

tptacek9• 4 months ago

Life expectancy is not a useful health care system comparison because the primary factors that cause divergences between developed countries aren't based in the health system --- they're things like traffic accidents, homicides, drug overdoses, and suicide. Yes, CVD will appear in that list of factors, but it's noisy; despite having structurally the same health care system, states in New England will have Scandinavian CVD outcomes while southern states (some of whom actually do a better job than New England at making care available) have developing-nation CVD outcomes.

bcooke• 4 months ago

This project reminds me of a book I highly recommend called An American Sickness. It sheds a lot of light on the same sorts of issues.

One underlying, perverse incentive behind many of the problems is that insurers are regulated based on percentages of spending rather than total costs.

The US passed laws meant to limit marketing and overhead that tied insurers economics to the size of the overall medical bill... which means as healthcare spending rises, the dollars they’re allowed to retain can rise too, which basically means they're incentivized to drive costs up rather than down.

Here's a link to the book: https://www.helmpublishing.com/products/an-american-sickness...

hattmall• 4 months ago

It's almost as if the insurance companies wrote those regulations. The same ones that required everyone to purchase their product and implemented government subsidies to pay them. Legitimately no way anything other than price increases and insurance profits could happen.

Taikonerd4• 4 months ago

The US passed laws meant to limit marketing and overhead that tied insurers economics to the size of the overall medical bill... which means as healthcare spending rises, the dollars they’re allowed to retain can rise too, which basically means they're incentivized to drive costs up rather than down.

Yes, this is an important piece of the puzzle. The "medical loss ratio" for large insurers (the kind we all know and love) is set to 85%. So they can keep up to 15% of their revenue as profit.

As you said, if total spending goes up, they get 15% of a larger number.

yeahwhatever10• 4 months ago

So same as realtors and most other brokers.

edgarvaldes• 4 months ago

As a non-American, I find it interesting that so many comments in the thread insist that "No, American healthcare is not that expensive compared to that of other countries; no, the costs of the American healthcare system are not high due to greed and capitalism; and no, the American healthcare system cannot be cheaper or better, it is not perfect, but it works as it is."

joe_the_user2• 4 months ago

As an American, I think most of my countrymen's arguments on the subject resemble something like "learned helplessness". The "healthcare system" is craptasm of kludges that each partly counter the fundamental irrationality of rapacious private healthcare but introduce their own idiocy. So the arguments and "ideas" involve this already dumb measure needs to be changed in that half-assed fashion. A few election cycles ago, an old woman was quoted saying "get the government out of my medicare [medicare is a state program, for foreigners trying to understand this stuff]"

turlockmike• 4 months ago

Unregulate the insurance industries problem solved. Let people actually buy insurance for it's intended purpose. No insurance company would pay these rates willingly, they do it because of all the regulations. They aren't allowed to profit normally, so they find ways around it. Just let them operate normally, like all sorts of other insurance programs.

danny_codes2• 4 months ago

Back to pre-existing conditions eh?

Yeah no thanks, let’s do the tried and true universal healthcare that literally every else does. They get better results AND it’s cheaper. We’re literally paying more for something worse.

linsomniac2• 4 months ago

Healthcare administrative overhead in the US is pretty huge and has been for a long time. Back in the early 90s I worked on claim processing software and I recall it being discussed as being around a third of healthcare costs.

Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

In 2021, the U.S. spent $1,055 per capita on healthcare administration, while the second-highest country — Germany — spent just $306 per capita, Japan is $82. https://www.pgpf.org/article/almost-25-percent-of-healthcare...

Administrative spending accounts for between 15% and 30% of total medical spending, with lower estimates covering only billing- and insurance-related expenses, and higher ones including general business overhead such as quality assurance, credentialing, and profits. https://www.healthaffairs.org/do/10.1377/hpb20220909.830296/

The Center for American Progress estimates that health care payers and providers in the United States spend about $496 billion annually on billing and insurance-related (BIR) costs alone. https://www.americanprogress.org/article/excess-administrati...

The time burden on physicians is staggering — estimated at $68,000 per physician per year spent dealing with billing-related administrative matters. https://www.pgpf.org/article/almost-25-percent-of-healthcare...

jimt12344• 4 months ago

I witnessed this devolution with my GF. She's a medical provider in CA that, since the mid-90's, got her funding from a state agency. She met with the agency once per quarter, reviewed her funding claims, worked out any discrepancies one-on-one, in-person with her representative. Worked great. Then private insurance muscled their way in. It's been a bureaucratic nightmare ever since. She had to hire a full-time staffer just to handle all the insurance BS. She never needed that before private insurance.

The nightmare isn't just for her; it's also for her patients. She now spends almost as much time walking her patients through the insurance bureaucracy than she spends on actual treatment. And it's so sad because her patients are so desperate (parents of extremely sick children), but often get nothing but bureaucratic run-around from their private insurers.

So yeah, it's been a lose-lose situation since private insurance took over.

heyitsmedotjayb2• 4 months ago

At least those parents have the freedom to choose which animated 3d mascot is on their insurance paperwork.

joe_mamba6• 4 months ago

Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs.

That's the reason why a lot of inefficiencies are kept in countries around the world: it keeps people employed and moves money through the economy. If broken things were suddenly to be made efficient overnight, the government wouldn't be able deal with masses of angry people/voters suddenly out of a job.

missingdays• 4 months ago

And they say there's no socialism in the US

roenxi• 4 months ago

The sentiment reminds me of the people who believe that having so much prosperity that people feel comfortable not working all year around... represents some terrible threat that must be vigorously resisted for the greater good! Think of what it would do to the poor metrics.

Literal overnight change might be too radical (although, frankly, I'd want to see some academic work on the matter because it sounds like it might work - typically the problem seems to be that the body politic tries every alternative but good policy first then blames the mess on freedom) but people who are scared of rapid improvement because they don't like change are a massive threat to human prosperity and really shouldn't be left in charge of anything important.

Delaying the industrial revolution was never a good choice at any point in human history. The potential gains from efficiency are unbelievably large.

cycomanic2• 4 months ago

This reminds of a debate in the German parliament 30 years back or so, about the cost for the Eurofighter project (IIRC). Essentially one speaker had argued against the staggering cost, and a second speaker from the government defended the project by saying how many jobs it created. Someone shouted that building a pyramid in honor of Helmut Kohl and it would create a lot of jobs as well, that didn't mean it's a good idea.

andrepd• 4 months ago

This is a sign of a broken system. It's the old joke about paying someone to smash windows and someone to repair them, how that's great for The GDP.

lII1lIlI11ll3• 4 months ago

I would assume reducing healthcare costs would make absolute majority of voters happy.

friendzis• 4 months ago

The time burden on physicians is staggering — estimated at $68,000 per physician per year spent dealing with billing-related administrative matters

Having had my share in the administrative part of the medical field, that figure is most probably somewhat misleading. Every time you deal with billing you are bound to deal with granularity. On one extreme you could bill per case, on the other extreme you can count the paperclips used. It could seem at the first glance that the more you move towards the latter, the more time has to be spent by someone to somehow eventually form the invoice.

