“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.”
By contrast, he said, while tax rates have fallen as a share of gross domestic product, health care costs have ballooned. About 50 years ago, he said, “health care was 5 percent of G.D.P., and now it’s about 17 percent.”
It's interesting to consider what it really means for something to be a drag on the economy. I mean, every dollar spent on healthcare is literally part of the economy -- it's not siphoned off into some void. Companies make a lot of money in healthcare. Healthcare employee a lot of people. Folks like being healthy.
You're right it's not being siphoned off into some void, it's being redistributed from some groups of people to other groups. If healthcare was delivered efficiently so that it was affordable and kept people healthy then that would be ok.
There are so many inefficiencies with monopolistic practices such as inability to import drugs from outside US, healthcare networks, and on and on.
Monopolistic practices == industry protected from competition by government violence.
If the health industry wasn't, you'd have people making a killing importing 2 dollar generic antibiotics from overseas to compete with the 70 dollar generic antibiotics sold at CVS.
And then the scandals when it turns out these generics are fakes as happened in Africa with faked AIDS drugs or drugs with a nugatory amount of active ingredients
You'd also have people performance plastic surgery in their shed killing people.
There's obviously middle ground somewhere, it's just we as a country lately have a REALLY hard time accepting the fact that compromise isn't a four letter word. At least some of us...
That is true but the healthcare industry doesn't bring any money in from abroad. So for the average international competetiveness of American companies, it's bad.
Total Money spent on heath care has very poor correlation with outcomes. Largely because it includes things like medical billing and advertising which increases costs without providing any benefit. You also often do more dangerous and unnecessary procedures and give more drugs risking poorly understood interactions.
Something like 80% of the benefit of modern heathcare comes from the first 10% of spending. EX: Sanitation and quarantine are cheap and amazing tools to stop the spread of disease where hospitals are extremely expencive and gather sick people together to spread disease. A vaccine is vastly cheaper and more effective than dealing with outbreaks.
“In all, 86 per cent of the increased life expectancy was due to decreases in infectious diseases. And the bulk of the decline in infectious disease deaths occurred prior to the age of antibiotics. Less than 4 per cent of the total improvement in life expectancy since 1700s can be credited to twentieth-century advances in medical care.”
― Laurie Garrett, Betrayal of Trust: The Collapse of Global Public Health
* Inefficiencies in delivery mean that those for whom low-cost interventions are most beneficial, most especially pregnant women, and infants and children, don't receive preventive and supportive care which offsets future problems.
* High healthcare costs translate directly to high labour costs, exacerbating the competitve disadvantages American labour faces relative to the rest of the world, and obviating much or all of the advantage of the greater efficiencies of such labour.
* What health care services as are offered are, counter to my first point, late and heroic measures which do little to extend life or its quality, but keep sick patients alive longer. They are delivered largely based on capacity to pay, rather than social need.
* Programmes to increase overall community well-being, ranging from vaccinations, education, and other public-health measures, to treatment of drugs and drink addiction as medical rather than criminal problems, aren't provided. Entire towns and states fall victim to epidemics of entirely preventible conditions: measles, mumps, cervical cancer, HIV/AIDS, alcoholism, drink driving, heroin and opoids additions, cocaine and meth addiction.
* I won't even talk about mental health services. They are a national embarassment and shame to all Americans.
Instead, a handful of insurers, hospitals, drugs manufacturers, equipment manufacturers, and service providers (look up medical transport for an eye-opener) are skimming off fat profits whilst delivering little of actual value, and actively eroding the competitive and health viability of the country as a whole.
The issue is relative efficiency. If I spend $500 more on treatment X in US vs. another country, that money is paying a healthcare employee, but the employee is also "paying" with their time. A more efficient system that needs less employees frees up other people to contribute to the economy in more ways. All of those extra people health insurance companies employ because they can get away with it would get other jobs and hence increase the total productivity.
The same argument applies to bloated costs of equipment. If a surgical sponge is $500 vs. $10 elsewhere, i doubt the added benefit justifies the extra $490. That $490 is coming out of someones pocket and its a complete waste.
This graph [1] also shows the same story. The return on investment measured by life expectancy in the US is pathetic. The extra money is just not helping... so its either being misused or stolen, probably both.
One difference is that the U.S. system gives a lot to the people who pay a lot. Rich people have access to the most advanced cancer treatments in world, for instance. But child mortality is relatively high among poor people (which is a shame on US.).
Of course, this is indeed bad for efficiency, if you consider health outcomes vs. spending. And inequality: wealthy people live longer. But then there are questions of fairness.
Elsewhere, in a so-called welfare state where I live, all children get very good care and child mortality is low, but for instance, when I consider myself - a fairly well-to-do person although not wealthy by US standards - I pay a lot to the system but it gives me very little attention. No regular health checks that are normal in the US for people who have a health insurance through employment, no screenings for cancer (women get several types of specific screenings but men do not).
(We use 9 % of GDP to public health, vs. 17 % in the US.)
I know that the care is quite good if I run into a life-threatening situation, but with smaller trouble such as broken bones or a pneumonia, I'll be prioritized down after drug addicts who have a more serious condition that they have inflicted themselves. And they never contributed to the system which tells me to go to a private clinic.
Fortunately the social problems resulting in non-contribution are still quite small, but an increasing number of people are not giving anything and are consuming more and more of the resources.
There are a lot of good responses to your question, sibling comments, but let me provide an orthogonal view: consider how many innovative companies are NOT being formed because worried workers cling to their generous big-company insurance plans -- plans which are so costly to buy independent that they are not real options. This is a major concern for me as an entrepreneur and parent.
“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.”
The problem with the latter statement is of course that it makes it sound like the top 1% is unfairly burdened by taxes, while hiding the fact that the richer they get compared to the rest, the larger a share of taxes they'll pay.
Taking it to the logical extreme, if all income went to the top 1%, they'd pay 100% of income taxes, while the lazy 99% contribute zero! Someone quickly give the rich a tax break!
Do you think the top 1% of Americans consume significantly more government services than an average 1% of Americans?
If not, why should consuming those services cost significantly more money?
It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different?
EDIT: To all of the people saying rich people consume more government services than poor people: you're forgetting about welfare payments. In the UK this is the largest government expenditure, and it is consumed almost entirely by people who are not paying for it.
I can think of three reasons, from least to most libertarian:
1) You're proposing a flat dollar amount be paid as tax by every citizen. This will be most painfully felt by the poorest. What sort of society do you think this leads to?
2) The rich do employ a lot of people, whose education and safety were provided for by taxes. Then there's all those road and water networks they use to deliver goods to the markets they own, and the large amount of property and contracts they have that are enforced by the state. So yes, I do believe they use more government services than the average person.
3) Plenty of markets work that way: https://en.wikipedia.org/wiki/Price_discrimination Furthermore, in a market, the seller sets the price, and the buyer is free to take his business elsewhere. And there's plenty of countries to choose from - so why should government services be different?
Yes they do consume a lot more government services.
Whole branches of government are set up to protect property in any forms. Outside of life and limb protection, the rich consume property protection more. Land, IP, bank accounts, shares, options, buildings, boats, freight... the rich have it because their property rights are protected by the government.
Because taxes aren't about market services? We, society as a whole, benefit from things that we don't consume. I'm not making use of social security, medicare, food stamps, WIC, or CHIP right now, but it benefits me to not have destitute people. Property owners pay school taxes regardless of if they have children in school because a well educated society is beneficial to everyone. I didn't own a car for over a decade, but my taxes still paid for roads and car-centric infrastructure.
Moreover, I detest that we even got involved in the wars in the Middle East, and was a strong supporter of NOT retaliating after 9/11. My taxes still pay for them.
Taxes have absolutely nothing to do with a market.
Because they benefit more from the society our "expensive" government has created. If they want capitalism without government, move your business to Mexico. What's that? There's a massive divide between the have's and have-not's and you'd never be able to make a profit?
"Do you think the top 1% of Americans consume significantly more government services than an average 1% of Americans?"
They obviously do consume more of about everything, including government services. Have you compared the cost to government of several McMansions versus a small rental appartment? Policing cost in an affluent neighborhood? The cost of people flying very often versus not or almost not? Of a heavy SUV versus a humble small car? I'm not even touching other externalities like environmental cost...
"If not, why should consuming those services cost significantly more money?"
One doesn't even need the "if not". This can be a perfectly valid political choice.
"It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different?"
Because government services are not "any other market". To illustrate that, one could also turn this around and ask "It might feel right that everyone should pay the same, but that's not how government services work. Why should private markets be different?".
Good news is that the amount of health care spending is a choice. E.g. other western countries are running a health care cost to GDP ratio from 10%-13%, sometimes offering vastly superior and equitable outcomes than in the US.
The bad news is that this is a choice Congress and Senate are taking on behalf of the American people. And with the partisan divide and lack of agreement on fundamental values, things won't really change.
Add in a rapidly aging population, and being cognizant of the per capita health care spending steeply increasing at later stages of life, kicking the can down the road won't make the later adjustment any easier...
A free market also rations. Just with entirely different acceptance criterion. Criterion which (when applied to health care) happen to not intersect with most mainstream systems of ethics and morality.
Constrainted, non-infinite supply, basically infinite demand. What a great business to be in!
To be fair you can't exactly call the current system in the US free market. There are ridiculous restrictions on hospitals and insurance companies that prevent proper competition from occurring in many cases.
While single payer is often a better system, it's not without its problems - in Canada ER wait times are ridiculous, my sister had to wait 10 hours recently and if you want to find a GP? Good luck. Everyone is booked solid.
I thought Obamacare seemed like a good compromise to be honest. Unfortunately it doesn't seem like that's been a miraculous solution. I think some sort of free market solution with a safety net on the low end could do the job, but I don't know what that would look like. And I don't think we've seen any proposals in that direction.
I live in Canada. Things vary. For sure triage is in place in ER like anywhere else. But I've sat in many an ER with my kids, my mother in law (cancer), and many friends and myself and honestly I've always felt their scheduling was fair considering the priorities and demand.
But right now I can see my family doctor with 1 day notice, most times same day, and they have someone on-call for phone 14 hours a day and on weekends. Mostly I can avoid ER and drop-in clinic visits completely.
Ignoring insurance spending: the US government spends more on healthcare than the UK government, and gets worse outcomes across many (but not all) measures.
This always seems such a strange view to me, like you are ignoring that the us is both the only rich western country without single payer and also a country with an infamously bad healthcare situation.
Are you talking about Victoria? Because I hear lots of complaints from people living here that they can't get a GP, waits are awful, etc etc. But I pretty much always get in to see a doctor within 45 minutes if I drop in, and every time I actually try to access healthcare it seems to work much better than my friends led me to believe it would.
I'm curious about this - why are other people able to get doctors while you are unable to (asking in utmost earnestness)?
Also, it seems that your condition isn't life-threatening (considering you're posting here and all). While the average, generally healthy, person will likely need to wait longer, they at least have access to care in developed countries outside the US.
The final point I would add is that private healthcare is still available, even if only available in a different country. I think that's a reasonable trade off- most people can get care readily, while those who need more can pay more to get more timely care.
But they do have government drug price controls, and tightly regulate health insurers...
And they do have single payer in a sense. The consumer pays the doctor and is reimbursed by a health insurer. Something that pretty much seems like it might not work well in the US, without very tight reins on the insurer reimbursement timeline and approval.
The US may be the only rich western country without universal health care, but it is by no means the only one without single-payer. Germany, for example, has private health insurance[0] but everyone has to have insurance, public insurers have to accept everyone, and employers have to pay part of the cost.
[0] There's a distinction between "public" (gesetzlich) and "private" (privat) health insurance, but neither is run by the government. Public insurers are private organizations. The difference is in what is covered (all public insurers provide essentially the same cover), and how they are funded (the cost of public insurance depends on income, while private insurers can set their own prices). There is an income threshold below which one is required to take public insurance; private insurance is seen by many as kind of a scam. Private insurance is generally cheaper for young people, but one can't easily switch from private to public, so you'd better be sure your income will continue to be high as you get old and premiums go up.
The public insurers are not private organizations. The reason they are called "gesetzlich" is exactly that: they exist by law. You are right in that they are not run by the government (be it state or federal) but are their own entity. They are however self-governed and currently hold elections for their board that undergo the same scrutiny as any other public election. They are public entities in full right. Not paying your fees has the same consequences as not paying taxes and they have more far-reaching powers than a private organization ever could.
This is a common argument but basically just a bogeyman.
People with disposable income/high healthcare needs aren't dying in countries with single-payer insurance. Indeed, they're able to purchase private healthcare, while the broader population gets better health than the US population.
Honestly, it looks like this 'socialism' thing works a lot better for peoples' health than what's happening in the US.
I've lived in multiple European countries and have never seen any of the rationing, waiting lists, supply shortages or others that you list.
Treatment I've known people go through include cancer therapy, orthopedic surgery, eye laser treatment, chronic pain management, casts after accidents, and others.
It seems like healthy people spend a bit of time in wealthy nations with socialized health care and see nothing wrong with the system.
Live it. Have friends and family suffer illness or disability and try to find treatment. There is very little preventative care where I'm from because the doctors have no time. It's emergency after emergency.
So, sure, in Canada you won't break the bank if you dislocate your shoulder and have to go to the ER. But any special procedures and you'll be waiting years sometimes for an appointment.
To dispel the myth about the Swedish "free" health care system, today about 650 000 swedes have private health care insurance, 70% paid by the employer. This is on top on the already public tax funded health care system.
So basically Sweden is slowly introducing the US system.
You misunderstood GP. Rather than disagree with your description of Sweden, GP claimed that Canada also has problems, and offered a theory as to why some people don't appreciate such problems.
Not sure you can blame capitalism here, because capitalism is economic system, not a political system, i.e capitalism and socialism is not it's counterparts because they are different entities, apples & oranges.
Health care in US is political regulated system, badly done as well.
Yes, you can have capitalism and government funded health care system.
Do you realize that this is happening in Canada because certain people are pushing for privatized health care, draining more and more resources away from the public health services, causing the service quality to go down?
It's a tried and tested technique. Take a well working system which doesn't generate profits, push to reduce costs, entirely destroying the service then point it out and say "See? It doesn't work. Better privatize it!"
Wow! That's a serious stretch. There is almost no private healthcare in Canada right now. Doctors are banned from "straddling the fence". They either have to go 100% public or 100% private.
The reason for the waitlists in Canada are complex, but cost control is one of the reasons.
Because waiting lists imply shortage or rationing. Here this is not the case. It is mostly optimization of utilization of existing capacity.
It is best for both the purse of the system and the patient if needed but not urgent stuff is done at time convenient to all parties. This way everybody could be prepared. The hoapitals will stock the right amount of supplies, the bloodbanks will know how much and what kind of blood is needed in advance and so on. The patient will make sure all mission critical projects are taken care of for the rehabilitation time etc.
Scarce resources are kidneys. There are not enough of them to go around. Not all people that need kidneys will get them in any time frame. They are also rationed - you get one kidney transplant and that's it.
On the other hand the people that need lets say hip replacement will get it. The system have enough capacity and budget to serve their medical needs. But it works better if the people are properly spaced.
But it works better if the people are properly spaced.
So (excepting some triage) they put people on a _list_ of people that need hip replacements and make them _wait_ until they get to the front of the list before they get their surgery.
if needed but not urgent stuff is done at time convenient to all parties
The most convenient time for me for my knee surgery was yesterday the most convenient time for the hospital was in 4-6 month. Guess who's convenience was taken into consideration.
Exactly. They didn't have enough resources to take care of everybody in the timeline all those patients wanted to, so everybody got put on a waiting list and knee surgeries where rationed out based on needs and available resources based on some opaque system.
Not at all (well obviously it would be nice, but highly unrealistic). I'm just saying that claiming the the 'European' systems are so great that they don't have waiting lists or rationing is asinine.
And while I guess knee surgery is technically 'elective' as in I could elect to not be able to carry heavy things and have trouble getting up stairs, I'm not quite sure I'd use that term.
Claiming there's no waiting in Europe is idiotic. Claiming Europe is bad because there's waiting is similarly idiotic, given the fact that US has significant wait times for procedures and specialists as well.
> Elective surgery or elective procedure (from the Latin eligere, meaning to choose) is surgery that is scheduled in advance because it does not involve a medical emergency. Semi-elective surgery is a surgery that must be done to preserve the patient's life, but does not need to be performed immediately.
In what country was that? What is the inconvenience of delaying the knee surgery (e.g. can you walk/drive/work)?
Would you be able to cut the waiting time in this country by paying more? What would be the waiting time without paying extra (which I'm sure the insurance company would not approve) in the US?
No, sorry, it's not just optimisation of existing capacity. Here in the UK the long waiting lists incentivise people who can afford it to get treated privately so they can get back to health sooner, saving the NHS from doing it at all. Often the treatments happen using the same facilities and staff that would also carry out the NHS-funded treatment.
What is a non-trivial procedure? In fact the issue would be trivial (or unjustified) procedures, since anything life threatening would obviously have priority over anything else.
In northern Italy I have seen two "simple" (easily removed surgically) cancer cases going through all diagnostic steps in less than 2 months (including ultrasound, biopsies, CT scans), followed by surgery and/or radiotherapy, all at absolutely zero cost for the patient.
If you need heart surgery (valve replacement, coronary stents, stuff like that), your GP can get you an ambulance straight to the ICU, and you can stay there for free until everything is ready for surgery, maybe in a couple days.
We fare badly in particular on getting access to a primary care doctor quickly (or other general care, if you Google articles). We have the highest percentage response for the question "Went to ER for condition that could have been treated by regular doctor if available" of the countries surveyed. And we have the highest response for people unable to get medical care due to cost.
When it comes to specialists and elective surgery, we definitely have much less issues with waiting lists there. IMHO general health care is much more important; this is another indicator of the perverse incentives of the current US health care structure.
This is nonsense. Someone has to decide if a procedure is worth the cost. If it's not the patient (who isn't paying) and it's not an insurer (though who wants that?), it's the government.
Deciding a procedure isn't appropriate or worth the cost is rationing. In a bureaucratic system, you have bureaucrats deciding what procedures are for whom and when.
> If a procedure is medically justified, cost doesn't factor into the equation.
Of course it does. There are rules saying what procedures are urgent, which ones are legitimate, and which treatments are covered and at what prices. The government doesn't write a blank check for doctors and patients to fill out.
I didn't say the government writes a blank check. They have a list of legitimate procedures, and fix a price for them. The administration is able to get a good price because it is in a strong bargaining position against pharmaceutical companies. However, price has historically not been a factor in deciding the medical effectiveness of a treatment. There is currently a debate on whether it should be: is it justified to cover cancer medicine costing 500.000 EUR per patient per year for life ([1], in Dutch)?
> Socialism in healthcare brings rationing, waiting lists, supply shortages
This isn't always true. The UK is single-payer, and their wait times are lower than in the US[1].
Even if that were true, those things are acceptable on average as long as outcomes improve. Australia, the UK, and France (all single-payer) have longer life expectancy[2] than the US.
In fact, the UK is doing better than the US in nearly every health-related metric[3]
> and all the kinds of things you don't want when dealing with people's lives.
So "better care for people who can pay more" is a better system? That's what we want when dealing with people's lives?
If anything should be socialized, it's health care. No one should die because they weren't born with the opportunity to work a high-paying job or accumulate wealth.
"So "better care for people who can pay more" is a better system?"
Don't phrase this as an alternative - those able to pay more can still buy themselves better care, they're being denied nothing except to watch the poor die of illness: https://en.wikipedia.org/wiki/Private_medicine_in_the_UK
This is OK as long as there is a sufficiently high floor on the quality of service that the poor receive. Someone has to pay for the advanced treatments, drugs, machinery, and training.
> This is OK as long as there is a sufficiently high floor on the quality of service that the poor receive. Someone has to pay for the advanced treatments, drugs, machinery, and training.
Yes, and that "somebody" is the US. Drug prices are high in the US because the US is responsible for funding the the majority of medical and pharmaceutical research for the entire world. Countries like the UK benefit from the research that is being paid by the US, while not actually having to find the R&D that goes into it.
> US is responsible for funding the the majority of medical and pharmaceutical research for the entire world
I believed this until very recently. I had a long discussion on Facebook with some friends in medical research and public policy. I learned that only a fraction of drug costs are due to this issue.
Furthermore, slightly less than 10% of all health-care spending in the US is on drugs.
It's an issue, but it's a relatively smaller one than I'd thought, and it's not as clear as "the US subsidizes other countries."
> I believed this until very recently. I had a long discussion on Facebook with some friends in medical research and public policy. I learned that only a fraction of drug costs are due to this issue.
Literally 50% of medical research in the world happens in the US, and even more is funded (indirectly) by the US market. In the last two years, that number has dropped slightly below 50%, but only because of rapid growth in China and India.
This is all medical research, not just pharmaceutical research. But yes, it is actually responsible for the bulk of drug prices in the US, through a combination of both direct and indirect effects. Even pharmaceutical companies based in Europe still use the US as the primary source of funding their research.
Pharmaceutical companies reap their profits from the US because that's where it's easiest to do so, and because the US is the largest non-developing country. If, overnight, the US capped drug costs[0], a combination of two things would happen: pharmaceutical research would drop dramatically (some would move to China and India, but some would just exit the industry) and drug costs in other developing countries would skyrocket.
