The sub 65 population is not really that high a percentage of overall healthcare costs in the US. And the US government actually covers over 50% of all healthcare costs in the country, it's just that young people end up subsidizing elderly care in a vast number of direct and indirect ways.

Medicare and Heath insurance are obvious, but also many end of life bills are simply unpaid which causes hospitals to increase there billed costs etc.

And how is this different in other countries?

I guess I'm not seeing where the government enters the picture here. Is it just the tax deductibility of group health insurance? If so, can you explain how the market would be structurally different if those premiums were taxed? For perspective, note that premiums have skyrocketed in the last 10 years, yet employers that offered group health insurance tend to still offer it.

> I guess I'm not seeing where the government enters the picture here.

Government half-assed it. How? By providing neither complete liberalization and deregulation (a libertarian dream I hear often -- why can't my health insurance be like my car insurance...etc..etc), nor fixing prices (a la Japan) or providing free a healthcare alternative.

It is the worse of both worlds it seems. All of the recent health care reforms are pretty much bullshit from what I can see if they dropped the single payer option. Without controlling the costs. Yeah I can insure my 26 year old children but my premiums have gone up 30%+ in last 2 years. It is like they are trying to plug holes in a hunk of Swiss cheese. "But we'll mandate them to give free preventive care checkups, we got them now! Everyone cheers. HMOs turns around, laugh and raise premiums by 30%.

I live in New Zealand, and the system is neither completely liberalized, or deregulated, and works fine.

There is a public healthcare system that is paid for by taxes. The quality is really good generally, though rationalisation does happen with time, so we have quite big waiting lists.

However, there is also a private medical system that you're free to use. The largest one is actually a non-for-profit insurance society, and they run a chain of hospitals as well. If the public system is overloaded, sometimes Health Boards (government) will pay private hospitals to do operations.

Either way, medical insurance is really cheap, optional, and healthcare is seen as a right between the government and the citizen, not some weird relationship with an employer.

Move to New Zealand?

> There is a public healthcare system that is paid for by taxes.

I wouldn't call that "liberal" and "deregulated". At least no according to US political-speak. Providing a free alternative and thus competing with the health insurance companies is a pretty obvious involvement in the health care by the government.

That is a sane option and I like it. We have enough regulation and involvement but it just stops short of actually offering a viable free alternative. So the government sticks its fingers in the pie and makes a mess then the health insurance companies do the same and in the end the citizens get screwed.

Southern Cross health care - not for profit, but I wonder what it's executives earn? It isn't a feel good organisation at any stretch, and the beady eye of the government has reached out in the past due to some unethical practices they have. Preferred providers etc - keeping the money within its hospitals more like it. I might be cynical, but I've observed them working within the private healthcare sector and it isn't pretty.

Directors were paid $48,000 and the chairman $80,000. The CE and senior executives earned a total if $2.7m between them all. All FY 2012. And all very reasonable

https://www.southerncross.co.nz/Portals/0/Group/Corporate/20...

Good link. The flip side of that is that each director got about national average wage (how many hours did they work?) and the executive wages are high. Membership is falling and they are making money (unexpectedly more than predicted, so this is accidental). This isn't a company out to help New Zealanders, it's out to feed its hospitals a steady flow of high paying patients.

Keeping money within its own hospitals sounds more or less what you'd expect, surely? That's the whole point of having their own hospitals? And I expect the executives are paid quite a bit. I'm sure they're not a bunch of angels, but nobody says you have to use them. FWIW, I've used them once in the past, and observed my father doing the same, and we've had no complaints. The premiums seemed reasonable, as well; far from the horror stories one hears from the States.

It feels like, at least until guaranteed issue kicks in, the government has no-assed this problem, except for Medicare, which is by many accounts tremendously efficient and effective.

I fail to see how Medicare can be considered effective and efficient when it costs about as much per capita as what other countries pay to cover everyone, it covers less than 1/6 of the population, and only covers about half the total health care costs of the covered population.

It may be better than the private US healthcare system, but that's not saying much.

Medicare has to do business with US providers, so of course it's still going to be more expensive than in a civilized country. According to your numbers, the tax burden relative to the level of service is at most about 12 times worse than other countries, though the fact that Medicare covers the people who most need expensive care means it's actually much closer to international costs. It's certainly effective in that it does provide a lot of care for a lot of people, and it's about as efficient as it can be without completely revamping the supply chain it depends on.

There is a healthcare system in the United States that does far better -- the Veterns Administration. So clearly it is not impossible.

Even leaving aside government provisioned care, there are several simple ways Medicare could use its massive purchasing power to control costs. Part A could take into account alternate available treatments and their effectiveness-adjusted-cost when determining what procedures to cover. Part B could coordinate care through a single gatekeeper physician. Part C could be eliminated, as it was a cost saving experiment that failed. Finally, Part D could negotiate with drug providers on behalf of the entire pool instead of delegating negotiation to dozens of insurance companies, each with smaller pools.

