"The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That's good in theory, but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here's how: Let's say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more."

https://www.npr.org/sections/health-shots/2018/05/25/6136857...

From the supply chain’s perspective, there is a very sophisticated insurance system to smooth out issues with crop yields, weather, etc. called the commodity futures market.

The history: wage-price controls implemented during WWII as labour was taken up by the military and companies had to find some basis other than pay on which to differentiate. Benefits, including health care, were excluded from wage consideration.

Insurance itself is the business of assessing, managing, and sharing (or "pooling") risk. In the case of health care, the typical costs that a given population will face are predictable based on age, gender, and various exposures. Given a sufficiently large number of people, a group or policy cost can be assessed. Along with other groups, this results in pooled risk.

I'm not an actuary, but "large pool" risk is fairly low, I suspect it's on the order of 30 or so people. Smaller pools can be formed (or more likely: aggregated to form larger ones), down to a small number of members, as few as a handful or so.

The idea being that in any given pool, what's called "adverse selection" (people specifically looking for insurance due to high risks) are less likely -- you're dealing with the average population.

In individual markets, all of this becomes much less predictable, and/or the transaction and administrative costs of individual insurance simply add up.

Since a large share of the population works, or lives in a household with someone who does, allocating healthcare group insurance through employment has more-or-less stuck in the US.

The fact that it provides yet more leverage and control by employers over employees is another factor, of course.

Source: A long time ago in a galaxy far, far away, I studied this at uni. Plus more recent experiences / exploration.

Adverse selection is the big reason. An individual signing up for insurance can be used as a signal that means "individual is sick" or "individual is likely to need insurance soon". If a company policy covers all employees (or all employees above a certain level), the signal is "person works" which is orthogonal to "person will need insurance" (in fact, it's probably slightly anti-correlated, a.k.a. "person is fit enough to work").

"Small-group" coverage is generally 50 or fewer (in some states, 100) members:

https://www.healthinsurance.org/glossary/small-group-health-...

Otherwise, the socialised version already exists, in most industrialised countries, in some form or another. Within the US, Medicare for the elderly, Medicaid for the poor and children, and in many states, "high risk pools" which are state managed.

More generally, a problem is that the bulk of health benefits do _not_ accrue from direct or acute medical treatment, but from public health and preventive measures, _especially_ well-mother, well-baby, early childhood, municipal sanitation and environmental measures, and general (workplace and elsewhere) safety provisions. Insurance companies of and by themselves don't address much of this.

If your employer pays your insurance premiums, this doesn't count as taxable income for you. So you effectively have a choice that looks like:

- Your employer directly pays $200/mo for your insurance, or

- Your employer pays you $200/mo as cash, the government takes $40 (adjust as appropriate for tax bracket) out as income taxes, and you have $160/mo left over to pay for health insurance.

I can't really speak to the political forces that keep this subsidy in place, though.

https://www.taxpolicycenter.org/briefing-book/how-does-tax-e...

Also, for simplicity, I left out payroll taxes, which are invisibly paid by your employer directly to the government ( https://squareup.com/us/en/townsquare/payroll-taxes-defined ).

So the choice from earlier is actually more correctly stated as:

- Your employer directly pays $220/mo for your insurance, or

- Your employer pays you $200/mo as cash and pays $20/mo directly to the government in payroll taxes, totaling $220/mo. Then the government takes $40 (adjust as appropriate for tax bracket) out of your paycheck as income taxes, and you have $160/mo left over to pay for health insurance.

The payroll tax issue would apply even if you could fully deduct the $200/mo from your personal taxable income.

> seems easy to fix. Why isn't that part of the health care discussion?

I am as mystified as you are.

Payroll taxes are another matter to me, that's mostly window dressing. Either employer pays the tax to the government, or pays it to employees and they pay it to the government. The outcome is the same.

I think payroll taxes exist mostly to hide the amount of taxes they pay from the population.

Big business in the U.S. gets what it wants, and if they didn’t want employer provided healthcare it would be gone, but it’s not gone so it means they like it.

If there was universal healthcare in the U.S. there would be an explosion of small business. Most small business can’t afford to provide healthcare, and if you have an existing health condition there is no guarantee that the plan from your new employer, if they have a plan, will include your doctor, or that they agree with the old doctor’s treatment plan.

If insurance costs $500/mo, either your company can pay the premium for you directly, with no taxable event for you; or, they can give you $500 more as a part of your salary, but the government will take $150 of that (or whatever, depending on your tax bracket), and then you have $350 to cover a $500 expense.