Or in other words, for the US to pay less in drug costs, other developed countries have to be ready to pay more, and the world has to be ready to accept a decrease in medical research.
> Furthermore, slightly less than 10% of all health-care spending in the US is on drugs.
That doesn't contradict the original point; that's just looking at a different denominator. And again, this is all medical research, not just pharmaceuticals.
[0] ignoring for the moment the mechanism of doing so
In a time when it is seriously proposed by high-ranking elected officials that e.g. South Korea pay for its own military defense, I think we can consider UK paying for its own drug research.
Because the UK is single-payer, they have enormous negotiating power -- and they use it[1]. They force drug companies to give them low prices, which means the US indirectly pays some of the costs of the research.
However, drugs can be very profitable, so you could just as easily say that all the countries share the cost of the research, and the US subsidizes the profits of the private companies.
> However, drugs can be very profitable, so you could just as easily say that all the countries share the cost of the research, and the US subsidizes the profits of the private companies.
Sure, though only if you assume that the companies would pursue the same research and achieve the same results without a profit incentive.
Except, we have pretty clear empirical evidence that that isn't the case. The overwhelming majority of both medical research spending and clinical medical discoveries come out of organizations that pursue a profit motive. That's true globally - it's true in the US, in Europe, and in China and India.
And even then, you can't say that companies "share the cost of research equally", because there is literally no objective metric under which European countries pay an amount of research proportional to how much they consume. Even European pharmaceutical companies obtain the bulk of their research funds from the US market.
The US is definitely not the "bulk" of revenue for these companies. A big market? Sure. But nothing special when compared to other rich countries if you take into account population and wealth.
Yes, if we normalize by the things we're measuring, we reduce the observed effect... but that's a statistical tautology.
For example, take Western European country prices as a reference point, and assume that the difference in price to the US is entirely an excess premium. That's already a dramatic overestimate, because it assumes that the prices in Europe would still be as low even without the US market, which we already know is not the case.
In that case, Norvartis earned $8.6 billion from inflated prices in the US in 2015. And in 2015, their entire R&D budget was $9.9 billion, on a net income of $6.7 billion.
In other words, if US prices were magically brought down to European levels, Novartis would somehow have to find another way to make up a sum of money that accounts for almost their entire R&D budget.
And even if you assume that the second largest pharmaceutical company in the world would operate the exact same way without an explicit profit motive, without the inflated prices in the US, they would literally be losing money.
> Stop spreading nonsense.
From the Hacker New Guidelines:
> Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity.
A country can't really pay for it's 'own' drug research unless that research is never shared or the drugs never made available outside that country. Unlike defense, which requires physical presence in a place, once drugs are created and researched, the cost of production is often very low. With defense, the cost of organizing, training, and equipping troops will never go away.
"Drug prices are high in the US because the US is responsible for funding the the majority of medical and pharmaceutical research for the entire world."
You could just as well say the US funds the majority of drug advertising for the entire world - they spend more on ads than R&D: http://www.bbc.com/news/business-28212223
Not to mention everything from vital new medicine, to reproducing generics of other companies, and drug reformulations to prolong patents, gets thrown under R&D. If you only count the R&D spending that's not done solely to steal market share from other companies, the ads vs. R&D ratio is even more dire.
So given they post more profits and more ad spending each than R&D spending, at what point would it be okay to stop raising drug prices? When profits are >10x their R&D?
You seem to be interested in arguing the statement "Pharmaceutical companies in the US spend too much on R&D".
But that's not equivalent to the statement "The US provides the funding for the majority of R&D that the rest of the world benefits from".
If you think that pharmaceutical companies should spend less of their money on R&D, or more on it, that's not really relevant. Whatever research pharmaceutical companies are doing, that's being disproportionately funded by the US market. That's a plainly evident statement; it's right there in their financial sheets.
> You could just as well say the US funds the majority of drug advertising for the entire world
No, because research is a wholly non-excusable good in the global market. Advertising is not.
> Sounds like as long as they spend some portion of their revenue on R&D, you'll argue inflated drug prices are good and necessary.
Again you're looking at the wrong denominator (fraction of spending spent on R&D, rather than fraction of R&D spending that's funded by the US).
Furthermore, I never made any claims about "good and necessary". It looks like you're interested in having a discussion about a different topic altogether, rather than the original statement.
That is true for literally anything, from food, education, jobs, lifestyle, etc. Why would just health-care be so different to all those other necessities?
Education, jobs, and lifestyle aren't necessities. That's how health care is different.
And I do believe people need to have food. Every developed country agrees, which is why there are welfare and food programs. They're inadequate and often leave people behind, but the goal is that no one dies just from being poor.
> Education, jobs, and lifestyle aren't necessities. That's how health care is different.
I disagree. Lifespan, quality of life and health all depend on all those.
> And I do believe people need to have food. Every developed country agrees, which is why there are welfare and food programs. They're inadequate and often leave people behind, but the goal is that no one dies just from being poor.
Sure, but not any kind of food at any price. The equivalent would be basic medical care, not advanced cancer treatment solutions.
I personally resist the idea that any human life is of infinite value, since it conflicts with the basic reality that economically, we trade some lives for others. Reducing cost is fruitful for everyone but the traders and professionals: supporting any cost as a right is fruitful for the traders and professionals and the recipients at the cost of the givers.
And in reality, the givers tend to be the poor more frequently than the rich.
> If anything should be socialized, it's health care. No one should die because they weren't born with the opportunity to work a high-paying job or accumulate wealth.
I understand the sentiment but that is simply not true. If someone gets cancer and requires the lifetime work of 10 people to survive, then guaranteeing that treatment for everyone would be have very negative results.
Life does have a value and a cost, and its not worth spending great amounts of achieve little results. 1000,000U$S might save the lives of a lot of people, but 1000,000U$S cancer treatment might just prolong the life of a single one.
> If someone gets cancer and requires the lifetime work of 10 people to survive, then guaranteeing that treatment for everyone would be have very negative results
1) Living people are taxpayers and consumers. Dead people are not.
2) This is the whole point of insurance. Very few people will be very expensive and most people will be relatively inexpensive. With preventative care and the advancement of research, fewer people should be expensive over time.
Regardless, the US, as a society, has more than enough money. There's no reason for someone to buy his second $50M yacht while someone else dies of the flu because they couldn't afford the $25 vaccine.
3) You can make these hyper-rationalist arguments, but the vast majority of people are willing to pay a lot of money to live in a society that doesn't just let them die of something curable.
I genuinely believe that people who are uninterested in the social contract of the US or other developed nations should be allowed to "opt out" of society: the citizens of the nation will pay for transport to any border of the country, and then citizenship is permanently lost.
> 1) Living people are taxpayers and consumers. Dead people are not.
In the example above, you get maybe 5 years + taxpayer+consumer - 10 lifetimes, which is a deficit both for taxpayers and consumers.
> This is the whole point of insurance. Very few people will be very expensive and most people will be relatively inexpensive. With preventative care and the advancement of research, fewer people should be expensive over time.
Basically everyone needs some sort of medical care. True, the most expensive cases are rare and they befit insurance, but medical costs are normally not about insurance. Checkups, dentists, basic clinical appointments, etc are not great cases for insurance.
That is, hard diseases can be convered by life insurance, without the need for socialized healthcare for the rest.
> Regardless, the US, as a society, has more than enough money. There's no reason for someone to buy his second $50M yacht while someone else dies of the flu because they couldn't afford the $25 vaccine.
This is a typical rabbit hole argument where it turns out nobody wants to donate their salary until they reach the lowest percentile of income to make it fair. Because who are you to spend your money on a vegan deluxe burger when people are dying of malnutrition!
Blaming rich people for hardships is akin to blaming immigrants for it, on the other side of the political spectrum. They guy with the 50 million dollars did not make the rest poor, in fact its possibly the exact opposite.
There is a lot of ideology in the mere presentation of that argument, i fear this can take a bad turn :).
> You can make these hyper-rationalist arguments, but the vast majority of people are willing to pay a lot of money to live in a society that doesn't just let them die of something curable
I somehow doubt thats really true, otherwise it wouldnt be a debate at all...
Socialism is definitely not the answer, however many European systems are not directly socialism, there are many different ways of solving health care, US system is just too expensive.
Our family live in a socialist country as seen through the US American lens: Germany.
Germany is interesting, depending of your annual income and your work contract, you can either go with a private health insurance and a public health insurance. Only about 10% of the population is going with the private system. Once you decided to go private, you cannot go back to the public insurance. At the moment, a lot of people regret their switch to the private system, because with low interest rates, the insurance costs have been increasing drastically.
In fact, proponent of a total privatization of the German health insurance system are now backtracking and thinking about the reverse, stopping the private system (but if the interest rates rocket again, I suppose the private system will make money again).
For that, Germany is pretty interesting as it allows observation of two parallel systems within the same country with the "best case scenario" for the private system because only rich people and state employees are allowed to go with a fully private health insurance.
My personal opinion is that health insurance like education is a basic "right" but this has nothing to do with the effectiveness of one approach or another, just an opinion.
This morning my girlfriend was sick. She called her doc, got an appointment for the very afternoon.
The visit, buying the med and getting a certificate for 3 days off work took us all in all 2 hours.
She paid most of the bills using her health care card, so in total it was less than 50 euros from her pocket.
The day off will be paid in full.
Tell me again how we suffered from "waiting lists, supply shortages and all the kinds of things you don't want when dealing with people's lives".
Cause right now my life is god damn awesome.
It has been for the last 3 decades, including when I got malaria in Africa and the french system refunded me, or when I break my arms multiple times, or got my appendice removed.
I always though that the US system was that bad compared to ours from the people POV because french companies paid a lot more. Now I see it's not even the case.
Are you conflating the economy in general with healthcare simply because you have no argument?
Le Pen voters are angry for some part, yes. They're the ones with the fewest resources, yes. And you know what? They still get the same health care as anyone else.
I'm saying the French people undermine your testimonial better than I can. The typical argument (all over this discussion) for bureaucratic medicine is "it's all over Europe and it's awesome!" But I don't think Europe thinks it has everything figured out.
One of the consequences of government-provided services, for example, is that it pits native citizens against 'new' and aspiring citizens on the years that everyone decides life is a zero sum game.
> But I don't think Europe thinks it has everything figured out.
Nobody has "everything" figured out, and health care (and paying for it) is a problem everywhere. It's just that comparatively...well, there really is no comparison. In comparison, it is awesome. And I've lived both in the US and in different parts of Europe.
The French voted a 2/3 against Le Pen. The US voted 48:46 against Trump (and got him anyway).
What you even mean by "socialism in healthcare" ? Is it a trigger-word for Americans so they switch off their brain ?
Anyway, in most west EU countries, public-run health care works very well. It's more efficient by a vast margin : no marketing cost, no middle-man overhead, no for-profit requirement.
In fact in France we are currently evaluating getting rid of private sector altogether, as recent reports showed it would be much cheaper and better overall.
I know plenty of family members in the US who have waited months for health care procedures. Being poor or rural brings rationing, waiting lists, supply shortages and all the kinds of things you don't want when dealing with people's lives.
People shouldn't confuse single-payer with socialism. In many single-payer systems, the government will put a limit on what they are willing to pay for various services, but those services are provided by private entities.
To bring us costs to western europe levels you need to have
1. Slash labor compensation
2. Slash medicine prices.
3. Reduce amenities in hospitals
4. Reduce medical student debt.
5. Reduce equipment cost
6. Reduce somewhat the freedom of patients to choose doctors and doctors to choose patients.
7. Outright kill hospital prices.
8. Reduce malpractice insurance. Reduce malpractice compensation.
9. Forbid direct medicine marketing to consumers and doctors.
Any of those is hard on its own. Combined - it is impossible.
First because reducing malpractice is a goal that does not depend on the way a system is funded. We should reduce medical errors full stop.
The two you mentioned give direct costs increase and indirect in the form of defensive medicine. UnNecessary treatments because the doctor is scared of potential lawsuits could event hurt patients since there is no such thing as procedure without risk or complications.
Considering the plague of lawyers with which USA is burdened, there is no reason to believe that reducing malpractice would reduce malpractice compensation or malpractice insurance.
It's only impossible because it's so had to get everybody to agree on a plan. To reduce healthcare costs, the USA really just needs a leader who's good at making deals.
Healthcare costs create huge problems across the economy, increasing the cost of everything from manufacturing to higher education.
Between myself and my employer, it costs about $20,000 to insure my family a year. My employer shares much of the cost breakdown and it's interesting how goes to prescriptions and how much of that goes to specialty drugs to keep a handful of people alive.
$500 million dollar spend on healthcare.
$120 million goes to prescriptions.
$40 million of that went to specialty drugs, representing 1.7% of the prescriptions.
"The average ingredient cost of a single-source brand prescription increased by 14.9% in 2016 to an average $745 per prescription, mainly driven by high-cost specialty drugs. The average ingredient cost of multiple-source brand prescription increased by 49.5% to an average $585 per prescription. The average ingredient cost for a generic prescription decreased by 10.9% to an average cost of $34.04 per prescription. "
Drug prices are high in the US but drug spending overall is nothing compared to overall healthcare costs. With a handful of exceptions, even the most expensive drugs cost 10k a year.
In contrast a few weeks in the ICU can easily top 100k. A visit to the ER is usually 1500 just to walk in the door. Healthcare costs are largely a result too many middle men and overhead from extremely high healthcare provider salary.
> overhead from extremely high healthcare provider salary.
may be there isn't any competition (which could be because it's quite hard to establish a new healthcare clinic/hospital)? Also, are there limited supplies of health care professionals that cause their salaries to grow to such a high number?
Yes, right, problem is abnormal cost of healthcare in US, that should be fixed first. But when only thing you do about this is letting wild free market put price tags as they want and let poor people be hopeless under costs, that is 'unhealthy' for the society.
> Between myself and my employer, it costs about $20,000 to insure my family a year.
Wow, that's an awful lot. What's the level of service like? For comparison when I lived in Switzerland my family, ie my wife and 2 kids, were about 750 CHF a month. All paid from my pocket.
The level of care was stunning though. That 750 was for single room care, and we had two babies by caesarean. Also the times I was in the emergency room there were zero other people in line. Almost wondered whether it was actually an emergency room.
You can get less comfy care, I think at about 500 per month, sharing a bedroom with one other patient.
By contrast the NHS in the UK is pretty stretched when you go there, but paid via taxes.
You know, I don't recall there being a deductible. Maybe there was, but most of the 7K or so expenses from the C-sections were paid by the insurance. Perhaps it was a few hundred, which I tended to hit regardless due to having various minor creme/inhaler/doctor appointment needs.
The system was that you'd pay for little things yourself, like asthma inhalers, and then send in a form to your insurer. So the deductible would have come out of the summary you got each month.
The middleman role of insurance companies in American healthcare seems completely useless. They're not serving patients, doctors nor the national economy by siphoning off enormous profits from the 17% of GDP that gets spent on healthcare.
Getting rid of them would be extremely hard, of course, given how well entrenched they are thanks to lobbying and regulatory capture.
Insurance companies are a massive-scale version of the car dealerships that have managed to keep Tesla out of many US states by taking advantage of local legislation -- nobody would want to deal with a car salesman or an insurance company given the choice.
You have to be determined, not just determined, but Ralph Nader determined. If you are Ralph Nader determined, then in America there is no company or lobby that can stop you. That's in fact one of the best things about America, out of everything else. That activism can't be stopped. That free speech is for the most part respected. And if you are determined to get some truth heard, you will eventually succeed if you try hard enough.
Some people (not me) would argue that their existence and competition create better choices for consumers.
For example, in theory, a single-payer system could have a single price (via taxes) and a single level of coverage. By contrast, private insurance companies are able to offer many different products depending on someone's tolerance for risk.
I don't think the private, market-driven system for health care is better in that regard, but some people do.
1. You can have single payer with the option for private insurance. Many countries do that. From what I can gather, here (Norway) one can get quicker service with the private doctors. The national health plan still pays the private doctors the national rate, and you pay the difference.
Ironically, this happens in the US despite the private insurance system. It's the worst of both worlds.
If you want to be seen quickly and you're not literally dying, you have to go to an urgent care clinic and pay a much higher fee.
And even that is only available for very minor, primary-care issues. I recently took my girlfriend to the emergency room for a very serious illness, and we ended up being there for 12 hours. About 1 hour of that time involved actual treatment or seeing a doctor -- the other 11 hours were just waiting. The bill was $20,000.
Urgent care is useless if you do not have the money to pay for it when you need it, even though insurers provide monetary incentives to go there (my insurance plans generally had a copay of $50-$75 for urgent care, but $100-$150 for the ER). You can still wait hours at these places, just like at the ER. And honestly, in such cases the care is likely similar.
You also have absolutely no coverage if you don't have private insurance or are poor enough/old enough for the government-run systems.
This system is more akin to visiting a doctor that charges more than the insurance's "customary charges" and expects you to pay the difference. You like the doctor, though, so you happily pay while the insurance still pays the portion they find to be a fair price.
It is more akin to finding out the specialists in your networks have a 6 month waiting list, but one outside the network only has a 3 month waiting list. The insurance pays a lower amount and you choose to pay the rest out of pocket for a shorter waiting time. The same thing for surgeries that aren't absolute emergencies (I do hear horror stories, but I heard horror stories in the states as well).
Above all, you are unlikely to wind up with such a bill afterwards.
The UK as well. Here there are fully comprehensive private healthcare plans that basically acts as "top up" over the public healthcare: You go to a NHS doctor first, and if they need to refer you for anything, you ask them to refer you privately.
So you pretty much pay to queue jump and get higher quality hospital rooms.
I think most people are fine getting rid of middlemen, but there is a deep divide over who should actually be paying the bills.
Personally, I think health insurance should be, you know, insurance. For catastrophic things you wouldn't wish on yourself and cannot save for. And there's a definite role for government to make sure that market is solvent and available to everyone.
For day-to-day healthcare, that should just be included in "cost of living" calculations. General-purpose welfare programs (or ideally a minimum income) would guarantee that people could afford checkups, birth control, etc.
Getting employers out of the business of all of the above is paramount and what businesses should be lobbying for. I believe the slow recovery from the recession has been affected by unintended (though not unpredicted) consequences of the ACA's failure to address this issue. The Republicans likewise seem happy to punt on the issue. It's this sort of thinking that is making the American electorate disgruntled with politicians and each other.
> Getting employers out of the business of all of the above is paramount and what businesses should be lobbying for.
Amen. I never quite understood what benefit (pardon the pun) it served, although I've got some idea of the origins of employer-provided health insurance.
The cynical part of me believes it's definitely a way for larger companies to hold more control over their employees, and they may lobby for this because it provides an extra advantage over smaller competitors.
I've known plenty of really sharp/talented folks whose talents may better serve the economy by taking those skills to other companies (sometimes in other parts of the country). "But I'll lose my health insurance" is almost always a primary reason why people've stayed in their job (however crappy it might be otherwise re: pay, commute, colleagues, boss, industry, etc). This seems like it's been a real drag on labor mobility for some time now.
I would have thought 'conservatives' would be all over a 'free market' where people make their own choices with their own money. They'll happily deride a "nanny-state" as fostering people who just want the govt to provide them with everything, but ... expecting people to need employers to provide access to basic services? Apparently there's no problem there whatsoever, and it doesn't even seem contradictory to many I talk to.
Any regulation provides regulatory capture benefits to big players over small players, regardless of what the regulation is.
I'm not sure big business lobbyists were campaigning to stay in the health insurance business, but they weren't exactly campaigning to get out when all the players were at the trough back when the ACA passed.
Hopefully this is a start of a trend. Leaders like Buffet saying the baby tiger of "employer provided health insurance" has grown up to a maneater might help change some minds.
Employer-sponsored healthcare in the U.S. is an accident of history.
How we got to now:
1. Roosevelt chose to forego nationalizing healthcare when he introduced social security in the 30's, fearing it would doom both to failure.
2. The U.S. feared debilitating inflation during WWII. The legislature passed a bill to limit employers' ability to raise wages for workers who were battling for employees in a scarce labor pool.
3. Unintended consequences ensued. To attract workers, employers began to offer non-salary perks: employer-sponsored healthcare was one.
4. The economic and labor boom post-WWII entrenched employer-sponsored healthcare and has led us to where we are today.
The second half of _The Social Transformation of American Medicine_, by Paul Starr, covers a lot of the history of American healthcare in the WW1-to-1980 period. (There's an epub at mobilism.)
"For day-to-day healthcare, that should just be included in "cost of living" calculations. General-purpose welfare programs (or ideally a minimum income) would guarantee that people could afford checkups, birth control, etc."
That sounds reasonable, but is it efficient?
1. It discourages "routine maintenance" -- it's a lot cheaper to go to the dentist annually than to get a root canal every ten, yet there are many who if they only had catastrophic dental insurance would skip the annual.
2. This "cost of living" varies drastically based on age, sex, pre-existing conditions, et cetera. So it couldn't be covered fairly by a single fixed UBI. So you'd need bureaucracy to determine who is eligible for extra coverage
3. Every small doctor's office would need a billing department. In socialized healthcare countries, "billing" is not much more work than filling in a time sheet, and is often done by the doctor themselves.
It's cheaper, more efficient and more fair to cover day-to-day healthcare for everybody than to just cover only catastrophic care.