However, this surface-level conclusion misses the fact that patient care does not start and stop at the the operating room door. Some processes mandate transparency/traceability and thus documenting what's being done and used is part of the process anyway. [edit: the final deliverables are not a treated patient, but rather a treated patient and documentation complete with medicine authorizations / prescriptions (including for drugs used internally), sick-leave certificates, etc.]. That data is then effectively reused for billing, with minimal overhead hopefully. Yes, there's a lot of room for improvement and automatization, but activities not directly related to active care make up a sizable portion of the time.

mlrtime• 4 months ago

Isn't this true across other sectors as well? NYC DOE spends $42,000 per child on education ~half of that is administration costs.

https://apps.schools.nyc/dsbpo/sbag/default.aspx?DDBSSS_INPU...

apical_dendrite5• 4 months ago

Where are you getting that from the link that you shared (which is one specific school)? The link you shared shows a figure of $34k and doesn't show a clear breakdown of administrative vs non-administrative costs. The closest I can see in that link is that $13k/$34k is allocated to central services, but most of that cost goes to things like the school buses and the cafeteria and the security guards, which are direct services to students, not administrative overhead. They just are run at the system level, not the individual school level.

projektfu• 4 months ago

I didn't see those figures in your link. It looks like $34,000 is the per capita funding of that school, and it wasn't really broken down into administrative or not.

LorenPechtel17• 4 months ago

Huge data problem here. How much of it is special education? There's a huge division here, the per-capita spending is not remotely what is spent on the average student in the classroom.

gorbachev• 4 months ago

Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

Yet we're ok with spending trillions on AI to eliminate jobs everywhere, including healthcare.

I don't think that's the reason.

Personally I'm of the opinion the reason it isn't being solved, is because the people whose job it would be to solve it get to keep their jobs due to donations from pharma and insurance companies.

tartuffe78• 4 months ago

Well right, people lobby not to change anything because they have giant companies that make them money. They need all those people in jobs to help them deny claims, identify fraud, waste, etc.

steveBK123• 4 months ago

Middle men in processes add overhead, but on various analyses I've seen.. zeroing all middleman (insurance, PBM, etc) out still leaves us as far more expensive than the rest of the rich world.

One thing which is not terribly popular to point out is that at least on procedure pricing - wages are way way higher here. Some of that is that education is far more expensive so then we need to pay very well to pay that down. Also we have a cartel that limits the number of medical graduates.

NYC have been striking and to quote the union-friendly NYT "The three hospital systems affected by the strike said their nurses on average make about $160,000 a year and are seeking raises that could propel nurses’ salaries on average past $200,000, according to the hospitals."

By comparison UK pays nurses like US blue state fast food workers. Per google - "Average nurse salaries in London are the highest in the UK, generally ranging from £37,000 to £55,000 per year." Note NYC minimum wage is at $17/hr though many hospitality workers in the $20s, with a renewed Mamdani push to $30/hr minimum.

And US tax rates at these 3-4x higher compensation levels are same/lower than the UK..

Then add Americans having generally unhealthier lifestyles, being more litigious requiring higher malpractice insurance, etc..

bigfudge2• 4 months ago

Malpractice insurance is a big part of the higher salaries.

shimman5• 4 months ago

Why are we attacking literal healers that want to be compensated fairly and have better standards for their patients?

The US is being pilfered by like less than 10,000 people so the federal government can give them corporate welfare worth $50 trillion over the decades [1] at the expense of workers.

But yeah... it's those damned nurses wanting to have fair wages and working hours that are the true enemy not the ghouls in SV that profit off of human misery... it's the nurses...

The idea that healthcare needs to be profit driven should be an idea excised from our collective intelligence.

[1] https://time.com/5888024/50-trillion-income-inequality-ameri...

helsinkiandrew2• 4 months ago

Administrative spending accounts for between 15% and 30% of total medical spending

Healthcare is nearly 20% of GDP (and growing), so administration is 3%-6% of the US economy!

heyitsmedotjayb2• 4 months ago

Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

Why not simply hire them to do something that isn't pointless - like dig ditches or clean garbage

nullpoint4202• 4 months ago

You could say the same to tech workers after AI.

rexroad26• 4 months ago

Those figures are consistent with what Issue #5 (still a couple weeks out) of this series computes from CMS NHE 2023 data and OECD health statistics. The 10-peer OECD average lands at $884 per capita, putting the US at 5.6x. Scaled to 335M people, that's $1.37T in excess admin annually.

The Woolhandler/Himmelstein 2020 figure ($812B) updates to $1.13-1.66T in 2023 dollars when adjusted for healthcare inflation. The CMS narrow admin estimate ($410B) plus CAP's billing complexity analysis ($496B) gives a $906B floor. Those three methodologies agree on the floor, disagree on the ceiling. Issue #5 covers all three and explains why the range is so wide. Coming soon.

paulddraper4• 4 months ago

Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

This is legitimately mentioned in the industry.

Imagine the "you need developers!" crowd on HN, but 5x stronger.

novok2• 4 months ago

When you really dig into the difference it's metabolic health that is driving most of it, and that will be fixed by agricultural and food regulation for the most of it, starting with going with the whitelist system that japan and the EU have for food additives & manufacturing processes vs. the wild west that is GRAS in the USA, and way more strict food quality / inspection standards than you would think.

paulmist3• 4 months ago

This! I flew from Madrid to SF last year and I can't begin to describe the difference in the quality of food. The scale of agricultural industrialization is terrifying - I wish you luck but I don't think anything short of this becoming a major campaign issue will help you.

hax0ron3• 4 months ago

I think it is possible that the majority of Americans do not know what they are missing. It is difficult to really understand how much better simple things like fruits, vegetables, and bread can taste without experiencing it. It's like The Matrix, you just have to see it for yourself. Well, taste it for yourself. I find that in America even local farm produce at the "farmer's market" often tastes flat and uninspiring. For whatever reason, heirloom tomatoes tend to be good though - they constitute an exception.

To be fair, I was not born in America. So it is possible that it's not that American food is actually subpar, it's just that I became used to particular nuances of how certain foods taste back when I was a child and I do not get that from most American food, and to Americans their produce tastes extremely delicious. I'm pretty skeptical of this idea though. My hunch is that I'm not experiencing some sort of chemical nostalgia, and that American produce actually isn't very good.

RFK Jr. successfully made some of this kind of stuff a minor campaign issue in the most recent US presidential election, so whatever one thinks about RFK Jr., at least it seems that there is some demand for food production reforms in the US electorate.

paulmist3• 4 months ago

As a European I would think a large part of the problem is that Americans are just sick more seriously and often. Your car culture, quality of food, and general preventative healthcare accessibility seem all terrible there. The prevalence of obesity in younger population is staggering. In my (engineering) programme I see one very obese person and a couple fairly overweight, but that's about it.

zdc1• 4 months ago

Australia and the US have similarly higher obesity rates. As you can see in the article, their system is simply just inefficient (arguably, by design)

dzink2• 4 months ago

Huge chunk of the costs come from the fact that Doctors pay astronomical malpractice insurance rates in some states with no tort reform. Some have to spend more than 100k on insurance - 1/3 of their total pay. Since some states allows multi-million dollar judgments from juries that raises insurance everywhere, which raises not only prices for everyone but also dramatically contributes to more procedures and tests being done at even higher costs to avoid liability. The risks of having your entire livelihood wiped out chases out doctors from those states and reduces availability of care for patients as well. If you want objective cost comparison, compare Veterinary care which has similar consumables and training, but no insurance and liability impact on prices.

sethammons2• 4 months ago

The doctor that delivered my middle child said he had to deliver three babies a week just to cover insurance, and he had never had a case against him in his decades of practice.

LorenPechtel17• 4 months ago

Yup, obstetrics is a really nasty one. The problem is in many cases it's impossible for the doctor to prove he didn't harm the baby, the jury sees a baby that needs a lot of care and they see deep pockets.

And then you get stuff like the local case the lawyers were using as a poster boy for supposedly blaming the insurance companies. Baby had serious problems. Trial #1, 90% fault to the mother, IIRC 10% to the birthing center (which was no longer in existence.) By state law she couldn't collect because she was more than 50% at fault. Trial #2, same case, refiled in the name of the baby. 90%/5%/5% to one doctor who saw her once several hours before delivery. The whole $6 million judgment landed on him and last I heard that was being litigated over sticking him with the whole bill.