Individuals can deduct medical/insurance payments on their taxes every year, but: 1) the rules are complicated with some payment minimums that mean a lot of people couldn't take the deduction at all, and 2) you have to come up with the extra $150 every month for 12 months before you get that money back (since the US tax system is pay-as-you-go with per-paycheck withholding), which is a real burden for many Americans.

Alternatively, your company can give you $715 per month, the government will take $215 of that in taxes, and then you have $500 left over to pay your $500 insurance bill, but: 1) your company would very much rather pay $500 instead of give you $715, and 2) that $715 is actually not a hard number, but will vary depending on each employee's personal tax situation, which can change throughout the year, and your company likely doesn't care to deal with that (this is less of a big deal, since it could be outsourced to a piece of software written by a payroll company).

Why do Americans put up with this? Many of them (most?) just don't understand how this all works, and so don't even know they're getting screwed. Many have no concept of systems in other countries that handle this better, in part because they don't travel and don't have friends or family abroad, but more because of concerted misinformation campaigns around any kind of changes to our health care system that would threaten the incumbents.

I guess big business doesn't "prevent" alternative insurance companies; there are plenty of available options for insurance that individuals can purchase on their own. But it generally costs more (because you're not an HR benefits person negotiating on behalf of your 500-, 1000-, 50000-person company), and you end up with the bad tax consequences described above.

If you're an enterprising individual who wants to set up an alternative insurance company that charges very low premiums for great plans, you run into the problem of having no negotiating power with health care providers, who are used to charging high prices because the traditional insurers will pay them.

Other (more concerning) items you itemize are the real blockers.

Regardless, there's a reason why I marked that issue as "not a big deal" -- because it isn't -- the other issues I mention are the meat of it.

Individual health insurance plans do exist, but few healthy people buy them, so the pool is sicker than average, so the insurance costs more, so even fewer healthy people buy the plans, and so on.

Employer group plans cost less in part because the pool is generally healthy.

When my kid gets a deep gash, disfiguring an eyebrow or messing with an important finger, I'd be willing to pay extra for a surgeon to sit there with a microscope putting all the little capillaries and nerves back together. I'm offered a staple, or some glue, or maybe a couple stitches. No, I really don't like zig-zag eyebrows and stiff numb fingers.

Anybody know how to get the good treatment?

Alternatives and transparent pricing isn't going to make brain surgery affordable to the average consumer.

This incentivises people to become doctors that perform such complecated procedures as it takes a lot of time and a lot of money to be able to do those things.

If you were to force doctors to perform work on people that can't afford it, then presumably they will earn less money. If they earn less money, there is less incentive to do that kind of work as they will pick something easier and more profitable.

You will end up with fewer people to do brain surgery.

First, to become a practicing doctor of any sort one first completes med school then a residency and (depending on specialty) fellowship. The med school part is more or less the same for all physicians from your GP to brain surgeons to psychiatrists. Many folks take out loans to cover med school.

The residency and fellowship parts are paid. In practical terms this means a person becoming a neurosurgeon needs no more loans or upfront cash than a person becoming a GP. (I assume everyone is familiar with opportunity cost so will leave that part unsaid)

As an aside, much of the funding for these programs comes from the public (via Medicare).

All this means, the cost of becoming a neurosurgeon is about the same as any other specialty.

As for the supply side entry to med school and selection to residency programs are the big bottlenecks.

Med schools are accredited via doctors trade bodies. This means doctors (not market forces) decide how many new folks can become doctors.

As previously mentioned, residencies are largely funded via Medicare already. However, the number of residents has been capped since 1996. In that period of time the US population has grown by about 60 million (25%).

You may have been familiar with all this, but I think the context is important for discussing market solutions to healthcare — there are a lot of distortions around the US having anything resembling market behaviors.

This gives doctors a way to pay out their colossal student debt, though!

I don't need brain surgery every tuesday.

https://aansneurosurgeon.org/departments/neurosurgical-workf...

https://www.pewresearch.org/fact-tank/2014/12/17/wealth-gap-...

Also, if you are a doctor and your primary motivation is helping people, wouldn't you want to help many people with simple problems, than few people with highly complex problems (which most likely have a higher risk of failure)? There is already a shortage of doctors doing the easy stuff.

I just don't see the incentive for doing difficult procedures other than with money.

Your analysis completely falls flat here. Not all doctors are motivated by the same things and yet most of them would consider their primary motivation helping people.

Neurosurgeons are a prime example. They would very much prefer few complex cases (not everyone gets a brain tumor thankfully) as their way to maximize benefit rather than manage cholesterol meds for 100s.

Speciality surgeons by their nature are motivated by a certain degree of risk.

