This is a really underrated point and part of the reason I'd like to start by seeing price transparency: http://seliger.com/2018/03/27/preventive-care-doesnt-save-mo... . Bizarrely (or at least, bizarrely to me) this doesn't seem to be part of the political discussion at all.

These prices should all be public and comparable. Common reasons to go to the doctor should be shown alongside their costs.

We got a surprise $19k bill that we were told would be $160 and our insurance would cover the rest. We’re letting them fight it out but would be very disappointed if we had to pay that out of pocket. We would never have ordered the test then, or would have tried to shop around

This is the trick. Accepting insurance - in particular, Medicare and Medicaid, because of their particular reimbursement model - makes it impossible for most providers to provide up-front pricing.

Typically the providers who can are for specialized treatments that don't intersect with other specialists much, like outpatient psychiatry or psychotherapy (you'll see this a lot in places like New York, where the demand is high enough that good psychiatrists can ensure a steady stream of patients even if they don't accept any insurance, and they rarely need to refer people to other specialists). I'm glad you're able to operate a practice like this elsewhere, especially for a non-psychiatric (I'm assuming) medical clinic.

I must be missing something. Suppose I tell the provider I am going to pay them cash, directly; I will not use Medicare, Medicaid, or any other insurance. Are you saying that because said provider accepts Medicare/Medicaid for other patients, it is impossible for them to tell me ahead of time what they are going to charge me?

This is also why commercial/retail space will generally negotiate on almost anything but the rent per square foot, since if they lower that, all the other tenants will immediately demand lower rent.

No fucking wonder health care costs a goddamn fortune.

There's an entire industry of entities involved with medical pricing. One of the players in one of the larger niches, a Pharmacy Benefits Manager[1], recently bought an insurer[2]. Manipulating, negotiating and offering various financial and marketing products (it gets really blurry) around medical pricing is huge business.

[1] https://en.wikipedia.org/wiki/Pharmacy_benefit_management

[2] https://www.nytimes.com/2017/12/03/business/dealbook/cvs-is-...

Yes. Medicare and Medicaid generally reimburse rates that are below COGS, so providers have to make up the difference with what they charge private insurers. If they didn't, they would literally go out of business - if you have to pay $100/unit wholesale to purchase a vaccine and Medicare only pays you $93 for the entire visit during which you administer the vaccine, you won't be around very long unless you can get private insurers to pay much more, to cover not only the $7 unit loss, but also enough to pay for all the overhead of running a practice (wages, office space, etc.)[0].

They'll make up the difference by requesting much more from private insurers, though they don't know a priori how much they'll get. In the end, private insurers typically peg their rates to multiples of what Medicare reimburses (for example: "we'll agree to pay 350% of Medicare's reimbursable rate for all reimbursable billing codes").

For various reasons (including both logistical and legal ones), they can't present one bill to private insurers and a different bill to self-paying patients. The amount that they'll accept to settle the bill may be dramatically less than the amount they bill for[1], but they can't provide different bills up-front.

So, any provider that accepts insurance is basically incapable of providing you in advance with a price quote that represents what you'll actually pay, regardless of whether or not you are actually on insurance.

In theory, providers who only accept a very small set of insurances and accept no Medicare patients would be able to do this. But in this day and age, you're almost never going to find one of those providers - the overhead of accepting insurance is large enough that it's to their advantage either to accept several different forms, or to refuse insurance altogether. And once you're taking insurance, you basically can't refuse Medicare patients (logistically and legally: some Medicare patients receive dual coverage or receive their Medicare coverage wholly under private plans, and you can't turn a patient away just because you discover that they're on Medicare if you're otherwise capable of accepting their insurance).

[0] These numbers are illustrative; Medicare (in aggregate) reimburses 7% less than costs.

[1] If you're insured, every time you visit the doctor, you probably receive an explanation of benefits statement, which shows that they were billed $1000, but their maximum reimbursable rate is $300, and they'll cover $250, so you're required to pay $50. The difference between $1000 and $300 is what I'm referring to here.

So, do I have this right, Medicare is state funded - they pay the doctor less than the cost of manufacturing the medicine and the doctor over-charges other people's insurance companies so as to pay for fixed costs and add profit, to the drug company and themselves?

Your expansion under [1] makes no sense - you were billed $1000, the insurance paid $300 and charged you $50 of that; who is paying the $700? Are you just saying that those at the point of delivery barter by trying to charge $1000, hoping you'll pay it, but the insurance company negotiates a 70% discount? Rather than having an actual cost for a treatment.

