This is actually close to what happens with private insurers- they negotiate with a hospital to pay n-times what Medicare pays for some set of treatments.
So why does Medicare pay the least? Because they have the most patients covered of any insurance network in the US. That's a hell of a bargaining factor. More patients = cheaper prices.
The logical conclusion is to then have Medicare for all. That'll regulate all prices to be exactly what Medicare pays!
Doctors bill $10k to your insurance, the insurance decides its too much, lawyers are on-hire to negotiate and take a 30% cut of the outcome, and finally 2k is paid out; the absurd bill naturally accounts for the absurd process, and I don't think anyone except the consumer ever expects 10k to really be 10k. And ofc, the insured consumer only ever pays $500 of it from his deductible.
This was basically Shkreli's defense as well -- the insured patient doesn't pay anything close to the bill given; and I'm pretty sure, neither does the insurance. If you want to raise the price be $10, you add $1000 to the bill.
What’s ironic (?) is that by mismanaging a scheme to get everyone on private insurance they’re really working towards socialized insurance. Which good or bad, there is no going away from once you have it.
Just go all cash with an HSA.
What doctors do you know? My friends who are just getting out of residency and such are making a few hundred thousand a year. My college roommate’s father was an anesthesiologist making $800k/year.
Just because they don’t draw attention to themselves with ostentatious vehicles doesn’t mean they couldn’t afford to (the anesthesiologist only had a Porsche for each of his kids).
https://www.sokanu.com/careers/doctor/salary/
So between $200k-400k depending on seniority and speciality. It's not really outrageous compared to other, highly educated professions.
This page gives $4246: https://www.healthsystemtracker.org/chart-collection/health-...
Here's a nice run through of the numbers.
Even if I turn up at a private hospital here in Norway, I pay nowhere near what you would pay in the US. Which tells me that either hospitals are run extremely inefficiently in the US (orders of magnitude worse than here) or there are layers of pretty substantial profit margins.
I may be a bit peculiar, but I think a healthcare sector that is set up to mainly benefit execs and shareholders is a bit immoral.
If all insurance lowered to Medicare reimbursements, you will reduce supply.
That said, every branch of healthcare works different and could be upside down from this where they make a ton on Medicare but not commercial
Its more like how airlines work: they make money on first class, and coach is something that fills the plane to cover some costs. If planes were made mandatory to only have coach, they would go bankrupt.
Which suggests to me that prices do not reflect actual cost, but rather inflated profit margins.
There are lots of healthcare companies that are public. Healthcare insurance companies are amongst the lowest earnings of any insurance, contrary to the argumentational of Bernie Sanders. Also, one of the biggest health insurance companies, blue cross, is a non-profit.
Furthermore, 60% of hospitals are non-profit. And hospitals are 30% of the national healthcare spending.
If we are theorizing at random on what changes could impact the cost-effectiveness of healthcare, it is the increase of profits, not the decrease, that would be a more significant change.
US has.. - a very low doc/population count, due to the artificial constraints of medical licensing and immigration law.
- a draconian FDA process for drugs and an unreasonable patent application to drugs.
- An incredibly distortive public service implementation (Medicare) that provokes cost-shifting (by paying below cost), that creates heavy admin burden (fee-for-service), and that overpays specialties and punishes primary care (fix reimbursement fees in multiples for specialties, giving a very low primary care doc count)
- An incredibly distortive tax credit for the wealthier to spend on healthcare (the richer you are, the more tax effective it is to get better insurance through your employer)
- A free-market abolishing regulation requirement: tying healthcare provider to employer.
Example (Sweden): I pay a full public insurance through taxes, and I have a private insurance via my employer that lets me cut some waiting times for certain procedures from 90 to 14 days. It’s an expensive way for my employer to make sure I’d be back to work quicker than I would otherwise be. Obviously, this is a luxury few use or need so the number of hospitals that provide this care is extremely limited (a few percent).
The “paying twice for the same thing” is a feature, not a bug. Most people wouldn’t do that of course, meaning they would simply get rid of their private insurance.
But when the public hospital is 10 miles away, and the private hospital is 1 mile away, paying twice effectively lowers the access of care to the people that can't afford to pay twice.
And then, proximity to public hospitals would be so valuable, that housing prices would icnrease close to the best public hospitals, and the richer will again take profit of it, just like it happens with zone-dependent schools.
