> we should also add that paying cash means you get the Medicare price.
Medicare doesn't pay enough. What if the doctor doesn't accept medicare?
Of course, reimbursement rates are hardly our only problem. We also use more expensive treatment options for the same conditions, give doctors (and thus patients) a level of flexibility unheard of elsewhere that allows to spend money on unnecessary medicine just to make a patient happy and have ridiculous administrative overhead costs.
Medicare's reimbursement rates could just as well be published by Gosplan. If you squint hard enough, they are almost an application of the Labor Theory of Value: There is an intrinsic value of everything determined by how much labor went into producing it. That, of course, leads to all sorts of fun stuff like seniors in Florida loading up on cosmetic surgery and ED medication on the backs of the younger generations.
The “price” is really just the unit cost. Companies seem to have no problem computing unit costs (and thus margins!), no gosplan-like apparatus is required for this beyond supply-chain management and accounting. The U.S. situation is complicated considerably by all the different parties involved which I guess is why this idea might work less well there.
Correspondingly I suppose the “true value” would be the value provided to the recipient of the procedure and society as a whole, and as you observe is much more subjective and probably best not even measured in dollars. I think “quality of life adjusted years” is a thing. The major problem is when the you and the state disagree on the value of a procedure and whether it justifies the costs...
Another way to look at it, “socialised medicine” is just health insurance collected by the state with full vertical integration; your insurer also runs the hospitals and provides the care. The upside is you’re covered, the downside is you don’t get to choose a plan.
You tell the working parents that they can deliver the baby in the shared room for no additional cost or upgrade to the private suite for $100k.
> We overtrain docs and we’ve built hospitals that focus on private rooms instead of wards. Both of those hugely increase the labor cost and will take a long time to undo.
If I was a patient at a hospital, I would not be able to control this:
> We overtrain docs
That part is outside my control.
... but, I, as a patient at a hospital, would be able to control this:
> we’ve built hospitals that focus on private rooms instead of wards
Infact, some of hopitals in the U.S. do have ward deliveries - I believe Kaiser Permanente have shared rooms?
However, that is the rub - people are not explicitly requesting private rooms - hospitals just have them so they can charge as much as they can.
If you walk into a hospital, you cant ask to have a ward delivery. They take you to a private room by default - no questions asked. That's all they have.
Then the bill comes and the game begins - if the insurance company does not pay, the hospital will then come after you. They will put you on a payment plan.
If you can't make payments, they will sell you to collections. Some hospitals might settle for an upfront cash payment but then it cannot go through your insurance and you are out of money AND you did not meet your family deductible either.
If there was a choice to new parents between ward deliveries for $50k and private rooms for $150k, I know which one I would take.
I don't have that choice because my employer might not be offering care though Kaiser Permanente and the hospitals in network might only have private rooms.
So change employers because I prefer ward deliveries?
Thank you for pointing out where I can end up confusing a reader. I write occasionally. Example: https://www.quora.com/Do-all-citizens-have-a-right-to-afford...
Not every new parent can afford the expense of birth. So the hospitals try and squeeze out as much as they can from every party to try and even it out.
As a high income earner, I'm specially vulnerable to this practice.
No judge or newspaper or activist has particular empathy that I got charged $200k for a delivery or $6k for an 2 mile ambulance ride.
I can afford to pay it so why am I being so picky about it?
It's such a regular occurrence that it does not make news anymore.
Much higher amounts make the news now:
https://www.theguardian.com/us-news/2018/jan/16/why-does-it-...
https://www.cbc.ca/news/canada/saskatoon/jennifer-huculak-ki...
I will quote:
> The insured person pays the insurance premium for the basic plan up to 8% of their personal income. If a premium is higher than this, the government gives the insured person a cash subsidy to pay for any additional premium.
So, it's a basic insurance that doesn't cover everything. Also quoting:
> "Health insurance covers the costs of medical treatment and hospitalization of the insured. However, the insured person 'pays part of the cost of treatment' and 'For hospitalisation, one pays a contribution to room and service costs'."
As you can see, there's no 'free' but subsidizied basic healthcare treatments, but then you should pay everything.
When I originally read it, it seemed like the former, but given everyone’s responses it must be the latter.
Neither would violate the constitution. It's not that long a document and written reasonably clearly. If you disagree please cite the section.
I would gladly pay more to be seen sooner by a more qualified doctor. If I have to fly to another place to do that, I would.