So, unintuitively, uninsured people (at least the ones who can pay their bills) are great for care provider revenue.

For certain things, yes that is the way it works. I believe most medical practices are losing money when they administer a vaccine.[0]

[0]: http://pediatrics.aappublications.org/content/124/Supplement...

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

This is because insurance companies pay in base on what you did or how long you did it. You itemize each visit like a tax return that later gets reviewed. Then someone reads the return and thinks if it makes any sense.

After that, they pay back the doctor, but according to the plan, they also have to charge the patient the copay.

That said, a doctors office that is only cash will get very little patients. Because people that are employed will not go to a cash-only doctor's office.

- What range of services do you offer? Do you take care of broken bones? Long-term illnesses? What kinds of things do you refer people to a full hospital for?

- Are there many offices like yours around? How unusual is your office?

- How easily could you build an entire hospital on this model? What would the limits of that be?

I don't believe you can run an entire hospital on this model. Hospitals/insurance are best suited for unpredictable events. Our model is great for chronic and predictable events.

[0]: https://en.wikipedia.org/wiki/Primary_care_physician#Scope_o...

Which is to say it's all madness.

Medical treatment by a physician or hospital? No, you can't really find out.

https://surgerycenterok.com/

are able to provide up front pricing. But if they were to accept medicare, they wouldn't be able to.

Here is a version of price transparency as a bill: https://revcycleintelligence.com/news/house-reps-introduce-h...

You should be able to see a common list of treatments and work done for general practitioners and specialists and it should be searchable on the internet.

The opacity in the labor market and the drug market is not an accident.

Health insurance is tied to your job, and your company pays most of the costs for you. If you choose to get your own insurance you don't get to take the amount your company pays, so you cannot afford to. This ties you to your company making it harder to just leave, first you have to find a new job. The more prices go up the harder it is to leave and live off your savings for a few months.

Obama promised "if you like your insurance you can keep it". However what wasn't said is "if hate your insurance you have no choice but to keep it". I don't like my insurance, but since I otherwise like my job there is nothing I can do about it.

Until the government changes the above prices will get higher.

To be fair, this was a worse problem prior to Obamacare. At least now we have the exchanges, and companies can't deny you coverage for preexisting conditions. I agree with what you're saying, and the current system certainly has big problems, I just don't think you can blame Obama for that.

The answer is certainly not the liberal/progressive wing of the Democratic party.

The existing policy is a compromise that liberals signed off on to improve the conditions of the worst off, but they were not able to create the kind of conceptually coherent total overhaul we would require to make the system rational.

I agree with you that blaming Obama for a failure of leadership in this situation is borderline absurd, but it's a simple narrative that is easy to regurgitate in a complex, frustrating world, so we have to forgive people for believing it, to some extent.

A one page bill could probably fix the whole thing

* move tax benefit of buying insurance from employer to employee (why is my company involved in my health insurance anyway?)

* allow buying of insurance across state lines

* require same price for all services, tests, medicines regardless of payer

* require those prices to be public

* declare a single 'pool' or market for insurance (just like federal employees have)

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

The bill passed in the Senate by 60-39 with all republicans voting against except for Jim Bunning who did not vote. With 58 Democrat and 2 Independent votes the Republicans weren't able to filibuster. After the bill passed the senate a special election to replace Ted Kennedy in the senate was won by a Republican, so the Democrats no longer had a super majority in the Senate, and so the decision was made that the house should pass the Senates bill as they didn't think voting on a house bill would pass the senate now that the Republicans had 41 votes which was enough to filibuster.

> The existing policy is a compromise that liberals signed off on to improve the conditions of the worst off

The only compromises happened between members of the Democrat party, between moderates and progressives.

> I agree with you that blaming Obama for a failure of leadership in this situation is borderline absurd

I agree that there are likely a lot of compromises that happened behind the scenes that we didn't see, but there has to be some ownership of that bill by President Obama. It was his marquee bill at a time when some Democrats were urging him not to tackle it, he had a super majority in the senate and the house. He signed it into law, he set the agenda, I think it's fair to hold him accountable for the outcome, even if it's not exactly what he wanted, it's still what was passed and if he didn't like it they could have scrapped it to try again.

if you really want to know the gory details of this process and healthcare in america read the excellent book by Steve brill:America's Bitter Pill.

and one more thing, you had insurance now but what happens in you lose your job or god forbid take a break for a few month to care for somebody.

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

He did try for the other problems, and there was a lot of opposition.

for a complex bill like that you cannot take one thing in isolation and complain you have to look at the context. Also, again, its congress not him. if you are gonna complain, complain about republicans that kept watering down the obamacare under bad faith negotiations (though eventually it passed without any red support).

