What I'm unclear on is whether "health spending", in this analysis, is defined as money paid to care providers such as hospitals and dentists, or money paid by citizens for healthcare. Because you've got insurers and PBMs taking profit.
The ratio of those two numbers is the efficiency of the American insurance model. How does it compare to the administration of a single-payer system such as the NHS?
Until I see some data indicating otherwise, I'm going to look at my £200pcm national insurance and my £9.90 prescriptions and my free ambulances, and Americans' $500pcm insurance and their unlimited prescription costs and their four-figure bills even when insured, and I'm going to continue to believe that Americans are punching themselves in the face.
We spend even more money on healthcare administration than what’s directly spent on it. HR departments screwing around with insurance. Various government benefits & other agencies having to mess with private health insurance issues. Attorneys general offices and state rep offices spending time to get insurers’ and hospital billing departments’ heads out of their asses (they do a lot of this).
There are also untold hours lost in unpaid labor on the part of “clients” messing with insurance and hospital billing departments. It’s not uncommon for someone who is, or is connected to a person who is, seriously sick for even a few days to spend a work-week or more of time that year messing with the billing from the incident. This can include uneventful pregnancies and births.
> What I'm unclear on is whether "health spending", in this analysis, is defined as money paid to care providers such as hospitals and dentists, or money paid by citizens for healthcare. Because you've got insurers and PBMs taking profit.
> The ratio of those two numbers is the efficiency of the American insurance model.
The ratio of those two numbers is quite divorced from the efficiency of an insurance model.
On the one side, this would count wasteful spending on unnecessary tests or overpriced services as an efficiency improvement because proportionally more money is going to providers. On the other side, if insurers better at preventing fraud have lower premiums and therefore get more customers and make more money, that would count as "inefficiency" and the fraud prevented would also count as inefficiency (because that money went to "providers"), even if the net result is less fraud and lower premiums.
That isn't to say that the US system is efficient. It's clearly quite broken. But its brokenness is because the government has been thoroughly captured by the industry -- which is the providers as much as the insurers -- and they oppose any measures that would improve actual efficiency because the inefficiency is their profit. Which is why the US system costs more than the systems in other countries regardless of whether the other countries use public or private systems.
An efficient regulatory system for a private insurance market would be something like, a schedule of service codes where each provider is required to publish a fee schedule representing the uniform fee paid by all institutional insurers, eliminating the overhead of "negotiating prices" (a major source of inefficiency) in favor of price transparency and allowing patients and insurers to choose a provider on the basis of price and distance, while still subjecting providers to competitive pressure because people would naturally favor providers with lower fees. But the existing US system doesn't do that at all.
Well, there's also the rate of new drug and procedure discovery. I've heard it quipped that Americans are subsidizing the discovery of new medical techniques for the rest of the world. Whether that's worth a higher cost is arguable but I think the effect is there.
When this gets brought up as a positive to our high healthcare spending (which you're not exactly doing, more just making note of the existence of the argument) it's such a head-scratcher for me.
1) OK... maybe we should stop, then? Like, that seems like a terrible deal? How is that a justification at all? It seems like just a description of something very stupid we're doing.
2) This would be a good deal if we were getting other countries to also pay high prices and bringing that money "home", but basically the exact opposite is happening. WTF.
3) More often than not, the side of the issue that raises this as a good thing is also the side full of folks who think we should e.g. reduce spending on foreign aid, so it's especially weird that they're bringing it up.
Plus, I'm very skeptical that the idea that drug development would dramatically slow down if the US stopped over-spending to the tune of 2x-100x on lots of drugs is even true. But setting that aside, it's still just a bizarre line of argument, to me.
High interest rates have stopped way more drug development than lower or higher drug prices ever have.
Between 2019 and 2022 there were like 88 biotech IPO lockup expirations and only 3 were trading higher than post lockup for any period of time.
Macro determines the rate of risk taking. Not “details.” You simply 100% cannot have drug discovery without risk, and risk wants returns.
Should we have low rates and high inflation for the sake of more “discovery of medical techniques?” Inflation and high costs: dude, they are exactly the same thing!
Wouldn't it be even better to explicitly funnel our money to R&D, rather than hoping that it gets there eventually after insurers and paperwork maximizers and intentionally-inefficient providers all take their cuts?
In general, anything that's mandatory for life/basic quality of life but still needs to be produced by industry should should be regulated to artificially reduce prices in order to compensate for inelastic demand and prevent price gouging. This regulation should include supply-side subsidies and dynamic, carefully considered price controls.
