What do they mean by "lose money"?

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.

Medicare reimbursements are below cost of care.

If all insurance lowered to Medicare reimbursements, you will reduce supply.

That’s what most providers claim. In my experience (healthcare Corp finance), it’s typically closer to breaking even on Medicare. Especially if you cut out some fluff/unnecessary spending companies like to engage in. I’ve worked with Medicare and they actually try to do a bottoms up, zero based, pricing to determine what something should cost. So when a hospital is built by some award winning architect and has fountains and statues etc. Medicare doesn’t cover that (donors often do in the hospital example, but not other lines of services). I often have to explain to C suites that Medicare should be seen as a high volume that basically helps break even thus covers your fixed costs in entirety and making commercial patients all the more profitable.

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

Considering private pays almost 200% what medicare pays, I doubt it.

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.

At least from what I know, its accepted medicare is below cost. I cant attest for padding or number fudging, but at least in primary care medicare pays crap and below physician salaries.

I was referring to private healthcare without reimbursements or insurance. And mind you: Norway has a pretty high cost of living so it isn't like this is a low cost country.

Which suggests to me that prices do not reflect actual cost, but rather inflated profit margins.

> 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.

So how do you explain that getting treated at private hospitals (on your own dime) in Norway is cheaper than in the US?

That private healthcare in the us is heavily and negatively affected by regulation.

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.

Wouldn’t it make more sense to properly separate private and public? If hospitals can be either Medicare-only or no-Medicare (using Medicare as the name of a future broad/universal system much larger than Medicare/aid is today) then hospitals would chose to be Medicare in proportion to how many are covered. If everyone (including those who chose a private insurance) pays a full insurance premium for the public system on their taxes, the private insurers’ patient lists would shrink very quickly, and so would the number of hospitals that could survive by providing treatment to those patients. So looking from outside it looks like “hospital prices” is just another one of the problems that would be solved by a tax funded public universal healthcare insurance?

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).

If you have public hospitals that are tax funded and private hospitals, you will see that private hospitals will only provide profitable services (cardian, neuro, etc) and give all loss patients to public hospitals (psychiatry, managed care, etc). Public hospitals will have a unreasonable burden of high-cost patients.

I think you misunderstood: anyone who uses private would do so while also paying for a full public health insurance. That is, the public system is fully funded regardless of whether anyone wants to operate private hospitals.

Ah, that would make healthcare a lot more expensive, making people pay twice for the same service.

Yes - it makes private insurance an added luxury product. This is normally how it works where there is a publicly funded universal system. On the other hand the public insurance covers many expensive things very well (e.g cancer treatment) so the private insurance is for things like getting a knee surgery without waiting time where the public system can have 90 days waiting time. Someone like an athlete wouldn’t want to wait that long but for most people it’s acceptable if it keeps premiums (taxes) lower.

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.

It makes it inefficient in economic terms. I think you are attempting to frame it in terms of cost-shifting: making the "rich" pay for "the poor" by paying twice.

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.

Doesn't that type of inefficiency already exist when a patient may need (or want) to go to a "network hospital", when there are multiple competing networks instead of one enormous one (that has say 95% of the "market")?

> 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?

> Doesn't that type of inefficiency already exist when a patient may need (or want) to go to a "network hospital", when there are multiple competing networks instead of one enormous one (that has say 95% of the "market")?

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.