> paying twice effectively lowers the access of care to the people that can't afford to pay twice
My private insurance that kicks in if I e.g. need a knee surgery with 14 days wait instead of 90, will often require me to fly to a different city, likely even a different country, to get the procedure performed at a specialist private clinic. This care is something completely different to the regular care I need day-to-day for a child delivery, cancer treatment, appendectomy or whatever. As there is so very little overlap I'm also not paying twice. There isn't a private insurer that will offer me cancer treatment, child delivery etc.
They don't exist because who would want to pay twice for that?
Not really, because all the insurers typically insure all hospitals. By having multiple insurance companies, hospitals get bargaining power and lower what insurance can ask from them. If you had only one insurance, like the state, you have 3 possible solutions: its the same, it pays more than the competing system (overly generous and thus worse for the tax payer), it pays less (uses monopoly market power and reduces hospital size/supply)
Hospitals and insurance companies are in a bargaining fight constantly, and if you look at the numbers, hospitals have won. However, hospitals are 60%+ non-profit (60% non profit, 20% public, 20% profit hospitals), so its not so clear you want hospitals to lose. Its really messy.
> My private insurance that kicks in if I e.g. need a knee surgery with 14 days wait instead of 90, will often require me to fly to a different city, likely even a different country, to get the procedure performed at a specialist private clinic. This care is something completely different to the regular care I need day-to-day for a child delivery, cancer treatment, appendectomy or whatever. As there is so very little overlap I'm also not paying twice. There isn't a private insurer that will offer me cancer treatment, child delivery etc.
The main benefit of having a single insurance company, or single payer system, is that you dont have to spend so much moeny on administrative costs. If you start getting into the rabbit hole of what will be public or private, at what cost and quality, i suspect the gains from the administrative relief will fade. Economically, maybe the best thing about having a public/private system would be that the public system is dirt cheap and effective, while the private one is simply more expensive. Thus there is some component of redistribution, but also some market forces. I think hybrid beats full state owned (I accept my own ideological bias and maybe hybrid beats fully private, though I believe it wouldnt).
> They don't exist because who would want to pay twice for that?
As an example of this, I can speak of Argentina. Argentina has had a diminishing public expenditure of public funds to public health. It has a very decaying public health system, and a thriving private one. The private one does have price controls, but not too much in effective terms: they biggest cost threat is probably that patients could choose to not have private insurance and just go to a public hospital. The reality is however crude: some public health services are of terrible quality. But its a trade-off: poor people dont pay and receive quite the tax benefit as a whole. Private is thriving and has very good quality metrics at reasonable prices. So yes, you can have a system with "double paying" that is definitely stable.
And no, Medicare doesn’t have the lowest rates (Medicaid does). The rates aren’t low due to negotiation (hah!), it’s the gov’t basically saying “here is what we pay, take it or leave it”.
I think scaling the average costs from other countries accounting for GDP would be a good way to set the rates.
In all OECD countries, unfortunately, healthcare spending doesn't seem to be especially correlated with increased lifespace.
Besides, you have to factor in living costs.
I've looked into living cost a few times when considering working in the Bay Area and I realized that while my income would easily double, my living costs would increase a more than just a factor of two. I would have to accept a lower standard of living than I enjoy now.
I think the only way to really deal with healthcare cost is to look at whether or not we think it is a good idea that there is a huge profit margin. For patient outcomes and for society as a whole.
Because healthcare is an ever expanding, ever innovating industry with infinite scope. For countries with universal healthcare this is painfully obvious. What once was a service in the 1950s to perform what now would be considered very rudimentary procedures and proscribe < 1% of contemporary drugs, now do space age procedures as if routine and treatment plans that took decades of international cooperation to develop.
> In all OECD countries, unfortunately, healthcare spending doesn't seem to be especially correlated with increased lifespace.
Diseases of plenty now represent greater harm in most of the developed world than do ailments of scarcity.
Median actually does a better job of including the poor than does mean. The reason is that median counts the number of affected people, whereas mean counts the amount of spending. Clearly the latter skews more towards the rich, for whom spending may approach infinity.
Second, just where is this extra income supposed to come from? More likely households bear almost all of the incidence of this spending, meaning each dollar spent on health means approximately one dollar less available to households to use elsewhere. This is certainly what the literature on employer health insurance benefits tends to suggest.
Third, the timing of this is all wrong. It’s clear the arrow of causation goes overwhelmingly from income to health spending because changes in health spending clearly follow changes in income. Over the past few decades it takes an average of about 2-3 years for changes income to be fully reflected in changes in health spending due to the large role played by 3rd party payers, employers, etc (the current year elasticity is about 0.2 whereas the long-term elasticity is north of 1.6).