Hey, both juries agreed she was the problem. But there's no way to prove the others were blameless.

I've also seen this more directly: mock jury. Their screening questions weren't adequate--I knew how things would actually play out. Claim for IIRC ~150k, defense presents a smoking gun, but I don't think they went far enough on arguing the implications of it. We "settled" (didn't have to be unanimous) on ~30k, giving her a fifth of what she was asking for--except that doesn't make the medical bills for running up the tab go away. Lawyer is going to get his percent, docs will get the rest, she will see nothing. I kept quiet about this part as I knew it was information their screening questions missed.

deltoidmaximus• 4 months ago

Maybe if we didn't have enormously expensive healthcare that is tried to our employers the payouts would need to be so huge. If I'm injured by medical malpractice and can't work I'm going to need a lot of money to make me whole in the US, even more so if I need additional medical treatment.

dzink2• 4 months ago

The money that goes to the injured is dramatically smaller than the money that everyone in the system pays to cover the insurance liability calculated insurance rates when the payouts can be arbitrarily set by juries. So if one jury says 600 million for one egregious case, all insurance for all doctors and all care for all patients skyrockets to trillions based on the risk assessment of insurers at that point. It is better to manage the risk with better measures (some states have a damage pool)

jeffreyrogers• 4 months ago

The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD.

Ethnic Japanese in the US live have about the same life expectancy as Japanese living in Japan do (within 1 year). US GDP per capita is about 2.4x Japan's. So the numbers don't look nearly as bad when you adjust for that. The higher drug prices in the US are definitely part of it, part of it is our population is less healthy in general (fatter, worse diet, more drug and alcohol abuse), but part of it is Baumol's cost disease[0]. Biggest barrier to lowering healthcare costs in the US is it probably requires paying doctors, nurses, etc. significantly less and most of them work hard and feel like they deserve to be paid as well as they do.

[0] https://en.wikipedia.org/wiki/Baumol_effect

Edit: to some extent high US drug prices are a public good that subsidizes healthcare for the rest of the world. I don't know the data but I would guess the US is responsible for a disproportionate share of new drugs.

jimt12344• 4 months ago

Issue #4 examines pharmacy benefit managers ...

I'm curious to read that. I worked for a PBM back in the 90s/early-2000s. When I was hired, it was just a job; I had no idea what the business did to make money. After working there a few years and learning - well, I would've felt better about myself if I had become an actual drug dealer, selling cocaine and meth. That's not a huge exaggeration.

slashtom• 4 months ago

It's great to see work being done to highlight an issue but I do wonder what background does the author have? Would recommend gestalt/cleveland as a good grounding, the visualizations is editorial rather than analytical.

Choosing US versus Japan, which Japan has the lowest cost and highest life expectancy in the OECD, it's cherry picking. I'd recommend showing the full distribution of OECD per-capita spending rather than just a single cherry picked comparison.

This also is troubled by McNamara Fallacy, we're looking at metrics that are qunatifiable but ignoring what can't be measured or overlooked, is speed of access being considered, how about innovation incentives, quality and outcomes variation across systems, patient choice and flexibility, in addition to workforce compensation (nurses and physicians in the US earn significantly more). Where are the trade-offs?

Summary Statistics can be dangerous. 254% of medicare is a single ratio summarizing enormous variation across thousands of hospitals and procedures. Median markup of 3.96x inherently hides the distribution, some hopsitals may be higher or lower, why is that?

I think the biggest one to me was the confirmation bias, the $3 trillion gap that represented 'fixable waste' was the conclusion. Every price difference is interpreted as waste rather than investigating the potential cost drivers, was there a null finding framework in place where US spending appears justified or is it all bad?

Overall, glad someone is looking into the data and pulling insights, please don't take this as discouragement just a comment from the peanut gallery.

socalgal2• 4 months ago

This might be rigth but I don't get a lot of confidence from the start comparing Japan's lifespans to the USAs and implying it's because of health care

Japanese, as a whole, have a vastly different diet than the average USAian. As a whole, they are far less obese, eat far less diary products, over eat less, eat less meat, etc... Again, not saying that's the reason but it's a possibility. USA = 2500 calories a day. Japan = 2000 calories a day. Japan = 3% obese. USA = 33% obese.

Next up is exercise. Sure, lots of people in the country live in rural areas and drive a car. But some large portion of the population does the majority of their commuting and shopping by walk/bus/train/bicycle. That means that on average, Japanese get more far more exercise than the average USAian. Japan gets ~25% more exercise on average

I'd suspect these 2 (3)? are the major reason Japanes live longer. (1) they get more exercise (2a) they don't over eat (2b) they eat healther foods.

Anyway, the point is, the post should arguably not be putting such a specious statement at the top. It suggests the rest is probably just as specious

TrackerFF• 4 months ago

Healthcare can only get you so long, if we're looking at life expectancy

If you're less active, eat worse, throwing more money at fixing the symptoms will not fix the underlying problem.

Not saying that Americans aren't paying outrageous amounts compared to others, but when comparing these things, I think it makes more sense to look at countries with population more similar to US.

tsoukase• 4 months ago

In health care everyone knows the exact problem because they live it and suggests a solution, mostly from opinion or other countries' systems. In the US the system is so bad primarily due to the holy national founding principles: the minimal public support pushes the prices to exorbitant levels due to loss of regulation that ends up to abject profiteering by providers. People try to hack the system so the price is reduced from exorbitant to very expensive. The naive but painful solution is to borrow and adapt elements from other systems and if the Sweden's feels too socialistic, let it be Portugal's or Greece's. The reform will do good to the whole nation, only a few jobs will be lost and some others will see less 6-figure income.

999900000999• 4 months ago

Looking at this as a math problem is a bit navie.

Americans don't want cheaper healthcare.

We've collectively decided the nightmare of employer based health insurance is a good idea.

Single payer healthcare will never happen.

Imagine if you will an Apple farmer willing to supply an entire town for a set amount per person.

One town, call it NordicTown says this is a great idea. Everyone chips in.

Another town, Jamestown has lively debate on the issue, but half the population believes unworthy people will get apples.

Since it's the policy that if anyone who shows up at the apple market starving they'll always get an apple, the apple farmer figures out they can bill the town for whatever they want.

Jamestown then ends up implementing special taxes to pay for poorer people to have apples. They could actually extend this to cover everyone without raising taxes.

But this will never happen. Someone you consider lazy might get a free apple. So you gladly pay 3 times as much.

Everyone in America is a single expensive illness away from ruin. We like living in a dystopian nightmare where you have to pick between medicine, a car note and rent.

Did I mention Jamestown residents who relay on free apple programs regularly vote against free apples?

bojangleslover2• 4 months ago

It's neither capitalist nor socialist. If it were fully socialist you would have long wait lists but it would be free and there would be one payer. It is like this for Medicare and Medicaid which I've heard are a fantastic UX. But this is only the case for about half of Americans (the ones who don't pay for it).

On the other side, if it were fully capitalist you would be able to see the price and walk away if you didn't like it. This is what makes capitalism work. Your margin is my opportunity. Instead, the upper middle class, who pays for everything already, and is unable to use Medicaid, is forced to use a certain "network" of providers and never, ever sees the price upfront. This is the cornerstone of capitalism. Does the buyer like the price? If so, transact. It's completely not there. Instead, it's actively discouraged and banned, and the price is maximized post-hoc by the same entities who negotiate directly with the employee's employer. Ie, a quantitative shakedown.