Other counties pay less and have plenty of doctors per capita plus waste far less on middle men.
If anything I ended up having issues at the few parts that _arent_ price controlled (eyecare in France is a pain, though I think mostly because supply of optometrists are limited)
I'm not arguing for price controls on everything in general. I'm pointing out that _in this context_ price controls are a proven strategy and work and mean that people don't _die due to not affording their insulin_.
Price control generates scarcity. Because bureaus can't have all the information about the market, it's impossible. The moment a bureau determinate a price you're generating an impact on the different areas without having the possibility to address it. The gov. is not the market, the gov can't be an omnipotent entity that knows everything, that's why they screw everything.
I lived in Canada for three years, and growing up in a fairly conservative area in the US, I was prepared for the worst - six-month wait times for life-saving procedures, etc. What I saw was more like Star Trek - people who needed medical care went to a clinic or hospital and got it, and they didn't have to worry about being bankrupted in the process.
After I moved back to the US, I got to see what it was like for most people - delaying or never getting critical procedures done, people with teeth rotting in their heads because they can't afford to go to the dentist, almost everyone 1 unexpected medical bill away from permanent financial ruin. Our system is objectively bad, and we deserve to feel bad for sticking with it.
You can cite all the market theory you want, but the US is a perfect empirical example of why those theories are wrong.
* Except for the tiny minority of the ultra-wealthy who can afford to pay any price for health care.
What a diversity of thinkers!
You can't just claim something which is demonstrably functional somewhere doesn't in fact work because your half baked theory trumps actual reality. This is why this sort of comment is downvoted.
What actual reality? Because there's price controls doesn't mean it works. It generates scarcity, always.
Go to SF, put all rentals to 100 dollars and see the effects of the price controls. They will be the same there and in China.
I am not surprised people who deny the fact of economic science is downvoting this.
Some of the middle men would have to get bent.
I imagine that dollar-for-dollar a non-profit with the right incentives and oversight could out do the VC-backed leeches driving up prescription med prices.
These amounts are small enough where the U.S. government could pretty easily cover the expenditures. So by your logic, why do we need Silicon Valley venture capital? Why not just have the government pay for the R&D and make the results freely available to everyone?
Either the government is good at allocating capital for high-tech R&D or its not. Whether you're talking about medical tech or computer tech doesn't make a difference.
This sounds like a bit of an oversimplification.
In theory, theory always beats practice. In practice, however...
Case in point: nearly every other developed country.
A single payer system would eliminate those points and drive costs to their equilibrium point.
The fallacy is assuming large insurer / care companies are interested in paying more to providers or keeping a lot for themselves.
Insurers work on margins, floats and risk pools.
More the better.
They would rather have more insured to have a larger float, a more diverse risk pool and lesser margins but more volume.
Also, why would a large insurer be OK with a smaller-scale company getting the same rate?
No market I know of works that way - a larger negotiating body always gets an advantage over a smaller negotiating body.
Which is WHY smaller companies want to become larger companies.
Otherwise it would not make sense - it's way easier and cheaper to run a smaller company than a larger company for example.
You and I can't start NewCo and demand the State of Alaska give us tax credits.
Alaska will bend over backwards for Amazon.
That's how it works.
I wrote a response to this article here: https://news.ycombinator.com/item?id=20281150
Would love any input!
Works in Japan where prices are super low and the system is very good (far more private doctors per capita than in USA).
I'm not convinced that the government can get a better rate - especially when you look at other sectors where government contracting has become a lucrative business like IT, military or space where the private sector does things much cheaper than what the government does.
>> Japan where prices are super low ... far more private doctors per capita than in US
I think the real reason in Japan might be that costs are low because there is more competition due to more private doctors. The cost of becoming a doctor are lower (lower education costs, lower malpractice insurances costs etc) and that incentivizes more people to become doctors and they are able to charge a lower fee as a result.
https://www.statista.com/statistics/268826/health-expenditur...
https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
The US is an outlier, because the US system is broken.
IMO the US healthcare market either needs to be properly regulated, or it should be converted to single-payer (a system which many other countries use with great success) - other developed countries are spending significantly less per capita for better outcomes while still allowing private healthcare for those who want it and can afford it.
It doesn't matter what seems plausible to you, what matters are the hard facts of how much is spent for what outcome, and as you'll see from those graphs, the evidence is overwhelming that the US spends a lot (both per capita and as % of GDP), and gets less in return.