The incentive for doing difficult procedures is often because they are challenging. Compensation for doctors in the US isn’t fully correlated with difficulty either... with no offense to my dermatology colleagues making more than most general surgery sub specialists.

That's fair. I probably over-emphasized the money part of it.

> The incentive for doing difficult procedures is often because they are challenging.

We can assume that since doctors aren't doing this for free or at least cheap already, that they require at least some amount of compensation. To return to my original point, if you force doctors to perform procedures on people that can't afford them, and the amount they receive is less than they want, then there be a greater shortage of such doctors.

> Compensation for doctors in the US isn’t fully correlated with difficulty either... with no offense to my dermatology colleagues making more than most general surgery sub specialists.

Not directly anyway, it's probably more supply/demand. Low supply of neurosurgeon means high cost. Whether that's from artificially suppressing the supply of these doctors or because it's very challenging is up for debate.

I'd guess dermatologists make so much because people are more willing to spend money on that sort of work.

Next we look to that "scorecard" (bank account) which is the value provided but not called upon and get to see if we can call in enough "favors" to afford the healthcare

Now s/food/health

In a just world, nobody would go hungry, nor would anyone die prematurely or suffer needlessly due to lack of care. We can obviously afford both, in this country, just like they can everywhere else in Europe or Canada. So this entire argument about insurance is a straw man.

It’s not the doctors who set up this world. It’s people who want to pay less taxes, but blame doctors.

The whole industry is a shame.

European countries do have more doctors per capita, which is good.

They don't have nearly as much resources in the system, though. Come to a doctor with a bad cough, get a prescription for Paracetamol. You got to have a pretty bad infection to get a prescription for an antibiotic. Endure a long discussion with a doctor to renew an antidepressant prescription made in another country.

Lines are pretty long, too. Wait for two weeks to get an appointment about your coughing and sneezing. Have a deteriorating chronic condition and be prescribed painkillers and be told to wait for a year. You're not yet feeling so bad as the people who are currently being treated and who take up the capacity; these people also waited a long time.

All are examples from my friends dealing with the health systems of Netherlands, Sweden, Germany.

The US system has a ton of issues, but I still take it over these European systems. Have I been floored by medical bills? Yes, from my dentist, from my wife's heart surgery. But I somehow managed — and we both received instant, high-quality help.

Even the Russian system is better, or used to be back in the day. You could buy local insurance, and the choice was reasonably wide. You could pay upfront in cash, and the sums were manageable — Moscow definitely not being a cheap city, more expensive than many EU capitals.

Of course, I'm talking from a perspective of a well-earning software engineer who lives in metropolises, not in countryside. Still I think that either system has downsides, and the European systems are not superior, but just suck differently.

* If I have a cold, I go to a doctor without appointment and if I'm unlucky, I have to wait for 2 hours. Usually it's 30-60 minutes.

* If I have a specific thing that requires a specialist, I may or may not have to get a referral from a general practitioner first. Most specialist don't really need it, but for an allergy test I needed to get one. This puts me at 2 x 60 minutes wait time.

* Costs are close to nothing. Drugs will cost a little, up to around 6€ for a pack of meds. I have to pay 2€ for a doctors visit due to the specific insurance provider I have, which is okay. I needed to pay 12€ for an x-ray because it wasn't an emergency.

* My austrian insurance provider payed more than half of a hospital trip I had to take during vacation in Taiwan. Total cost of the trip to the hospital without insurance was 130€, which included check by the doctor, pain medications and some medical equipment. I had travel insurance, but I didn't use it because I was left with a bill of just 60€.

* A few times I was angry because a doctor only took 5 minutes time, prescribed some pain meds and sent me on my way. Told me all I can do right now is wait until it gets better. Turns out, that was the case.

* If it's an emergency, you get treated immediately.

I wouldn't trade our system for anything. It's not perfect, but it's perfectly fine.

we are not as ritch as Austria and that shows, so if you don't have emergency wait lists for certain things are longer.

What is correct is that in Belgium you also don't get antibiotics because you ask for them. Only when the doctor deems it necessary you will get it.

In Japan I have had mixed experiences:

Good:

* It's relatively cheap. Apprently the government sets prices. The government offers medical insurence. It costs based on previous year's income. i've paid as little as $15 a month and as high as $300. I don't know the range. It only covers 70%. My employeers have provided insurance that covered more.

* Fast. There are no appointments or a least I've never made one. Just walk in, usually no more than a 20 minute wait. Did have one long wait 1998.

* Some pretty good tech. Had back problems once. Got an MRI immediately (Japan has/had ?x more MRI machines than USA). Last week had an unusual pain in neck, went in, got immediate endoscope pictures inside neck.