TheOtherHobbes• 4 months ago

Waitlists are a function of funding, not a direct abstract consequence of socialism. Countries with single payer that have adequate funding - with single payments from taxes that are hugely lower per capita than the US system - do not have long wait lists.

As for walking away - it's hard to do that if you're dying or unconscious.

And of course corporate capitalism always collapses to cartels and monopolies.

The idea that a free market optimised for consumer competition is a mythology, not a reality.

Markets compete for shareholder returns, not customer satisfaction. Customers are only ever a convenient source of profit with inconvenient expectations of service quality and cost.

Doable0896• 4 months ago

If it were fully socialist you would have long wait lists but it would be free and there would be one payer.

That is a crazy thing to say. Not saying that it can't be true, but a socialist system doesn't mean automatically long wait lists.

Ylpertnodi• 4 months ago

If it were fully socialist you would have long wait lists but it would be free [....]

No. Wouldn't wait times are dictated by supply (doctors) and demand (patients), not the political system?

petesergeant• 4 months ago

It’s not a conundrum, it’s a stealth regressive tax. The people who could fix it don’t want it fixed, and there’s are massive commercial incentives to keep perpetuating it, wrapped up in arguments against socialism.

TuringNYC• 4 months ago

The problems are so vast it is difficult to even describe to outsiders. For example, if I purchase a particular medication at a local pharmacy, it costs $25. However, my insurer mandates that I purchase it via their Pharmacy Benefit Managers (PBM) Optum, which charges $125. Easy enough right, you price shop? Well then it doesnt count towards your deductible. The whole thing is an elaborate trap to not pay.

Sometimes it is easier to just pay cash without insurance altogether. You need the medication today and dont have two weeks to fight it out with letters and forms, then it definitely doesnt count towards your deductible (and also, what is the purpose of the pharmacy coverage insurance?)

cmiles82• 4 months ago

Prescriptions are a total racket. A good portion of actual medication literally costs a few dollars at most. Then there’s layer upon layer of bloat and bureaucracy that add no value but drive the cost up 10x or more. It’s totally bonkers.

When these Rx cards and Marc Cuban CostPlus drugs came out where you just pay cash and a fraction of the price I thought there must be some catch or scam here. But turns out no, they’re just cutting out all the middleware bloat and selling you the meds at a defensible markup plus their logistics costs. Love what these guys are doing.

The fact that something like that even exists highlights how corrupt and broken the health insurance companies have become. It’s their job to get better prices at scale and yet somehow they manage to sell at prices far worse that Joe Blogs off the street can get with cash.

In many ways the quality of care in the US is far better than what folks get elsewhere, which in part is probably why there isn’t a total patient rebellion, but the US’s challenges are all rooted in massive administrative overhead. If we got rid of that and had a lean system where healthcare providers can do their job without interference there would be plenty of money to go around for amazing care at lower cost.

Turskarama• 4 months ago

In many ways the quality of care in the US is far better than what folks get elsewhere, which in part is probably why there isn’t a total patient rebellion

How sure of this are we really? Other countries mostly have problems with emergency departments being full, but that's less because those emergency departments are worse and more because in the US people aren't going, they just stay home and hope they don't die.

PaulHoule• 4 months ago

See https://pharmacy.osu.edu/news/prescription-discount-cards-wh...

anon7000• 4 months ago

It’s their job to get better prices at scale and yet somehow they manage to sell at prices far worse

Maybe on paper, in reality their job is to return as much profit as possible to shareholders. Convoluted bureaucracy, complicated regulations, layers of useless middlemen… they all help to reduce competition and increase profits. There are industries where the “free” market doesn’t work, partly because “human well-being” is a non-goal for any health insurance company. The entire point of the insurance business model is to avoid paying for it as much as possible

hammock• 4 months ago

People are waking up and a lot is happening to counteract some of this.

In the FY26 omnibus bill passed by Congress and signed last month by Trump is the most aggressive federal crackdown on PBMs in history. Starting in 2028 it bans PBMs from taking a percentage cut, which is exactly what incentivized them to drive up the sticker price of your meds. It forces PBMs to pass 100% of the rebates and discounts they negotiate directly to employer health plans, stopping them from pocketing the savings. And PBMs are now mandated to provide detailed semiannual reports exposing their "spread pricing" (charging the plan more than they pay the pharmacy) and their shady practices of steering patients only to pharmacies they own

Also to do what Mark Cuban did but on a national scale, the federal govt launched TrumpRx.gov, a direct-to-consumer federal platform that completely cuts out the PBMs and insurance deductibles you're talking about , allowing people to buy dozens of the most popular meds for an average of 50% off.

Finally one benefit from the threats of tariffs has been that companies like Pfizer caved and signed landmark deals with the US to offer their drugs at “most favored nation” prices to Medicaid and directly to consumers

samiv• 4 months ago

"In many ways the quality of care in the US is far better than what folks get elsewhere"

This comment has very strong survival ship bias though because you're only looking and ranking the treatments that did happen. How about the cases when the person was denied treatment based coverage or whatever reason. These cases should rank too.

Aeolun2• 4 months ago

In many ways the quality of care in the US is far better than what folks get elsewhere

Or so people keep telling themselves to not feel completely fucked?

fragmede2• 4 months ago

The catch is that Mark Cuban is now the one capturing the rewards instead of the now-unknown-to-me-in-the-wake-of -Luigi-Mangione healthcare tech company CEO

realo• 4 months ago

"... quality of care in the US is far better ..."

Care starts when you need it, at the ambulance level.

Recently we saw that people who dial 911 in the US can actually die because the ambulance arrives hours (!!!) later.

So no. Quuality of care in the US is not that good.

alexfoo5• 4 months ago

This always baffles me.

There’s so much rampant profiteering in the US healthcare system it’s unbelievable. Other countries look at it from afar in utter disbelief. I’m glad I had no serious health problems when I lived there 25 years ago (and I had health insurance via my employer).

In the UK prescriptions are effectively capped at about USD125 per year:

https://www.nhsbsa.nhs.uk/help-nhs-prescription-costs/nhs-pr...

I recently collected 4 prescriptions from my local pharmacy (3 for temporary conditions, the other one was ADHD meds which I’ll be on for the foreseeable future) and the pharmacy didn’t even want to see proof of my prepayment certificate, I just said I had one and they ticked the relevant box and handed me the prescriptions.

(The implication is that the NHS will check this and come after me if I was lying.)

Don’t get me wrong, there’s lots wrong with the UK healthcare system but the access to regular medication has very few barriers.

arethuza• 4 months ago

In Scotland and, I think, Wales there are no subscription charges at all.

1234letshaveatw3• 4 months ago

What an amazing system! Poof! just like magic you can pretend that sophisticated medicines, that are years in development, should cost nothing just because! And then you can act all smug about it!

onlyrealcuzzo10• 4 months ago

Health care is so broken that I think it will unbreak itself.

You can eliminate most of the problem by mandating true cost billing by hospitals (get rid of their insurance mandated 500%+ markups to make it look like your insurance does anything at all besides make your care as costly as possible).

As you said, it's oftentimes cheaper to buy drugs without insurance.

The average person would quickly find out that insurance doesn't pay for anything at the hospital (most of the time).

~80% of healthcare spending is already at the tail end, and the state already covers most of that through Medicare and Medicaid.

The bottom ~50% of spenders (healthy people) only spend ~3% in total of healthcare (~$900 per year per person, about 1 month's PREMIUM).

Health insurance is a MASSIVE tax on the bottom ~3% of spenders (~50% of the population), when the state ALREADY covers the vast majority of people that need covered for tail end expenses.