This should apply to food, water, housing, health care, transportation, internet; all those good things that you can't do without and are extremely vulnerable to market manipulation.
Yeah, it's unfortunate for the US, but since no one else is stepping up to pay for the medical research that benefits all of humanity, we have to do it.
The recent "negotiated prices" for Medicare drugs could be the beginning of the end for this system though.
Americans look at their 9k a month salary and don't care about loosing an extra 300 USD on health insurance. I've experienced the British and Swiss systems - Swiss is like the American - pay roughly 600 CHF a month - and it's way better than the NHS. You can see a specialist the next day, get a scan the next day etc.
Only 4% of US bankruptcies are because of medical bills <https://www.washingtonpost.com/blogs/post-partisan/wp/2018/0...>. A tipoff that [insert large percentage here] of bankruptcies aren't actually because of medical costs is that only 6% of bankruptcies by those without health insurance are because of that cause. The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect in any country.
It is surprisingly hard to track down what is meant exactly. It is not either of the options you listed here, but closer to the first. Chasing a very long chain of citations to other citations, it appears this paper contains the original explanation of where the data come from: https://sci-hub.st/10.1007/s11205-015-1196-y.
They survey all of the possible healthcare goods and services available across OECD nations, make their best attempt to select a representative basket that is both available across all nations and reasonably similar, then estimate what they call a "quasi-price" per unit of good and/or service, to account for the fact that the actual charged price is often artificially suppressed or set to zero by government fiat. This seems to be done by scouring management accounting databases to figure out what the payers and providers consider to be reasonable reimbursement rates for accounting purposes, whether or not that is what they actually receive.
I get what they're trying to do, but this probably explains some of the counterintuive results, because mostly people are probably thinking more along the lines of "add up all premiums paid to insurers, out of pocket expenses paid directly by consumers to providers, and all government outlays classified as healthcare" and that's how much your country spends on healthcare.
That's a reasonable comparison to make, but as the blog and the OECD report both point out, it does nothing to account for differences in quantity and quality of healthcare goods being paid for. The problem is this discourse then inevitably leads to "well the US gets worse outcomes," but to what extent is that fair? The only reason I can walk today is because of US healthcare. If you incur a musculoskeletal injury that requires intervention in various different countries, how likely are you to fully recover? If you get cancer, how likely are you to go into remission? I don't necessarily know exactly what should be measured, but I know that when the discussion goes straight to lifespan, that is heavily confounded. Americans drive more, own more guns, are fatter. There has been tremendous industrial pollution in various places, though I don't know how that compares to the rest of the OECD. I wouldn't be surprised if we have more backyard pools. There are many, many reasons we might live shorter lives that have nothing at all to do with the quality of the healthcare we receive.
Studies have found that Kaiser Permanente (an integrated health insurance/care provider—basically a non-governmental equivalent of the NHS in comprehensiveness—that is available in many US states) is more efficient and effective than the NHS for about the same cost.
Profit margins for insurers are pretty low on a percentage basis. The Affordable Care Act (Obamacare) imposed a minimum medical loss ratio on commercial payers. You can read the financial statements for those that are publicly traded. Some of the largest insurers such as Blue Cross Blue Shield Association members are non-profit.
The NHS isn't really a "single-payer system" in any meaningful sense. In the UK, most healthcare providers are employed directly by the government and their wages are fixed below the market rate to control costs. There are internal financial transfers but there aren't really arms-length negotiations and payments between separate payer and provider organizations.
If the USA was to adopt a single-payer system like the various "Medicare for All" proposals that politicians have floated that wouldn't do much to reduce costs. Any meaningful cost reduction for the system as a whole would require driving down provider wages, rationing care, and ending the way that we subsidize drug development costs for the rest of the world. Those measures might be good things to do on balance, but they aren't politically popular.
This is so misleading. What you are saying it technically true, but also why our system is broken.
If I can only make 10% profit (or whatever the law is), what is my incentive to keep healthcare costs down? The ONLY way I can grow my income if it healthcare costs go up. 10% profit on a $100 medication is way less than 10% profit on a $1,000,000 medication. The road to hell is paved with good intentions.
Another disingenuous argument on non-profits. Is all of Blue Cross Blue Shield non-profit or only the certain parts you want us to look at? A 'Pay no attention to the man behind the curtain' argument.
Final disingenuous argument is you just asserting 'meaningful cost reduction'. There is no way ambulance rides went from $200 to $10,000 because of EMT pay.