The blame is on Congress.

Personally, I don't think that's a coincidence.

And, of course, this was a massive lie. Personally, I loved my previous insurance but after ObamaCare, it went away and my replacements were far more expensive.

It was the 2013 Lie of the Year by Politifact, even.

http://www.politifact.com/truth-o-meter/article/2013/dec/12/...

You are correct - in cases where there is a brand-name version of a dug AND also a generic version of the same drug, the generic is usually provided unless the brand-name is specifically requested.

But, the parent post is describing cases where there is a new, brand-name drug that fills the same niche as an existing generic. Two different drugs, but often only slightly differing results. MDs often prescribe the newest, assuming it's better than the generic. MDs receive much of their ongoing education about drugs from the pharmaceutical sales reps, so they are bombarded with ads and samples (just as consumers are with ads on TV).

As an aside, my dermatologist has been good about ensuring the costs of any treatments I receive are managed. She's recommended specific pharmacies, brand-name vs generic, and other tips/tricks to reduce the costs. This despite the fact that I don't directly bear any of the costs because I have a decent medical plan.

That is not always a correct assumption. Due to the way some programs like Medicare pay out, doctors are sometimes strongly incentivized to prescribe the most expensive drug.

Ophthalmologists are the usual notorious example, prescribing for macular degeneration. Medicare's reimbursement for drugs administered in-office includes paying the cost of the drug plus an additional percentage.

For macular degeneration, research showed Avastin and Lucentis are basically equally effective. But Avastin is ~$50/dose and Lucentis is ~$2,000/dose. If you're going to get a "bonus" payment equal to a percentage of the cost of the drug, which one would you use?

Lucentis has at times accounted for 10% of the entire Medicare part B drug budget because of this.

My comment was based on the more typical situation, where the physician sends the patient to a pharmacist.

Giving the same (high?) standard of care to patients without regard to their financial resources.

So the generic just doesn't get considered, even though it would be suitable for the patient at much lower costs. This is unrelated to the situation you're describing.

Many ophthalmologists will give the most expensive post surgical drops. When I called one to have him change it, he was like “uh, there’s no substitute.” I thought to myself, “then what did you guys do before these drugs came out a couple months ago?” Example: post cataract surgery people usually get an antibiotic, a corticosteroid, and an anti inflammatory. These generic drugs have been on the market for years. But new ones come out here and there that are hella expensive, we’re talking a copay of $5.00 vs $100+ per eye drop.

Also there are prescribing guidelines called step therapy. For example for diabetes: https://emedicine.medscape.com/article/117853-treatment#d10 doctors will skip the first few steps and prescribe a brand name drug immediately that’s like step 3.

Insurance companies try to stop it by requiring authorization but... I feel like we’re fighting an uphill battle with perverse incentives.

What I found was that a lot of doctors look at the decision from a clinical lens only. Why not prescribe the latest branded product, even if it's only marginally better than the generic? Patients deserve the best, right?

Making a cost vs. benefit trade off wasn't a universal process for many physicians.

I can't really disagree with that logic.

By the way, some of these newer drugs don’t have to be “superior” to be approved, they just have to be none-inferior to current therapy. https://www.raps.org/regulatory-focus™/news-articles/2016/11...

We had a similar corruption here, in Lithuania, until the law has been passed that pharmacist must offer a generic alternative. But there again, world is seen very differently in EU than USA, so I don't expect that to apply on the other side of the pond.

That's surprising. Over here (Germany) the doctor can fill in the name of the brand in the prescription, but unless he ticks a special box you'll automatically get the generic.

Some people will still opt for the more expensive, of course, but where's the incentive for the pharmacist to fill a script for Neurofen RTM with anything other than ibuprofen? Why even is there a special box -- if the generic isn't the same drug (tested, licensed, etc.) it's not a generic. Might as well have a "are you getting a kickback for prescribing this" box?

> Each tablet contains Ibuprofen 200 mg Also contains: Sucrose, Sodium Citrate, talk, Croscarmellose Sodium, Stearis Acid, Titaniu, Dioxide, Silicon Dioxide, Acacia, Carmellose Sodium, Sodiu, Laurilsulphate, Macrogol and Blank Ink(contains Shellac, Iron Oxide Black (E172) and Propylene Glycol) or Opacode S -1 -8152 HV Black (contains Shellac, Iron Oxide Black (E172, Antifoam DC1510 and Soya Lecithin

https://www.boots.com/nurofen-200mg-tablets-16-tablets

to generic ibuprofen:

> Ibuprofen 400mg, sodium starch glycollate, croscarmellose sodium, sucrose, E171, E127 and E211

https://www.chemistdirect.co.uk/ibuprofen-400mg-tablets/prd-...