Think about this: the MEDIAN adult in the US pays <$1k in personal income tax! Yearly health care premiums (that do nothing) are 3x that! 75%+ of the median person's true tax is going to health insurance that does NOTHING for them.

We already have the European model. Health insurance as it is is a tax. It just could not be designed to function more poorly than it does for the average healthy worker.

It benefits literally no one besides the health insurance industry which does not employ that many people, and is not strategically important for national security.

If the state completely covered the tail, and we had true billing at hospitals, almost no one would need or want insurance besides people that already have it through Medicare and Medicaid.

mekdoonggi5• 4 months ago

You are extremely close to arriving at the solution, which is medicare for all. Cover everyone, then almost noone uses the insurance except when they need it, which is when they get old.

If the US had the equivalence of Canadian health insurance, the spending reduction would be so big, that as a working person, your health insurance bill would go to zero, out of pocket costs to zero, and everyone would have health insurance.

WarmWash6• 4 months ago

The actual true problem is that there is a mismatch between the value the average person generates in their life, and the value of them staying alive. A handful of SOTA treatments can easily blast through a year of someone's total earnings. And this isn't even some kind of gouging or scam, anything SOTA tends to be the most expensive.

Insurance is the natural solution to this, but to be effective it requires most people to not need it while still paying into it. This is what Obamacare tried to fix by mandating insurance, but healthy/young people got sticker shock and bailed.

LorenPechtel17• 4 months ago

And this is supposed to be an answer?

1) In many cases you are paying that high "markup" for the handling rather than the product.

2) Hospitals are typically not making much money. Available 24/365 costs. Deadbeats cost.

3) Yes, most people don't pay much healthcare in any given year. But you don't know what year they are going to.

4) I like the idea of it as a tax--but in the real world this always ends up with the fox guarding the henhouse. Because most people don't need much care in a given year it's easy to satisfy the majority of the population with poor quality care. The ones that see the failure aren't enough to change the outcome of the ballot box.

throwaway1737383• 4 months ago

Oh you must have United Healthcare. Yeah they do this with IVF drugs too, and I’m sure with chemotherapy drugs. Plus it all has to be shipped so if you’re mid-cycle and the doctor orders a different medication you either waste the benefits or pay out of pocket. And they structure all their pricing so the fertility benefit covers a cycle but the medications aren’t fully covered so you pay out of pocket in medication that’s 3-4x as expensive as the cash price would be at a pharmacy like Alto.

iwontberude2• 4 months ago

If you are on UnitedHealth and reading this, switch to Kaiser HMO next open enrollment, you will not regret it. It’s worth far more than the UnitedHealth PPO, they have plenty of availability for appointments and lots of remote options. They don’t skimp on screenings and radiology, their pharmacy is fairly priced. You can go in for a single appointment and get 4 things accomplished (physical checkup, blood draw, prescription transfer, physical therapy sign up and more) in 45 minutes. The people are nice and you have tons of locations nearby.

fearmerchant• 4 months ago

I pay cash for a medication because the insurance won't pay for the 90 day supply and it's a hassle to deal with it every month. It's $70 for me to pay for 90 days out of pocket versus paying a $20 deductible each month. I'm only paying $10 extra to avoid the hassle. Worth it.

estimator7292• 4 months ago

My new job has some kind of insurance add-on which is an entire company of people with the express purpose of negotiating with your primary insurance to get specialty medication paid for.

Sticker price on my partner's medication is $10k/mo. Insurance alone refused to pay anything. This third party negotiator managed to get insurance to pay some, the manufacturer to discount it, and a "copay card" with several thousand dollars preloaded appeared to pay the rest.

We ended up paying zero out of pocket for the medication but it took two weeks of thrice-daily phone calls with various entities.

The very notion that an entire company can exist and sustain itself solely on negotiating with your insurance provider on your behalf is utter insanity. I've heard horror stories about communist bureaucracy from Soviet-occupied European countries, but I don't think even the USSR can compete with the modern American healthcare bureaucracy. It's outrageous and unconscionable.

soupfordummies• 4 months ago

Free idea: AI-powered "agent" that fights health insurance and medical bills for you.

Vrondi• 4 months ago

The people writing the AI agents are being paid by the insurance companies.

thayne• 4 months ago

Another example, I needed to rent some medical equipment which was pretty inexpensive. But for some unfathomable reason the insurance required that if that was rented, I also had to rent some other equipment that was like 20x as expensive that I didn't need at all. As well as purchase some disposable stuff, that I would not use, and could not be returned or used by someone else. And paying for just the things I actually needed myself without insurance wasn't an option.

kraig911• 4 months ago

try being diabetic ugh. I am constantly grinding against made up barriers. 150$ in strips and about 500-700$ for insulin. Meanwhile I meet a friend and he's just buying the base insulin from walmart for about 50$ a vial.

vablings• 4 months ago

It is insane to me how much diabetic test strips cost in the United States. They are a cheap mass manufactured product that cost almost nothing everywhere else in the world

SoftTalker5• 4 months ago

If you can pay cash without insurance, then you don't need the insurance.

Insurance is (should be) addressing the risk of unexpected expenses that you cannot afford. Not predictable, small expenses that everyone has.

tmountain• 4 months ago

This ignores catastrophic scenarios.

jimt12344• 4 months ago

My Boomer mother has a mild case of shingles. Her health insurance will only pay for an expensive monthly injection. She tried it, but doesn't want it, as she says the side-effects are worse than the shingles. She prefers to apply a cream when she experiences a flare up - maybe, twice per year. Well, her insurance won't pay for the prescription cream; they keep insisting on the monthly injection. She was told if she insists on the cream, she needs to buy it on her own - cost, around $150. Thankfully, we live not far from Mexico, where I can purchase the exact same cream for around $7.

So, it seems the solution to the high cost of prescription drugs in the US is to live near a border. LOL

georgeburdell• 4 months ago

I have never heard of shingles as a chronic condition. Will the vaccine not work?

boppo1• 4 months ago

This kind of bureaucracy sounds like the stuff my teachers criticised communism and socialism for in school. Isn't our 'capitalist' system supposed to thwart this?

rexroad26• 4 months ago

Your example captures two distinct extraction mechanisms in one transaction. The $25 to $125 gap is spread pricing: the PBM pockets the difference between what they pay the pharmacy and what they bill the plan. The deductible non-application is a separate mechanism: by routing through their own mail-order or in-network channel, the PBM ensures that cost doesn't reduce your out-of-pocket maximum, extending your exposure for the year.

The FTC's 2024 Interim Report documented $7.3B in specialty drug markups from the Big 3 PBMs (CVS Caremark, Express Scripts, OptumRx) in a single year. The Ohio Auditor found PBM spread pricing extracted $224.8M from one state's $2.5B Medicaid drug budget annually. This is the subject of the next issue being released this Sunday.

rexroad26• 4 months ago

Your example captures two distinct extraction mechanisms in one transaction. The $25 to $125 gap is spread pricing: the PBM pockets the difference between what they pay the pharmacy and what they bill the plan. The deductible non-application is a separate mechanism: by routing through their own channel, the PBM ensures that cost doesn't reduce your out-of-pocket maximum, extending your exposure for the year.

The FTC's 2024 Interim Report documented $7.3B in specialty drug markups from the Big 3 PBMs in a single year. The Ohio Auditor found PBM spread pricing extracted $224.8M from one state's $2.5B Medicaid drug budget annually.

whatever12• 4 months ago

The problem with healthcare is that it can have infinite cost. The question that each society tries to answer is how much are they willing to pay to prolong the life of each individual. There are no right answers unfortunately, as all of them lead to preventable deaths. But some of them at least promote the concept of a caring society.

turbotim• 4 months ago

One example of this calculation is QALYs (Quality Adjusted Life Years) which is used in the UK to determine what drugs are worthwhile: https://www.nice.org.uk/news/articles/changes-to-nice-s-cost...

whatever12• 4 months ago

Adding a formula just hides the harshness of the decision. It does not change the fact that some people who could have been saved, will die as a result of the policy.