> If I can only make 10% profit (or whatever the law is), what is my incentive to keep healthcare costs down? The ONLY way I can grow my income if it healthcare costs go up.
You're missing the step where you also have to increase premiums, i.e. price. And what normally keeps any seller from increasing their prices whenever they want is competition--some other insurer will get your business.
That begs the question of how competitive the insurance market is. Let's assume it's woefully uncompetitive. But in that case I don't see how the ACA 80/20 rule on administrative overhead changes incentives and the evolution of price inflation one way or another. At best it temporarily disrupted existing inflationary schemes, at worst it does nothing.
I'm not asking you to look at anything. Many US healthcare payers are private non-profit corporations. That includes some (but not all) Blue Cross Blue Shield Association licensees. The BCBSA isn't a payer itself and merely provides some shared services to their independent licensees. Outside of the Blues system there are other large non-profit payers such as Kaiser Permanente, HCSC, Geisinger, EmblemHealth, etc. This isn't secret information, you can just go look it up instead of arguing.
Commercial health plans have conflicting financial incentives. Most of them no longer provide much insurance (in terms of bearing financial risk) but rather primarily act as administrators for self-insured employers. So while payers can potentially boost short-term profits by paying out higher claims, employers comparison shop between competing health plans every year. Your HR department would happily switch from Aetna to Cigna (or whatever) next year if their analytics forecast shows that would save a few dollars on expected claims.
Ambulance fees are a mess but those represent a tiny fraction of overall US healthcare spending. Some reform there would be a good idea but that wouldn't do much to reduce costs.
Significant systemic cost reductions will require some mix of lower provider wages, care rationing, and reduced spending on new drug and device development. Countries with more socialized healthcare systems are more financially efficient in some ways but they also just do less stuff: less drug development, longer queues for advanced treatments, underpaid doctors (relative to market wages), care restrictions based on QALYs (or similar metrics). Complaints about payer profits, while perhaps somewhat legitimate in certain cases, are largely a distraction from more fundamental problems. That's just basic math dictated by the cashflows. There are no simple solutions and we're eventually going to have to make hard choices. No one wants to face this reality.
I wrote hospital medical software for 20 years passing on way better pay because I wanted to make a difference. And I gave up because the system WANTS to be how it is today. Everyone in medical is CHOOSING to make it this way, then claiming 'ah it's too big, it's too complicated, we can't change it'. Americans being to scared to call an ambulance means emergency care has completely failed them, not a small little thing to be brushed off. Americans are making hard choices about medical care every day already.
This is nonsense. Health care costs about twice as much in US as everywhere else and only the rich can afford it. Health insurance companies fight against doctors and patients to subvert health and profit as much as possible.
$749 million is revenue. Revenue less expenses (i.e. profit) was $57 million, which admittedly is a decent 7.5%. But as a nonprofit there are no shareholders or partners to siphon off that profit. The common argument is that management siphons off that money through salaries, and I can't say they don't, but if you look at their assets & liabilities it seems like some significant amount of their profit is going into savings.
Anyhow, the Blue Cross/Blue Shield system has a very complex structure so if you're looking to find where the real money is being siphoned off it's unlikely to be at the top. BC/BS affiliates are independent, that's why the org at the top for a system insuring over a hundred million people pulls in less than a billion dollars in revenue.
"Nonprofit", at least in the US, is usually shorthand for having received a 501c3 (or similar) designation from the IRS. It has little bearing on your ability to make money as an organization (with caveats like the public support calculations)
Source: Ran a nonprofit for a few years that made money doing software consulting
GDP per capita and other "per capita" metrics are also unreliable metrics for household income, as they suffer from the same issue as averages. This is a common trap that is done in population statistics, as mean and averages are always easier to calculate and reduce the complexity of the calculations.
Large wealth inequality makes GDP per capita and average household spending not representative of a real-world median household. If healthcare costs have outpaced median income but kept up with mean income, that is a MASSIVE societal issue.
Most of the plots and arguments in the article overlook this, so I don't trust the arguments much.
However, it is still interesting how strong the correlations are. It gives some interesting insights into what goes into the cost of running hospitals, I suppose.
This is fine as a high level economic discussion, but I think it misses the point of the complaints from actually US consumers: when I consume healthcare as an individual I am paying with a blank check, and I am therefore likely to be tricked into consuming more health care than I would otherwise choose to afford, perhaps to a ruinous degree.
I think ordinary consumers care much less about whether their country spends a nominal share of GDP on the heath sector, than about whether they will be unexpectedly bankrupt by consuming health services, and this is why people are actually mad.