That's a bold and unfounded claim. Drug makers do not incentivize doctors to write DAW on a prescription.

Forbes and the New York Times have written articles on it. The Affordable Care Act has a provision that requires Doctors to disclose payments.

Empirically, I dated a girl for about 2 years who was a sales representative for a major pharmaceutical company. When I asked about her job she said it was mostly dropping of brochures, swag, free lunches, and holding contests to promote products. Top producers (doctors) received all expense paid trips to medical conferences held in exotic locations or were invited to be paid speakers at said conferences. It was not too different from what the marketers did at the insurance broker I worked for at the time to cater Agents to write their lines.

Your anecdote is about which drugs the doctors choose to prescribe. It has nothing to do with incentivizing doctors to prevent patients from filling generic versions of drugs and forcing them to purchase the brand-name version of the same drug, which is what this thread is about.

I don't know how those reports are generated. Do pharmacies report that information back to pharmaceutical companies? Are they based off of shipments to regions?

They're not out there to make sales for old drugs (drugs that have gone generic). They're out there to make sales for new drugs, which don't have generic equivalents at all.

No pharmaceutical company is going to waste money on sales for drugs that have gone generic, and certainly no pharmaceutical company is going to try and incentivize providers to DAW prescriptions. Aside from being already illegal, even an unscrupulous company wouldn't bother because it'd be a tremendous waste of money.

Saving a life creates some aggregate economic value (the person will not die and instead will continue contributing to the economy for X more years). Drugs are expensive because in the first world, that amount is a lot and the entity creating a cure can reasonably expect to capture a substantial portion of it, either because the person will pay it or because governments will.

Neither is intrinsically a problem. $84,000 to cure HepC is a bargain, because people die from that quite young and on the other side of the equation is potentially millions of dollars of saved economic productivity. That’s not an argument for not charging $84,000 for HepC drugs. It may well be an argument for having the government foot the bill.

The drug testing process is no doubt important but is it so much more important than the initial drug discovery that the entity that funds it should be where all the profits go?

It costs over $200M to take a drug from academia to market just including out of pocket costs. Including the drugs that fail at various stages within industrial drug dev -- 90%+ of drugs -- and the cost to get a drug approved is $2.6B, not including academic costs

Compounds discovered in academia have like a 1 in 10,000 chance of getting approved. The group that analyzes which of those drugs have a shot at getting to market and funds the cost of that R&D are biopharma companies

Of course you expect the pitchfork-toting mobs to be irrational. But that’s not a basis for arguing in favor of something as a matter of sound policy.

Trying to set drug policy ignoring the economics of human life is like trying to design an airplane while ignoring gravity. You can’t will physics into submission through moral outrage. There is, as far as I can tell, no proven correlation between scientific talent and altruism. If you make it so you can’t get rich saving lives, many of the best and brightest will go work making better advertising technology instead.

In any case it's nearly irrelevant because this was a completely post-hoc rationale for pricing this drug. I am not opposed to large cash bounties for major advances but our current system is not remotely designed around that principle. Forgive me for thinking you are defending the wrong system.

> In any case it's nearly irrelevant because this was completely post-hoc rationale for pricing this drug

Drug development, like tech startups, is high risk, but every now and then creates a lot of economic value. To make the system sustainable, there must be a way of capturing a significant chunk of that value from those "unicorns." So yes, it's post hoc in the sense that you don't know until after you roll the decide whether a particular drug is going to create a lot of value or not. That's the case with most high risk investments.

> Forgive me for thinking you are defending the wrong system.

Forgive me for thinking that people are completely nuts for thinking it's a good idea to lower the potential rewards to investment for industries that are "more important." It's completely ass-backward.

I meant the pricing was post-hoc in the sense that they came up with a story like yours for why it was worth $84,000 when they were bringing it to market. There was no precedent for a pill that costly when the research was undertaken. Even in the case of HCV--the best case to be discussing if you're an advocate of for-profit medicine--it's not a good example of an incentive structure.

This way, you'd have no one to blame for all the problems.

To me a big issue is, does this drug cure a condition or merely treat and contain it...?

And I think a large part of this stems from insurance companies paying for most of the cost of care (if you're insured) rather than the person who is receiving the care, which leads to a market failure because the insurance companies aren't incentivized to keep costs down like an individual would be.