I thought it obvious, but the first hypothesis from the OP:
I'm not convinced that the government can get a better rate
From the data:
Single payer system countries have far lower costs for similar if not better outcomes.
The other hypothesis:
I think the real reason in Japan might be that costs are low because there is more competition due to more private doctors
From the data:
Japan has dramatically lower costs than the US, while having a radically different system far more similar to 'Medicare for all'. The far more private doctors comment was I think addressing irrational concerns that private healthcare would somehow disappear under medicare for all (instead of just being a lot cheaper). Japan is the proof that doesn't have to be the case.
What are better outcomes ? How are those measured ?
US is still the leader in healthtech, health quality, and health service timing.
Canadians are literally pouncing on new doctors like freshmen on beer, because existing doctors no longer take patients. The UK NHS has waiting times that are measured in months.
The only thing we struggle with is cost. So again, what are better outcomes ?
https://slatestarcodex.com/2017/02/09/considerations-on-cost...
We need some price setting regulation to protect consumers from getting fleeced. When the hospital knows that I'm going to say yes, why not price every surgery at $100k?
We've tried letting the insurance companies regulate the price, but they've proven themselves incapable either because there are so many secrets making the market not fair or because they don't have an incentive. It is time to try something else. The government is our mechanism for regulation. Let's use it.
Emergency medical care isn't.
But most other things are.
It should be possible to shop around for imaging and testing services. The regular "family doctor" is something families can (or at least should) be able to choose at will.
Heck people shop dentists all the time. They shop physical therapists, and even mental health providers.
If all the local X-Ray providers near me publish their prices online the fact is prices will drop, and that will likely carry over to what price is paid during emergency services as well. It will be hard to charge someone 5k for an X-Ray in the same imaging center that has a price of $120 listed on their website!
So if you want to make people price shop, it has to be coming out of their pockets for it to work. Dentists, PT, etc that you listed have much higher rates of cash/self pay.
The reason this matters is that we don't see the same problems in other inelastic markets - for example, automotive gasoline is highly inelastic (estimated to be at -0.02 - https://www.eia.gov/todayinenergy/detail.php?id=19191), but we don't have the same pricing pathology with it that we do with healthcare (emergency healthcare estimated to be at -0.04 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/). Therefore, we can't conclude that the problems are specifically due to inelasticity.
Next time when a bone in broken in your body, go comparison shopping because it's a free market and you should get the best deal while your bones hang freely.
Health care is a special case not comparable with any other market.
Or already know the price of how much it costs to get a bone set at different local providers and make your pick ahead of time.
Why assume people aren't going to shop around until something happens? "Hey ambulance driver, my preferred clinic is such and such take me there please."
Most medical situations are non-emergency.
Unless of course you aren't conscious enough to direct the ambulance driver at all.
Imagine a world where prices are openly advertised, and as a result they start to drop.
Take laser eye surgery as an example. Prices are insanely competitive! They have been going down for years, and equipment manufacturers have been hard at work making more reliable and cheaper to operate equipment that has less side effects!
We have a free market for literally curing blindness and it works really well.
Now take more urgent but not life threatening cases. Last couple times I broke something, it was of the "well that sucks and it is kind of swollen but whatever" type, and I got to choose where to get an X-Ray at.
That is a perfect case where open pricing would drive the market price down and save me money.
As another example, physical therapy prices are often advertised on the open market. So are therapeutic massage prices. Both are price competitive markets.
Sure life threatening emergencies will still be subject to price gouging, but if the entire medical system is running more efficiently then even emergency services may see a reduction in costs in places. Maybe not for the trauma center, but for the hospital stay outside the ICU, why not?
I wouldn't have done said yes to that if I had known the price.
It is also illegal to change advertised prices, not to mention a great way to lose business!
I definitely would, why wouldn't you? Broken bones are urgent but usually not life threatening - in that situation I'd definitely take a few minutes to decide how exactly to handle the situation - call an ambulance, or have a friend drive me to the hospital? ER, urgent care, or GP? Lots of options with different trade-offs, even if cost wasn't one of them!
