State run healthcare ruins the market by basing the cost of treatments to pretty much what they cost to perform rather than how much person is willing to pay for them. Of course it does not work quite so smoothly in the real world, but enough that countries with public healthcare seem to be cheaper.
Try asking a cardiologist or neurologist for a fixed price estimate before a test is run. If you press the issue you'll be labeled a "confrontational" or "hostile" patient and rejected from the practice.
It's time to admit that not all problems are amenable to market solutions.
Likewise, insurances would negotiate rates for certain procedures. Of course it is not the task of the patient during cardiac arrest to do so. But the patient would choose the insurance provider.
This sort of thing is usually fertile breeding ground for corruption and backhanders. The NHS has been dogged by scandals caused by this sort of pseudo-privatization.
It works for smaller and short term contracts, especially for things which the private sector also needs, but the larger the size of the contract the more likely it is that the price will be determined by backhanders and which ministers play golf with which chief execs.
For something the size of "supply a city with emergency services", you could practically guarantee that the city council leader's cushy post-political job would be determined by which company they picked.
tl;dr read up on the principal/agent problem.
Sure, governments/councils spending other people's money is always a fertile ground for corruption.
Most privatization efforts come about as an attempt to inject corruption, however, so arguing that it could be done in a fairer and cheaper way is something of a moot point: if it were going to be cheaper and fairer they wouldn't be pushing for it in the first place.
Huh - citation needed? I've never heard that claim before. Corruption pretty much needs governments, who else are you going to bribe?
To me competition seems the only surefire way to keep prices fair/low. Yes, motivated governments in theory could do everything. A supercomputer could theoretically compute the perfect prices and allocations for everything. But no such computer exists, and markets are the only approximation available. You can not rely on governments to be motivated to be selfless and good. Even if perhaps some individuals are, in the long run the incentives are just not aligned, and it takes just a few bad apples to ruin the system.
It's worth noticing that most of ambulance services in the world are run entirely or in a good part by volunteers and no-profit organizations to ensure honesty and quality of the service.
...to put it mildly. Applying the market law to medicine encourages the most inhuman behaviors.
[1]http://theinvestmentsblog.blogspot.fi/2014/09/munger-on-airl...
full speech
I don't mean for this to be antagonistic so please don't take it that way, but it seems so many outside the US see the US as almost a form of extreme capitalism, where an almost dogmatic belief in the ideal has resulted in sub-optimal infrastructure and services.
In my view, insurance is completely compatible with capitalism. It is simply a business, based on statistics. So why should the US have a special problem with insurance?
Non-US manage costs by some combination of state price control, aggressive triage, reduction of bureaucracy compared to complex insurance systems, and lower labour costs.
Also, in re "other countries are poorer than the US": that may be due to the US having a few extremely rich people, it may be possible that the average or modal American is poorer than the average European. Especially if you account for healthcare.
The one which has "US Tax rate 20.3%" and "UK Tax rate 18.9%"?
Even if we did pay more tax, how are you accounting for healthcare and other benefits? US state taxes? UK council tax, and the situations where you can have "negative income tax" in the UK (WFTC)?
And, as discussed, you're free of worries about whether or not you'll get healthcare in the UK. (You may experience a delay for non-urgent conditions, I'll give you that)
Perhaps the issue isn't that the US as a whole can't afford it, but more that medical treatments are expensive and the rich aren't willing to subsidise for the others.
In countries where it's funded essentially via sliding scale income tax, the rich don't have a choice but to subsidise it.
Are the numbers even known, I mean, how much would proper health insurance cost per person?
There are economic forces in American life that actively misinform the public. Medical care is made to be expensive to protect those interests.
In the UK most hospitals are owned and run by the state.
Single payer works better, that's why almost all countries use it for basic healthcare.
"Only one issue per visit" so they can charge for two visits. Making me visit to hear the negative results of a standard STD panel, again, just so they can charge for two visits. They charge for an extra visit just to renew prescriptions with no additional examination. Etc.
Also there are different structures for payment, insurance and pay per visit are simply not necessary with single payer though some systems use an amalgam of public/private.
(A) which countries do you mean here? Be specific
(B) Do you think hospitals aren't trying to fleece insurers and customers all the time? e.g. with opaque billing practices?
What we are trying to say is that in the US, insurance provides very little benefit while constantly driving up cost. They actually have every incentive to shield consumers and producers from having good levels of information about value and cost. If making money from the actuarial spread were the only thing that they did, they might not be so toxic. Instead, they partition information into silo's to further create arbitrage points. Every point where they serve as gatekeeper for information is a place in the system that extra profit can be made.