Except for the quoted paragraph, I agree completely with the parent and grandparent comments which make effective arguments that middleman insurance companies should be cut out. Should have made that clear, I guess.
Sure, we Chinese basically cover most of our medical bills, and rely on insurance for treatments of more vital diseases. Actually, people go to hospital more, because cold or other smallish issues cost no more than a good meal.
Clinics do fine. They charge more, and they have the hospitals as a reference for their prices, providing better service for a premium.
This creates a big problem though... the hospitals are incentivized to prescribe antibiotics when they are not needed (which they can charge for, the "doctor visit fee" is not remotely enough to cover the hospitals costs) leading to rampant over-prescription of antibiotics (leading to antibiotic-resistant bacteria).
> "1. It discourages "routine maintenance" -- it's a lot cheaper to go to the dentist annually than to get a root canal every ten, yet there are many who if they only had catastrophic dental insurance would skip the annual."
It's not quite fair to say that it discourages, when really it just doesn't encourage routine maintenance.
To that end, it would be interesting if there was a component that encourages routine maintenance. Every undocumented annual checkup results in <some percentage> of the claim being the claimant's financial responsibility.
Similar, I suppose, to an automobile warranty where a lack of documented regular maintenance can be grounds for voiding some portion or all of the warranty. The healthcare parallel being less extreme.
This is one of those citation needed moments. IIRC insurance companies paid 90% of their income as "medical loss ratio". Even if you made them NPO - the cost will drop some percent. US needs healthcare costs to drop times.
The Atlantic pointed out a few years ago that removing all the profit from health insurance companies would not make a significant dent in health care costs.
Combine it with allowing patients to buy their medicine from any country, tame the AMA, tame the FDA, allow non-profit insurance companies the freedom to sell insurance across state lines, sell more medications OTC, make becoming a General Practitioner easier (just the Family doctor, not specialists.), and then maybe tort reform for all health professionals? Oh, yea--allow certain patients the authority to refill their own prescriptions if they are on a maintenance drug (yes they would have to have a blood test,etc., but they days of doctors holding patients hostage would be over?
I'm sure the average Doctor could add a lot to the list. Maybe they don't want much to change, with the exception of making their club smaller, or just the changes that increase their wealth? Yea--my view of them has changed. I don't look at them as The Golden Boys anymore. I just look at most of them as greedy little business entities. Maybe they always were?
Well if we stop calling products insurance that are not insurance it might be a step in the right direction. I think catastrophic medical insurance should exist and that earns the name "insurance". What most people perceive as insurance is really a service plan. You pay a fee to have services selected on the plan to be available when you want them and you get provided with a list of those who can deliver.
Still the real bogeyman is just like income taxes most people don't see the cost first hand or don't associate it with their income. They see the final check value and somehow disconnect the costs.
The step is getting name insurance off of products that are not insurance
The costs of the services in the bronze ACA plans isn't that high. They basically are catastrophic plans. The premiums and deductibles are expensive because medical care is expensive and a real medical catastrophe can have obscene costs.
Cheaper coverage can pretty much only be obtained by excluding people or limiting the benefit.
Which goes against all the evidence - every other first world country with universal coverage that also provides all the same medical services the US does, while paying a third as much per person.
The US pays more for a lot of reasons. It isn't a one trick pony:
* Americans are much, much more unhealthy than Europeans on average. Way more obesity, way more smoking and drinking for addiction rather than socialiation.
* The insurance apparatus imposes a ~20% overhead outright on expenses, and puts further money on top by moving costs out of the consumers hands. They control what doctors you see and what procedures and drugs you get, and often do so in ways that are locally beneficial to the insurer but are more inefficient than a universal system.
* Hospitals and doctors, by being decoupled from patient expenses by the insurers, run rampant on spending and salary and hospital administration gets as crooked as insurance bureaucracy. Your healthcare dollar quickly ends up going 60% to bureaucrats and institutionalized middle-men expenses and only 40% to actual care.
Solving #1 is something that has to be done over time, and the only way to do that is to have a healthcare system, any system, that stops disincentivizing people from seeing doctors except for during crisis. The ACA did very little to fix this (it basically only mandated that some routine preventative care came at no cost to patients) and until you can get the general unhealthiness of Americans under control you can't get costs under control regardless of healthcare system.
The other two, though? Single payer solves them either immediately or with the market pressure of the entire US populations healthcare needs. Every other developed country that adopted single payer was able to use its influence to get hospitals and private insurance in line. That is why the UK now has one of the best systems in the world.
The ACA did very little to fix this (it basically only mandated that some routine preventative care came at no cost to patients)
This is what I meant by services (and also things like birth control and so on that are mandated in the plans but "part of life" rather than related to a change in health or injury).
edit: and I think you were responding in part because the services are more expensive than they need to be. My meaning was that they don't drive up the premiums of the insurance all that much (and with the large deductibles, in many cases the annual premiums together are not the largest component of the patient's contribution towards a large medical expense).
Anecdotally in my case that is not true - this may be due to your age that you didn't see the difference, I was I think 47 when this switch happened. I had catastrophic health insurance for $135 per month in California pre - Obamacare with no prescriptions or treatment for pre existing conditions/maintenance of health. The minimum insurance on the CA marketplace was 350 per month for me then, now it's 440 a month.
Yes IIRC it did. Forgot to mention California's market place eliminated catastrophic insurance plans so residents of California kind of got burned by the promise of keeping one's current plan.
This may be a misconception. In other countries there are also insurance companies at work making good money managing premiums and payments. And yes, they are not liked there ether particularly when they find excuses not to pay. The US problems however run deeper.
One of the biggest US health insurer is UnitedHealth Group. In their last financial quarter report they published:
Revenues $48.7 billion
Earnings From Operations $3.4 billion
Net Margin 4.5%
These type of good and enviable stable profits are not enough to explain the inefficiencies in the US. Insurance may be lobbying but that is dwarfed e.g. by the marketing expenditure of the pharmaceutical industry (same level as their R&D). Yes health insurance is living well on the inefficiencies and their (in part unnecessary) middle man role but there are way bigger money leaks.
That is showing only official profits. There is so much else being siphoned off within the insurance companies as inefficiencies. I agree there are efficiencies external to the insurance companies though, but I am not sure how incentivized these companies are to minimize costs.
It's irrelevant how much they spend on premiums, because they are the ones who set prices of procedures and drugs. There is no one to step in and introduce hard price controls, because it doesn't benefit anyone on the gravy train, just the consumer.
Imagine if there existed a company whose only job was to buy oil from OPEC and deliver it somewhere else. They could say "we spend 99% of our revenue on oil! look at how efficient we are!", ignoring the fact that OPEC is a cartel that sets prices, so not only can they be vastly overpaying, but the amount of oil purchased can be wildly inadequate to cover the needs.
It's a little relevant, they aren't capturing any more than the 17% of the premiums (and they aren't capturing all of it as profit, they do provide some necessary administration).
Yes, but if they are capturing 4% as profit on 17% of the premium, they have a perverse incentive to keep costs high, which is directly opposed to their customer's interests.
Sure. I was just pointing out that we have pretty clear information about the amount of money that ends up inside the insurance company and how much gets passed on to providers.
In a functioning market they would face competition for customers and try to lower premiums (and so try to lower costs). In our system they seem to look at provider prices in a region and decide if they can profit there or not (and in the case of non profits, if they can operate without losing money).
One of the provisions of Obamacare was a cap on the administrative costs of insurance companies at 20% of premiums, with any excess returned to the purchaser as a rebate. The first year it was in effect more than a billion dollars was returned. The deadweight cost of the private insurance industry over the years is pretty staggering.
In contrast, the Medicare program spends less than 2% of its budget on administrative costs.
>The middleman role of insurance companies in American healthcare seems completely useless. They're not serving patients, doctors ...
I think you're being too generous here. Insurance providers are not only useless, but of negative value to patients and physicians alike. They add yet another bureaucratic layer atop the healthcare system as a whole, and inundate physicians with red tape that interferes with care.
In my experience, insurance companies will actively go out of their way to fuck over patients on technicalities—even in life threatening situations—just to try and save a dime. The sheer indifference to humanity can be breathtaking at times.
"Getting rid of them would be extremely hard, of course, given how well entrenched they are thanks to lobbying and regulatory capture."
I always go back to when the Affordable Care Act was passed. At the time the amount of money being spent and the future money promised was enough for the federal government to buy every public health insurance company on the open market. If that decision had been made the argument for going to single payer, universal healthcare would have been over.
Yes, it would have been a rough transition, but at the time elapsed between now and then would have moved the USA into the rest of the world when it comes to healthcare.
> The middleman role of insurance companies in American healthcare seems completely useless.
It depends on where you are. There are areas of the country where insurance companies are fighting a cost war on behalf of patients against increasingly conglomerated and monopolistic hospitals.
This American Life had a great episode on this a while back. I went in thinking, "This problem's simple, it's all the fault of x." (For a few values of x.)
I left the episode thinking, "Wow, who knew health care could be so complicated?"
I have moved towards a Marxist philosophy on healthcare. Well, Groucho Marxist: I no longer trust any solutions to healthcare that non-experts like me could understand.
There are areas of the country where insurance companies are fighting a cost war on behalf of patients against increasingly conglomerated and monopolistic hospitals.
This seems like an unnecessary war. Are patients really being helped by a structure where multiple corporate entities -- the hospital and the insurance companies -- are battling each other to extract the maximum value from both the patient and the government actor paying for some part of the care?
If the hospital were not a regular for-profit corporation, they wouldn't turn into a monopolistic conglomerate... But of course it's practically impossible to undo these corporate structures and replace them with something with a whiff of socialism. It might even mean a pay cut for doctors, and then you'd have to restructure their education costs too... It's a very deep problem.
Especially insofar as it's a war, yes. In general, I like two strongly motivated and opposing advisors on my healthcare decisions, one advocating for the best possible care, and one team of actuaries arguing about what's least likely to be a waste of money.[0]
Anyway, that's just the ideal case where insurance and hospitals oppose each other, possibly motivated by financial incentives, and I benefit. Admittedly, things usually aren't ideal.
You might be able to restructure things where hospital incentives are tied to outcomes. Making them responsible for hospital-acquired infections was a step towards that.
But it's hard to pin them to long term outcomes, and weight that towards cost of procedures, which is apparently what we really care about judging by the outcomes / cost headlines.
You could assign people to a specific hospital for long periods of time to track long term health outcomes, make them responsible for your health full stop. But occasionally some hospitals face systemic challenges and become institutional failures over time.[1] It'd be horrible to chain people to a failing institution, especially the sole institution responsible for their health.
> It's a very deep problem.
Agreed 100%.
--
[0] Even if I'm not paying full costs directly, I don't want society to simply waste money on me. I've heard of plans that give you a weekly back massage from a chiropractor at a $10 copay. I'd feel terrible doing that, like I was stealing money from babies with cancer.
Could some kind of distributed option-contracts (like insurance) be developed using Ethereum or other smart-contract blockchain.
Imagine if people with Ether (or other blockchain currency) could "reserve" ethers to serve as insurance spending for other people that buys the insurance contracts... something like crowdsourcing of insurance.
Health care costs would be lower, if more people were able to provide health care service. If the world focused less on rate my sandwich apps, and more on fixing humans, the prices would be much more affordable.
Americans unable to afford healthcare are just waiting in line to become bankrupt.
A study done at Harvard University indicates that this [medical costs] is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies.
In the US the health care cost since 95 went from 13.1 to 17.1 while in Germany they went from 9.4. to 11.3. It is actually way worse than the article tells if one considers the age structure of the two countries where Germany has 21.7% over 65 vs. the US with 15.25%.
The non tangible cost are also non negligible. There is friction in the job market as changing job risks incurring a potentially catastrophic coverage gap. There are bizarre industries focused on renegotiating issued medical bills, collecting those or managing the health related bankruptcies.
Pricing of pharmaceutical usually generally defies the laws of gravity as the incentives of regulators, suppliers, distributors, doctors and insurers have been distorted beyond anything resembling a fair playing field. In such an environment playing games is superior than providing value and adhering to generally accepted rules. When it comes to pricing the costs of providing the service is often the least important input.
Steve Balmer recently: “If you look at these tax deductions for employer-provided health [...], they’re really subsidies to the affluent, which I guess I hadn’t thought about them.”
The biggest problem society faces at the moment is the vanishing middle class and lower qualified jobs that are still providing enough to subside. For the latter the cost of food, shelter, fuel and health are key. Lower the cost of living and there will be more jobs that are worth taking.
Yes, remove the tax deductions for employer-provided health care is good start. Employers should not decide what kind of health care you have access to, as little as for food.
That was one thing McCain had right in 2008. Removing employer health insurance would also remove a lot of political controversy like whether contraception should be offered. It's simply should not be the employer's business.
Amazon could disrupt providing Health Care services in the US. Current price overhead versus over developed countries is huge, so an efficient provider could shock the whole HC market.
Looking from the outside, it seems to me that the root of the problem is not about the health care in US, but about the prices of health related services and products? Prices are so inflated, hospital and medication bills are huge compared to what the same things costs in Europe or elsewhere.
It argues that the high cost of health care in the United States is explained by its extreme wealth and that health care is a superior good (https://en.wikipedia.org/wiki/Superior_good).
This is a much different explanation than what is given by either political party.
Anyone have any points in support of or against this argument?
Health care costs have an incentive and price transparency problem. If hospitals had to post their prices on the internet and people had an incentive to save money, the costs would go way down. There may be some truth to the argument, but the author ignores the ability of a market to drive down prices and improve products. As it stands, we have a market, but the lack of price transparency causes significant inefficiencies. The government should tweak the current system to require open data standards. This would allow a value-for-money comparison when people choose physicians/treatment and increase the efficiency of the system.
There are no sane constraints on the prices. Instead of "price is what the market will bear," it's "the market will bear whatever price." This creates an irrational drain on the rest of the system. Whoever is sucking on that drain is doing well, though.
My grandfather used to get a shot that was $12,000 a pop, and didn't do anything.
The pharma industry should open up; it is dominated by corporatism and their monopoly patents driving up prices, which make individual spending on drugs rise till an unaffordable level for the lower income.
I really think health care costs in the US are a byproduct of Americans obsession with convenience. Most lifestyles can be lived without any physical activity - the whole country is designed around the car.
Traveling around a bit I've seen other cultures still require people to walk somewhat to get places and people will also just go on "walks" whereas Americans will go for a "drive"
Food culture is also responsible, just jamming food into your face as quickly as possible rather than enjoying a meal is for sure and American thing.
Add all this up and you get 60% obesity rates in adults and getting worse.
There are many, many problems with healthcare in the US. Off the top of my head, the big ones are:
* Endless number of middlemen and administrators.
* Every player in the healthcare chain benefits from higher prices.
* No price transparency.
* Tacit collusion is rampant.
* "Cost no object" mentality to treating the dying.
The last one, while insensitive, is true nonetheless, and it's alarming that over 50% of all healthcare spending takes place in the last two years of a person's life. We have basically decided that it's okay to spend literally any sum of money on a dying person in order to prolong life by an average of a few months. And the problematic word there is average, because some people do live a lot longer, and that's what we all look to. I realize this is grim and seemingly lacks humanity, but unfortunately that doesn't make it not true. Charlie Munger, who is on the board of Kaiser Permanente, said this same thing yesterday..."over-treatment of the dying" was the biggest problem they faced.
It's reminiscent of our approach to college education - justified at any cost. So we push millions of kids into a schooling system that's not right for them, and the result is a lot of crappy education, worthless degrees, student loans, etc. Once we flip the switch to "there is no price you can put on _____" things get sideways FAST.
Well, the argument here is that for example, there are types of cancer which have extremely low survivalability rate, like 1 out 10 people who get it survive it. But we still treat them, and sure, right now 90% of them die but the data is used to create new drugs which in the future might improve the odds. If we just straight up said "it's very unlikely this person will survive so we won't spend $$$ on trying treatment" then we wouldn't get anywhere with many different medicines.
Keeping people alive too long is definitely a really difficult problem. Having walked through many dementia floors in nursing homes, I'd prefer to have some reasonable way of opting for assisted suicide in my will. Maybe once a consortium of doctors verifies I'm at a specified stage of dementia. Assisted suicide is another tricky area but I think it is humane when administered properly.
Alternatively, we could consider a more strict "No heroic efforts" for people with dementia -- which means not spending tens to hundreds of thousands on resuscitation or surgical procedures for people with dementia if they are not in pain from their current ailment. Its obviously nuanced, but there is a hugely significant amount of savings to be made if we can get over the political obstacles.
Physical rehab has some of the highest Medicaid/care reimbursement rates and you should see how many dementia patients are getting pointless "rehab" to the maximum a facility can bill.
It's getting more common to get a DNR/DNI (Do Not Resuscitate / Do Not Intubate ) put into a "living will" that goes to into effect if you are in a situation where you will no longer be mentally cognitive.
Besides being illogical (i.e. it's bad to eliminate waste), this exemplifies the problem with change. Any time there is a ANY constituency that is rendered worse off, no matter how justified it is, it is nearly impossible to effectuate change because the affected group screams bloody murder.
But, wouldn't you? More importantly, shouldn't you? If the people in your government are doing something that is not in your best interest then you SHOULD speak up against it. After all, the word "representative" is based on the word "represent". If they are not representing my interests to the government then I should make that known.
If I have ailment X and a bill is being pushed that pulls funding/ assistance away from ailment X, then I should make it known that I am unhappy about it. What if it is now guaranteed that I will die from ailment X? You're saying that I shouldn't kick and yell about it? I'm about to die!
However, if it is also helps people with ailment Y, Z, I, J, K, and L, then it is the government's job to recognize that maybe I am less important to the bigger picture. If enough people will be negatively impacted to the point that I will not be reelected, then maybe it doesn't truly benefit my constituency as much as I think it will.
Of course all of this is in an ideal world without accounting for the power of advertisement funding and the fact that most of the voting population isn't well educated about the issues.
A great deal of jobs in US defense are completely bureaucracy and make-work programs in disguise while the political discourse makes it sound like our soldiers are so underfunded they're marching into battle with muskets and bayonets.
A ton of people in government related jobs only have equivalent roles in jobs at equally large and capital inefficient bureaucracies.
That doesn't solve the problem of the growing politicization of healthcare, especially given new life extending tech and augmentation, and it may make it worse in some ways: Year 2090 and an elderly bureaucrat can afford to be more productive than a sick impoverished child, who gets the funding?
Individuals can then purchase separate private insurance for optional health procedures and for faster elective care.
Australia's healthcare system works on a similar model. Everyone gets basic free cover, but waiting lists for elective surgery can range from weeks to months.
If you optionally pay for private health insurance then you can get better, faster treatment, including for elective surgeries.
In your hypothetical 2090, the sick impoverished child gets their basic needs taken care of by the basic cover, and the elderly bureaucrat gets his life extending tech and augmentation paid for by the private insurance he's been paying in to his entire working life.
Once the sick, impoverished child recovers, they can return to school, graduate, get a good job and pay in to private insurance so that by the time they are elderly they can also afford life extending tech and augmentation.
Don't ignore the elephant in the room. There is a good reason the USA spends the most on medical and has less than stellar results. That is without glancing at the corporate tax evasion.
Unfettered profit at all costs capitalism isn't a glowing unicorn.
To your first points, the system exists as it does because each party can sort of displace the onus of overspending on another party.
1. Insurers are incentivized to seek out the minimum cost to achieve maintainable health.
2. Health care providers are incentived to reap as much as possible from insurers in return for acceptable (not always exemplary) health outcomes.
3. Patients, who on average are getting older and in need of more care, are pigeonholed (sometimes good, sometimes bad) into health care decisions by their providers and insurers.
4. Device/equipment manufacturers can charge ludicrous amounts because they capture very specific pieces of markets or gain preference from health care providers. However, the risk and cost involved in creating a new/competing product and entering a market can be staggering, and so high costs become inevitable (same argument drug developers can make).
As you said, 'justified at any cost' makes this whole shebang go, especially when no single party is capable of controlling the cost. We can't point to a boogeyman we all have a part in making.
As per 1- insurance companies justify their earnings as a percent of costs for care- so if they keep costs for care high, it actually helps them charge higher premiums. Of course, they have to ensure that costs are high for everyone.
If an insurance company were to announce record profits because they were able to better control costs than their competitors, there would be immediate pressure to lower premiums and not take the additional profits.
When it comes to health care, the idea that we have anything resembling a free-market and private competition to lower prices is a farce on a grand scale.
The law actually caps their profit margin[1] so it effectively forces the insurance to pay and charge more if it wants to increase its income. Ironically, this law is called "Affordable Care Act".
This would be more true if hospitals weren't allowed to bill patients for services that insurance refuses to cover.
But hospitals force patients to agree to be responsible for all bills their insurance doesn't cover.
So there are two large institutions, neither of which is entirely aligned with the interests of the individual dealing with them. Of course hospitals aren't trying to kill people, but good luck figuring out if the care they bill for is really necessary or not.
This has been a huge issue for me lately. Several times in the last year my family has been in the position of trying to decide whether to have a procedure done, and literally nobody can tell us how much it costs. Not the providers, not the insurance companies, not the hospital. "Probably less than $50k" is not a helpful answer. The best answers we were able to find came from other people who had already had similar procedures done at the same hospital, by the same providers. But even so, one quirk in the procedure, one extra diagnostic, one extra drug, can cost thousands of dollars. Once you've signed up for the procedure, it's very hard to say no to the extras. You might not even know they've been ordered until it's too late.