All answers are wrong. But at least the one that you highlight can help us track over time if we are making progress to saving more people.

elgertam4• 4 months ago

I see a lot of the comments operating from an empirical framing. This is valid analysis and is good; we should want to understand the waste in the system as it stands.

However, that isn't enough. US healthcare is wildly inefficient because the paying customer is different than the serves customer. This has been known for sixty years, since Arrow published his paper (he identified four reasons, three of which are not exclusive to healthcare and seem to be mitigated well in other industries). I'm surprised people posting can't quite see this: when you go to the doctor, would you call the experience efficient? You check in, then wait, then are called back, tell the nurse or PA why you're there, wait, see the provider who asks you again why you're there, has a short exam, wait, finally get all the paperwork and sign out.

If you have labs or tests, you then wait again. And of course if you need a specialist, you wait again, sometimes for months. If you need any sort of "specialty" medication or equipment, then you REALLY wait, as specialty pharmacies, DMEs and the like jump in.

The whole system is woefully inefficient, and overhead is only a part of the explanation. No one knows what anything costs, and the people who pay (insurance providers, the largest of which is the US Government) want to believe they're not getting scammed - they still are, but at an acceptable level.

The question we ought to ask is how we can buy better health outcomes for people. And I think part of the answer is that in most cases, individuals and families themselves must allocate resources they control to make this happen.

Vinnl• 4 months ago

And yet it is still vastly more inaccessible and inefficient than other countries where the same holds. There is a lot that could be learned from other countries. So it's good to see that this repo does so.

klipt• 4 months ago

I notice the repo has no data on supply of doctors per person in different countries. It's well known that the US residency system with its limited slots constrains the supply of doctors who can practice in the US.

bluGill2• 4 months ago

The reason you tell several different people why you are there is because that is important. if a system doesn't they need to start!

people often remember things when asked latter. this gives more opportunity to ask about everything you care about even if you forget the first time.

people sonetimes grab the wrong chart. This helps ensure that they check for things that matter to you and not someone else - your history is on the chart if they are watching you for something weird in you history this is important.

LorenPechtel17• 4 months ago

Or the patient makes the mistake. I've seen it happen:

My wife has a foreign name--an English speaker coming at it cold is going to butcher it. Someone gets it right--either they've been told or they speak some Chinese. (It's not hard to say, but you have to know the Chinese Pinyin rules to get it right.) Over the decades we have grown used to responding to anything in the ballpark and then sitting back down if someone else responds. Oops--L shaped waiting room, we didn't see the somebody else. She ended up in back, the check caught it there.

Or look at my own name. That's the male spelling--but most people don't realize there is a male spelling. It's caused confusion over the years.

elgertam4• 4 months ago

I mean isn't that why they ask for name and DoB each time? I get that they want to ensure they're working with the correct patient. I just don't love trying to recall on command the litany of symptoms I've experienced and remedies I've tried before seeing a physician.

speefers• 4 months ago

The question we ought to ask is how we can buy better health outcomes for people

spend more money. you DO live in the greatest country on the planet, surely if an american citizen cannot raise the funds for healthcare, in what country can you expect to?

elgertam4• 4 months ago

We spend a ton of money per capita and get bad outcomes.

snarf214• 4 months ago

I worked in healthcare start-ups for many years and the main problem is mis-aligned incentives.

The #1 thing we need to do is make it illegal for your healthcare to be tied to your employment. We can still have your employer provide a X% or $Y to an HSA account that the employee can buy health coverage wherever they like. (I'm not optimistic that this will ever happen politically)

The issue today is that NOT healing you makes everyone more money, like a LOT more. There is no incentive for anyone to help people get healthy just to have a different insurance company benefit from the decreased claims.

This is also the only way forward to value based care (for primary) where doctors (providers et al) can take on the risk/reward. They get some amount (say $1K ??) per year and they keep it and submit no claims. However, if there costs go above, they eat it loss. Now the doctor and the insurance company (payer) are all incentivized to get and keep people healthy.

baggachipz• 4 months ago

I worked in healthcare start-ups for many years

I learned a while back that there are two industries you should never ever touch as a startup:

- Healthcare

- Education

Both systems are so broken (for different reasons) that it's a fool's errand.

Taikonerd4• 4 months ago

We can still have your employer provide a X% or $Y to an HSA account that the employee can buy health coverage wherever they like. (I'm not optimistic that this will ever happen politically)

Doesn't this already partly exist? My (US) employer offers an HDHP (high-deductible health plan) that comes with an HSA.

(It's not quite what you described, because you have to use the insurer that the company picked. I think you're describing something more like the Singaporean system with Medisave.)

orangecat2• 4 months ago

The #1 thing we need to do is make it illegal for your healthcare to be tied to your employment

Yes. Or at the very least, stop making it mandatory. Health insurance should work like literally everything else: your employer pays you money, and you use that money to buy it.

shimman5• 4 months ago

Why make this so complicated when we can just have medicare for all? You're right that healthcare shouldn't be tied to your employment, but what you're proposing is something that only the rich + affluent can achieve independently.

All you're doing is playing musical chairs with different capitalists, just stop playing the game. A large part of the electorate wants to stop playing the game.

randusername• 4 months ago

I am less interested in the quantitative analysis, but the qualitative analysis. Why, culturally, has the US shot itself in the foot in this way?

And I think part of the answer is that in most cases, individuals and families themselves must allocate resources they control to make this happen.

Assuming uniquely American selfishness got us in this mess, I don't buy that rugged individualism is the route out. You'll just get that classic pattern of those with enough resources to manage criticizing the resource management of those with too few resources to learn to manage. That just further corrodes solidarity.

nsvd22• 4 months ago

The unfortunate answer is that the US seems to be very bad at fighting regulatory corruption which allows small parts of the market to buy laws which give them a moat. Rinse and repeat over the last half century and you get to the situation we're in.

eigencoder• 4 months ago

But that's not rugged individualism. It's just letting the market actually do its job, and let consumers and producers actually communicate a price

elgertam4• 4 months ago

Assuming uniquely American selfishness got us in this mess, I don't buy that rugged individualism is the route out. You'll just get that classic pattern of those with enough resources to manage criticizing the resource management of those with too few resources to learn to manage. That just further corrodes solidarity.

I chose my words carefully so as not to imply "rugged individualism" was the solution. I mean I even explicitly invoked "families" as an institution greater than the individual. And I used the word "control" rather than "earned" or something.

Weirdly, "rugged individualism" is kind of why American healthcare is so bad: we tie it to employment for those under age 65. Before the ACA, this was simply because healthcare is exempt from income tax; with the ACA, it's literally mandated. In order to get health insurance, you need to pull yourself up by the bootstraps and get a job OR pull yourself up by the bootstraps and pay extremely high premiums.

Disentangling healthcare from employment and allowing for other institutions like churches or schools to play a part in helping fund it would do a lot. And for the truly catastrophic conditions like cancer, we should just have a universal policy that kicks in.

joe_the_user2• 4 months ago

One key problem appears as misaligned ("perverse") incentives. But it has to be that because its essentially impossible for an average person to purchase health care in the moderately informed and choice-filled fashion that I can purchase a vacuum cleaner.