The VA does a better job because they actually run their own hospitals and clinics. That makes a huge difference - they can directly control many of the costs, and can wield their negotiating power far more effectively than Medicare is currently allowed to.

I certainly agree that much of the blame for Medicare not being better than it is lies with Congress, which seems to be the upshot of your comment.

I sympathise completely with your overall point, but it's worth pointing out that the per-capita comparison isn't completely fair - Medicare covers the elderly, a group that have tremendously high per-capita costs relative to most of the rest of the population.

This isn't to say that the system isn't massively inefficient, just that it's maybe not quite as bad as that stat suggests :-)

When he says "per capita" he's talking about the total population of the country.

That is, lots of European countries cover their entire populations with a budget of around $2000 per citizen per year. Medicare/Medicaid have a budget over $2000 for every citizen per year -- 300 million people * $2000 = $600 Billion.

(In 2010, Medicare had a budget of $453 Billion, and Medicaid has $290 Billion.)

When people call Medicare efficient, it may mean "they spend little money on overhead," but that's very different than spending it well.

Yeah, I realise that - perhaps my response was unclear.

What I mean is, when people say "Medicare costs the US more per member of the population (covered or not) than the UK, even though it only covers 1/6th of the population" the stat is unfairly biased - because the segment of the population that medicare covers is the segment that requires by far the most healthcare.

The stat would be dramatically improved if we accounted not by percentage of the population covered, but instead by percentage of healthcare resources used.

The efficiency of Medicare is often overstated. Medicare spends a lot per patient, which makes administrative costs a smaller percentage of total spending. And some administrative tasks are handled by other government agencies, but many calculations of Medicare efficiency don't include those.

Additionally, there's a not insubstantial chunk of Medicare spending that's essentially fraudulent, and that no "real" insurance company would pay, but Medicare lacks the "overhead" to do much about all but the most egregious cases.

Why else did you think there were so many daytime TV ads for "free" scooters before Medicare cracked down? And that's just one example.

They are heavily regulating it.

If you ask some people they would say "everything is screwed up because govt is regulating it" others say "everything is screwed up because they are not involved enough with it". I lean towards the latter, but I can buy the argument from the other side as well perhaps.

When there's a battle of opinions between "they're regulating too much" and "they're regulating to little", my presumption is the actual answer is "they're regulating it in the wrong way".

You didn't really answer his question. What exactly is the government doing?

I haven't really studied the issue deeply myself, but the usual complaint I hear is about things like selling insurance across state lines. But I'm not clear on how 15 or 25 or 40 (IL, TX, CA, respectively) isn't a big enough population to capture most of the efficiencies of scale that are there to be captured.

One of the arguments for shopping across state lines is changing the risk profile. There are certain conditions that are more prevalent in certain states or regions (e.g. obesity in the "deep south").

Another argument is that states individually mandate what should be covered under insurance. If you can buy from another state, then you can get (cheaper?) insurance such that you're not paying for things that aren't relevant to you.

The reality is that shopping across states will result in the least-regulated states hosting the dominant providers; it creates a race to the bottom.

You mean a race to the top :)

And the more regulated providers will have no way to sell their added oversight as a benefit worth paying for? That doesn't seem plausible: Certainly PPO's were able to sell "see a specialist without a referral" to many group plan customers.

When the government offered tax benefits for corporate plans, it shifted the dynamics from individual plans to said corporate plans. When employers started offering plans, it shifted the way people think about health insurance. The way it existed, pre-tax-benefits, was much more like life insurance: you paid your way for daily expenses but had catastrophic coverage. After the tax benefits, people began treating it more like "nearly free healthcare". Due to the change of insurance type, instead of knowing how much a doctor's visit costs, the insurance "takes care of it".

Finally, by having the company hide 60-80% of the cost of the premiums and averaging the costs out across the entire company, people don't know how much things are really changing on a year-to-year basis, even though they are, in all actuality, paying the entire cost of the premium through lower salaries.

> Doctors over-test and over-treat because it makes them money

I believe at least part of the reason is also that it reduces their chances of getting sued.

The average doctor in the US spends 50% of his time on bill collection issues of one type or another and a significant percentage of his income on malpractice insurance. Assuming 6 patents an hour * 10$ a patent * 40 hour weeks * 48 weeks a year = 192,000$. Say 50% overhead and that's 96k / year in Argentina. Drop that to 3 patents an hour and add in ~4x cost of living, rent's cheap cars are less so, and your around 200k / year which is close to the US equivelent.

Now, let's swap that around in the US and say 40$ or ~30$ in Canada a visit should be about right for 10-25 minutes with a doctor assuming a decent heath care system. Except most offices have more people doing medical billing than doctors and doctors still spend a lot of time on insurance related tasks and your quickly into 100+$ a visit.