> The claim that US health care prices are inexplicably high was never well-evidenced
I can provide anecdotal evidence that prices inexplicably high. A primary care physician will charge anywhere between $200-$500 for a visit. If you have good insurance, you don’t pay out of pocket. In the same city, I once had to go to a PCP who would only work without insurance. I had to wait a lot because of how many people were lined up in front of the office, but I paid $50 for the visit. I’m already paying 4-10x in a comprable market for the same services.
When I was abroad, I had to visit a doctor’s office for food poisoning. I paid 200 in the local currency. I could have gone to a hospital and they would charged me 500 in the local currency. But what’s important to know is that the median monthly wages in the country were 25000 in the local currency. So all in all, you’d pay a smaller portion of your wages for a simple checkup.
I recently had skin cancer surgery. I was offered a 20% discount to self pay. Because of my deductible I would have paid more if I used insurance than if I just paid. We are now to the point where it's not cost effective to use our private insurance for cancer surgery. How anyone is defending this system is crazy to me.
I started and sold a company in the industry, and agree that macro level analysis misses this. In the us healthcare as a “product” has an AWFUL customer experience. On so many levels. And the worse it gets the more people want to “burn it all down”, despite the fact that it might not be as dire as we think when we do the high level analysis. Whether or not that’s a good thing is up for debate.
This analysis in the end doesn't show what it claims to show and actually proves the reverse - US Health care spending is much larger than other countries, it eats up significant fraction of productivity gains in other sectors (rises faster than income as shown by the 1.8 slope in the very first graph), and does not lead to better health outcomes. It actually proves we would be better off if we spent less and focused on lifestyle.
> US Health care spending is much larger than other countries
The thing is that in USA (and Canada) radiologist compensation went from 300k/yer to 500k/year over the last 10 yeas. It's the same radiologist.
While spending is growing quantity of doctor per population is diminishing.
In USA/Canada there is cartel enforced cap on how many new doctors can be minted per year, and this cap is not even scaling up with the population growth.
I skimmed what I can while on break. What I didn’t see is something I’ve heard from doctors but can’t verify. It’s that insurance companies require them to do extra procedures or have extra employees they don’t think they need. Some who didn’t take insurance say it keeps their cost down.
One told me the insurance companies incentivize him to treat patients like an assembly line where cash only lets him spend one on one time with customers. He also might treat people for several things on the same bill which he claimed he’d have to itemize and charge separately for with insurance.
So, do people here have specific examples (esp links) to support or refute those anecdotes? If they were true, it would mean insurance rules were driving much of the cost. Looking at their causes, my first guess would be how they respond to losses from both real malpractice and greed-driven lawsuits. I can’t imagine that costs aren’t impacted by this with all the lawyer ads I see for suing insurance companies. ;)
To be clear: you're suggesting that there is scant evidence that any forms of disease arise from pathogens? Or do you have a more narrow definition of disease?
For instance, is a strep throat caused by a colonization of strep bacteria in one's throat, based on your understanding?
the often cited Landsteiner and Popper experiment simply showed that drilling a hole in the head of a monkey and injecting biological material into the hole causes paralysis in a few of the monkeys.
Two monkeys were injected and both died within days. One of the monkeys showed paralysis. Both showed spinal lesions consistent with polio in humans. The material injected had been run through a filter small enough to stain out bacteria, and the sample was cultured to prove that no bacteria was present.
Well, that was interesting.
What I'm unclear on is whether "health spending", in this analysis, is defined as money paid to care providers such as hospitals and dentists, or money paid by citizens for healthcare. Because you've got insurers and PBMs taking profit.
The ratio of those two numbers is the efficiency of the American insurance model. How does it compare to the administration of a single-payer system such as the NHS?
Until I see some data indicating otherwise, I'm going to look at my £200pcm national insurance and my £9.90 prescriptions and my free ambulances, and Americans' $500pcm insurance and their unlimited prescription costs and their four-figure bills even when insured, and I'm going to continue to believe that Americans are punching themselves in the face.
We spend even more money on healthcare administration than what’s directly spent on it. HR departments screwing around with insurance. Various government benefits & other agencies having to mess with private health insurance issues. Attorneys general offices and state rep offices spending time to get insurers’ and hospital billing departments’ heads out of their asses (they do a lot of this).
There are also untold hours lost in unpaid labor on the part of “clients” messing with insurance and hospital billing departments. It’s not uncommon for someone who is, or is connected to a person who is, seriously sick for even a few days to spend a work-week or more of time that year messing with the billing from the incident. This can include uneventful pregnancies and births.