~RCA
Adjusted for GDP, US spending on inpatient procedures is somewhat inline. However, spending for outpatient procedures is way higher. Americans just have a lot more outpatient stuff done than other countries.[1]
[1] McKinsey analysis of US healthcare spending; search my history for actual link or google it!
Inventing a fancy index is not a replacement for "price fixing". And price fixing does not work. You reduce supply.
Am I going to get a quad bypass just because it is cheaper?
People seek care because they need it. The kind of care that people use more because it is cheaper/available is maintenance care (which reduces overall costs because things are often treated before they become critical).
The first time I heard “I am feeling sick / cut my hand / need stitches but I cannot afford to go to the doctor” was in the US, and it left me dumbfounded - I have lived in a few places, and that’s a US only thing.
Also, I could understand some of George Carlin’s jokes (e.g. “dirty doctor” one) until I had lived in the US.
E.g., in the netherlands (and IIRC also in Germany), it is considered rude to come to work when you are sick - you expose everyone else to risk, for a work day that's likely less-than-effective (because, you are sick) -- whereas in the US, you're expected to just pop an advil and show up (and .. if you are visibly suffering, you'd be considered a hero).
In argentina I remember calling a doctor home to check up on a cold. This would be unreasonably expensive in the US for very little healthservice in exchange.
IIRC, it made zero measurable difference on the number of visits, but the bureaucracy involved with charging this was costing more than than the money collected, so it was eventually scrapped.
(I might be mistaken, an Israeli versed in how the system works / worked is welcome to correct me)
In fact, the US could improve a lot of basic services if it looked at what other developed countries (OECD) are delivering, and for how much, and made those targets for the next lets say ~10 years.
After those 10 years of bringing the US more into line with the best countries in the world, it should strive to do even better.
Or, alternatively, the US can keep falling further behind.
It amazes me how the US is still arguing how archaic districting laws should work, how to have elections with integrity or manage without paper checks or fax machines.
I realize there are politicsl/historical and cultural differences but there is a combination of exceptionalism (“the US is so special we can’t just look at France and imitate”) and resignation (“yeah we want that but we cant have that because it would never work because X”) surrounding each of these discussions. The US is pushing boundaries in so many areas but when it comes to evolving society in a way that requires broad agreements, there isn’t much to report on
I can tell from first hand experience. Healthcare companies, set prices by market. Specifically, by what price that market will sustain. It just so happens that the US can sustain the highest prices. You know being unregulated and rich af and all.
This is how all industries/companies set prices btw. What you’re saying, It’s kind of like saying, I want New York City to base real estate prices off median home prices in the Midwest because as a buyer I like those prices better.
In fact, it sounds like a great way to make things worse!
“Tweaking” the system is how the US system got so messed up in the first place. Anyone who suggests “just one simple tweak should fix things” is an idiot.
In some cases, maybe the US has better care. But the cost of that is just way too damn high.
Yes, medical research in the US is superior, but that shouldn’t be at the cost of peoples’ lives.
Reducing investment in medical research will absolutely come at the cost of people’s lives. More people’s infact, as anybody will die from a terminal illness that doesn’t have a treatment. As an example the US market constitutes something life 70% of _global_ pharmaceutical profits.
But as we see above, plenty are willing to carry the water of the poor, downtrodden drug companies.
The incremental cost of selling drugs you’ve already developed is quite low, so of course they can still profit from them in less profitable markets. But it’s the US that’s paying for them to be developed. This isn’t even up for debate, R&D in the US dwarfs everywhere else.
In the private sector, far larger amounts of funding are spent on marketing than research[1]. The basic maths shows: investment in research can be maintained or even increased while providing greater access to the fruits of that research.
The money is there. What we lack is the proper incentivisation.
1. https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
So they focus on illnesses of the rich gerontocracy while diseases of the developing world have to be addressed by public funding. Additionally, there's no real incentive to work on cost reduction.
The US was rather a shock for me. Costs were mind-boggling, and most physicians struck me as jerks. At least, the male ones did, and they predominated. Nurses, on the other hand, generally seemed OK.
Somehow the US healthcare system seems to attract jerks for physicians, and they seem to be mostly in it for the money. Not all of them, obviously. But enough to set the standard.
I have no clue how that happened. Or how to reverse it.
Edit: Some might ask why being "in it for the money" is bad. I mean, that's what "free enterprise" is about, isn't it? But think about it. Is it OK for priests/minster/rabbis to be "in it for the money"? Or politicians? I hope not. And then, why physicians?
One of the problems with care in the US are clinics that treat Drs (and NPs and PAs) essentially as billing machines, and don't allow them any time to build any rapport or relationship with patients. Depending on your insurance coverage, your location, and your needs, your experience will vary wildly.