That phenomenon isn't unique to medical procedures. The answer to the question "how much is this lawsuit/software project/renovation going to cost?" is almost never going to be a definite number. (It's no surprise that people complain about bills in all these areas. But it's not your contractor's fault that your subfloor rotted and his $X quote for re-tiling now needs to include $Y for replacing the subfloor.)
But the contractor will at least give you an estimate and say, "this job will cost $2200 unless your subfloor is rotted out." And they can at least give you a verbal estimate of how much more it would cost if the subfloor is rotten. In the last year, I've dealt with this exact situation --- linoleum replacement with rotted subfloor. I'll take contractors over the medical industry any day for pricing transparency.
While discussion of death is a bit morbid, some towns in the US have experimented with death planning, led by care providers and counselors at local hospitals. It has led to significant savings without resorting to "death panels".
Here are two that I often see left out of the discussion:
1) Unfathomable amounts of money lavished on superficial appearances. From hospitals to private practices and surgery centers, everyone has to look trustworthy, exude that 'aura' of professional health care, with expensive landscaping, chic interior design with opulent materials, and of course enormous 4K television sets so that pharmaceutical manufacturers can push pills on the patients as they sit in the waiting room. Untold amounts of money are wasted on these non-essentials, which have literally nothing to do with the quality of the service provided, but which we all must pay for.
2) The epidemic of lifestyle diseases such as obesity, acquired diabetes, etc. Many of the nations where single payer is touted to work so effectively do not suffer from this issue (see Japan). The causes of this issue aside, at the end of the day, an undue burden is placed on the system generally, and as we have come to find out with ACA, young people making healthy choices rightly feel punished as their premiums climb and climb to cover the costs of treating completely avoidable conditions. We have to come together as a society and fix these problems at their root before they become the subject of medical treatments.
That statistic about the percentage of spending being in the last 2 years of life may be a bit misleading, just like keys are always in the last place you look. Once someone dies, most healthcare spending on them stops. Auto accident that's fatal after surgeries and a few days? In that window. The same applies to plenty of things that may have excellent recovery chances but which are not 100%.
Edit:
ObXKCD: https://www.xkcd.com/931/ (Lanes)
Every one of those lanes going off to the right is the end of healthcare spending for someone, but you can't know going in which ones are going to turn off. Focusing on the "50% in the last 2 years" number is a lot like the the naive visualization at the top.
your point is well taken, but I feel like there is still a subset of "excessive spending at end of life" that we can discuss as being more obviously problematic, from a social spending point of view.
excluding trauma care for accident victims (that end up dying anyway), and excluding cases of early-in-life cancer, and excluding every other case we can think of where a spike of medical spending shortly before the person dies anyway is understandable as part of a good faith effort that had a reasonable chance of prolonging their life for many years, after all those exclusions are made we will still find many instances of cases where the end-of-life medical spending seems excessive.
The canonical example I can think of would be organ transplants for very elderly people. A new kidney for a 75 year old person in advanced renal failure is unlikely to prolong their life by very much.
This kind of stuff gets very emotional and very political though. This is what provoked the demagoguery about "death panels" when Obamacare was being debated in congress in 2009. We are both very uncomfortable allowing the government to make those decisions and also very uncomfortable allowing private insurers to make those decisions. We want to empower families to make those decisions and so remove cost from their consideration (via regulation, requiring insurers to pay) and then we become surprised when people who haven't made their peace with death are willing to spend any amount of money (which is a hidden cost from their point of view) to prolong end-of-life. It shouldn't be surprising. We set up a perverse incentive structure and locked it in place with regulations.
Freakonmics has an interesting episode where they cover the idea of offering a patient a bonus/rebate if they forego the standard end-of-life medical care. Quite a controversial suggestion but it does seem to have some though behind it
Saving peoples lives isn't a unique practice in the US. Doctors in the developed world are all bound by the Hippocratic Oath, and I'm not aware of any first world country that regularly judges the sick or old to die when doctors still have options available. They still pay a third as much in healthcare.
A lot of those countries have physician assisted suicide though, which greatly improves the humanity of late term care. That is an easy and obvious piece of the solution the US should have been able to get behind a long time ago.
> The United States has authorized medical aid in dying in six states, which refers to a terminally ill person with 6 months or less to live taking a medication prescribed by a doctor
Here in the UK, when the NHS decides whether a treatment is covered they take the cost and divide it by the estimated quality-adjusted life years it will give the patients who have it. If it costs more than £20,000-£30,000 per QALY they won't offer it. That's simply the value of a year of human life according to the NHS.
Strongly recommend the work on Random Critical Analysis linked to by SSC there.
Approx. zero people reading this will believe the conclusion, but RCA argues that the US is not really an outlier on healthcare costs.
There's a dizzying amount of data and statistics levied for the argument. It's a fascinating read even if you don't agree just because of how much is put into the argument.
This blogger indeed uses a dizzying amount of graphs, but doesn't mention until the end that he has built his entire argument on the assumption that Americans "choose" to spend their higher income on health care.
That was mentioned at the very start of the 2nd link (see "superior good") and it's true virtually everywhere in the long run (especially in developed countries with reasonably reliable growth in disposable incomes and where we have pretty reliable data). If we want to identify systems that might allow us to contain costs on the margins knowing who spends least or the most is not informative in and of itself. Rather we should be interested in residuals with the best model, as in, who is furthest below trend (as a function of comprehensive consumption or disposable income), what plausibly explains this, and whether are we actually willing and able to implement those sorts of features in our system....
It's his interpretation that people "chose" to spend more money as they got richer. Many other people interpret it differently, when the alternative to paying might be death.
Right, it's just a coincidence that disposable income correlates nearly perfectly with health expenditures at a national level in the long run (and quite well at a subnational level) and that when disposable income falls NHE tracks it and so on and so forth.
Perhaps that indicates how effective the healthcare industry in the US is at maximizing their revenue. If the choice is paying or dying, people will pay an unlimited amount.
And the better data on price suggests US actually isn't unusually expensive for a high income country and so on and so forth. Much data points to higher volumes of health goods and services as we chase diminishing returns as a society.
I meant my comment about unlimited spending as an philosphical argument, not as a literal data point.
And yes, the biggest problem in the US is unneccessary tests, procedures, drug consumption, etc., and the cause of that problem is a system which is built around maximizing revenue instead of maximizing public health.
But if you look carefully you will find most of this behavior plays out similarly in those few countries with somewhat more comparable wealth (e.g., Norway). The issues that many people think of as being particularly "American" problems are problems that mostly have to do with our high material living conditions (as in, diminishing marginal utility attached to other forms of consumption and increasingly high values attached to human life). Overall health expenditures are increasing equally rapidly in these countries as a function of AIC, disposable income, etc and there is no evidence they are getting any more value for their money (having a healthier populations helps naive comparisons of life expectancy, IMR, etc a ton).
Here are some papers that touch on some of these more fundamental theoretical issues:
The real problem with health care is that it's a gravy train for all involved. Doctors, who don't invent anything new and who just practice garden-variety medicine are wildly overpaid. They don't like it be known, but the average doctor earns a quarter-million a year. Totally unjustified.
Then there are the medical device manufacturers, big Pharma and the hospitals. They all are getting rich off the current system. That's what needs to change.
Doctors are so highly paid as a function of their scarcity, which is itself a function of the high barriers to entry (intense schooling, selective admissions, high costs). I think the first 2 barriers are necessary to keep quality high, but doing something about the 3rd could help lower costs by increasing the supply of doctors, and I certainly think that's a better solution than being mad at the doctors for accepting a high salary that's offered to them.
Schooling costs are high because of the length of the program - four years of pre-med, four years of med school. Compare in the UK - five years instead of eight, taking 2 years of pre-clinical courses and 3 years of clinical courses, subsidised to a good extent by the state. UK doctors seem equally skilled, and have minimal student debt.
Scarcity being a function of selective admissions is a tautology. To be useful, selectivity would need to be to some objective minimum standard, rather than enforcing an ever-changing standard that enforces the restriction of the profession to an arbitrary small number of entrants.
I believe that the big pharma and the insurance companies are certainly part of the problem, but rarely do we mention doctors as a contributing factor (albeit relatively small) to the high cost.
The American Medical Association (AMA) does its duty to restrict the supply of doctors [1]. Countries like India, which produces plenty of high quality doctors, does not require aspiring doctors to go through an additional (unnecessary) 4 years of undergrad education. That would hugely cut the cost down in training the doctors.
Secondly, doctors on average makes $200K/year [2] or more. I have four housemates, who were trained in Myanmar (went through five years of medical school there right after high school) and scored above 95th percentile or more in all three steps of their USMLEs, to get into the residency programs in the US. One of them is going into general practice (family medicine) in Virginia and her starting salary is: $210K/year. I have no doubt that she (or anyone who has been trained 5 years in a decent med school--without the 4-year undergrad prior to that) is more than capable of treating generic diseases and illnesses. But this shows that we can train doctors cheaper and that we can reduce their pay by quite a bit (no hard-working person in other profession--except maybe Banking--could easily earn $210K/year to do such a relatively uneventful--in my opinion--job).
I regret quitting med school in Myanmar in the third year. Then, I thought med school training involves too much rote learning (a lot of memorization in organic chem for example) and that I'd rather do something more 'exciting' like tech or math. I was wrong.
We probably don't hear about doctors' salaries as part of the problem because they're not a huge problem. A cursory web search indicates theres about a million doctors in the US. If you cut each of their salaries by 100,000 (which probably isn't feasible) then you would save 100 billion.
Sounds like a lot, right? Until you note its just $300 out of $10,000 spent per person each year.
And what's the trade-off? Despite your opinion that it's boring or potentially not very challenging... there are pretty logical reasons why people would still want a relatively disciplined, intelligent and careful person as their doctor. The lengthy and onerous requirements for schooling are filtering for more than just the ability to perform a series of carefully defined procedures.
I’m not American, but I’ve been hearing about your health system for a several years. Ironically, I know more about it than my own country’s (Ireland).
Several years ago, there seemed to be a lot of talk about how much The US spends (private & public) per capita on health. It’s a lot more than everywhere else. This was usually presented in the context of the health care “regime” A UK-esque system, a Swiss-like system, etc.
Lately, that comparison seems to come up less. Obama-care, Trump-care or Bernie-care would mostly deal with who pays & how, not how much.
The “who pays” question is a favourite ideological one so politicians and commentators are comfortable with it. But, I think the “how much” question is probably the more important one, and the harder one to solve. If the US could get costs down to average European rates, then I’m sure a workable system could be found within the confines of most ideological frameworks.
The problem is that getting costs down is almost impossible. Costs are salaries of doctors & nurses, a giant pharmaceutical industry, thousands of radiologists, ultrasound technicians, the machines they use (far more frequently than europeans)…
Getting costs down to EU levels would be mean the medical industry shrinks like manufacturing shrunk two generations ago.
I don’t have a solution to suggest, but I do suggest toning down the ideological discussion. The problem is more of a technical one.
Is it technical? There is a reason the US is unique in the world in both its unsocialized healthcare and in its costs. While socialized medicine now may not reverse the out of control spending, we can observe that the lack of it was the most likely cause. In the semi-private market of American healthcare that has been around since the 70s, the incentives structure has been absurdly broken for so long it should be no surprise you pay more for mediocre results.
At this point though, going with the known working solution sooner rather than later is the technically most plausible way to stop the cost expansion. It is exactly like people debating about national debt - you can't complain or argue about how to pay it off until you stop adding to it every year, often with an increasing deficit (which is how republican administrations for the last 30 years have governed).
It is crazy to argue that in the moment your house is on fire to try this untested strategy of using giant fans to blow the fire out that nobody else has done versus going with the tried and true use a fire truck to extinguish the blaze. Experiment after everything isn't on fire.
The problem isn't necessarily that it's a semi-private market, it's that for the vast majority of people it's tied to their employer.
The only for most Americans to have a choice in their health insurance is when they get to pick between the plans from either husband's or the wife's employers.
The biggest disappointment of the Republican alternative to Obamacare was not coming up with a way to sever that tie.
But tying it to an employer allows for group rate bargaining with the insurance company. I'm no expert in insurance, but I imagine there's very few instances where an individual will be able to negotiate a better rate for comparable coverage than they would get as part of a group.
Sure it cuts down on individual choice, but it should theoretically be the most cost efficient method, both for the employees and the insurance company.
It's inefficient in the first place that groups are limited to employees within a given employer instead of entire insurance customer bases or broad product based policy groups. It is very much not a cost efficiency to introduce employer sub groupings of customers.
Employer-based plans typically have lower premiums because they are, by definition, groups of working-age and (in most cases) working people. They are younger and less sick, so insurance costs are lower. (Dependents are typically more expensive.) This is the reason that companies, once they reach a sufficient size, self-insure, because they are carving out their younger and healthier population from the broader population. Plus, there are savings gained from administrative costs as well.
Selection of plans or providers is not the problem, especially with the current popularity of PPO plans.
I have a really hard time believing that somehow companies self-managing healthcare administration is more efficient than a large group consisting of the entirety of an insurers customers let alone vs. nations with universal healthcare or even ones with single payer private healthcare. And that doesn't even address the many small businesses which need to pay for "individual" plans as if there weren't larger groups with which to distribute the risk.
Even the marketing act of splitting up all these groups up as you describe is a huge waste. Now you have to shop the differences, the companies have to explain the differences, and everyone (insurance co, health provider, patients) gets to track multiple different groups with different rules. It's all a waste compared to fewer larger distributed risk pools - which is the whole point of insurance.
High marginal tax rates incentivizes employers to offer health care benefits instead of salary. This is a main reason why health care has been so closely tied to insurance. Either tax the benefits at the marginal rate, or reduce the marginal rate to liberate health care from employment.
By technical I don't mean unrelated to the question of who pays. It's certainly related. But, I think it's a mistake to spend too much time on the macro-level "medical care as a right" or "free markets."
Most medical markets (including the US') have large free market & "social" elements. I don't think moving one way or another along that axis would move the needle in a predictable way. That would be decided by the more detailed points. That's what I mean by technical
Amen! I tend to be more Libertarian than either of the 2 major parties, but I would gladly pay personally for other people's health care if it was actually being done rationally. But I've had major problems every time I've seen a doctor my entire adult life, all related to the complexity of the billing, and it got to the point where my biggest health risk was the stress of fighting it. Go for an annual physical: $1200 bill for 2 physicals, blood tests I never got the results for, and a test they never performed. Not covered by insurance because the doctor's "wellness check up" wasn't the same as the insurance company's "annual physical". Time to resolve: 8 months. Resolution: I paid because the lawyer was going to be more expensive. That's not a system I'm willing to pay for, and it's got nothing to do with whether it's my social obligation or not.
It wasn't just his doctor it is the whole system which is somewhat unavoidable.
We are lucky to have good health insurance, and a simple ER visit to get stitches or an X-Ray will invoke 5 pieces of mail from 3 different entities. You have to watch out for student Doctors who will send you a bill for being in the room. It's too much to think about when you should be focused on taking care of your health issue.
I'm a medical student, we are assured that the hospital can't bill for us. It would be enlightening to see an itemized bill showing that our presence is actually billed for. I've never heard of it happening so I think proof is warranted.
If I remember correctly, the hospital did not bill for him, he billed us separately, but the Hospital condoned this. I'm sure we agreed to it somewhere in the fine print. I'm not trying to vilify student doctors here, I understand 99% of the time they are not billing. But after this experience, we ask.
Ah gotcha. He wasn't a medical student then, most likely a resident. Residents are doctors though, if they perform a service such as anesthesia or other procedure they will likely bill.
For example, an Anesthesia resident will perform all of the procedures and monitor the patient's vital signs and response to the general anesthetics or other drugs. The Attending physician only intermittently checks on the case if the resident needs help or the case becomes too complicated.
If the resident doesn't bill for services performed, such as central line, placement, peripheral line placement, intubation, arterial lines, etc. I'm not sure who would do the billing.
>> It's too much to think about when you should be focused on taking care of your health issue.
This is one of my biggest pet peeves. The biggest bill I've ever had get processed wrong is the only one where lawyers ended up getting involved, and what the other side's lawyers sent was a form my wife signed while in labor (was at an 8 when we got there) while I was out of the room agreeing to pay the bill however the hospital decided to bill it. They said that excused their mistake, and now that it was too late to bill insurance (had been over a year) we were on the hook.
Poor people have always had access to health care and society has always paid for it. You don't get turned away at the ER and we have Medicaid ($545B) and Medicare ($646B) [1].
The people that get hosed the most are the ones with assets, like middle-class homeowners with some savings that have a major health emergency.
It makes sense to try and force everyone onto health insurance before they need it, just like auto insurance; as it will cost a lot more to everyone if people are uninsured. But I agree that bringing down the cost should be a focus. Everyone gets a raw deal when doctors play billing games any chance they get, like giving x-rays for everything and keeping people overnight unnecessarily and charging insurance companies exorbitant multiples of the cash price.
I actually know someone carving out a business going into healthcare centers and showing them how to make more money- by not playing admin/billing games and just serving patients. That's just crazy.
Before the ACA, my uncle (lower-middle class, with two kids and a wife in a two bedroom apartment in Indiana), had to choose between between paying the gas bill and paying for his near-daily dialysis, which is not a service provided by emergency rooms. He had picked up Hep C as a young teenager and could not afford insurance in adulthood due to this pre-existing condition. The only "health care" he would have had access to was the ER when he inevitably suffered renal failure.
Respectfully, like 80% of HN comments, mine was not "nice", but it was neither uncivil nor unsubstantial - parent was literally an anecdote related to their billing grievances and their proposed solution was literally to let poor people die of treatable ailments. Unless you had an alternative reading?
Totally understand how you could interpret my comment as uncivil if you believe I intentionally misrepresented his argument.
Actually my proposed solution would be single payer. Reducing political issues to "x wants to kill y" is never productive. FWIW my anecdote was from when I was living at approximately half of the poverty line and after ACA took effect. Similar things have happened to me in 3 different states. So forgive me for not having confidence that required insurance is really going to do much for me, or anyone. But let me know when you're voluntarily forking over all the money you don't need to survive to help save lives in third-world countries or something.
Yes it seems the complexity of billing still has something to do with Who Pays.
I had a similar issue where I was billed for a physical that my insurance provider would not pay. My wife suggested I have the Dr. office re-code the bill. Not sure what that is but I contacted the Dr. office and explained that it was not a wellness check up but an annual physical that my insurance should cover. After arguing for about 10 minutes they finally agreed to re-submit to insurance under that code... and it ended up being covered by insurance after all.
The complexity of billing is strongly intertwined with who pays and how, and adding the third-party of your employer, who actually selects the health insurance company for many of us adds yet another layer on top of the already inefficient setup.
And that's what swings me to single-payer, despite my other political leanings. The incentives system is just so screwed up. Consolidating is would make solving the remaining problems so much simpler.
Healthcare costs have ballooned for much the same reason as university tuition. There are 2 university administrators for every professor vs 10 hospital administrators for every doctor.
And most of the people in the Army don't have a rifle in their hands, and most of the people at Google don't write software. By itself those ratios don't tell you anything.
The ratio itself isn't the problem, it's the assertion that we need a growing amount of administrative vs. procedural employees. We can talk in hand wavy abstractions all day long, but for every additional person you have to pay who isn't _writing software_, you need to now pay that much more for your marginal cost of obtaining the software. In almost every other modern domain I can think of as well, efficiency is moving in the other direction. (I think, if I'm trying to be formal here, some aspects of this would seem to be described in 'Baumol's cost disease')
If we're talking anecdotes, from what I've seen of administration in healthcare and military (family is in that business) and at bigCo (my business) we could likely handle a far more lean ratio of knowledge to support workers, but that often goes against leadership incentives/risk tolerance for less conventional strategic decisions. (although I think we're seeing vestiges in this through the pushes for e.g. devops and dev/test merges)
To state the data you've cited in another way, there are 10 non-clinical workers for every 7 clinical roles. I'm guessing you don't personally know anyone in a healthcare administrative role, but these people are certainly not sitting around all day looking for something to do. They are hiring so many of them because the arcane administerial requirements of our healthcare system are only growing.
Good points but important to point out that driving down costs may not be a net negative. From Buffett's comments in the video he seems to be indicating that business are more likely to make investment and hiring decisions on the basis of high and ever-increasing health coverage costs than a change in corporate tax.
Capping or reducing healthcare cost as a % of GDP may help many other sectors to expand. On this basis politicians should first try to get the support of corporations to reduce their insurance costs, and try to change the argument - sustainable healthcare for all. This kind of corporate backing would counter the inevitable lobbying of pharma/medical corporations who will put their resources into countering any legislation that reduces their profit margins.
The problem is that healthcare is more concentrated which always helps with lobbying efforts.
Pharmaceuticals are 5 large companies. The rest of the economy is 500. So let's imagine there is a bill that would reduce the cost of drugs by 50 billion dollars. Each non drug company would stand to save 100 million but each pharmaceutical company stands to lose 10 billion. This is a classic coordination problem, and free riding dictates the pharmaceuticals win everytime.