> What I'm unclear on is whether "health spending", in this analysis, is defined as money paid to care providers such as hospitals and dentists, or money paid by citizens for healthcare. Because you've got insurers and PBMs taking profit.
> The ratio of those two numbers is the efficiency of the American insurance model.
The ratio of those two numbers is quite divorced from the efficiency of an insurance model.
On the one side, this would count wasteful spending on unnecessary tests or overpriced services as an efficiency improvement because proportionally more money is going to providers. On the other side, if insurers better at preventing fraud have lower premiums and therefore get more customers and make more money, that would count as "inefficiency" and the fraud prevented would also count as inefficiency (because that money went to "providers"), even if the net result is less fraud and lower premiums.
That isn't to say that the US system is efficient. It's clearly quite broken. But its brokenness is because the government has been thoroughly captured by the industry -- which is the providers as much as the insurers -- and they oppose any measures that would improve actual efficiency because the inefficiency is their profit. Which is why the US system costs more than the systems in other countries regardless of whether the other countries use public or private systems.
An efficient regulatory system for a private insurance market would be something like, a schedule of service codes where each provider is required to publish a fee schedule representing the uniform fee paid by all institutional insurers, eliminating the overhead of "negotiating prices" (a major source of inefficiency) in favor of price transparency and allowing patients and insurers to choose a provider on the basis of price and distance, while still subjecting providers to competitive pressure because people would naturally favor providers with lower fees. But the existing US system doesn't do that at all.
Well, there's also the rate of new drug and procedure discovery. I've heard it quipped that Americans are subsidizing the discovery of new medical techniques for the rest of the world. Whether that's worth a higher cost is arguable but I think the effect is there.
When this gets brought up as a positive to our high healthcare spending (which you're not exactly doing, more just making note of the existence of the argument) it's such a head-scratcher for me.
1) OK... maybe we should stop, then? Like, that seems like a terrible deal? How is that a justification at all? It seems like just a description of something very stupid we're doing.
2) This would be a good deal if we were getting other countries to also pay high prices and bringing that money "home", but basically the exact opposite is happening. WTF.
3) More often than not, the side of the issue that raises this as a good thing is also the side full of folks who think we should e.g. reduce spending on foreign aid, so it's especially weird that they're bringing it up.
Plus, I'm very skeptical that the idea that drug development would dramatically slow down if the US stopped over-spending to the tune of 2x-100x on lots of drugs is even true. But setting that aside, it's still just a bizarre line of argument, to me.
High interest rates have stopped way more drug development than lower or higher drug prices ever have.
Between 2019 and 2022 there were like 88 biotech IPO lockup expirations and only 3 were trading higher than post lockup for any period of time.
Macro determines the rate of risk taking. Not “details.” You simply 100% cannot have drug discovery without risk, and risk wants returns.
Should we have low rates and high inflation for the sake of more “discovery of medical techniques?” Inflation and high costs: dude, they are exactly the same thing!
Wouldn't it be even better to explicitly funnel our money to R&D, rather than hoping that it gets there eventually after insurers and paperwork maximizers and intentionally-inefficient providers all take their cuts?
Exactly this, example: biologics.
I am currently prescribed a medication that is over $30,000 per injection every 12 weeks.
Because we have absolutely atrocious health organization. Pharmaceutical companies can set their prices regardless of anything but their profit.
How should pharmaceutical prices be set?
In general, anything that's mandatory for life/basic quality of life but still needs to be produced by industry should should be regulated to artificially reduce prices in order to compensate for inelastic demand and prevent price gouging. This regulation should include supply-side subsidies and dynamic, carefully considered price controls.
This should apply to food, water, housing, health care, transportation, internet; all those good things that you can't do without and are extremely vulnerable to market manipulation.
It's worth researching the inevitable consequences of price controls, it's a predictable outcome that's been tested many times.
Price controls are Hobson's choice: Would you prefer expensive bread, or no bread?
Yeah, it's unfortunate for the US, but since no one else is stepping up to pay for the medical research that benefits all of humanity, we have to do it.
The recent "negotiated prices" for Medicare drugs could be the beginning of the end for this system though.
Americans look at their 9k a month salary and don't care about loosing an extra 300 USD on health insurance. I've experienced the British and Swiss systems - Swiss is like the American - pay roughly 600 CHF a month - and it's way better than the NHS. You can see a specialist the next day, get a scan the next day etc.