Of course, another key problem is trying to divide distinct parts of health care into distinct costs. Everyone benefits from having a good quality hospital in their area and so assigning a health care provider's cost to just a given patient and then trying to reduce the patient's cost is quite irrational.

Essentially, you have a public good that the state and private interests are trying to make into a public good. A lot of profit comes from this but little good for the patients.

LorenPechtel17• 4 months ago

Why do you think we can??

We already have mandated covering the things where spending now saves more down the road. And the medical community has standards of proper care. If there was a way to reduce costs by improving patient health it would already have been done!

Think we haven't learned a fair bit about our own health issues? If there was some magic answer a lot of people would have found it.

philipallstar2• 4 months ago

US pays 7–581x more than peer nations for the same drugs

This is what pays for future drug research for the world.

jdub• 4 months ago

No, it pays for ticket-clipping middle-men and political corruption.

philipallstar2• 4 months ago

It also does that.

pif5• 4 months ago

No, this is just what pays big dividends to useless managers.

ArtDev• 4 months ago

From the top to just above bottom: waste, fraud and abuse and injustice.

MrBuddyCasino• 4 months ago

"Our high spending is overwhelmingly a product of our high incomes and if other OECD countries had our exceptionally high material standard of living most of them would be spending very similarly, with similar utilization, similar intensity, similar prices, and otherwise not obviously better overall outcomes."

https://randomcriticalanalysis.com/2018/11/19/why-everything...

tlb• 4 months ago

You and I look with dismay at the high prices, but remember that a million hospital administrators are high-fiving themselves. So ideas like "just cut waste" are opposed by a large group with a lot more skin in the game.

superxpro12• 4 months ago

Until we eliminate for-profit health insurance companies, i will never be convinced this isn't anything other than a massive scam to over-inflate costs, and inflate insurance margins as much as the people can tolerate.

Im sure big-pharma has an interest in over-medicating too, but that should be solved by transparent pricing.

It still blows my mind i cant window shop hospital procedures.

The opaque-ness of medical billing in the US only further favors the for-profit insurance company margins.

Burn it all down. Single-payer for all. I really have zero sympathy for insurance companies who pride themselves on denying their paying clients life-saving care in favor of shareholder returns. It's such a crazy moral hazard that really highlights a sickness in America.

Dumblydorr2• 4 months ago

We already have multiple forms of socialized medicine, it isn’t perfect. Burning our current system down and shoving them all into Medicare and the VA system would kill thousands or more people, healthcare needs to be operational 24/7/365.

I think a gradual move to single payer is the way, but even if you could get that passed as legislation, which you can’t due to a rigged senate balance, and not struck down by SCOTUS, you’d need 10 years to begin the changeover. It’s really that massive of a project.

But it won’t happen with the current solidifying conservative governmental systems. Say hello to your future, it’s now.

ferguess_k2• 4 months ago

I don't really think it (late Capitalism) is reversible in anyway. It is better to just let it completes its path, turn a new page and maybe we can start from scratch. A lot of people (you and me) are going to suffer and die. But human nature says that real changes only happen when the old bastion is dead.

Ancient Chinese wisdom: "People praise doctors who delay the progression of incurable diseases but not those who prevent them".

virgil_disgr4ce• 4 months ago

Although I'd be happy to see this insanity die, I don't understand how anyone thinks this is going to "complete its path." Honest question. Can someone describe what that end consists of?

ferguess_k2• 4 months ago

It is just like anything in the world, that has a path to complete. I'm just saying that no one can stop it from completing its path. I don't know what the end consists of, or what exactly the path consists of, but nothing too good for ordinary people, I guess, as an armchair historian observing current affairs.

Taikonerd4• 4 months ago

I think the root problem is fee-for-service.

Doctors and other providers bill for each individual thing they do. But that means that their incentive is to do as much as possible, so they can quickly rack up billable codes.

It's like if developers billed their employer per line of code they wrote: the incentive is for churn, when it should be for slowing down and thinking about quality.

ThrowawayTestr• 4 months ago

Doctors in Canada also bill the government for everything they do but I've never felt pressured for procedures by my doctor. Don't kid yourself, it's the insurance companies.

mchusma• 4 months ago

It’s disturbing to see multiple comments that “capitalism” is to blame for the costs in healthcare. The US healthcare market is the least free market in the US. Capitalism (when there is true competition) brings down costs pretty universally. Those parts of the market that are market oriented tend to get better and cheaper over time (for example, generic over the counter meds, needles, and even health care panels, AI health advice) all getting better and cheaper. You can get pretty cheap panels of blood drawn, for $200 or less with tons of data. It’s only when you hit the regulatory wall and you exit the market do you see costs explode.

Our imperfect system pays for the worlds medical R&D, so I would actually love to see per capita spending remain similar BUT have the market opened up, with a nice safety net at reasonable cost, and money pouring into curing aging and all disease.

estearum6• 4 months ago

Capitalism (when there is true competition) brings down costs pretty universally.

"True competition" is doing a lot of heavy lifting here. There are many conditions that must be true for prices to go down.

Dumblydorr2• 4 months ago

Capitalism =\= free-market

We have crony capitalism in the US, healthcare is one of the easiest areas to see it.

Free-market is the illusive perfect sphere. Most markets are oval or amoeba shaped. Rarely can the US achieve a true free market in any industry, since money pours into politics and corrupts the laws and regulations.

rexroad26• 4 months ago

Agreed on the diagnosis: the inpatient hospital market does not function as a competitive market. Patients arriving by ambulance do not shop on price. Insurance insulates consumers from marginal cost. Regulatory and capital barriers prevent new entrants. The HCRIS FY2023 data for 3,193 hospitals shows what this produces: a 2.6x median markup to actual cost, with the highest-markup hospitals rarely losing patients to lower-cost alternatives nearby.

Your examples of what works are instructive. Generic OTC, needles, blood panels all share the same conditions: price-visible, consumer-controlled, no third-party payment insulation. The RAND hospital data shows the identical procedure (hip replacement) costing $29K commercially in the US versus $14.7K in Germany and $8.7K in Spain. Same implant, same surgeon training requirements. The patient's insurance status varies; the procedure does not.

Montana's commercial reference pricing is not deregulation, but it creates the price-visibility function you are describing: a known floor price that makes it possible for a purchaser to act on price information. Employers have adopted it nationally with documented savings.

a3w2• 4 months ago

Removing cars and fast food would probably equal things out a bit in terms of life expectancy.

Removing some patent protections earlier and having a national healthcare system own the clinics and insure people would reduce the cost?

Sanctuary85422• 4 months ago

https://www.cms.gov/priorities/innovation/innovation-models/...

rexroad26• 4 months ago

Correction on ownership breakdown: A CMS cost report expert flagged that my CTRL_TYPE mapping in the HCRIS processing script was wrong — I had for-profit and nonprofit hospital categories swapped. The corrected figures: for-profit hospitals have a 4.11x median markup (highest), nonprofits 2.46x, government 2.22x. The 254% commercial-to-Medicare finding ($73B savings estimate) is unaffected — that's from RAND, not my HCRIS analysis. Corrected code and a full audit report are on GitHub. This is exactly why the code is open-source.

thegrim33• 4 months ago

Am I completely tripping out or does rexroad's profile use a template where they were supposed to fill in a blank but forgot? "Former [your background if relevant]".