True. I think that if Buffett wanted to address this problem his best option would be to fund an entity that could lobby on this issue and match dollar-for-dollar pharmaceutical company donations for house reps and senators that were willing to push to reduce the cost of healthcare.
Tackling healthcare is one 'big issue' that could have a huge effect on the US economy and living standards. Seems a worthy 'legacy' project for Buffett to finance.
The Swiss spend about as much as the USA does on health care (as a percent of GDP) and have a similar mandated health insurance system, the main difference being that employers aren't allowed to provide health insurance as a benefit do there are no group policies (everyone is in the individual policy market).
I stand corrected, thanks! I actually liked the Swiss system when I was a part of it, even though I was a bit mad for having to pay for health insurance out of pocket at the beginning.
Switzerland also controls the max price of drugs as part of their gov't approval process.
"Drugs must be effective, cost-effective and appropriate to be listed in the positive drug list (SL/Spezialitätenliste). The federal government sets the maximal allowable public price for drugs in the SL."
The medical industry is the only industry with a broad anti-trust exemption. What this means is that they do not have to publish prices like all other industries.
How can one expect to control costs if you cannot even know how much things cost?
Removing this anti-trust exemption and allowing the public to see prices for the common procedures would be a good start.
I echoed this idea in a comment yesterday.
The medical industry is the only industry with a broad anti-trust exemption. What this means is that they do not have to publish prices like all other industries.
Could you elaborate on this? I don't see what publishing prices has to do with anti-trust, and certainly I have encountered "call for prices" elsewhere.
I don't know about the anti-trust aspect, but the situation in medicine goes far beyond "call for prices." It's often impossible, no matter what you do, to find out what a procedure will cost. Billing systems are so complicated that the hospitals themselves barely understand it, and the only way they can find the cost for many things is to go ahead and do it and see how it comes out.
Would be hard to enforce legislatively, as you're essentially forcing private companies to disclose the previously confidential pricing agreements between them and insurance companies.
What will end up happening is the equivalent of MSRP in car sales - here's the list price, but since you're such a good guy, and we're running a promotion, you can get 5% off if you act today.
So instead you sign a contract to purchase a car (with no take backs!) and only then do you get told the must-pay MSRP? That's about how medical pricing works today.
Why would that be hard? I thought law takes precedence over contracts.
Even having the equivalent of car MSRPs would be a huge improvement. As it stands today, you often cannot get any price for a procedure beforehand, not even a "forget about insurance, I'm just going to pull out a wad of benjamins and start counting until you tell me it's enough" price.
Plus, car prices don't vary that much from MSRP. I can look up a car's MSRP and know that this is approximately what I'll pay. If I get a really good deal I might get away with paying 10-20% less. If the car is in extremely high demand, I might have to pay 10-20% more. But I can get a pretty decent idea. Medical pricing often varies by a factor of ten depending on whether you have insurance, and which provider it is.
I posted a link below, but some states already mandate chargemaster transparency. It's close to useless, as one quickly discovers that (a) pretty much any procedure costs a trillion dollars, but discounts apply and (b) the consumer's view of "procedure" and hospital system's view of "services provided" differ radically, as every gauze used up, every vital measurement, and every painkiller is a billing item in hospital's book (cost of goods and labor), but are integral part of the "procedure" the way the consumer sees it.
That some current laws are useless doesn't mean better laws couldn't be made. Mandate a final, guaranteed, all-inclusive price, or require disclosing every single discount made available to anybody, or even require charging the same price to everybody.
I think the real problem is that Americans mostly aren't willing to have their government going around telling businesses to cut out their shit or else.
I don't know if there are simple one-step solutions.
> Mandate a final, guaranteed, all-inclusive price
How would that work for something like birth? Depending on the amount of time spent in labor and a host of potential complications (some requiring presence of additional doctors like anesthesiologists or surgeons to perform a C-section) the costs will vary greatly.
> require disclosing every single discount made available to anybody, or even require charging the same price to everybody
That could work, as long as discounts don't evolve into kickbacks or rebates, but then why should an insurance company that signed up 10 customers receive the same discount as an insurance company that sent 100,000 people? The latter loses their leverage, which typically sends the prices up, not down.
It's definitely not simple, but I'm confident that it can be done. For something like birth, you'd have a baseline, then extras for various contingencies.
Why should an insurance company that signed up 10 customers get the same price as one that signed up 100,000? Because health care is fundamentally incompatible with free market capitalism (information asymmetry is extreme, demand curves are whacked, and there's often no competition due to time constraints) so allowing this sort of thing just leads to monopolies.
To put it another way, they should receive the same discount because if they don't, the smaller insurance company will go out of business and we'll ultimately be left with a few gigantic ones who use their market position to simultaneously squeeze hospitals and customers.
Aren't there single-payer systems where medical care is still private, and the government pays them for services? I doubt those systems would put up with "we'll tell you how much you have to pay when we're done" so I'm sure there are examples to follow.
Interesting, if ranty, hard to follow, and possibly overstated.
For one, there seems a distinction to be made between "publishing" prices and individually receiving a quote in advance of work. If there's a technical sense in which the two are equivalent, I would recommend clarifying in casual conversation.
Those requirements also don't seem (though I could've missed something) to be a part of anti-trust law, per se. The requirement that prices be consistent is, in the cited Robinson-Patman Act (although that seems to only apply if you're crossing state lines?)
But knowing the price of a procedure doesn't change my need for it. If I need heart surgery, I still need it regardless of whether it's $10k or $100k.
In other words, demand is inelastic.
And, most people can't afford to pay 10k or 100k out-of-pocket. So, it's not like managing your household budget. The funds have to come from somewhere else (insurance).
Also, healthcare is not easy to evaluate for a layperson. If my doctor says that I need 'procedure X', I'm relying on their expertise. Healthcare recommendations are not fungible products. If I'm buying a car, I can read reviews about the different models, reliability, etc. But my doctor's recommendation for me is highly specific to my personal health history.
So, for a lot of healthcare spending, it's not me that's choosing a medical procedure. Instead, I'm choosing to trust a doctor's recommendation. The doctor is the one that's recommending the procedure.
I think the elasticity of the demand depends pretty heavily upon the urgency of the problem.
And the demand - as you pointed out - also depends heavily on trust. That said, most health problems aren't unique enough to require a completely bespoke solution.
So at least hypothetically, it's possible to shop around IF pricing and other data were available. But they are not, at least generally.
Health insurance companies are able to negotiate lower prices for their subscribers due to leverage. Likewise, single payer would mean all subscribers would have their prices negotiated through a single entity.
Without consolidation of payment, the anti-trust exemptions for the healthcare industry means patients cannot effectively negotiate the cost for their care.
With all the leverage Medicare spending per capita (and that capita got a pretty huge boost with US population aging and baby boomers retiring) is still growing year-over-year. Their biggest claim to fame is to compare themselves to private insurers, where the growth is even more insane.
I agree with you -- the cost here is prohibitively high for many folks I know, and the politicians makes hay each election season switching groups that will take the most hit.
So HN, this field here is ripe for disruption. Like the kitchen remodeling stand at Lowe’s or Home Depot, why not a booth to connect people to competent doctors and medical specialists in Europe, Russia, or India with all medical records and diagnostics online, allowing people find the most competitive prices and options for their medical services.
Right now for a surgery if you need it, there are least three 14 hour non-stop direct flights daily to India or Dubai where well equipped hospitals and experienced surgeons will be available (added: at a fraction of the cost here)
This is a good point. If we could avoid massive expansion of arbitrary and innovation-killing biotech regulations, then the market will eventually correct the current shortcomings and will catch up and work within the current framework. This will lower costs and drive up quality of care. Silicon Valley potentially has an important role to play here.
You are just changing the problem, not solving it: the American health care would downgrade (less money to spend) and the people from that countries would complain that their access to health care got worse because of Americans.
meaning what? that a VC funded startup should come in and start offering health insurance? what are you suggesting? what does disruption even mean in this context?
let's get away from those corner cases where it's even thinkable to fly to Dubai for surgery. that's a high cost intervention for specific (wealthy) individuals. that isn't solving the problem of providing health care for 300 million people. how do you propose we do that?
Nothing to do with insurance or VC. Think of a consumer service at Walmart or Home Depot, helping people get very competitive services at prices to fit people's need.
Yes, travel is not a total solution for all 300 million people, but think along the lines of many packaged tour companies in cities who cater for international travellers and can arrange such facilities very efficiently. (I once had dental work done in India, and people don't realize how easy it is, the same kind of thing that you get here.)
Walmart already provides a handful of services of the kind you're mentioning. They have low cost clinic services (at some locations) for flu-shots, eye exams, and prescription drugs. Expanding those services would require having MDs on staff and on location.
There are plenty of businesses trying to offer more accessible medical services also. Urgent Care clinics are becoming popular in New York City, where I live.
None of this is doing much about cost though. The Walmart style sells things cheaply that are allowed to be sold cheaply. They don't sell what they are prevented from selling due to regulations or due to non-viability of offering the service due to staffing limitations. The Urgent Care style is going through the private health insurance system like just about every other medical care provider.
So I suggested an insurance "startup" because the space that seems to lack innovation is the payment side of the health care industry.
I haven't seen a mechanism for lowering price without collective bargaining. That's why I see a single payer system as a must for the problem you've described here. I'd like to hear more alternative views on this though.
The cost of goods (computers, phones) went down without collective bargaining, and it seems like so did the cost of services (haircuts, plumbing projects, airline tickets). Opening up the supply side seemed to do the trick.
What would happen if US (a) lowered the bar for doctor certification or (b) automatically recognized foreign doctor and nursing diplomas from English-speaking (or Spanish-speaking, to accommodate some states) countries?
I agree with you completely that cost reduction is fundamental, but I disagree with you that the problem is more technical than ideological. Who pays is just as important as how much it costs, because under some regimes we get spectacularly unjust outcomes because of ideological constraints on who pays.
In other words, a privatized system will always fail to adequately cover certain groups of people: the poor, those with unusually expensive conditions, the unemployed, the elderly, etc. Providing coverage for those groups, motivated by humanitarian concerns, is the reason there is so much ideological debate. The system as it is currently constructed uses a combination of limited-scope public services (medicare for the elderly, medicaid for the extremely poor) and heavy-handed regulations (various acts of Congress) to cover those groups.
That is why we have so much ideological debate and why it needs to continue. Cost reduction alone won't solve the totality of issues in the system.
The National Association of Health Underwriters have this brief, non-partisan analysis of healthcare cost drivers in the USA and some proposed solutions. (PDF warning)
Costs are also somewhat ideological too. A good for instance is the US belief in suing any time something bad happens. From what I can tell, 10% of every dollar spent on health care in the US goes towards malpractice insurance for doctors. A system that acknowledges that well-meaning doctors can make mistakes and shouldn't be unduly punished could cost almost that 10% less. America's health care system is designed for the %0.1 case literally at the expense of the %99.9 case.
Also, the lack of universal coverage here means that a lot of medical bills go unpaid, for many reasons including bankruptcy or even people giving the emergency room a fake name when they go in. The hospitals don't just eat that cost, they amortize it into the costs paid by patients who do pay their bills. Universal coverage would, therefore, lower the cost of care per individual by eliminating the costs of trying to collect from uninsured people who can't pay.
But the biggest ideological cost of health care in the US is our insistence on including the "free" market in paying for health care. Insurers have a ~25% profit margin. A single-payer system could be very inefficient and yet still come in far below that cost.
> From what I can tell, 10% of every dollar spent on health care in the US goes towards malpractice insurance for doctors. A system that acknowledges that well-meaning doctors can make mistakes and shouldn't be unduly punished could cost almost that 10% less.
There's no such thing as a free lunch. If you don't pay for the damage caused by doctor's mistakes, you are just offloading part of the cost of your healthcare system onto a few unlucky people. If you do pay for it but it's not paid for by the doctors, you just re-invented malpractice insurance but with a different source of funding.
Ahh...but what percent of malpractice payments are consumed by legal fees? Enough for many, many free lunches.
Also, if health care coverage were universal, we wouldn't need big medical settlements to cover future medical costs since those costs would already be covered.
But mistakes happen. How you deal with those mistakes is an ideological question. Do patients who suffer from those mistakes deserve large settlements to the detriment of the vastly larger amount of patients that receive quality care? The US system believes that while other countries choose to lower costs at the expense of those unlucky few.
Maybe. I don't know where the money goes to say what we can cut. Are wages our biggest cost? If so, I'd imagine salaries have to come down across the board but especially at the top. Sadly I don't know how.
The problem is not a technical one.
It's about idealogy/belief.
The left believes that healthcare should be a right - that everyone should get care regardless of whether you are homeless, or a billionaire.
The right believes that it is not a right. That you should only get healthcare if you earn it. If you are homeless, too bad. You die.
Now, conservatives know that they can't come right out and say it that way, but ultimately, that's what a lot of people believe. They don't want to pay for someone else's care.
So, the arguments aren't really about 'what is the most efficient way to pay for everyone to get healthcare'.
The arguments are about the fact that half the population doesn't want to pay for healthcare for someone else.
That's certainly the standard left-wing perspective on it, yes. The problem with this is that just declaring something like healthcare a "right" doesn't give people it - you need vast numbers of doctors, hospitals, surgeons and medications and supplies, all of which have to be funded and organised somehow. You need some way of keeping the costs under control and the services operating effectively across something with hundreds of millions of customers. The American left has no more idea how to do this than the right, so they resort to emotional appeals instead.
> The problem is that getting costs down is almost impossible. Costs are salaries of doctors & nurses, a giant pharmaceutical industry, thousands of radiologists, ultrasound technicians, the machines they use (far more frequently than europeans)…
Those aren't the only costs though. A lot of the cost is on useless things like bureaucracy, middlemen and duplication.
For example, there are two very large hospitals within about a mile of my home solely because one of the insurance providers likes to build its own and providers don't like to share. You could cut costs significantly by simply demolishing one of the buildings and moving the staff to the other one.
That was basically the conclusion of the widely-circulated SlateStarCodex piece [1] -- that health care (and schooling, and housing) are becoming much more expensive with no clear reason why, and if it weren't so expensive, we would all be in much closer agreement on what problems need fixing and be able to reach a compromise.
SSC in particular noted that it was not any individual salaries that were the problem -- everyone's pay seemed about reasonable. Rather, what made the US so different was how much they had to spend in near-paranoid countermeasures against the dreaded "lawsuits".
That, I think, provided the clearest clue: in Europe, it's near impossible to "sue the school", "sue for malpractice" if they adhered to the regulations, and if you can, the loser pays. On top of that, the state automatically covers the injuries, so it's much less likely for resources to get lost in the black hole of litigation and discovery.
The thing that is pretty remarkable is that you unfortunately realize just how far either political party is in addressing any of the issues brought in the piece.
By this argument, we should also be examining why we spend so much on education. In 2010, the United States spent 7.3 percent of its gross domestic product on education, compared with the 6.3 percent average of other OECD countries.
Surely spending dramatically higher amounts than other countries, with no better effects, is enough to drive us to consider how we can reduce the costs of education - and should make us think long and hard before considering proposals that we should throw even more money at this.
It's surely true that having a well-educated workforce improves productivity, but it's also true that having a healthy workforce does the same. I'm having trouble finding much difference between the two examples.
Question for y'all...
Have your health care providers started being more conscious or out-spoken about cost? Mine definitely have, both for prescriptions and procedures.
Would it be a worthwhile idea to open up health care internationally? Maybe insurance companies could create global standards for medical procedures, so that clients could choose in which countries they want to perform a procedure and then receive or pay the difference with regards to the cost of a national procedure. This could introduce some level of competition without jeopardizing quality - or am I missing something?
And entirely ignored seems to be the demand side of the question, why is that? Could expenses be higher than we want if we are less healthy that we should be? I see a lot of unhealthy habits associated with the subsequent associated costly interventions required. Just because we see no path forward to affect demand, leaving it out of the discussion will ensure the debate is framed only as which system can provide that volume of healthcare for a little more or a little less.
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[ 685 ms ] story [ 4270 ms ] threadBy contrast, he said, while tax rates have fallen as a share of gross domestic product, health care costs have ballooned. About 50 years ago, he said, “health care was 5 percent of G.D.P., and now it’s about 17 percent.”
There are so many inefficiencies with monopolistic practices such as inability to import drugs from outside US, healthcare networks, and on and on.
If the health industry wasn't, you'd have people making a killing importing 2 dollar generic antibiotics from overseas to compete with the 70 dollar generic antibiotics sold at CVS.
There's obviously middle ground somewhere, it's just we as a country lately have a REALLY hard time accepting the fact that compromise isn't a four letter word. At least some of us...
Other countries are getting better health results for way less money which all other things equal makes Americans comparatively less well off.
When I pay $1500 and dozens of hours of time for something that costs $2 and 15 minutes in another country, I am less well off.
I like being healthy, but I'd rather be more healthy for less money than less healthy for more money.
You are right, the money isn't transferred off into a void, it is a wealth transfer from consumers to the healthcare industry.
Total Money spent on heath care has very poor correlation with outcomes. Largely because it includes things like medical billing and advertising which increases costs without providing any benefit. You also often do more dangerous and unnecessary procedures and give more drugs risking poorly understood interactions.
Something like 80% of the benefit of modern heathcare comes from the first 10% of spending. EX: Sanitation and quarantine are cheap and amazing tools to stop the spread of disease where hospitals are extremely expencive and gather sick people together to spread disease. A vaccine is vastly cheaper and more effective than dealing with outbreaks.
― Laurie Garrett, Betrayal of Trust: The Collapse of Global Public Health
https://www.goodreads.com/author/show/12627.Laurie_Garrett
* Inefficiencies in delivery mean that those for whom low-cost interventions are most beneficial, most especially pregnant women, and infants and children, don't receive preventive and supportive care which offsets future problems.
* High healthcare costs translate directly to high labour costs, exacerbating the competitve disadvantages American labour faces relative to the rest of the world, and obviating much or all of the advantage of the greater efficiencies of such labour.
* What health care services as are offered are, counter to my first point, late and heroic measures which do little to extend life or its quality, but keep sick patients alive longer. They are delivered largely based on capacity to pay, rather than social need.
* Programmes to increase overall community well-being, ranging from vaccinations, education, and other public-health measures, to treatment of drugs and drink addiction as medical rather than criminal problems, aren't provided. Entire towns and states fall victim to epidemics of entirely preventible conditions: measles, mumps, cervical cancer, HIV/AIDS, alcoholism, drink driving, heroin and opoids additions, cocaine and meth addiction.
* I won't even talk about mental health services. They are a national embarassment and shame to all Americans.
Instead, a handful of insurers, hospitals, drugs manufacturers, equipment manufacturers, and service providers (look up medical transport for an eye-opener) are skimming off fat profits whilst delivering little of actual value, and actively eroding the competitive and health viability of the country as a whole.
The same argument applies to bloated costs of equipment. If a surgical sponge is $500 vs. $10 elsewhere, i doubt the added benefit justifies the extra $490. That $490 is coming out of someones pocket and its a complete waste.
This graph [1] also shows the same story. The return on investment measured by life expectancy in the US is pathetic. The extra money is just not helping... so its either being misused or stolen, probably both.
https://ourworldindata.org/the-link-between-life-expectancy-...
Of course, this is indeed bad for efficiency, if you consider health outcomes vs. spending. And inequality: wealthy people live longer. But then there are questions of fairness.
Elsewhere, in a so-called welfare state where I live, all children get very good care and child mortality is low, but for instance, when I consider myself - a fairly well-to-do person although not wealthy by US standards - I pay a lot to the system but it gives me very little attention. No regular health checks that are normal in the US for people who have a health insurance through employment, no screenings for cancer (women get several types of specific screenings but men do not).
(We use 9 % of GDP to public health, vs. 17 % in the US.)
I know that the care is quite good if I run into a life-threatening situation, but with smaller trouble such as broken bones or a pneumonia, I'll be prioritized down after drug addicts who have a more serious condition that they have inflicted themselves. And they never contributed to the system which tells me to go to a private clinic.
Fortunately the social problems resulting in non-contribution are still quite small, but an increasing number of people are not giving anything and are consuming more and more of the resources.
"...an increasing number" - citation?
While I guess I have no problem with this statement specifically, it's a bit too close to "the top 1 percent of Americans will pay 45.7 percent of the individual income taxes" : http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fede...
The problem with the latter statement is of course that it makes it sound like the top 1% is unfairly burdened by taxes, while hiding the fact that the richer they get compared to the rest, the larger a share of taxes they'll pay.
Taking it to the logical extreme, if all income went to the top 1%, they'd pay 100% of income taxes, while the lazy 99% contribute zero! Someone quickly give the rich a tax break!
If not, why should consuming those services cost significantly more money?
It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different?
EDIT: To all of the people saying rich people consume more government services than poor people: you're forgetting about welfare payments. In the UK this is the largest government expenditure, and it is consumed almost entirely by people who are not paying for it.
1) You're proposing a flat dollar amount be paid as tax by every citizen. This will be most painfully felt by the poorest. What sort of society do you think this leads to?
2) The rich do employ a lot of people, whose education and safety were provided for by taxes. Then there's all those road and water networks they use to deliver goods to the markets they own, and the large amount of property and contracts they have that are enforced by the state. So yes, I do believe they use more government services than the average person.