Is medical bankruptcy common in Switzerland?
600chf sounds like passable value for money, as long as you get excellent care and as long as that's all you pay.
But my concern is always what happens to the poor. Yeah, yeah, the Swiss are rich - but not literally every Swiss, I presume.
>Is medical bankruptcy common in Switzerland?
Only 4% of US bankruptcies are because of medical bills <https://www.washingtonpost.com/blogs/post-partisan/wp/2018/0...>. A tipoff that [insert large percentage here] of bankruptcies aren't actually because of medical costs is that only 6% of bankruptcies by those without health insurance are because of that cause. The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect in any country.
9k a month is not typical for sure.
It is surprisingly hard to track down what is meant exactly. It is not either of the options you listed here, but closer to the first. Chasing a very long chain of citations to other citations, it appears this paper contains the original explanation of where the data come from: https://sci-hub.st/10.1007/s11205-015-1196-y.
They survey all of the possible healthcare goods and services available across OECD nations, make their best attempt to select a representative basket that is both available across all nations and reasonably similar, then estimate what they call a "quasi-price" per unit of good and/or service, to account for the fact that the actual charged price is often artificially suppressed or set to zero by government fiat. This seems to be done by scouring management accounting databases to figure out what the payers and providers consider to be reasonable reimbursement rates for accounting purposes, whether or not that is what they actually receive.
I get what they're trying to do, but this probably explains some of the counterintuive results, because mostly people are probably thinking more along the lines of "add up all premiums paid to insurers, out of pocket expenses paid directly by consumers to providers, and all government outlays classified as healthcare" and that's how much your country spends on healthcare.
That's a reasonable comparison to make, but as the blog and the OECD report both point out, it does nothing to account for differences in quantity and quality of healthcare goods being paid for. The problem is this discourse then inevitably leads to "well the US gets worse outcomes," but to what extent is that fair? The only reason I can walk today is because of US healthcare. If you incur a musculoskeletal injury that requires intervention in various different countries, how likely are you to fully recover? If you get cancer, how likely are you to go into remission? I don't necessarily know exactly what should be measured, but I know that when the discussion goes straight to lifespan, that is heavily confounded. Americans drive more, own more guns, are fatter. There has been tremendous industrial pollution in various places, though I don't know how that compares to the rest of the OECD. I wouldn't be surprised if we have more backyard pools. There are many, many reasons we might live shorter lives that have nothing at all to do with the quality of the healthcare we receive.
Studies have found that Kaiser Permanente (an integrated health insurance/care provider—basically a non-governmental equivalent of the NHS in comprehensiveness—that is available in many US states) is more efficient and effective than the NHS for about the same cost.
Examples:
* <https://www.bmj.com/content/324/7330/135>
* <https://www.bmj.com/content/327/7426/1257>
Profit margins for insurers are pretty low on a percentage basis. The Affordable Care Act (Obamacare) imposed a minimum medical loss ratio on commercial payers. You can read the financial statements for those that are publicly traded. Some of the largest insurers such as Blue Cross Blue Shield Association members are non-profit.
The NHS isn't really a "single-payer system" in any meaningful sense. In the UK, most healthcare providers are employed directly by the government and their wages are fixed below the market rate to control costs. There are internal financial transfers but there aren't really arms-length negotiations and payments between separate payer and provider organizations.
If the USA was to adopt a single-payer system like the various "Medicare for All" proposals that politicians have floated that wouldn't do much to reduce costs. Any meaningful cost reduction for the system as a whole would require driving down provider wages, rationing care, and ending the way that we subsidize drug development costs for the rest of the world. Those measures might be good things to do on balance, but they aren't politically popular.
This is so misleading. What you are saying it technically true, but also why our system is broken.
If I can only make 10% profit (or whatever the law is), what is my incentive to keep healthcare costs down? The ONLY way I can grow my income if it healthcare costs go up. 10% profit on a $100 medication is way less than 10% profit on a $1,000,000 medication. The road to hell is paved with good intentions.
Another disingenuous argument on non-profits. Is all of Blue Cross Blue Shield non-profit or only the certain parts you want us to look at? A 'Pay no attention to the man behind the curtain' argument.
Final disingenuous argument is you just asserting 'meaningful cost reduction'. There is no way ambulance rides went from $200 to $10,000 because of EMT pay.
> If I can only make 10% profit (or whatever the law is), what is my incentive to keep healthcare costs down? The ONLY way I can grow my income if it healthcare costs go up.