Really opens my eyes to all the other politics posting accounts that have a similarly constructed profile description .. But of course, they'll never be banned and instead they get front page of HN and hundreds of upvotes.

slumberlust• 4 months ago

Yeah, day old account too.

simojo• 4 months ago

What do you see as the bad part of this? That the user is trying to farm points by copying patterns of upvote-winning users, or that there's a flood of inauthentic new users? Genuinely asking.

stronglikedan• 4 months ago

every forum has busybodies who try to make something out of nothing

zk_haider• 4 months ago

Healthcare is the one industry we need AI or automation to take over large parts, and a hostile Uber style industry take-over. Make treatment stupidly cheap with innovations, watch the corrupt racket unfold.

hirako2000• 4 months ago

Mark Cuban is at it. I doubt the Uber trick would work. Because as with banks, innovative and more efficient businesses get bought out. Or engage in the racket once they make it.

iwontberude2• 4 months ago

Kaiser Permanente solved all of my problems with healthcare. They are what Medicare should be, single payer with one system.

snarfy• 4 months ago

If healthcare was cost competitive there would be prices listed like a fast food restaurant.

rexroad26• 4 months ago

CMS now requires hospitals to publish machine-readable price files under the Hospital Price Transparency Rule (effective 2021, enforcement added 2022). Compliance rates are technically high. The problem is the files run tens of thousands of line items in inconsistent formats, negotiated rates vary by insurance plan, and chargemaster list prices bear no predictable relationship to what any patient actually pays.

RAND's Round 5.1 study analyzed actual paid claims rather than posted prices and found commercial insurers paid 254% of Medicare rates for identical procedures at the same hospitals. The transparency is on paper. The opacity is structural: a price list is only useful if a purchaser can act on it, and the moment of care is not when most patients can comparison shop. Which is why reference pricing works at the employer level (purchaser can act in advance on a population basis) but published hospital price lists have not moved the market.

8f2ab37a-ed6c• 4 months ago

There's a super long episode on The Drive going deep into the mechanics and economics of the US healthcare system, could be a useful addition to the conversation here: https://www.youtube.com/watch?v=QqrpFICtqpQ

bhelkey2• 4 months ago

Public perception is that the US is not willing to pay for universal healthcare. However, the US spends enough money, it just spends it inefficiently.

The US spends ~$900 Billion a year on Medicaid [1] and ~$1.1 Trillion a year on Medicare [2]. If the US spent this money as efficiently as Japan (or UK [3], ...) it could pay for Universal Healthcare without increasing its budget.

[1] https://www.kff.org/medicaid/medicaid-financing-the-basics/#...

[2] https://usafacts.org/answers/how-much-does-medicare-cost-the...

[3] https://www.bbc.com/news/articles/cwy7zvp5xrqo

adventured• 4 months ago

Incomes are dramatically higher in the US than in Japan. Their economy has imploded so badly due to debt + currency destruction that they're now just barely above Lithuania (which has come a long ways of course) on economic output per capita.

Japan is no longer a primary economic power and their (perpetually falling) purchasing power + incomes represent that.

US GDP per capita is estimated at $92,000 for 2026. Norway is $96,000 for comparison. 340 million people vs one of the world's richest nations at 5 million people. The UK is $60k, and Japan is a mere $36k.

Read that again. US GDP per capita will soon be 3x that of Japan.

Doing a direct comparison of healthcare costs is silly accordingly. At a minimum you need to 2x to account for the drastically higher US incomes vs Japan, and at least 50% higher vs the UK.

Nicook• 4 months ago

Japan is also way thingger than America, which the article points out: > The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD. That gap is roughly $3 trillion per year.

Need to have people go in for checkups and get shamed for unhealthy habits, not really a money question.

bhelkey2• 4 months ago

I don't agree with your framing but let's accept it for the sake of this conversation.

The UK and Japan are not the only countries with more efficient healthcare systems than the US. We can look at a variety of countries, some of which have a higher GDP per capita than the US.

If we look at a graph of 'healthcare spending per capita' by 'GDP per capita' [1], we can see that the US is a massive outlier spending ~2x countries with comparable GDP per capita.

In fact, the US has a higher healthcare spending per capita than every other OECD country. By a large margin.

[1] https://www.healthsystemtracker.org/chart-collection/health-...

downrightmike• 4 months ago

Japan's economy imploded because it was doing better than the US and Japanese were buying big American names like Rockefeller Center, so the US forced Japan to destroy their currency, which popped the Asian miracle.

rexroad26• 4 months ago

The direction is right. Total US healthcare spending is $4.87T for 335M people ($14,570/capita, CMS NHE 2023). Japan's per-capita is $5,790, with the highest life expectancy in the world and lowest infant mortality in the OECD. The annual national gap is approximately $3T.

The series is not arguing for a specific coverage structure. It is documenting where the excess goes, mechanism by mechanism. Four issues in, $128.6B is accounted for conservatively: drug pricing, hospital commercial markups, PBM extraction. Each mechanism has a defensible, operationally precedented fix that does not require redesigning the entire system. Montana Medicaid adopted commercial reference pricing at 200% of Medicare and measured no quality deterioration. The FTC documented PBM specialty drug markups and three states have already enacted clawback restrictions. None of that required universal healthcare.

jasonhong• 4 months ago

I saw Jim Clark (founder of SGI, Netscape, Healtheon) talk one time about entrepreneurship. He said something that compactly explains a lot of issues humanity faces in general: "One person's inefficiency is someone else's bottom line."

A lot of the things that the original post shares has this characteristic. Sure, things in US healthcare are wildly inefficient, but that's how a lot of these companies make a lot of money. And they will lobby and fight to the death that cash flow.

techcam• 4 months ago

This resonates — most of the hard problems show up after you ship, not before.

nacozarina• 4 months ago

there’s no conundrum, the lords have the peasants by the neck and they are never gonna let go, you’re choices are an early death or an earlier death.

broabprobe• 4 months ago

for people who prefer a video intro to the mess of the American healthcare system, Brian David Gilbert has an excellent video on the subject, https://www.youtube.com/watch?v=-wpHszfnJns

he manages to make it a fun and enjoyable topic to learn about which is quite a feat imo

SlightlyLeftPad2• 4 months ago

I suspect we can solve about 2.9T of waste by eliminating publicly traded for-profit healthcare and for-profit insurance.

rexroad26• 4 months ago

For-profit structure is part of the problem but not all of it. Issue 3 analyzed 3,193 hospitals using CMS HCRIS FY2023 cost reports. For-profit hospitals do have the highest cost-to-charge markups: 4.11x median. But nonprofits are 2.46x, and nonprofits hold 75.5% of total national hospital supply spend. The ownership form does not reliably determine pricing behavior when market conditions are the same: opaque prices, patients who cannot shop, no reference price to anchor negotiation.

Maryland has had all-payer hospital rate-setting since 1977 with a largely nonprofit hospital sector. It produces significantly better cost control than the national average. The structural fix for hospital pricing (commercial reference pricing at 200% of Medicare) works regardless of tax status because it creates a known floor price. That is what the RAND data and the Montana Medicaid experience both show. The mechanism matters more than the ownership form.

SlightlyLeftPad2• 4 months ago

I’m willing to agree on some points however, the for-profit model is what incentivizes the convolution in the first place. It has been the main driver for injecting complexity at every level. In turn, even nonprofits have to spend capital to make sense of it.

In other words, it does measurable harm to the entire industry and builds the moat wider in favor of the for-profits and shrinks the margins of the nonprofits trying to compete.

rexroad26• 4 months ago

Author here. Issue #4 is now live — pharmacy benefit managers.

Three companies process 80% of US prescriptions. The FTC spent two years investigating them and documented $7.3B in specialty drug markups at PBM-owned pharmacies alone. Ohio's state auditor found $224.8M in spread pricing extracted from one state's Medicaid program in a single year.

Six mechanisms, $30B/year booked conservatively. Running total across four issues: $128.6B.

github.com/rexrodeo/american-healthcare-conundrum

The American Healthcare Conundrum

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