People will pay almost anything to stay alive and healthy, or to keep their loved ones alive and healthy; few people are willing to turn down the more expensive option even if the increased benefits are minor, and even if it means going bankrupt in the process;

Health-care costs are not very transparent, and bills are often computed after the fact; it is much easier to find out the price and quality of a washing machine, than the price and quality of a doctor. In other words, shopping around (assuming you have time and energy to do that while sick or dying) is not easy.

Rich countries outside of the US manage to spend much less money per capita on health care than the US, with similar health outcomes, and with a much lower rate of people forced into bankruptcy by medical expenses. They don't do this by pushing more of the cost of care onto the patient. Perhaps we in the US should try to learn from them.

Alternatives can be cheaper, or useful if a patient cannot tolerate the first choise.

Analogy: How do you get people to win the game? "Reward the winner". Sure, but what's the game, how do you win it, what's the reward, how do you distribute it.

If you don't have money, society shouldn't just let you die. The second you try to fix that (with government) you don't have a free market.

Health care was a lot cheaper then, and charity was available for poor people.

Sources: 1965 number from: https://www.cdc.gov/nchs/data/series/sr_20/sr20_020acc.pdf 2016 number from: https://en.wikipedia.org/wiki/List_of_countries_by_infant_an...

https://www2.census.gov/library/publications/1960/compendia/...

You can see by the other stats in the PDF that all measures of health improved dramatically 1800-1960.

The solution "incentives" isn't really constructive in solving that issue, if you don't suggest what those incentives are.

And as for your comment: within this problem space, everyone defining their own healthcare system and solving it is even less constructive.

> The point is that the "healthcare system" should be an emergent one where each person is maximally in control of their own destiny.

Again, this is a nice sounding platitude. What does it mean? Since you want everyone to be "maximally in control", does that mean Mad Max-style anarchy? Representative democracy ensuring everyone gets a voice and securing of rights?

Both ensures freedoms, but in very different directions.

With regards to healthcare, the best system is one in which each individual person has autonomy over themselves. Each will have its own desires: making money, saving money, receiving treatment, etc. The "system" emerges from the accumulation of human desires and abilities. I can't tell you exactly what it looks like because I can't pretend to know what everyone will want, nor can I tell you what is best for everyone. They are best left to determine that themselves.

> With regards to healthcare, the best system is one in which each individual person has autonomy over themselves. Each will have its own desires: making money, saving money, receiving treatment, etc. The "system" emerges from the accumulation of human desires and abilities. I can't tell you exactly what it looks like because I can't pretend to know what everyone will want, nor can I tell you what is best for everyone. They are best left to determine that themselves.

So basically no health care system and no social security, and bartering for whatever you want.

Just say you want libertarian minimal government and we'd have saved 10 minutes of our lives instead of vague platitudes.

Authoritarianism comes in many stripes. Capitalism can be authoritarian, but forced socialism always is.

>So basically no health care system and no social security, and bartering for whatever you want.

Emergent systems exist all over the place. The very language we're using right now to communicate is an emergent system. There is not a central authority which dictates how we must converse, and yet here we are.

>Just say you want libertarian minimal government and we'd have saved 10 minutes of our lives instead of vague platitudes.

I didn't try to give you a platitude. You wanted me to define what is best for everyone and I tried to show you that your question implies that authoritarianism is best. I disagree with your implication.

Cooperation and synergy isn't the same as authoritarianism. There's a reason that civilization and societies reached all major advances and discoveries, and not hermits or tribes.

There's immense value in limiting overhead by delegating fundamental services into a collective pool.

But all that is besides the point. On topic:

I wanted neither you or OP to define what is best, I wanted OP to clarify what he was suggesting since he was suggesting something. I wanted you to clarify what you were saying, since I didn't understand how it fit into my response to OP. Apparently it didn't.

You explicitly asked questions like, "how do you get people to win the game?" "How do you win it?" "What's the reward?" "How do you distribute it?"

In other words, you wanted us to dictate what "winning" means, what the rewards are for winning, and how the rewards would be distributed. That's not cooperation, that's dictation. Each person may have their own definition of winning and as long as they're not infringing on the rights of another, they can do whatever they wish to accomplish their goal.

>There's immense value in limiting overhead by delegating fundamental services into a collective pool.

Please don't forcibly dictate to me what is valuable by forcing me into a system that maximizes what you personally find valuable. I will offer the same kindness in return. That is the crux of the problem with the set of questions you asked originally and why what I've said does fit into your response to OP.