3) Plenty of markets work that way: https://en.wikipedia.org/wiki/Price_discrimination Furthermore, in a market, the seller sets the price, and the buyer is free to take his business elsewhere. And there's plenty of countries to choose from - so why should government services be different?
Whole branches of government are set up to protect property in any forms. Outside of life and limb protection, the rich consume property protection more. Land, IP, bank accounts, shares, options, buildings, boats, freight... the rich have it because their property rights are protected by the government.
Moreover, I detest that we even got involved in the wars in the Middle East, and was a strong supporter of NOT retaliating after 9/11. My taxes still pay for them.
Taxes have absolutely nothing to do with a market.
I guess those taxes aren't so bad.
"If not, why should consuming those services cost significantly more money?" One doesn't even need the "if not". This can be a perfectly valid political choice.
"It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different?" Because government services are not "any other market". To illustrate that, one could also turn this around and ask "It might feel right that everyone should pay the same, but that's not how government services work. Why should private markets be different?".
The bad news is that this is a choice Congress and Senate are taking on behalf of the American people. And with the partisan divide and lack of agreement on fundamental values, things won't really change.
Add in a rapidly aging population, and being cognizant of the per capita health care spending steeply increasing at later stages of life, kicking the can down the road won't make the later adjustment any easier...
Constrainted, non-infinite supply, basically infinite demand. What a great business to be in!
While single payer is often a better system, it's not without its problems - in Canada ER wait times are ridiculous, my sister had to wait 10 hours recently and if you want to find a GP? Good luck. Everyone is booked solid.
I thought Obamacare seemed like a good compromise to be honest. Unfortunately it doesn't seem like that's been a miraculous solution. I think some sort of free market solution with a safety net on the low end could do the job, but I don't know what that would look like. And I don't think we've seen any proposals in that direction.
But right now I can see my family doctor with 1 day notice, most times same day, and they have someone on-call for phone 14 hours a day and on weekends. Mostly I can avoid ER and drop-in clinic visits completely.
Plus universal access, which is pretty much how you'd judge if a country is civilised or not.
http://visual.ons.gov.uk/how-does-uk-healthcare-spending-com...
Ignoring insurance spending: the US government spends more on healthcare than the UK government, and gets worse outcomes across many (but not all) measures.
Well as someone from Canada, living in a provincial capital, who can't get a doctor (for years), I'd say I agree with the OP.
I guess the family doctor waiting list I've been on for two years and counting is simply a "bogeyman".
No, but it's a problem coast to coast, apparently.
>every time I actually try to access healthcare it seems to work much better than my friends led me to believe it would.
You sound healthy. Not everyone is so lucky.
Also, it seems that your condition isn't life-threatening (considering you're posting here and all). While the average, generally healthy, person will likely need to wait longer, they at least have access to care in developed countries outside the US.
The final point I would add is that private healthcare is still available, even if only available in a different country. I think that's a reasonable trade off- most people can get care readily, while those who need more can pay more to get more timely care.
And they do have single payer in a sense. The consumer pays the doctor and is reimbursed by a health insurer. Something that pretty much seems like it might not work well in the US, without very tight reins on the insurer reimbursement timeline and approval.
[0] There's a distinction between "public" (gesetzlich) and "private" (privat) health insurance, but neither is run by the government. Public insurers are private organizations. The difference is in what is covered (all public insurers provide essentially the same cover), and how they are funded (the cost of public insurance depends on income, while private insurers can set their own prices). There is an income threshold below which one is required to take public insurance; private insurance is seen by many as kind of a scam. Private insurance is generally cheaper for young people, but one can't easily switch from private to public, so you'd better be sure your income will continue to be high as you get old and premiums go up.
People with disposable income/high healthcare needs aren't dying in countries with single-payer insurance. Indeed, they're able to purchase private healthcare, while the broader population gets better health than the US population.
Honestly, it looks like this 'socialism' thing works a lot better for peoples' health than what's happening in the US.
Treatment I've known people go through include cancer therapy, orthopedic surgery, eye laser treatment, chronic pain management, casts after accidents, and others.
https://www.svt.se/nyheter/akut-brist-pa-vardplatser-i-hela-...
It seems like healthy people spend a bit of time in wealthy nations with socialized health care and see nothing wrong with the system.
Live it. Have friends and family suffer illness or disability and try to find treatment. There is very little preventative care where I'm from because the doctors have no time. It's emergency after emergency.
So, sure, in Canada you won't break the bank if you dislocate your shoulder and have to go to the ER. But any special procedures and you'll be waiting years sometimes for an appointment.
US problems in health care are not the same as the Swedish problems. Different problems, different solutions.
Disclosure: I live in Sweden and follow the health care debate here.
So basically Sweden is slowly introducing the US system.
https://www.svt.se/nyheter/inrikes/privat-sjukvardsforsakrin...
Health care in US is political regulated system, badly done as well.
Yes, you can have capitalism and government funded health care system.
There is no waiting lists or rationing and many countries do well with this setup.
It has been years since Soviet Union collapsed, it is amazing to see same boogeyman yet again.
Look at Canada, where this stuff is happening in spades. I'm living it.
It's a tried and tested technique. Take a well working system which doesn't generate profits, push to reduce costs, entirely destroying the service then point it out and say "See? It doesn't work. Better privatize it!"
The reason for the waitlists in Canada are complex, but cost control is one of the reasons.
Surgical operations are split into 2 groups - planned and unplanned. In planned enter people that could wait a bit.
If there is good medical reason that you cannot wait you get the treatment on the spot.
You only have real waiting lists for transplants.
And in what way is that not a waiting list?
It is best for both the purse of the system and the patient if needed but not urgent stuff is done at time convenient to all parties. This way everybody could be prepared. The hoapitals will stock the right amount of supplies, the bloodbanks will know how much and what kind of blood is needed in advance and so on. The patient will make sure all mission critical projects are taken care of for the rehabilitation time etc.
Call it what you want, but that is literally rationing a scarce resources
On the other hand the people that need lets say hip replacement will get it. The system have enough capacity and budget to serve their medical needs. But it works better if the people are properly spaced.
So (excepting some triage) they put people on a _list_ of people that need hip replacements and make them _wait_ until they get to the front of the list before they get their surgery.
The most convenient time for me for my knee surgery was yesterday the most convenient time for the hospital was in 4-6 month. Guess who's convenience was taken into consideration.
4-6 months worth of other patients with similar needs?
And while I guess knee surgery is technically 'elective' as in I could elect to not be able to carry heavy things and have trouble getting up stairs, I'm not quite sure I'd use that term.
As for using the term "elective", I would use that term, given it has a specific definition: https://en.wikipedia.org/wiki/Elective_surgery
> Elective surgery or elective procedure (from the Latin eligere, meaning to choose) is surgery that is scheduled in advance because it does not involve a medical emergency. Semi-elective surgery is a surgery that must be done to preserve the patient's life, but does not need to be performed immediately.
Its always me-me-me. Screw everybody else's needs. If i cant get get what i the second i ask for it then the system muat be horrible.
Would you be able to cut the waiting time in this country by paying more? What would be the waiting time without paying extra (which I'm sure the insurance company would not approve) in the US?
Waiting lists are just a stupid argument, because the US has them too.
In northern Italy I have seen two "simple" (easily removed surgically) cancer cases going through all diagnostic steps in less than 2 months (including ultrasound, biopsies, CT scans), followed by surgery and/or radiotherapy, all at absolutely zero cost for the patient.
If you need heart surgery (valve replacement, coronary stents, stuff like that), your GP can get you an ambulance straight to the ICU, and you can stay there for free until everything is ready for surgery, maybe in a couple days.
We fare badly in particular on getting access to a primary care doctor quickly (or other general care, if you Google articles). We have the highest percentage response for the question "Went to ER for condition that could have been treated by regular doctor if available" of the countries surveyed. And we have the highest response for people unable to get medical care due to cost.
When it comes to specialists and elective surgery, we definitely have much less issues with waiting lists there. IMHO general health care is much more important; this is another indicator of the perverse incentives of the current US health care structure.
This is nonsense. Someone has to decide if a procedure is worth the cost. If it's not the patient (who isn't paying) and it's not an insurer (though who wants that?), it's the government.
Deciding a procedure isn't appropriate or worth the cost is rationing. In a bureaucratic system, you have bureaucrats deciding what procedures are for whom and when.
No it isn't.
> Someone has to decide if a procedure is worth the cost. If it's not the patient (who isn't paying)
In Belgium, it is the doctor together with the patient. If a procedure is medically justified, cost doesn't factor into the equation.
> In a bureaucratic system, you have bureaucrats deciding what procedures are for whom and when.
That is simply false.
Of course it does. There are rules saying what procedures are urgent, which ones are legitimate, and which treatments are covered and at what prices. The government doesn't write a blank check for doctors and patients to fill out.
[1] http://www.mloz.be/nl/art/dure-geneesmiddelen-structurele-ma...
This isn't always true. The UK is single-payer, and their wait times are lower than in the US[1].
Even if that were true, those things are acceptable on average as long as outcomes improve. Australia, the UK, and France (all single-payer) have longer life expectancy[2] than the US.
In fact, the UK is doing better than the US in nearly every health-related metric[3]
> and all the kinds of things you don't want when dealing with people's lives.
So "better care for people who can pay more" is a better system? That's what we want when dealing with people's lives?
If anything should be socialized, it's health care. No one should die because they weren't born with the opportunity to work a high-paying job or accumulate wealth.
1. https://www.theguardian.com/society/2015/aug/25/gp-appointme...
2. https://data.oecd.org/healthstat/life-expectancy-at-birth.ht...
3. http://www.commonwealthfund.org/publications/fund-reports/20...
Don't phrase this as an alternative - those able to pay more can still buy themselves better care, they're being denied nothing except to watch the poor die of illness: https://en.wikipedia.org/wiki/Private_medicine_in_the_UK
"Health-care quality in proportion to wealth" -- the poor get worse care because they can't afford to pay for gold-standard care.
Yes, and that "somebody" is the US. Drug prices are high in the US because the US is responsible for funding the the majority of medical and pharmaceutical research for the entire world. Countries like the UK benefit from the research that is being paid by the US, while not actually having to find the R&D that goes into it.
I believed this until very recently. I had a long discussion on Facebook with some friends in medical research and public policy. I learned that only a fraction of drug costs are due to this issue.
Furthermore, slightly less than 10% of all health-care spending in the US is on drugs.
It's an issue, but it's a relatively smaller one than I'd thought, and it's not as clear as "the US subsidizes other countries."
Literally 50% of medical research in the world happens in the US, and even more is funded (indirectly) by the US market. In the last two years, that number has dropped slightly below 50%, but only because of rapid growth in China and India.
This is all medical research, not just pharmaceutical research. But yes, it is actually responsible for the bulk of drug prices in the US, through a combination of both direct and indirect effects. Even pharmaceutical companies based in Europe still use the US as the primary source of funding their research.
Pharmaceutical companies reap their profits from the US because that's where it's easiest to do so, and because the US is the largest non-developing country. If, overnight, the US capped drug costs[0], a combination of two things would happen: pharmaceutical research would drop dramatically (some would move to China and India, but some would just exit the industry) and drug costs in other developing countries would skyrocket.
Or in other words, for the US to pay less in drug costs, other developed countries have to be ready to pay more, and the world has to be ready to accept a decrease in medical research.
> Furthermore, slightly less than 10% of all health-care spending in the US is on drugs.
That doesn't contradict the original point; that's just looking at a different denominator. And again, this is all medical research, not just pharmaceuticals.
[0] ignoring for the moment the mechanism of doing so
Because the UK is single-payer, they have enormous negotiating power -- and they use it[1]. They force drug companies to give them low prices, which means the US indirectly pays some of the costs of the research.
However, drugs can be very profitable, so you could just as easily say that all the countries share the cost of the research, and the US subsidizes the profits of the private companies.
1. https://qz.com/509344/the-way-to-fix-outrageous-drug-pricing...
Sure, though only if you assume that the companies would pursue the same research and achieve the same results without a profit incentive.
Except, we have pretty clear empirical evidence that that isn't the case. The overwhelming majority of both medical research spending and clinical medical discoveries come out of organizations that pursue a profit motive. That's true globally - it's true in the US, in Europe, and in China and India.
And even then, you can't say that companies "share the cost of research equally", because there is literally no objective metric under which European countries pay an amount of research proportional to how much they consume. Even European pharmaceutical companies obtain the bulk of their research funds from the US market.
Stop spreading nonsense. This is easily verifiable information and very easy to disprove.
Take Norvatis for example:
https://www.statista.com/statistics/294631/novartis-revenue-...
The US is definitely not the "bulk" of revenue for these companies. A big market? Sure. But nothing special when compared to other rich countries if you take into account population and wealth.
Yes, if we normalize by the things we're measuring, we reduce the observed effect... but that's a statistical tautology.
For example, take Western European country prices as a reference point, and assume that the difference in price to the US is entirely an excess premium. That's already a dramatic overestimate, because it assumes that the prices in Europe would still be as low even without the US market, which we already know is not the case.
In that case, Norvartis earned $8.6 billion from inflated prices in the US in 2015. And in 2015, their entire R&D budget was $9.9 billion, on a net income of $6.7 billion.
In other words, if US prices were magically brought down to European levels, Novartis would somehow have to find another way to make up a sum of money that accounts for almost their entire R&D budget.
And even if you assume that the second largest pharmaceutical company in the world would operate the exact same way without an explicit profit motive, without the inflated prices in the US, they would literally be losing money.
> Stop spreading nonsense.
From the Hacker New Guidelines:
> Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity.
A statement entirely unsupported by data. If pharmaceutical companies spent on R&D only the money earned due the inflation of US prices, they'd still have plenty left over: http://healthaffairs.org/blog/2017/03/07/rd-costs-for-pharma...
You could just as well say the US funds the majority of drug advertising for the entire world - they spend more on ads than R&D: http://www.bbc.com/news/business-28212223
Not to mention everything from vital new medicine, to reproducing generics of other companies, and drug reformulations to prolong patents, gets thrown under R&D. If you only count the R&D spending that's not done solely to steal market share from other companies, the ads vs. R&D ratio is even more dire.
So given they post more profits and more ad spending each than R&D spending, at what point would it be okay to stop raising drug prices? When profits are >10x their R&D?
But that's not equivalent to the statement "The US provides the funding for the majority of R&D that the rest of the world benefits from".
If you think that pharmaceutical companies should spend less of their money on R&D, or more on it, that's not really relevant. Whatever research pharmaceutical companies are doing, that's being disproportionately funded by the US market. That's a plainly evident statement; it's right there in their financial sheets.
> You could just as well say the US funds the majority of drug advertising for the entire world
No, because research is a wholly non-excusable good in the global market. Advertising is not.
> they spend more on ads than R&D
Again, not really the point.
Again you're looking at the wrong denominator (fraction of spending spent on R&D, rather than fraction of R&D spending that's funded by the US).
Furthermore, I never made any claims about "good and necessary". It looks like you're interested in having a discussion about a different topic altogether, rather than the original statement.
And I do believe people need to have food. Every developed country agrees, which is why there are welfare and food programs. They're inadequate and often leave people behind, but the goal is that no one dies just from being poor.
I disagree. Lifespan, quality of life and health all depend on all those.
> And I do believe people need to have food. Every developed country agrees, which is why there are welfare and food programs. They're inadequate and often leave people behind, but the goal is that no one dies just from being poor.
Sure, but not any kind of food at any price. The equivalent would be basic medical care, not advanced cancer treatment solutions.
I personally resist the idea that any human life is of infinite value, since it conflicts with the basic reality that economically, we trade some lives for others. Reducing cost is fruitful for everyone but the traders and professionals: supporting any cost as a right is fruitful for the traders and professionals and the recipients at the cost of the givers.
And in reality, the givers tend to be the poor more frequently than the rich.
I understand the sentiment but that is simply not true. If someone gets cancer and requires the lifetime work of 10 people to survive, then guaranteeing that treatment for everyone would be have very negative results.
Life does have a value and a cost, and its not worth spending great amounts of achieve little results. 1000,000U$S might save the lives of a lot of people, but 1000,000U$S cancer treatment might just prolong the life of a single one.
1) Living people are taxpayers and consumers. Dead people are not.
2) This is the whole point of insurance. Very few people will be very expensive and most people will be relatively inexpensive. With preventative care and the advancement of research, fewer people should be expensive over time.
Regardless, the US, as a society, has more than enough money. There's no reason for someone to buy his second $50M yacht while someone else dies of the flu because they couldn't afford the $25 vaccine.
3) You can make these hyper-rationalist arguments, but the vast majority of people are willing to pay a lot of money to live in a society that doesn't just let them die of something curable.
I genuinely believe that people who are uninterested in the social contract of the US or other developed nations should be allowed to "opt out" of society: the citizens of the nation will pay for transport to any border of the country, and then citizenship is permanently lost.
In the example above, you get maybe 5 years + taxpayer+consumer - 10 lifetimes, which is a deficit both for taxpayers and consumers.
> This is the whole point of insurance. Very few people will be very expensive and most people will be relatively inexpensive. With preventative care and the advancement of research, fewer people should be expensive over time.
Basically everyone needs some sort of medical care. True, the most expensive cases are rare and they befit insurance, but medical costs are normally not about insurance. Checkups, dentists, basic clinical appointments, etc are not great cases for insurance.
That is, hard diseases can be convered by life insurance, without the need for socialized healthcare for the rest.
> Regardless, the US, as a society, has more than enough money. There's no reason for someone to buy his second $50M yacht while someone else dies of the flu because they couldn't afford the $25 vaccine.
This is a typical rabbit hole argument where it turns out nobody wants to donate their salary until they reach the lowest percentile of income to make it fair. Because who are you to spend your money on a vegan deluxe burger when people are dying of malnutrition!
Blaming rich people for hardships is akin to blaming immigrants for it, on the other side of the political spectrum. They guy with the 50 million dollars did not make the rest poor, in fact its possibly the exact opposite.
There is a lot of ideology in the mere presentation of that argument, i fear this can take a bad turn :).
> You can make these hyper-rationalist arguments, but the vast majority of people are willing to pay a lot of money to live in a society that doesn't just let them die of something curable
I somehow doubt thats really true, otherwise it wouldnt be a debate at all...
See: Europe. High taxes, strong social safety net. The "debate" is a minority of highly vocal people.
Germany is interesting, depending of your annual income and your work contract, you can either go with a private health insurance and a public health insurance. Only about 10% of the population is going with the private system. Once you decided to go private, you cannot go back to the public insurance. At the moment, a lot of people regret their switch to the private system, because with low interest rates, the insurance costs have been increasing drastically.
In fact, proponent of a total privatization of the German health insurance system are now backtracking and thinking about the reverse, stopping the private system (but if the interest rates rocket again, I suppose the private system will make money again).
For that, Germany is pretty interesting as it allows observation of two parallel systems within the same country with the "best case scenario" for the private system because only rich people and state employees are allowed to go with a fully private health insurance.
My personal opinion is that health insurance like education is a basic "right" but this has nothing to do with the effectiveness of one approach or another, just an opinion.
Wow, it seems there may have been an interesting series of political deals that led to these particular eligibility criteria.
This morning my girlfriend was sick. She called her doc, got an appointment for the very afternoon.
The visit, buying the med and getting a certificate for 3 days off work took us all in all 2 hours.
She paid most of the bills using her health care card, so in total it was less than 50 euros from her pocket.
The day off will be paid in full.
Tell me again how we suffered from "waiting lists, supply shortages and all the kinds of things you don't want when dealing with people's lives".
Cause right now my life is god damn awesome.
It has been for the last 3 decades, including when I got malaria in Africa and the french system refunded me, or when I break my arms multiple times, or got my appendice removed.
I always though that the US system was that bad compared to ours from the people POV because french companies paid a lot more. Now I see it's not even the case.
Maybe, but Le Pen got a lot more interest than she should have. If the economy was roaring and France was "awesome" would that happen?
Le Pen voters are angry for some part, yes. They're the ones with the fewest resources, yes. And you know what? They still get the same health care as anyone else.
One of the consequences of government-provided services, for example, is that it pits native citizens against 'new' and aspiring citizens on the years that everyone decides life is a zero sum game.
It pits nobody against nobody. It's (almost) universal healthcare, including for non citizens.
Nobody has "everything" figured out, and health care (and paying for it) is a problem everywhere. It's just that comparatively...well, there really is no comparison. In comparison, it is awesome. And I've lived both in the US and in different parts of Europe.
The French voted a 2/3 against Le Pen. The US voted 48:46 against Trump (and got him anyway).
What you even mean by "socialism in healthcare" ? Is it a trigger-word for Americans so they switch off their brain ?
Anyway, in most west EU countries, public-run health care works very well. It's more efficient by a vast margin : no marketing cost, no middle-man overhead, no for-profit requirement.
In fact in France we are currently evaluating getting rid of private sector altogether, as recent reports showed it would be much cheaper and better overall.
Any of those is hard on its own. Combined - it is impossible.
The two you mentioned give direct costs increase and indirect in the form of defensive medicine. UnNecessary treatments because the doctor is scared of potential lawsuits could event hurt patients since there is no such thing as procedure without risk or complications.
Between myself and my employer, it costs about $20,000 to insure my family a year. My employer shares much of the cost breakdown and it's interesting how goes to prescriptions and how much of that goes to specialty drugs to keep a handful of people alive.
$500 million dollar spend on healthcare.