Urgent, life and death situations are obviously a special case but are also a pretty small percentage of medical care at least IME. My wife has had quite a bit of medical care over the last few years including having 3 kids and several unrelated, important but not immediately life or death surgeries. In every case we evaluated several options before picking a Dr and a hospital. We looked at price, recs from friends, distance from home, reviews, etc just like picking a restaurant or a new car. Even in the few urgent life/death ER visits we've had we still picked where to go, we just picked ahead of time - when we get a new insurance plan we usually glance through it to make sure we know what are the closest ERs and urgent cares that are covered, and if there are multiple options we'll pick a default. Again I don't know why someone wouldn't do that, even if our healthcare were free we'd still compare on other metrics.
Why would cost not play a role in that decision?
In your anecdotal situation let's say you fell and broke your arm and are now sitting in the back of the ambulance when they ask that question. North or South hospital?
With your one good arm are will you load up a cost comparison of services between the hospitals, checking what the procedure might be if the break is impacted, if muscle tissue is torn or needs to be repaired surgically, what followups or cast removal costs, and building a spreadsheet of possible scenarios based on the underlying medical statistics combined with the risk factors of your incident? Ar you comparing that against hospital ratings for those departments and doctors and their success rates combined with education or training in line with best practices or regulations? Then are you compiling this data to make a decision based on which hospital is the most viable economically vs the standard of care for your suspected injury and reaching a decision?
Are you going to do this for every viable healthcare situation in advance so you're aware of updated costs at South or the new star surgeon hired at North hospital?
There's certainly a market for that analysis but I don't think it's analogous to real life. Most people are going to call 911, get in the ambulance if needed, and go to the closest hospital with capacity. The price, quality, and other checks need to happen at a higher level while still be transparent and open. Medicare has tools to solve this just like how the FDA us meant to resolve food safety questions and other governing bodies are there to regulate and enforce standards. Unfortunately it's not as simple libertarian as "North or South?"
So, no, of course no one is going to fire up the equivalent of GasBuddy when they're in an ambulance. You no doubt already know this, so why make such a ludicrous argument?
The only substantially cheaper across the board hospitals are those people go to die in because they are profoundly incompetent and understaffed.
Hi "Mason General Hospital" in Washington State.
...And tend to get sued out of business for malpractice.
In a free market, I can open a hospital across the street from your hospital and charge whatever I want for similar (or completely different) services. Presumably, our hospitals would also have a brand reputation: I know lots of folks who say "I'll never go to X HMO again, it's so much better at Y public hospital" and would gladly drive an extra mile or two with their broken arm kid if it means they're fairly certain they'll save a few grand (or more).
A similar example is that I'm halfway down a 200 mile highway, and I need gasoline. There could be one gas station, there could be five, but the fact that I'm allowed to open a gas station next to the sole one that exists means it's a free market. If the government says "there shall be one [or two, or ten]" gas stations here, or that "all gas stations here shall charge this rate", then it's less of a free market.
You may be trying to describe the concept of perfect competition[1]. If so, I'd agree with you that health care can almost never achieve perfect competition because perfect information becomes harder to obtain as situations become more expedient or dire.
The government needs to regulate markets like this.
Consider the example of food, in general. Demand for food is wildly inelastic - without it provided regularly, for your entire life, you _will_ die. If elasticity were the only consideration in pricing, we should expect food to be break-the-bank expensive, but it clearly isn't. What else is different between the healthcare and food markets?
(To be clear, I'm not defending the current state of our healthcare system. It's broken in a lot of ways, and is way more expensive than it needs to be. I'm just arguing against the idea that the cause of its dysfunction is inelasticity of demand.)
[1] https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...
Because welfare (and subsidy) programs exist so people aren't desperate for food, just like people who are covered under medicaid are not desperate to pay for health services.
There is really no mystery here.
The government is EXTREMELY good at negotiating prices. In other words, there are already examples of it working really well, so it's pretty clear it can work well here too with enough care.
Japan is known for really high-quality care that is insanely cheap and has more doctors per capita than in the USA. So the worry that overall service and competition would decline is unfounded.
So let's take really good working examples and try them here. The USA can do so much better, it's not even funny.
https://www.bloomberg.com/opinion/articles/2017-09-19/want-a...
We're paying our doctors sometimes double what they make in other countries and receiving inferior health outcomes. It's easy to vilify the AMA but our doctors also have an unusually high amount of risk and obligation when it comes to malpractice, which wouldn't go away if everyone magically was on Medicare For All tomorrow.
To reduce health care costs, someone needs to get squeezed... but who? Reducing doctor salaries will lead to a shortage of doctors unless there's some additional action on easing the education burden they presently have to take on.