I think one of the things that you are assuming is that they have a single function in the market. They don't. As is often the case, simple capitalist models for ideal markets just don't match reality. They are also able to use their gains to game the system in their favor from a regulatory perspective.
Obviously, things are not working out in the US. I am just not yet convinced that the market/capitalism is to blame, or if it is essentially corruption (including lobbyists bribing politicians to set up a system that allows the bad insurers to stay in operation).
Also, EMTALA prevents hospitals from denying treatment for ER visits. People without insurance use these frequently as they have no other alternatives for care. ER visits are incredibly expensive and its a partial reason for price spikes.
Basically the US healthcare system is a patchwork of system tied to employment (which stemmed from wage controls during WW2). No one's been able to rework the system since there are too many entrenched players making too much money
Insurance that is based upon a normal distribution is compatible. Insurance based upon a non-normal distribution is not compatible because you basically can't price it. You therefore usually get a few scenarios:
* The insurer prints money during the good years and goes bankrupt in the bad years.
* The insurer prints money during the good years and somehow caps their liability in the bad years (this is why homeowners' insurance typically doesn't cover flood damage).
Sometimes the government covers the difference (e.g. the government coughing up the money AIG owed to Goldman Sachs, the nuclear liability cap or NFIP), sometimes it doesn't.
You get non-normal distributions in a lot of situations - nuclear insurance, flood, earthquake, healthcare and insuring against default risk.
tl;dr capitalism is compatible only with high school statistics.
Sure, there is no guarantee that the whole network can not go broke. But that goes for governments, too.
Also I think health care will always have to be capped at some point, because with arbitrarily high investments, you could presumably keep people alive indefinitely (heart fails - attach heart machine. Lung fails - attach lung machine...). That is why in the UK afaik they don't pay for dialysis once you reach a certain age.
Where this does happen there's usually a fairly low liability cap, some sort of hybrid private/public partnership or a combination.
"Also I think health care will always have to be capped at some point, because with arbitrarily high investments, you could presumably keep people alive indefinitely (heart fails - attach heart machine. Lung fails - attach lung machine...). That is why in the UK afaik they don't pay for dialysis once you reach a certain age."
The UK is almost entirely communist (this is a description, not a slur) in the way funds are allocated. They base funding decisions on something called QALYs - quality adjusted life years.
The practical upshot is that expensive operations that will add 6 months of painful life for an elderly patient are not prioritized under the NHS whereas operations that could save a newborn child's life have virtually no funding limits.
Another factor is that many people don't shop for their insurance, they take whatever their employer offers (and if they have much leverage, they demand that their employer offer something with broad coverage and minimal copays and deductibles).
For instance: a hospital charges patients $300 for an X-ray if they pay directly in cash. However, insurer "X" has a policy that they only pay 25% of standard rate for all procedures. So the hospital states their standard rate is $1200 for an X-ray.
So now I (as an insurer "X" policyholder) get billed $1200, but my insurer decides it's a non-covered expense. Does the hospital adjust my bill down to their cash rate of $300?
No.
That would violate their agreement with the insurer and potentially mean that the insurer would only pay them $75 per x-ray moving forward on ALL of insurer "X"'s policyholders.
So now I hypothetically am stuck with a bill four times as large as it would have been if I were entirely uninsured.
This is a product of the impersonal transformation of medicine caused by corporate ownership (and accounting) of local care facilities combined with the legal/profit seeking power of large insurance firms.
I think that is one of the main challenges of health insurance.
In my country (Germany) I have actually shied away from switching to private insurance, because they pay doctors more, and doctors are known to do as many tests and procedures as possible (not always a good thing, but in the end it is a gamble - too many examinations/procedures or too few?).
The "public" health insurance is quite regulated as to what gets paid and how much. The downside is that doctors have to waste a lot of time on bureaucracy (every examination has to be entered into the computer to determine the costs), and transparency is still missing (patients typically don't even know how much their treatments cost). And some committee decides what procedures get paid. I don't trust committees. I trust the market (I mean I trust "in" markets, not necessarily any given market as markets can be broken by regulations, lack of transparency, all sorts of things). I have also spent a lot of money on things that weren't covered by public insurance.
One story I heard is that for example in the UK they won't pay for dialysis after a certain age. So public health insurance is not an automatic solution to every problem.
I think it is actually unavoidable that insurance will have to make a cut at some point, because medical procedures can become arbitrarily expensive. Perhaps even now for the right money, people could be kept alive indefinitely.