$120 million goes to prescriptions.
$40 million of that went to specialty drugs, representing 1.7% of the prescriptions.
"The average ingredient cost of a single-source brand prescription increased by 14.9% in 2016 to an average $745 per prescription, mainly driven by high-cost specialty drugs. The average ingredient cost of multiple-source brand prescription increased by 49.5% to an average $585 per prescription. The average ingredient cost for a generic prescription decreased by 10.9% to an average cost of $34.04 per prescription. "
In contrast a few weeks in the ICU can easily top 100k. A visit to the ER is usually 1500 just to walk in the door. Healthcare costs are largely a result too many middle men and overhead from extremely high healthcare provider salary.
may be there isn't any competition (which could be because it's quite hard to establish a new healthcare clinic/hospital)? Also, are there limited supplies of health care professionals that cause their salaries to grow to such a high number?
Yes, right, problem is abnormal cost of healthcare in US, that should be fixed first. But when only thing you do about this is letting wild free market put price tags as they want and let poor people be hopeless under costs, that is 'unhealthy' for the society.
The free market is not the problem.
Wow, that's an awful lot. What's the level of service like? For comparison when I lived in Switzerland my family, ie my wife and 2 kids, were about 750 CHF a month. All paid from my pocket.
The level of care was stunning though. That 750 was for single room care, and we had two babies by caesarean. Also the times I was in the emergency room there were zero other people in line. Almost wondered whether it was actually an emergency room.
You can get less comfy care, I think at about 500 per month, sharing a bedroom with one other patient.
By contrast the NHS in the UK is pretty stretched when you go there, but paid via taxes.
Though with the cost of education and all the mess around malpractice, it seems very hard to _fix_ the US system.
The system was that you'd pay for little things yourself, like asthma inhalers, and then send in a form to your insurer. So the deductible would have come out of the summary you got each month.
Getting rid of them would be extremely hard, of course, given how well entrenched they are thanks to lobbying and regulatory capture.
Insurance companies are a massive-scale version of the car dealerships that have managed to keep Tesla out of many US states by taking advantage of local legislation -- nobody would want to deal with a car salesman or an insurance company given the choice.
That, ultimately is how the tobacco industry was (mostly) quashed.
Some people (not me) would argue that their existence and competition create better choices for consumers.
For example, in theory, a single-payer system could have a single price (via taxes) and a single level of coverage. By contrast, private insurance companies are able to offer many different products depending on someone's tolerance for risk.
I don't think the private, market-driven system for health care is better in that regard, but some people do.
If you want to be seen quickly and you're not literally dying, you have to go to an urgent care clinic and pay a much higher fee.
And even that is only available for very minor, primary-care issues. I recently took my girlfriend to the emergency room for a very serious illness, and we ended up being there for 12 hours. About 1 hour of that time involved actual treatment or seeing a doctor -- the other 11 hours were just waiting. The bill was $20,000.
Urgent care is useless if you do not have the money to pay for it when you need it, even though insurers provide monetary incentives to go there (my insurance plans generally had a copay of $50-$75 for urgent care, but $100-$150 for the ER). You can still wait hours at these places, just like at the ER. And honestly, in such cases the care is likely similar.
You also have absolutely no coverage if you don't have private insurance or are poor enough/old enough for the government-run systems.
This system is more akin to visiting a doctor that charges more than the insurance's "customary charges" and expects you to pay the difference. You like the doctor, though, so you happily pay while the insurance still pays the portion they find to be a fair price.
It is more akin to finding out the specialists in your networks have a 6 month waiting list, but one outside the network only has a 3 month waiting list. The insurance pays a lower amount and you choose to pay the rest out of pocket for a shorter waiting time. The same thing for surgeries that aren't absolute emergencies (I do hear horror stories, but I heard horror stories in the states as well).
Above all, you are unlikely to wind up with such a bill afterwards.
So you pretty much pay to queue jump and get higher quality hospital rooms.
Personally, I think health insurance should be, you know, insurance. For catastrophic things you wouldn't wish on yourself and cannot save for. And there's a definite role for government to make sure that market is solvent and available to everyone.
For day-to-day healthcare, that should just be included in "cost of living" calculations. General-purpose welfare programs (or ideally a minimum income) would guarantee that people could afford checkups, birth control, etc.
Getting employers out of the business of all of the above is paramount and what businesses should be lobbying for. I believe the slow recovery from the recession has been affected by unintended (though not unpredicted) consequences of the ACA's failure to address this issue. The Republicans likewise seem happy to punt on the issue. It's this sort of thinking that is making the American electorate disgruntled with politicians and each other.
Amen. I never quite understood what benefit (pardon the pun) it served, although I've got some idea of the origins of employer-provided health insurance.
The cynical part of me believes it's definitely a way for larger companies to hold more control over their employees, and they may lobby for this because it provides an extra advantage over smaller competitors.
I've known plenty of really sharp/talented folks whose talents may better serve the economy by taking those skills to other companies (sometimes in other parts of the country). "But I'll lose my health insurance" is almost always a primary reason why people've stayed in their job (however crappy it might be otherwise re: pay, commute, colleagues, boss, industry, etc). This seems like it's been a real drag on labor mobility for some time now.
I would have thought 'conservatives' would be all over a 'free market' where people make their own choices with their own money. They'll happily deride a "nanny-state" as fostering people who just want the govt to provide them with everything, but ... expecting people to need employers to provide access to basic services? Apparently there's no problem there whatsoever, and it doesn't even seem contradictory to many I talk to.
Any regulation provides regulatory capture benefits to big players over small players, regardless of what the regulation is.
I'm not sure big business lobbyists were campaigning to stay in the health insurance business, but they weren't exactly campaigning to get out when all the players were at the trough back when the ACA passed.
Hopefully this is a start of a trend. Leaders like Buffet saying the baby tiger of "employer provided health insurance" has grown up to a maneater might help change some minds.
How we got to now: 1. Roosevelt chose to forego nationalizing healthcare when he introduced social security in the 30's, fearing it would doom both to failure.
2. The U.S. feared debilitating inflation during WWII. The legislature passed a bill to limit employers' ability to raise wages for workers who were battling for employees in a scarce labor pool.
3. Unintended consequences ensued. To attract workers, employers began to offer non-salary perks: employer-sponsored healthcare was one.
4. The economic and labor boom post-WWII entrenched employer-sponsored healthcare and has led us to where we are today.
Employment serves as a convenient risk pool that is too hard to join based only on a wish to get insurance.
That sounds reasonable, but is it efficient?
1. It discourages "routine maintenance" -- it's a lot cheaper to go to the dentist annually than to get a root canal every ten, yet there are many who if they only had catastrophic dental insurance would skip the annual.
2. This "cost of living" varies drastically based on age, sex, pre-existing conditions, et cetera. So it couldn't be covered fairly by a single fixed UBI. So you'd need bureaucracy to determine who is eligible for extra coverage
3. Every small doctor's office would need a billing department. In socialized healthcare countries, "billing" is not much more work than filling in a time sheet, and is often done by the doctor themselves.
It's cheaper, more efficient and more fair to cover day-to-day healthcare for everybody than to just cover only catastrophic care.
Clinics do fine. They charge more, and they have the hospitals as a reference for their prices, providing better service for a premium.
It's not quite fair to say that it discourages, when really it just doesn't encourage routine maintenance.
To that end, it would be interesting if there was a component that encourages routine maintenance. Every undocumented annual checkup results in <some percentage> of the claim being the claimant's financial responsibility.
Similar, I suppose, to an automobile warranty where a lack of documented regular maintenance can be grounds for voiding some portion or all of the warranty. The healthcare parallel being less extreme.
https://www.theatlantic.com/magazine/archive/2009/09/how-ame...
Insurers are not prohibited from negotiating prices. Quite the opposite.
I'm sure the average Doctor could add a lot to the list. Maybe they don't want much to change, with the exception of making their club smaller, or just the changes that increase their wealth? Yea--my view of them has changed. I don't look at them as The Golden Boys anymore. I just look at most of them as greedy little business entities. Maybe they always were?
Still the real bogeyman is just like income taxes most people don't see the cost first hand or don't associate it with their income. They see the final check value and somehow disconnect the costs.
The step is getting name insurance off of products that are not insurance
Cheaper coverage can pretty much only be obtained by excluding people or limiting the benefit.
The US pays more for a lot of reasons. It isn't a one trick pony:
* Americans are much, much more unhealthy than Europeans on average. Way more obesity, way more smoking and drinking for addiction rather than socialiation.
* The insurance apparatus imposes a ~20% overhead outright on expenses, and puts further money on top by moving costs out of the consumers hands. They control what doctors you see and what procedures and drugs you get, and often do so in ways that are locally beneficial to the insurer but are more inefficient than a universal system.
* Hospitals and doctors, by being decoupled from patient expenses by the insurers, run rampant on spending and salary and hospital administration gets as crooked as insurance bureaucracy. Your healthcare dollar quickly ends up going 60% to bureaucrats and institutionalized middle-men expenses and only 40% to actual care.
Solving #1 is something that has to be done over time, and the only way to do that is to have a healthcare system, any system, that stops disincentivizing people from seeing doctors except for during crisis. The ACA did very little to fix this (it basically only mandated that some routine preventative care came at no cost to patients) and until you can get the general unhealthiness of Americans under control you can't get costs under control regardless of healthcare system.
The other two, though? Single payer solves them either immediately or with the market pressure of the entire US populations healthcare needs. Every other developed country that adopted single payer was able to use its influence to get hospitals and private insurance in line. That is why the UK now has one of the best systems in the world.
This is what I meant by services (and also things like birth control and so on that are mandated in the plans but "part of life" rather than related to a change in health or injury).
edit: and I think you were responding in part because the services are more expensive than they need to be. My meaning was that they don't drive up the premiums of the insurance all that much (and with the large deductibles, in many cases the annual premiums together are not the largest component of the patient's contribution towards a large medical expense).
One of the biggest US health insurer is UnitedHealth Group. In their last financial quarter report they published:
Revenues $48.7 billion
Earnings From Operations $3.4 billion
Net Margin 4.5%
These type of good and enviable stable profits are not enough to explain the inefficiencies in the US. Insurance may be lobbying but that is dwarfed e.g. by the marketing expenditure of the pharmaceutical industry (same level as their R&D). Yes health insurance is living well on the inefficiencies and their (in part unnecessary) middle man role but there are way bigger money leaks.
(they list both numbers on page 9 of http://www.unitedhealthgroup.com/~/media/CEBA762A544B44D19F1... )
Some of the 17% represents necessary administrative costs. Who knows how much.
Imagine if there existed a company whose only job was to buy oil from OPEC and deliver it somewhere else. They could say "we spend 99% of our revenue on oil! look at how efficient we are!", ignoring the fact that OPEC is a cartel that sets prices, so not only can they be vastly overpaying, but the amount of oil purchased can be wildly inadequate to cover the needs.
In a functioning market they would face competition for customers and try to lower premiums (and so try to lower costs). In our system they seem to look at provider prices in a region and decide if they can profit there or not (and in the case of non profits, if they can operate without losing money).
In contrast, the Medicare program spends less than 2% of its budget on administrative costs.
I think you're being too generous here. Insurance providers are not only useless, but of negative value to patients and physicians alike. They add yet another bureaucratic layer atop the healthcare system as a whole, and inundate physicians with red tape that interferes with care.
In my experience, insurance companies will actively go out of their way to fuck over patients on technicalities—even in life threatening situations—just to try and save a dime. The sheer indifference to humanity can be breathtaking at times.
Of course you can argue that having just one system is far more efficient than having hundreds of different ones as exists in the US today.
However, someone still has to say "no" to certain care. I know when i was in Canada that role was taken by the gov't.
[1]http://www.dailymail.co.uk/health/article-3222588/Thousands-...
I always go back to when the Affordable Care Act was passed. At the time the amount of money being spent and the future money promised was enough for the federal government to buy every public health insurance company on the open market. If that decision had been made the argument for going to single payer, universal healthcare would have been over.
Yes, it would have been a rough transition, but at the time elapsed between now and then would have moved the USA into the rest of the world when it comes to healthcare.
It depends on where you are. There are areas of the country where insurance companies are fighting a cost war on behalf of patients against increasingly conglomerated and monopolistic hospitals.
This American Life had a great episode on this a while back. I went in thinking, "This problem's simple, it's all the fault of x." (For a few values of x.)
I left the episode thinking, "Wow, who knew health care could be so complicated?"
I have moved towards a Marxist philosophy on healthcare. Well, Groucho Marxist: I no longer trust any solutions to healthcare that non-experts like me could understand.
https://www.thisamericanlife.org/radio-archives/episode/391/...
This seems like an unnecessary war. Are patients really being helped by a structure where multiple corporate entities -- the hospital and the insurance companies -- are battling each other to extract the maximum value from both the patient and the government actor paying for some part of the care?
If the hospital were not a regular for-profit corporation, they wouldn't turn into a monopolistic conglomerate... But of course it's practically impossible to undo these corporate structures and replace them with something with a whiff of socialism. It might even mean a pay cut for doctors, and then you'd have to restructure their education costs too... It's a very deep problem.
Especially insofar as it's a war, yes. In general, I like two strongly motivated and opposing advisors on my healthcare decisions, one advocating for the best possible care, and one team of actuaries arguing about what's least likely to be a waste of money.[0]
Anyway, that's just the ideal case where insurance and hospitals oppose each other, possibly motivated by financial incentives, and I benefit. Admittedly, things usually aren't ideal.
You might be able to restructure things where hospital incentives are tied to outcomes. Making them responsible for hospital-acquired infections was a step towards that.
But it's hard to pin them to long term outcomes, and weight that towards cost of procedures, which is apparently what we really care about judging by the outcomes / cost headlines.
You could assign people to a specific hospital for long periods of time to track long term health outcomes, make them responsible for your health full stop. But occasionally some hospitals face systemic challenges and become institutional failures over time.[1] It'd be horrible to chain people to a failing institution, especially the sole institution responsible for their health.
> It's a very deep problem.
Agreed 100%.
--
[0] Even if I'm not paying full costs directly, I don't want society to simply waste money on me. I've heard of plans that give you a weekly back massage from a chiropractor at a $10 copay. I'd feel terrible doing that, like I was stealing money from babies with cancer.
[1] e.g., https://en.wikipedia.org/wiki/St._Joseph_Medical_Center_(Hou...
Imagine if people with Ether (or other blockchain currency) could "reserve" ethers to serve as insurance spending for other people that buys the insurance contracts... something like crowdsourcing of insurance.
That would be really cool.
A study done at Harvard University indicates that this [medical costs] is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies.
http://www.investopedia.com/slide-show/top-5-reasons-why-peo...
The non tangible cost are also non negligible. There is friction in the job market as changing job risks incurring a potentially catastrophic coverage gap. There are bizarre industries focused on renegotiating issued medical bills, collecting those or managing the health related bankruptcies.
Pricing of pharmaceutical usually generally defies the laws of gravity as the incentives of regulators, suppliers, distributors, doctors and insurers have been distorted beyond anything resembling a fair playing field. In such an environment playing games is superior than providing value and adhering to generally accepted rules. When it comes to pricing the costs of providing the service is often the least important input.
Steve Balmer recently: “If you look at these tax deductions for employer-provided health [...], they’re really subsidies to the affluent, which I guess I hadn’t thought about them.”
The biggest problem society faces at the moment is the vanishing middle class and lower qualified jobs that are still providing enough to subside. For the latter the cost of food, shelter, fuel and health are key. Lower the cost of living and there will be more jobs that are worth taking.
https://www.youtube.com/watch?v=gXBPKE28UF0
https://randomcriticalanalysis.wordpress.com/2016/09/25/high...
It argues that the high cost of health care in the United States is explained by its extreme wealth and that health care is a superior good (https://en.wikipedia.org/wiki/Superior_good).
This is a much different explanation than what is given by either political party.
Anyone have any points in support of or against this argument?
My grandfather used to get a shot that was $12,000 a pop, and didn't do anything.
Traveling around a bit I've seen other cultures still require people to walk somewhat to get places and people will also just go on "walks" whereas Americans will go for a "drive"
Food culture is also responsible, just jamming food into your face as quickly as possible rather than enjoying a meal is for sure and American thing.
Add all this up and you get 60% obesity rates in adults and getting worse.
* Endless number of middlemen and administrators. * Every player in the healthcare chain benefits from higher prices. * No price transparency. * Tacit collusion is rampant. * "Cost no object" mentality to treating the dying.
The last one, while insensitive, is true nonetheless, and it's alarming that over 50% of all healthcare spending takes place in the last two years of a person's life. We have basically decided that it's okay to spend literally any sum of money on a dying person in order to prolong life by an average of a few months. And the problematic word there is average, because some people do live a lot longer, and that's what we all look to. I realize this is grim and seemingly lacks humanity, but unfortunately that doesn't make it not true. Charlie Munger, who is on the board of Kaiser Permanente, said this same thing yesterday..."over-treatment of the dying" was the biggest problem they faced.
It's reminiscent of our approach to college education - justified at any cost. So we push millions of kids into a schooling system that's not right for them, and the result is a lot of crappy education, worthless degrees, student loans, etc. Once we flip the switch to "there is no price you can put on _____" things get sideways FAST.
Cutting the fat from that may mean a lot of folks lose livelihoods (and THEIR healthcare).
If I have ailment X and a bill is being pushed that pulls funding/ assistance away from ailment X, then I should make it known that I am unhappy about it. What if it is now guaranteed that I will die from ailment X? You're saying that I shouldn't kick and yell about it? I'm about to die!
However, if it is also helps people with ailment Y, Z, I, J, K, and L, then it is the government's job to recognize that maybe I am less important to the bigger picture. If enough people will be negatively impacted to the point that I will not be reelected, then maybe it doesn't truly benefit my constituency as much as I think it will.
Of course all of this is in an ideal world without accounting for the power of advertisement funding and the fact that most of the voting population isn't well educated about the issues.
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
Edit: Which is not to say those impacted won't need assistance moving on to other things. But, cutting the fat should be a net benefit to society.
A ton of people in government related jobs only have equivalent roles in jobs at equally large and capital inefficient bureaucracies.
Obamacare was actually a make-work program for taxi drivers, who were needed to take all those poor people to and from their medical appointments.
Individuals can then purchase separate private insurance for optional health procedures and for faster elective care.
Australia's healthcare system works on a similar model. Everyone gets basic free cover, but waiting lists for elective surgery can range from weeks to months.
If you optionally pay for private health insurance then you can get better, faster treatment, including for elective surgeries.
In your hypothetical 2090, the sick impoverished child gets their basic needs taken care of by the basic cover, and the elderly bureaucrat gets his life extending tech and augmentation paid for by the private insurance he's been paying in to his entire working life.
Once the sick, impoverished child recovers, they can return to school, graduate, get a good job and pay in to private insurance so that by the time they are elderly they can also afford life extending tech and augmentation.
Unfettered profit at all costs capitalism isn't a glowing unicorn.
1. Insurers are incentivized to seek out the minimum cost to achieve maintainable health.
2. Health care providers are incentived to reap as much as possible from insurers in return for acceptable (not always exemplary) health outcomes.
3. Patients, who on average are getting older and in need of more care, are pigeonholed (sometimes good, sometimes bad) into health care decisions by their providers and insurers.
4. Device/equipment manufacturers can charge ludicrous amounts because they capture very specific pieces of markets or gain preference from health care providers. However, the risk and cost involved in creating a new/competing product and entering a market can be staggering, and so high costs become inevitable (same argument drug developers can make).
As you said, 'justified at any cost' makes this whole shebang go, especially when no single party is capable of controlling the cost. We can't point to a boogeyman we all have a part in making.
If an insurance company were to announce record profits because they were able to better control costs than their competitors, there would be immediate pressure to lower premiums and not take the additional profits.
When it comes to health care, the idea that we have anything resembling a free-market and private competition to lower prices is a farce on a grand scale.
1. http://abcnews.go.com/Politics/obamacare-health-insurance-re...
But hospitals force patients to agree to be responsible for all bills their insurance doesn't cover.
So there are two large institutions, neither of which is entirely aligned with the interests of the individual dealing with them. Of course hospitals aren't trying to kill people, but good luck figuring out if the care they bill for is really necessary or not.
http://www.npr.org/sections/money/2014/03/05/286126451/livin...
1) Unfathomable amounts of money lavished on superficial appearances. From hospitals to private practices and surgery centers, everyone has to look trustworthy, exude that 'aura' of professional health care, with expensive landscaping, chic interior design with opulent materials, and of course enormous 4K television sets so that pharmaceutical manufacturers can push pills on the patients as they sit in the waiting room. Untold amounts of money are wasted on these non-essentials, which have literally nothing to do with the quality of the service provided, but which we all must pay for.
2) The epidemic of lifestyle diseases such as obesity, acquired diabetes, etc. Many of the nations where single payer is touted to work so effectively do not suffer from this issue (see Japan). The causes of this issue aside, at the end of the day, an undue burden is placed on the system generally, and as we have come to find out with ACA, young people making healthy choices rightly feel punished as their premiums climb and climb to cover the costs of treating completely avoidable conditions. We have to come together as a society and fix these problems at their root before they become the subject of medical treatments.
