It's all well and good to tell people to fund HSAs or buy health discount cards or get savvier about spending and buy generic meds. But a trip to the emergency room or a serious illness is simply going to max out your deductable, no matter how cost-conscious you are.

The core problem is that medical services are priced by colluding hospital chains and insurance companies, and those prices are both (a) deliberately decoupled from the actual economics of providing health care and (b) a fig leaf covering the way hospitals and insurers actually resolve invoices.

Unless/until you can extract the insurers from medical pricing, no amount of free market cheerleading is going to fix the problem. We don't have a free market to fall back on.

Indeed. Vets can do operations for less than a tenth the price doctors can, so prices could presumably go a long way down given the right market incentives.

But getting the right incentives in place is the hard thing. I don't think there is a really good way to run health care, all the obvious solutins have big holes, e.g.:

- buyer paying for health care as they need it doesn't work because someone might not have any health problems for years then they are suddenly hit by a crippling bill

- insurance doesn't work because once people have a pre-existing condition, they can't buy insurance any more.

- big state-run bureaucracies have all the problems you'd expect with big state-run bureaucracies.

(Published price lists with limits on 'negotiated discounts'? Antitrust actions splitting up larger operators? Tax favoritism for processes that make true costs clear, rather than for processes which hide costs through multiple levels of indirection?)

http://www.guardian.co.uk/world/feedarticle/8557832

If there's essentially only one payer, and even the terms of every transaction outside that one payer are dictated by national legislation, then the 'fig leaf' that the providers are nominally independent isn't worth much.

This isn't complicated: the price list for medical procedures bears no relationship either to the cost of those services or the money changing hands between providers and insurers.

I'm only questioning your claim that collusion among insurance companies does much of anything besides push us closer to monopsony pricing.

If employer-sponsored health insurance wasn't the primary vehicle for medical expenses in the US, maybe you could get an actual price list for hospital services even in the face of aggressive negotiation. But it is, and so you can't, and any conversation about health expenses that tries to dodge that point is disingenuous. That's my point.

Collusion is problematic because, the insurance companies [legal] duty is to increase their profits. Their interest in reducing costs is to reduce their cost of doing business not the patient's cost for services.

However when the insurance companies collude to deny coverage for tuberculosis, it is problematic from the standpoint of my self interest because your untreated tuberculosis will kill me. There is a difference between healthcare and insurance.

I reviewed plans with a health insurance broker in Washington state in September, who openly mocked some Regence (Blue Shield) coverage with a fifteen hundred dollar annual limit on "complex imaging", which means MRIs, CAT scans, PET scans, mammography, etc. He said, "Do you have any idea how many scans you'd get if you had cancer?", and that $1500 might cover most of the first one. If you missed that detail and got sick, you might as well not have insurance.

That's not high-deductible, it's low-benefit. A high deductible plan would have you pay out of pocket up to $5k or $10k, and then cover everything above that. I agree that a plan that caps benefits (at something less than $1 million or so) is practically worthless, because the sort of events you actually want to insure against get expensive really fast.

I have less experience shopping for group plans, but in the individual market you will die of natural causes before you find a high-deductible, high-benefit plan, let alone one without fatal loopholes.

I know a woman under 40 who had cancer, and a woman under 30 who had cancer. And I may know more, for all I know. Plus plenty of over-50s who've had cancer. And my social sphere is not all that large.

I'd have to say cancer is not really a low-probability event.

Once you conflate patients with consumers, you have fundamentally moved away from a public health model towards a model where costs are based on what the market will bear rather than the costs associated with providing the service.

For a small startup, it makes a lot of sense - no time is taken up with 'HR' issues. And (from my initial research) the group medical rates that they can get more than make up for their administration cost. Making the payroll, etc, all a free bonus...

However, three years ago we had private family coverage through BC/BS Alabama. Because BC/BS has ~90% of the private insurance market in the State [Alabama essentially has a single payer system] our premiums were very low compared to much of the rest of the country. They were even lower than the similar coverage offered through the BC/BS plan at my former employer.

https://www.mahealthconnector.org/portal/site/connector/

ps -- people who don't straightforwardly acknowledge that health insurance isn't insurance, it's group cost pooling, are idiots who should be ignored in the health care debate. It's not insurance and shouldn't be because we can tell that in certain cases people will cost a lot of money to treat. Insurance would leave them out in the cold. Societies with integrity or conscience treat people anyway. Compare to insurance -- if you build a house in a flood zone on the florida cost, you should probably be told hell no -- no company will sell you insurance. If all the women in your family get breast cancer, we should still give you health insurance for when you get breast cancer.

This has been proven experimentally (by a randomized trial) to be true. When people pay more out of pocket for medicine (95% copay vs 5%), they consume 30% less medicine, but have statistically identical health outcomes.

http://www.rand.org/health/projects/hie/

The reason people consume unnecessary medicine is unknown, but the fact that they do so is not in doubt.

(I'm not even going to address your claim that "anyone who disagrees with me on the purpose of insurance are idiots".)

http://www.rand.org/health/projects/hie/documents/b_newhouse...

Newhouse also writes: "All the Experimental cost-sharing plans had a stop-loss feature that was at most $1,000 for medical spending for the entire family for a year and less for lower income families. (The $1,000 is in late 1970s dollars, which is about $3,400 in 2007 dollars if one inflates by the all-items Consumer Price Index.)"

In other words,the cap on out of pocket expenses was roughly equivalent to three or four months worth of family health insurance premiums in today's market.

Good system.

There are plenty of pragmatic problems in the current system to address arguments to. The solutions to those problems will improve people's lives without requiring anyone to adopt new political ideologies.

Please name a single attempt to replicate the RAND experiment (i.e., a randomized trial). Really, I'm waiting. I ask because I'd really love to see something more current. It would be amazingly useful.

Incidentally, you are eliding some other interesting facts the RAND experiment turned up. For the healthiest 80% of the poor, being in the 5% copay group made them less healthy. In all cases, the variation was very small. This is roughly what you'd expect in a study statistically measuring many null results - a few measures turn up non-zero purely by chance.

Similarly, if you study the affect of prayer on 30 or 40 different medical problems, you are likely to come up with 1 or 2 positives.

Yeah. Also, he's trying to make you drive an unsafe car by not paying for your Volvo. There's no reason why your employer should be involved with your health insurance. Our current system eliminates pricing signals, discourages entrepreneurship, doubly screws you if you lose your job, and means that you get to disclose personal health information to HR.

health insurance isn't insurance

Yes, and this is the source of much confusion in these discussions. Most of us would be better off with real insurance, where we pay for minor and routine services directly, and are still protected from large unexpected expenses. It's true that some people can't get real insurance because of preexisting conditions, and we should help them directly.