You're missing the step where you also have to increase premiums, i.e. price. And what normally keeps any seller from increasing their prices whenever they want is competition--some other insurer will get your business.
That begs the question of how competitive the insurance market is. Let's assume it's woefully uncompetitive. But in that case I don't see how the ACA 80/20 rule on administrative overhead changes incentives and the evolution of price inflation one way or another. At best it temporarily disrupted existing inflationary schemes, at worst it does nothing.
> There is no way ambulance rides went from $200 to $10,000 because of EMT pay.
Absolutely not. EMT pay can be as low as $12 an hour.
I'm not asking you to look at anything. Many US healthcare payers are private non-profit corporations. That includes some (but not all) Blue Cross Blue Shield Association licensees. The BCBSA isn't a payer itself and merely provides some shared services to their independent licensees. Outside of the Blues system there are other large non-profit payers such as Kaiser Permanente, HCSC, Geisinger, EmblemHealth, etc. This isn't secret information, you can just go look it up instead of arguing.
Commercial health plans have conflicting financial incentives. Most of them no longer provide much insurance (in terms of bearing financial risk) but rather primarily act as administrators for self-insured employers. So while payers can potentially boost short-term profits by paying out higher claims, employers comparison shop between competing health plans every year. Your HR department would happily switch from Aetna to Cigna (or whatever) next year if their analytics forecast shows that would save a few dollars on expected claims.
Ambulance fees are a mess but those represent a tiny fraction of overall US healthcare spending. Some reform there would be a good idea but that wouldn't do much to reduce costs.
Significant systemic cost reductions will require some mix of lower provider wages, care rationing, and reduced spending on new drug and device development. Countries with more socialized healthcare systems are more financially efficient in some ways but they also just do less stuff: less drug development, longer queues for advanced treatments, underpaid doctors (relative to market wages), care restrictions based on QALYs (or similar metrics). Complaints about payer profits, while perhaps somewhat legitimate in certain cases, are largely a distraction from more fundamental problems. That's just basic math dictated by the cashflows. There are no simple solutions and we're eventually going to have to make hard choices. No one wants to face this reality.
Edited out frustration.
I wrote hospital medical software for 20 years passing on way better pay because I wanted to make a difference. And I gave up because the system WANTS to be how it is today. Everyone in medical is CHOOSING to make it this way, then claiming 'ah it's too big, it's too complicated, we can't change it'. Americans being to scared to call an ambulance means emergency care has completely failed them, not a small little thing to be brushed off. Americans are making hard choices about medical care every day already.
This is nonsense. Health care costs about twice as much in US as everywhere else and only the rich can afford it. Health insurance companies fight against doctors and patients to subvert health and profit as much as possible.
For profit non profits exist. There is no “metric” for how much a 501(c)(3) must ratio in order to be considered tax exempt.
They must follow their own discipline set in their founding documents.
Calling blue cross blue shield nonprofit is disingenuous as they made $749,000,000 in 2022.
Per their 990’s: https://www.causeiq.com/organizations/view_990/135656874/101...
$749 million is revenue. Revenue less expenses (i.e. profit) was $57 million, which admittedly is a decent 7.5%. But as a nonprofit there are no shareholders or partners to siphon off that profit. The common argument is that management siphons off that money through salaries, and I can't say they don't, but if you look at their assets & liabilities it seems like some significant amount of their profit is going into savings.
Anyhow, the Blue Cross/Blue Shield system has a very complex structure so if you're looking to find where the real money is being siphoned off it's unlikely to be at the top. BC/BS affiliates are independent, that's why the org at the top for a system insuring over a hundred million people pulls in less than a billion dollars in revenue.
"Nonprofit", at least in the US, is usually shorthand for having received a 501c3 (or similar) designation from the IRS. It has little bearing on your ability to make money as an organization (with caveats like the public support calculations)
Source: Ran a nonprofit for a few years that made money doing software consulting
Have you tried phoning a GP or for an ambulance recently?
GDP per capita and other "per capita" metrics are also unreliable metrics for household income, as they suffer from the same issue as averages. This is a common trap that is done in population statistics, as mean and averages are always easier to calculate and reduce the complexity of the calculations.
Large wealth inequality makes GDP per capita and average household spending not representative of a real-world median household. If healthcare costs have outpaced median income but kept up with mean income, that is a MASSIVE societal issue.
Most of the plots and arguments in the article overlook this, so I don't trust the arguments much.
However, it is still interesting how strong the correlations are. It gives some interesting insights into what goes into the cost of running hospitals, I suppose.