Edit: ObXKCD: https://www.xkcd.com/931/ (Lanes) Every one of those lanes going off to the right is the end of healthcare spending for someone, but you can't know going in which ones are going to turn off. Focusing on the "50% in the last 2 years" number is a lot like the the naive visualization at the top.
excluding trauma care for accident victims (that end up dying anyway), and excluding cases of early-in-life cancer, and excluding every other case we can think of where a spike of medical spending shortly before the person dies anyway is understandable as part of a good faith effort that had a reasonable chance of prolonging their life for many years, after all those exclusions are made we will still find many instances of cases where the end-of-life medical spending seems excessive.
The canonical example I can think of would be organ transplants for very elderly people. A new kidney for a 75 year old person in advanced renal failure is unlikely to prolong their life by very much.
This kind of stuff gets very emotional and very political though. This is what provoked the demagoguery about "death panels" when Obamacare was being debated in congress in 2009. We are both very uncomfortable allowing the government to make those decisions and also very uncomfortable allowing private insurers to make those decisions. We want to empower families to make those decisions and so remove cost from their consideration (via regulation, requiring insurers to pay) and then we become surprised when people who haven't made their peace with death are willing to spend any amount of money (which is a hidden cost from their point of view) to prolong end-of-life. It shouldn't be surprising. We set up a perverse incentive structure and locked it in place with regulations.
http://freakonomics.com/podcast/are-you-ready-for-a-glorious...
A lot of those countries have physician assisted suicide though, which greatly improves the humanity of late term care. That is an easy and obvious piece of the solution the US should have been able to get behind a long time ago.
Six US states have end of life care that can include doctors prescribing fatal doses of medication.
https://en.wikipedia.org/wiki/Assisted_suicide
> The United States has authorized medical aid in dying in six states, which refers to a terminally ill person with 6 months or less to live taking a medication prescribed by a doctor
http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
Scott Alexander examines "cost disease" in the sectors of health care and education.
Approx. zero people reading this will believe the conclusion, but RCA argues that the US is not really an outlier on healthcare costs.
There's a dizzying amount of data and statistics levied for the argument. It's a fascinating read even if you don't agree just because of how much is put into the argument.
https://randomcriticalanalysis.wordpress.com/2014/11/24/nati...
https://randomcriticalanalysis.wordpress.com/2016/09/25/high...
This blogger indeed uses a dizzying amount of graphs, but doesn't mention until the end that he has built his entire argument on the assumption that Americans "choose" to spend their higher income on health care.
Incidentally these patterns are not only found in health care, the basket of goods has changed and continues to change as countries get richer: https://randomcriticalanalysis.wordpress.com/2017/05/09/towa...
P.S., I wrote the blog post.
http://mason.gmu.edu/~rhanson/EC496/SOURCES/LUXURY.PDF
And the better data on price suggests US actually isn't unusually expensive for a high income country and so on and so forth. Much data points to higher volumes of health goods and services as we chase diminishing returns as a society.
And yes, the biggest problem in the US is unneccessary tests, procedures, drug consumption, etc., and the cause of that problem is a system which is built around maximizing revenue instead of maximizing public health.
Here are some papers that touch on some of these more fundamental theoretical issues:
https://web.stanford.edu/~chadj/HallJones2007.pdf
http://mason.gmu.edu/~rhanson/showcare.pdf
Then there are the medical device manufacturers, big Pharma and the hospitals. They all are getting rich off the current system. That's what needs to change.
Scarcity being a function of selective admissions is a tautology. To be useful, selectivity would need to be to some objective minimum standard, rather than enforcing an ever-changing standard that enforces the restriction of the profession to an arbitrary small number of entrants.
The American Medical Association (AMA) does its duty to restrict the supply of doctors [1]. Countries like India, which produces plenty of high quality doctors, does not require aspiring doctors to go through an additional (unnecessary) 4 years of undergrad education. That would hugely cut the cost down in training the doctors.
Secondly, doctors on average makes $200K/year [2] or more. I have four housemates, who were trained in Myanmar (went through five years of medical school there right after high school) and scored above 95th percentile or more in all three steps of their USMLEs, to get into the residency programs in the US. One of them is going into general practice (family medicine) in Virginia and her starting salary is: $210K/year. I have no doubt that she (or anyone who has been trained 5 years in a decent med school--without the 4-year undergrad prior to that) is more than capable of treating generic diseases and illnesses. But this shows that we can train doctors cheaper and that we can reduce their pay by quite a bit (no hard-working person in other profession--except maybe Banking--could easily earn $210K/year to do such a relatively uneventful--in my opinion--job).
I regret quitting med school in Myanmar in the third year. Then, I thought med school training involves too much rote learning (a lot of memorization in organic chem for example) and that I'd rather do something more 'exciting' like tech or math. I was wrong.
[1] https://mises.org/library/how-government-helped-create-comin... [2] https://www.theatlantic.com/health/archive/2015/01/physician...
Sounds like a lot, right? Until you note its just $300 out of $10,000 spent per person each year.
And what's the trade-off? Despite your opinion that it's boring or potentially not very challenging... there are pretty logical reasons why people would still want a relatively disciplined, intelligent and careful person as their doctor. The lengthy and onerous requirements for schooling are filtering for more than just the ability to perform a series of carefully defined procedures.
Several years ago, there seemed to be a lot of talk about how much The US spends (private & public) per capita on health. It’s a lot more than everywhere else. This was usually presented in the context of the health care “regime” A UK-esque system, a Swiss-like system, etc.
Lately, that comparison seems to come up less. Obama-care, Trump-care or Bernie-care would mostly deal with who pays & how, not how much.
The “who pays” question is a favourite ideological one so politicians and commentators are comfortable with it. But, I think the “how much” question is probably the more important one, and the harder one to solve. If the US could get costs down to average European rates, then I’m sure a workable system could be found within the confines of most ideological frameworks.
The problem is that getting costs down is almost impossible. Costs are salaries of doctors & nurses, a giant pharmaceutical industry, thousands of radiologists, ultrasound technicians, the machines they use (far more frequently than europeans)…
Getting costs down to EU levels would be mean the medical industry shrinks like manufacturing shrunk two generations ago.
I don’t have a solution to suggest, but I do suggest toning down the ideological discussion. The problem is more of a technical one.
At this point though, going with the known working solution sooner rather than later is the technically most plausible way to stop the cost expansion. It is exactly like people debating about national debt - you can't complain or argue about how to pay it off until you stop adding to it every year, often with an increasing deficit (which is how republican administrations for the last 30 years have governed).
It is crazy to argue that in the moment your house is on fire to try this untested strategy of using giant fans to blow the fire out that nobody else has done versus going with the tried and true use a fire truck to extinguish the blaze. Experiment after everything isn't on fire.
The only for most Americans to have a choice in their health insurance is when they get to pick between the plans from either husband's or the wife's employers.
The biggest disappointment of the Republican alternative to Obamacare was not coming up with a way to sever that tie.
Since that tie is also maintained by large amounts of political donations, it's going to be a hard one to break.
Sure it cuts down on individual choice, but it should theoretically be the most cost efficient method, both for the employees and the insurance company.
Selection of plans or providers is not the problem, especially with the current popularity of PPO plans.
Even the marketing act of splitting up all these groups up as you describe is a huge waste. Now you have to shop the differences, the companies have to explain the differences, and everyone (insurance co, health provider, patients) gets to track multiple different groups with different rules. It's all a waste compared to fewer larger distributed risk pools - which is the whole point of insurance.
Most medical markets (including the US') have large free market & "social" elements. I don't think moving one way or another along that axis would move the needle in a predictable way. That would be decided by the more detailed points. That's what I mean by technical
We are lucky to have good health insurance, and a simple ER visit to get stitches or an X-Ray will invoke 5 pieces of mail from 3 different entities. You have to watch out for student Doctors who will send you a bill for being in the room. It's too much to think about when you should be focused on taking care of your health issue.
For example, an Anesthesia resident will perform all of the procedures and monitor the patient's vital signs and response to the general anesthetics or other drugs. The Attending physician only intermittently checks on the case if the resident needs help or the case becomes too complicated.
If the resident doesn't bill for services performed, such as central line, placement, peripheral line placement, intubation, arterial lines, etc. I'm not sure who would do the billing.
This is one of my biggest pet peeves. The biggest bill I've ever had get processed wrong is the only one where lawyers ended up getting involved, and what the other side's lawyers sent was a form my wife signed while in labor (was at an 8 when we got there) while I was out of the room agreeing to pay the bill however the hospital decided to bill it. They said that excused their mistake, and now that it was too late to bill insurance (had been over a year) we were on the hook.
The people that get hosed the most are the ones with assets, like middle-class homeowners with some savings that have a major health emergency.
It makes sense to try and force everyone onto health insurance before they need it, just like auto insurance; as it will cost a lot more to everyone if people are uninsured. But I agree that bringing down the cost should be a focus. Everyone gets a raw deal when doctors play billing games any chance they get, like giving x-rays for everything and keeping people overnight unnecessarily and charging insurance companies exorbitant multiples of the cash price.
I actually know someone carving out a business going into healthcare centers and showing them how to make more money- by not playing admin/billing games and just serving patients. That's just crazy.
[1] https://www.cms.gov/research-statistics-data-and-systems/sta...
Totally understand how you could interpret my comment as uncivil if you believe I intentionally misrepresented his argument.
I had a similar issue where I was billed for a physical that my insurance provider would not pay. My wife suggested I have the Dr. office re-code the bill. Not sure what that is but I contacted the Dr. office and explained that it was not a wellness check up but an annual physical that my insurance should cover. After arguing for about 10 minutes they finally agreed to re-submit to insurance under that code... and it ended up being covered by insurance after all.
http://www.chronicle.com/interactives/administrative_bloat https://hbr.org/2013/09/the-downside-of-health-care-job-grow...
If we're talking anecdotes, from what I've seen of administration in healthcare and military (family is in that business) and at bigCo (my business) we could likely handle a far more lean ratio of knowledge to support workers, but that often goes against leadership incentives/risk tolerance for less conventional strategic decisions. (although I think we're seeing vestiges in this through the pushes for e.g. devops and dev/test merges)
Capping or reducing healthcare cost as a % of GDP may help many other sectors to expand. On this basis politicians should first try to get the support of corporations to reduce their insurance costs, and try to change the argument - sustainable healthcare for all. This kind of corporate backing would counter the inevitable lobbying of pharma/medical corporations who will put their resources into countering any legislation that reduces their profit margins.
Pharmaceuticals are 5 large companies. The rest of the economy is 500. So let's imagine there is a bill that would reduce the cost of drugs by 50 billion dollars. Each non drug company would stand to save 100 million but each pharmaceutical company stands to lose 10 billion. This is a classic coordination problem, and free riding dictates the pharmaceuticals win everytime.
Tackling healthcare is one 'big issue' that could have a huge effect on the US economy and living standards. Seems a worthy 'legacy' project for Buffett to finance.
However, US private spending is much higher, so the total cost of healthcare is higher.
The OECD numbers for 2013 put US per capita spending at $9,086 compared with Swiss spending of $6,325. The OECD median is $3,661.
It would be better to compare the USA with Canada, which has a universal healthcare system at a lower cost to the state ($3,974 vs $4,197).
"Drugs must be effective, cost-effective and appropriate to be listed in the positive drug list (SL/Spezialitätenliste). The federal government sets the maximal allowable public price for drugs in the SL."
https://www.ispor.org/HTARoadMaps/SwitzerlandPH.asp
It is also the most expensive of the european OECD nations...
Which either demonstrates everything that is right or everything that is wrong with the world's leading free-market capitalist economy...
The medical industry is the only industry with a broad anti-trust exemption. What this means is that they do not have to publish prices like all other industries.
How can one expect to control costs if you cannot even know how much things cost?
Removing this anti-trust exemption and allowing the public to see prices for the common procedures would be a good start.
I echoed this idea in a comment yesterday. The medical industry is the only industry with a broad anti-trust exemption. What this means is that they do not have to publish prices like all other industries.
Could you elaborate on this? I don't see what publishing prices has to do with anti-trust, and certainly I have encountered "call for prices" elsewhere.
This kind of thing is outright criminal. We need transparent pricing regulation!
What will end up happening is the equivalent of MSRP in car sales - here's the list price, but since you're such a good guy, and we're running a promotion, you can get 5% off if you act today.
Even having the equivalent of car MSRPs would be a huge improvement. As it stands today, you often cannot get any price for a procedure beforehand, not even a "forget about insurance, I'm just going to pull out a wad of benjamins and start counting until you tell me it's enough" price.
Plus, car prices don't vary that much from MSRP. I can look up a car's MSRP and know that this is approximately what I'll pay. If I get a really good deal I might get away with paying 10-20% less. If the car is in extremely high demand, I might have to pay 10-20% more. But I can get a pretty decent idea. Medical pricing often varies by a factor of ten depending on whether you have insurance, and which provider it is.
I think the real problem is that Americans mostly aren't willing to have their government going around telling businesses to cut out their shit or else.
> Mandate a final, guaranteed, all-inclusive price
How would that work for something like birth? Depending on the amount of time spent in labor and a host of potential complications (some requiring presence of additional doctors like anesthesiologists or surgeons to perform a C-section) the costs will vary greatly.
> require disclosing every single discount made available to anybody, or even require charging the same price to everybody
That could work, as long as discounts don't evolve into kickbacks or rebates, but then why should an insurance company that signed up 10 customers receive the same discount as an insurance company that sent 100,000 people? The latter loses their leverage, which typically sends the prices up, not down.
Why should an insurance company that signed up 10 customers get the same price as one that signed up 100,000? Because health care is fundamentally incompatible with free market capitalism (information asymmetry is extreme, demand curves are whacked, and there's often no competition due to time constraints) so allowing this sort of thing just leads to monopolies.
To put it another way, they should receive the same discount because if they don't, the smaller insurance company will go out of business and we'll ultimately be left with a few gigantic ones who use their market position to simultaneously squeeze hospitals and customers.
Aren't there single-payer systems where medical care is still private, and the government pays them for services? I doubt those systems would put up with "we'll tell you how much you have to pay when we're done" so I'm sure there are examples to follow.
http://thehill.com/policy/healthcare/204868-new-price-transp...
https://www.bna.com/hospitals-required-price-n17179910723/
https://market-ticker.org/akcs-www?post=231949
For one, there seems a distinction to be made between "publishing" prices and individually receiving a quote in advance of work. If there's a technical sense in which the two are equivalent, I would recommend clarifying in casual conversation.
Those requirements also don't seem (though I could've missed something) to be a part of anti-trust law, per se. The requirement that prices be consistent is, in the cited Robinson-Patman Act (although that seems to only apply if you're crossing state lines?)
In other words, demand is inelastic.
And, most people can't afford to pay 10k or 100k out-of-pocket. So, it's not like managing your household budget. The funds have to come from somewhere else (insurance).
Also, healthcare is not easy to evaluate for a layperson. If my doctor says that I need 'procedure X', I'm relying on their expertise. Healthcare recommendations are not fungible products. If I'm buying a car, I can read reviews about the different models, reliability, etc. But my doctor's recommendation for me is highly specific to my personal health history.
So, for a lot of healthcare spending, it's not me that's choosing a medical procedure. Instead, I'm choosing to trust a doctor's recommendation. The doctor is the one that's recommending the procedure.
And the demand - as you pointed out - also depends heavily on trust. That said, most health problems aren't unique enough to require a completely bespoke solution.
So at least hypothetically, it's possible to shop around IF pricing and other data were available. But they are not, at least generally.
I found this book rather interesting -- https://www.amazon.com/dp/B01DRXKWRM/ref=dp-kindle-redirect?... -- where a company compiled their health care expenditures and made the data available to their employees.
Health insurance companies are able to negotiate lower prices for their subscribers due to leverage. Likewise, single payer would mean all subscribers would have their prices negotiated through a single entity.
Without consolidation of payment, the anti-trust exemptions for the healthcare industry means patients cannot effectively negotiate the cost for their care.
Single-payer would remedy that.
So HN, this field here is ripe for disruption. Like the kitchen remodeling stand at Lowe’s or Home Depot, why not a booth to connect people to competent doctors and medical specialists in Europe, Russia, or India with all medical records and diagnostics online, allowing people find the most competitive prices and options for their medical services.
Right now for a surgery if you need it, there are least three 14 hour non-stop direct flights daily to India or Dubai where well equipped hospitals and experienced surgeons will be available (added: at a fraction of the cost here)
meaning what? that a VC funded startup should come in and start offering health insurance? what are you suggesting? what does disruption even mean in this context?
let's get away from those corner cases where it's even thinkable to fly to Dubai for surgery. that's a high cost intervention for specific (wealthy) individuals. that isn't solving the problem of providing health care for 300 million people. how do you propose we do that?
Yes, travel is not a total solution for all 300 million people, but think along the lines of many packaged tour companies in cities who cater for international travellers and can arrange such facilities very efficiently. (I once had dental work done in India, and people don't realize how easy it is, the same kind of thing that you get here.)
There are plenty of businesses trying to offer more accessible medical services also. Urgent Care clinics are becoming popular in New York City, where I live.
None of this is doing much about cost though. The Walmart style sells things cheaply that are allowed to be sold cheaply. They don't sell what they are prevented from selling due to regulations or due to non-viability of offering the service due to staffing limitations. The Urgent Care style is going through the private health insurance system like just about every other medical care provider.
So I suggested an insurance "startup" because the space that seems to lack innovation is the payment side of the health care industry.
What would happen if US (a) lowered the bar for doctor certification or (b) automatically recognized foreign doctor and nursing diplomas from English-speaking (or Spanish-speaking, to accommodate some states) countries?
The problem outta not on the supply side, but at the parasitic insurer and drug supply side.
In other words, even if all Rx drugs were made free, current total healthcare cost growth rates would eradicate those savings in less than 2 years.
In other words, a privatized system will always fail to adequately cover certain groups of people: the poor, those with unusually expensive conditions, the unemployed, the elderly, etc. Providing coverage for those groups, motivated by humanitarian concerns, is the reason there is so much ideological debate. The system as it is currently constructed uses a combination of limited-scope public services (medicare for the elderly, medicaid for the extremely poor) and heavy-handed regulations (various acts of Congress) to cover those groups.
That is why we have so much ideological debate and why it needs to continue. Cost reduction alone won't solve the totality of issues in the system.
http://www.nahu.org/legislative/policydocuments/NAHUWhitePap...
Also, the lack of universal coverage here means that a lot of medical bills go unpaid, for many reasons including bankruptcy or even people giving the emergency room a fake name when they go in. The hospitals don't just eat that cost, they amortize it into the costs paid by patients who do pay their bills. Universal coverage would, therefore, lower the cost of care per individual by eliminating the costs of trying to collect from uninsured people who can't pay.
But the biggest ideological cost of health care in the US is our insistence on including the "free" market in paying for health care. Insurers have a ~25% profit margin. A single-payer system could be very inefficient and yet still come in far below that cost.
There's no such thing as a free lunch. If you don't pay for the damage caused by doctor's mistakes, you are just offloading part of the cost of your healthcare system onto a few unlucky people. If you do pay for it but it's not paid for by the doctors, you just re-invented malpractice insurance but with a different source of funding.
Also, if health care coverage were universal, we wouldn't need big medical settlements to cover future medical costs since those costs would already be covered.
But mistakes happen. How you deal with those mistakes is an ideological question. Do patients who suffer from those mistakes deserve large settlements to the detriment of the vastly larger amount of patients that receive quality care? The US system believes that while other countries choose to lower costs at the expense of those unlucky few.
Wouldn't cutting down regulation, and reducing the AMAs monopoly on doctors help?
Less regulation = less costs.
More doctors drive costs down too.
The left believes that healthcare should be a right - that everyone should get care regardless of whether you are homeless, or a billionaire.
The right believes that it is not a right. That you should only get healthcare if you earn it. If you are homeless, too bad. You die.
Now, conservatives know that they can't come right out and say it that way, but ultimately, that's what a lot of people believe. They don't want to pay for someone else's care.
So, the arguments aren't really about 'what is the most efficient way to pay for everyone to get healthcare'.
The arguments are about the fact that half the population doesn't want to pay for healthcare for someone else.
Those aren't the only costs though. A lot of the cost is on useless things like bureaucracy, middlemen and duplication.
For example, there are two very large hospitals within about a mile of my home solely because one of the insurance providers likes to build its own and providers don't like to share. You could cut costs significantly by simply demolishing one of the buildings and moving the staff to the other one.
SSC in particular noted that it was not any individual salaries that were the problem -- everyone's pay seemed about reasonable. Rather, what made the US so different was how much they had to spend in near-paranoid countermeasures against the dreaded "lawsuits".
That, I think, provided the clearest clue: in Europe, it's near impossible to "sue the school", "sue for malpractice" if they adhered to the regulations, and if you can, the loser pays. On top of that, the state automatically covers the injuries, so it's much less likely for resources to get lost in the black hole of litigation and discovery.
[1] http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
HN Discussion: https://news.ycombinator.com/item?id=13613687
The thing that is pretty remarkable is that you unfortunately realize just how far either political party is in addressing any of the issues brought in the piece.
Surely spending dramatically higher amounts than other countries, with no better effects, is enough to drive us to consider how we can reduce the costs of education - and should make us think long and hard before considering proposals that we should throw even more money at this.
It's surely true that having a well-educated workforce improves productivity, but it's also true that having a healthy workforce does the same. I'm having trouble finding much difference between the two examples.