For what it's worth, my experience teaching premeds was also not so great :) That's also anecdotal. But colleagues had similar complaints.
Also:
> And we fail to recognize that what we really have is a distribution problem. Parts of this country have lots of doctors, perhaps too many. ... A result is that many rural areas, and less popular cities, experience more of a doctor shortage than others.
> The other distribution issue is in specialization. When it comes to generalists, we ranked 24th of 28 countries in doctors per 1,000 people. Specialists are a different story. There, we were 11th. This is an important fact about the American health care system. We sometimes hear that we have too many specialists and too few generalists. That’s not necessarily the case. We have an average number of specialists compared with other advanced countries, and even shortages in some specialties. It’s the ratio of specialists to generalists that’s the problem. When you compare the percentage of physicians who are generalists with those who are specialists, the United States beats only Greece among developed economies.
> Here, financial drivers play a role. Doctors who choose to specialize can make much more money, millions more dollars over a career, than primary care physicians.
https://www.nytimes.com/2016/11/08/upshot/a-doctor-shortage-...
Also see https://www.politico.com/agenda/story/2017/10/25/doctors-sal...
If the quality of care is so amazing I'd expect Americans to have longer life expectancy, and they don't.
https://www.vox.com/science-and-health/2018/1/9/16860994/lif...
This is manifestly untrue in so many domains, including medicine. Most research is heavily government funded, particularly pure research, and most academics are not interested in profit. The only orgs motivated by profit (drug companies, insurance companies) are the ones who push this misconception, because they profit from it. As one example, the UK runs large trials comstantly to improve care, without a profit motive.
Nobody has to postulate that price fixing (as you call it), or single payer healthcare without insurers works better, because the rest of the developed world outside the US uses that system and delivers very similar outcomes for radically lower cost. The facts are clear.
If you refer to the professionals’ compensations that’s correct, but not that useful as it applies to all of the adult working population.
If you’re referring to the capital accumulation of investments in healthcare companies, you’re off the mark, as there are several examples that falsify your statement, even in the US
It’s no different in Canada - small towns don’t offer as good of care particularly when it’s something that’s not common.
Anyway, I found a reference to support your claim:
Also consistent with the conclusions of Torrey1 and Saha et al,2 our analyses shown in table 3 found a strong tendency for prevalence to increase with latitude.[1]
Vitamin D deficiency from what I've read is common everywhere. It does make sense that longer winters would impact a person such as staying inside more. Yet I doubt any evidence can confirm lack of Vitamin D is associated with the illness schizophrenia.
And there's probably at least quite a few things that aren't mental illness that benefit from mental healthcare.
The evidence is constantly against US healthcare except for experimental or rare treatments. The doctors aren't any worse, surely.
I 100% agree: experience is key ... but so is a clinic's/hospital's internal investment in any given speciality. And if it's a teaching/research hospital, so then is publishing by its clinical experts.
They dont work, simply because if you limit payment then hospitals will stop doing the procedure, will fight against doing them, and will engage in high cost cutting to provide them. Please remember that about 60%+ plus of hospitals are non-profits: they only bask in the profits for their own salaries, but don't have the profit-based mentality usually accussed of.
You might want them to do that, but I doubt the market will agree with you on that one.
There will be a heavy pushback from industry about how that’s socialism, delivered via Fox News and other conservative outlets.
EDIT: and if anyone can explain why forcing doctors and hospitals to provide their services at a loss, is not socialism, then feel free to reply; as that will be assuredly more enlightening than a simple downvote.
> Well that is socialism
As indeed is provision of roads, fire trucks, police, military and so on. For some reason, people rarely call those out
> Being a form of price control, it also happens to not work very well
I think there's a strong strong case that it works very well in every rich country, because they're all doing it to some degree?
> forcing doctors and hospitals to provide their services at a loss
This assume they're not currently making super-normal profit, which I'm far from convinced by.
Personally I would call out. But hey, so what if I did? As you rightly pointed out most people are convinced that they need the govt in their _many_ aspects of their lives. I'm outnumbered by people who think, that they can decide what is good for me as an individual.
One interesting idea (not well thought out at all) would say that all prices need to be +\- 50% of what Medicare pays.
Medicare pays $20,000 for stent placement? Great! You can charge whatever you want up to $30,000.
A lot of effort goes into setting Medicare rates (and they are based on self reported costs across the country), so forcing providers to be in the ballpark of those might help.
It wouldn’t solve the issue, but it would eliminate those ridiculous “why do you charge $10,000 for an MRI when the clinic down the street charges $1,000?”.