This is fine as a high level economic discussion, but I think it misses the point of the complaints from actually US consumers: when I consume healthcare as an individual I am paying with a blank check, and I am therefore likely to be tricked into consuming more health care than I would otherwise choose to afford, perhaps to a ruinous degree.
I think ordinary consumers care much less about whether their country spends a nominal share of GDP on the heath sector, than about whether they will be unexpectedly bankrupt by consuming health services, and this is why people are actually mad.
> The claim that US health care prices are inexplicably high was never well-evidenced
I can provide anecdotal evidence that prices inexplicably high. A primary care physician will charge anywhere between $200-$500 for a visit. If you have good insurance, you don’t pay out of pocket. In the same city, I once had to go to a PCP who would only work without insurance. I had to wait a lot because of how many people were lined up in front of the office, but I paid $50 for the visit. I’m already paying 4-10x in a comprable market for the same services.
When I was abroad, I had to visit a doctor’s office for food poisoning. I paid 200 in the local currency. I could have gone to a hospital and they would charged me 500 in the local currency. But what’s important to know is that the median monthly wages in the country were 25000 in the local currency. So all in all, you’d pay a smaller portion of your wages for a simple checkup.
And that tbh is why people are actually mad.
I recently had skin cancer surgery. I was offered a 20% discount to self pay. Because of my deductible I would have paid more if I used insurance than if I just paid. We are now to the point where it's not cost effective to use our private insurance for cancer surgery. How anyone is defending this system is crazy to me.
I started and sold a company in the industry, and agree that macro level analysis misses this. In the us healthcare as a “product” has an AWFUL customer experience. On so many levels. And the worse it gets the more people want to “burn it all down”, despite the fact that it might not be as dire as we think when we do the high level analysis. Whether or not that’s a good thing is up for debate.
A quick reading of the summary shows a lot of debunking and just one item that explains the bad health of North Americans:
Diminishing returns to spending and worse lifestyle factors explain America’s mediocre health outcomes
https://randomcriticalanalysis.com/why-conventional-wisdom-o...
This analysis in the end doesn't show what it claims to show and actually proves the reverse - US Health care spending is much larger than other countries, it eats up significant fraction of productivity gains in other sectors (rises faster than income as shown by the 1.8 slope in the very first graph), and does not lead to better health outcomes. It actually proves we would be better off if we spent less and focused on lifestyle.
> US Health care spending is much larger than other countries
The thing is that in USA (and Canada) radiologist compensation went from 300k/yer to 500k/year over the last 10 yeas. It's the same radiologist. While spending is growing quantity of doctor per population is diminishing.
In USA/Canada there is cartel enforced cap on how many new doctors can be minted per year, and this cap is not even scaling up with the population growth.
What was it claiming exactly that it proved to be reverse?
> we would be better off if we spent less and focused on lifestyle.
I didn't see any claim opposite of this.
I skimmed what I can while on break. What I didn’t see is something I’ve heard from doctors but can’t verify. It’s that insurance companies require them to do extra procedures or have extra employees they don’t think they need. Some who didn’t take insurance say it keeps their cost down.
One told me the insurance companies incentivize him to treat patients like an assembly line where cash only lets him spend one on one time with customers. He also might treat people for several things on the same bill which he claimed he’d have to itemize and charge separately for with insurance.
So, do people here have specific examples (esp links) to support or refute those anecdotes? If they were true, it would mean insurance rules were driving much of the cost. Looking at their causes, my first guess would be how they respond to losses from both real malpractice and greed-driven lawsuits. I can’t imagine that costs aren’t impacted by this with all the lawyer ads I see for suing insurance companies. ;)
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>The more often a person has regular checkups with a doctor the shorter their life expectancy.
Well I'm no expert, but I can think of an alternative interpretation to this datapoint...
To be clear: you're suggesting that there is scant evidence that any forms of disease arise from pathogens? Or do you have a more narrow definition of disease?
For instance, is a strep throat caused by a colonization of strep bacteria in one's throat, based on your understanding?
the often cited Landsteiner and Popper experiment simply showed that drilling a hole in the head of a monkey and injecting biological material into the hole causes paralysis in a few of the monkeys.
Two monkeys were injected and both died within days. One of the monkeys showed paralysis. Both showed spinal lesions consistent with polio in humans. The material injected had been run through a filter small enough to stain out bacteria, and the sample was cultured to prove that no bacteria was present.
Polio is caused by Poliovirus.
https://pmc.ncbi.nlm.nih.gov/articles/PMC112492/