[1] http://nbakki.hatenablog.com/entry/Annual_Salary_by_Occupati... (2014) [2] https://www.businessinsider.com/how-much-salary-does-a-docto... (2014)
https://washingtonmonthly.com/magazine/julyaugust-2013/speci... https://mises.org/library/how-government-helped-create-comin... https://www.washingtonexaminer.com/thanks-to-doctors-there-a...
in mexico, they only make geos. So prices reflect that.
in the US, you are only allowed to supply healthcare if you buy into $500,000 of loans and give up 6 years of your life. The AMA and government have mandated it to be so.
That's the price of a ferrari. US Medical salaries reflect that medical ferrari
Oh wait...
I can think of two. First, so they can spend the money on other things they want (military, social security, education, etc.). Second, is so they can get re-elected by those same citizens.
==There is no way to tell if the price we are paying is at all good value for money compared to what it could cost.
We could look at the dozens of other developed countries who work like this, should give us some clues.
Respectfully, is there any reason to think that the US government would actually do this, based on past behavior? Government spending is famously wasteful, both parties spend like it's going out of style when it aligns with their interests, government debt continues to explode, and spending continues to grow year-over-year effectively unchecked. I may just be overly cynical here, but I don't think that responsible spending is the primary election issue for hardly anyone today.
Insurance companies are not subject to FOIA requests like the government. People tie Medicare to the Government, why would this be different?
==A single negotiator will likely only make pricing more opaque==
Not sure it's possible to be more opaque than today. All of the other country's who do it this way have far more transparent pricing than the US, so I'm not sure I buy this reasoning.
American politicians are not elected by voters or citizens, they're elected by contributors. This unhinging is either a root or partial cause to many problems.
Because larger purchasers have more leverage to negotiate better discounts/bulk rates. When your choice is, "take the offer or you don't get any payment", you take the offer.
Here are three good ones: the UK, Japan and Canada. All different systems, all providing medical care for much less cost than we do in the US.
Additionally, your reasoning is flawed at best. The government can legislate that providers can only charge $x for y service, which private actors cannot. 300 million+ people is a very large market to leave just because you are slipping on profits. There are many other levers a single payer who is the government can pull as well.
"While available data are limited to select services and drugs, we find that higher prices – more so than utilization – explain the United States’ high health spending relative to other high-income countries." [1]
Perhaps the US is closer to those other countries than you claim.
1. https://www.healthsystemtracker.org/chart-collection/how-do-...
https://www.theguardian.com/world/2018/dec/27/japan-shrinkin...
The difference over there is that kids are born into families that are at least middle-class, while here in the US a huge number of children are born in poverty and raised by single parents. I don't think having a higher birthrate is going to turn out well in the long run when that's the case, compared to a country where children have a much better upbringing.
In Japan, they have to worry about the younger generations supporting the elderly.
In the US, we have to worry about the productive generations (the ones of working age) supporting both the elderly AND all the children and families in poverty and not having that bite us in the ass when those kids become adults (e.g., committing crimes, something that Japan doesn't have much trouble with).
I would prefer to trust actual stats compared to your powers of observation. In this case 1.4 births per female in Japan vs 1.8 in the US. +0.7% annual population for the US vs -0.2% for Japan.
The point is that the Japanese system isn't inherently flawed its dealing with the consequences of there being fewer working age people supporting a greater number of older individuals. This has nothing to do with your opinion on the relative social mores of the 2 countries.
This kind of effort is what is required in order to allow for comparison shopping to occur. Maybe this even enables consumers to shop better for their insurance plans depending on their common needs. That would likely allow folks with certain recurring conditions to shop for the best insurance plan for them (thus also raising the risk level for that insurer and changing prices?) but that's a bit more like how a market is supposed to work.
I can't speak specifically to whether the order just increases legal ambiguity or whether it will be enforced, but I'm happy to see any initiative toward price transparency in medicine that will allow the public to start making better decisions.
> But the order doesn’t say if hospitals would have to disclose the average of all rates they get from insurers or the specific rate they get from an individual’s insurer. That detail matters: The average rates would have a milder effect on local markets as insurers and hospitals still wouldn’t get clarity on rivals’ specific secret rates.
PRECISELY. If everybody understands the negotiated rate, then any size organization can argue for that rate. This would make it easier for smaller-scale companies to get the same rates as larger plans and also reduce some of the incentives for large insurer / care company mergers that seem to be really rent-seeking given the industry comment on this order.