I would have no problem with a doctor trying to be profitable - just as with other businesses. I guess the classic assumption is that to be profitable, businesses have to provide good service.
This is completely WRONG, there are NO age-related limits for treatment like this in the UK. Dialysis is a life-saving procedure for those with kidney failure, and is available to everyone in the UK who requires it regardless of age. The same goes for heart surgery, bypass operations, stents etc. which are also sometimes claimed to be age restricted.
The fact that people actually believe that a cruel system like this (one that would cause people to die by withholding treatment just because of their age) might really exist probably says much more about the way US health care works and the perceptions surrounding it.
Nevertheless I think there will always be procedures that won't be paid for, in any health care system, because it would always be possible to incur arbitrarily high costs. As an extreme example, you could assemble a team of 1000 scientists to try to cure one person.
A quick Google search reveals this claim is spurious, so maybe don't believe everything you hear.
This is not true. In fact, most people getting dialysis are over 65.
https://www.renalreg.org/wp-content/uploads/2014/12/Incidenc...
> Kidney disease is more common as we get older, and although people of all ages can need to start dialysis, it most commonly affects people aged between 65 and 84 years. Figure 2 shows the number of people starting dialysis or going straight to transplantation in each age group and it can be seen that the age group with the most people was 65–74 for both haemodialysis and peritoneal dialysis. In 2013, the average age of people starting treatment was 65 years and this has changed little over the last six years. The average age at start was 67 years for people starting on haemodialysis, 60 for people starting on peritoneal dialysis and 50 for those having a transplant before they start dialysis. In 2013, more men started treatment than women (63% male versus 37% female). Diabetes was the single most common cause of kidney failure (25%).
Here's a document talking about cost of dialysis for older people: https://academic.oup.com/ndt/article/18/10/2122/1807737/Cost...
The NHS Constitution for England forbids discrimination based on age, as does the Equality Act 2010.
https://www.gov.uk/government/publications/the-nhs-constitut...
> The NHS provides a comprehensive service, available to all
> It is available to all irrespective of gender, race, disability, age, sexual orientation, religion, belief, gender reassignment, pregnancy and maternity or marital or civil partnership status. The service is designed to improve, prevent, diagnose and treat both physical and mental health problems with equal regard. It has a duty to each and every individual that it serves and must respect their human rights. At the same time, it has a wider social duty to promote equality through the services it provides and to pay particular attention to groups or sections of society where improvements in health and life expectancy are not keeping pace with the rest of the population.
Speaking of kidneys - don't they prioritize recipients of organs somehow? If age based discrimination is forbidden, an 85 year old person would be as eligible as an 8 year old to receive a new kidney?
Not saying it would be wrong, just curious.
Can you name any?
No, your mistake is in assuming that insurance companies exist to spread risk and reduce costs. Insurance companies like most publicly traded companies exist to transfer wealth from customers to executives and shareholders. As a result, they will do whatever they legally can to raise revenue (increasing premiums) and reduce costs (deny coverage, push the burden to the consumer).
The other aspect is that healthcare in the United States does not lend itself to a free market solution. There's no transparency in prices, so you can't exactly shop around when you need a procedure done. In addition, you also have times when a person needs treatment due to a life-threatening condition. He is not interested in looking at alternatives, he's interested in staying alive, so he's going to take whatever provider is around. Well, if that provider is not "in-network", he's going to get hit with a massive bill. The United States is literally the only developed* nation that has the concept of medical bankruptcy.
* The United States is not truly developed. From an economic standpoint, we are, from a social standpoint, we're not.
I've heard that a big part of this cost is due to the highly litigious culture in America that requires doctors to carry very high malpractice insurance, which they must then pass on in their patient costs. Americans love to sue, and this drives prices up.
I don't know if this is true, but its the one argument I've heard over the years that makes the most sense to me.
I once had a worldwide health insurance plan while living in Asia, and it covered all countries EXCEPT the USA, because of the absurd costs there.
And unfortunately, many serious conditions are dramatically more expensive, and potentially more lethal, when presenting late. It's a nasty piece of positive cost feedback inherent to the current US system, and one that disproportionately affects patients from lower income brackets.
Other reasons include the massive costs of running and staffing the billing infrastructure, cost of compliance & provider insurance, and uncontrolled drug pricing.
These factors are not present in most other first-world healthcare systems, or are present but minimised by effective regulation.
Because otherwise I don't understand why the market can't provide good health insurance in the US? Isn't that a classic insurance problem, take a group of people and spread out the risk?
What is going on? Is medicine too expensive because of state subsidies, so private insurers can't compete? Or are there regulations preventing private insurers from entering the market?