Note that in Japan, unlike the USA, hospitals are a place you can just walk in for a cold. (you can also go to small clinics and private doctors). The advantage of going to a hospital is they have more specialists and equipmnent. The disadvantage is sometimes longer waits and probably not as close. I only bring that up as a contrast to USA where a hospital is someplace you don't go unless it's an emergency or surgery or something else really serious.

Bad:

* Bar to be a doctor much lower. Have had several very quack doctor expeiences in Japan. Have not yet had a quack doctor experience in USA

* Unclean. Have been to several facilities that seemed unclean to me. Machines that looked like people had coughed on them for years and had never been cleaned. Not all places but enough the experience has stuck out. No idea what that's about but just surprised since my experience in the USA was that medical services are or at least appear spotless.

Unknown:

* Nurses require no training (or so I was told by a nurse). You just go apply for job like a fast food job. Is that better (lower cost) or worse (less training).

The thing I like about it is that you can just leave the unclean facilities behind and find a new doctor, and it will cost you exactly the same as the old one.

Replace ‘Japan’ with ‘metro cities in India’ and its almost the same. I can’t still fathom why there would be no walk in facilities for ailments like cold.

I still remember my shock when in US I realised from a colleague that for my cold I need to wait because I can’t walk in and need to take an appointment.

(Amusingly, I was in London a few years ago and came down with a cold. One of my local colleagues told me about this amazing thing called paracetamol that was just magic and would make me feel better. I was astounded that we didn't have it back home in the US... until I looked it up and realized it's just acetaminophen under a different name.)

That's such an american thing to say. A flu can be swine flu and fever can be Malaria or Dangue and one day delay can mean losing your life, so people in many parts of the world take fever and flu seriously.

You are not the norm.

The state of insurance for health in the US has far reach ing, society altering negative effects too which are often not considered. My sister in law would like to stay at home for a few years woth her young kids taking a career break - but cannot as she'd loose her insurance, despite her husband's income being enough to support them, it's the insurance holding her back. This absolutely would not be an issue anywhere in Europe I can think of.

It's strange to hear about not getting an insurance if staying at home. That's exactly what my wife did when our child was small. She had the same insurance as me, because I was able to add her to my employer-sponsored insurance policy.

What really sucks is to be a small-scale entrepreneur, a garage-stage startup founder. You're cash-constrained, and there's no employer to give you a cheaper insurance plan. Obamacare is said to have helped recently.

Here in the UK you can get an appointment to see your GP the following day most of the time, and we have walk-in clinics for same day check ups if you don't care which doctor you see. Availability varies a lot around the country but its mostly good.

It turned out to be cancer. Original complaint stated when trying to book the appointment was “I have a testicle the size and hardness of a golf ball”.

Through that now, but the NHS is dysfunctional compared with U.S. healthcare. I have several relatives with bad hips or knees in U.K. who got prescribed stronger and stronger painkillers for >6 months because the waiting list for surgical intervention in their cases was so long.

That's because of antibiotic resistance. Increased use of antibiotics means they're less effective in the long term.

Good. Most coughs are viral, and that's the appropriate treatment.

Except not really. If I'm poor I can choose to eat nothing but ramen. I might not like it, it might not be the best for me, but it'll keep me alive. If I'm poor and have a heart attack I can't choose to just take tylenol, I do need that bypass surgery.

The ability to walk away from a transaction entirely is what makes the market free, and because health care is life or death there is simply no way to make it a free market, you are compelled by your life to make (many? most?) of the transactions.

There are plenty of medical conditions where there are several options for how to manage it. With insurance, people usually choose based on risk of failure or complications, recovery time, etc. Without insurance, someone might choose primarily based on price, and a poor person might go for the cheapest option. For some non-life-threatening issues, a poor person might refuse treatment if the cost for even the most minimal intervention is too high.

This is obviously not what we want -- ideally, we want some reasonably-high minimum level of care so people don't have to choose between, say, starvation and permanent disfigurement -- so, as the parent says, we don't want health care to be exactly like a grocery store, but this kind of thing would be more like a free market for health care.

(And even in your example, you still have to buy and eat that ramen. Sure, you don't have to pay for steak, but you have to buy something. You can't just walk away from the transaction entirely.)

A family friend, a smart guy with excellent insurance, was recently diagnosed with Parkinson’s Disease. Since I’m a neuroscience researcher, he asked me for advice. Despite working in an immediately adjacent field, at a Parkinson’s Centre of Excellence, with access to experts and tons of relevant training and literature, I found it very difficult to make a recommendation, even between the options his doctors had already laid out. I can only imagine how hard this would be if I had to consider the price of these treatments too.