from Wikipedia:
The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is not adding value in any way, directly or indirectly, except for himself. All he is doing is finding a way to make money from something that used to be free.
This feudal lord probably have invested in an upkeep of few knights who enforce that chains stays in place. And then lobbied at the court against complaints from merchants and peasants. He might have also have to bribe few judges.
Also historically feudal lords had been constantly in debt spending more on representation then they have earned. Some moneylenders might have taken all this rent from river chain. Or the feudal lord have spent that income on luxury items stimulating demand for art or trade with far away corners of the globe.
This is an example of how economist have no idea how making money works..
If I offer you the opportunity of not having your kneecaps broken in exchange for only $100/month, is this potentially completely fine because I could spend the money on "stimulating demand"?
Stupid Economists, already making your points for you:
> An example of rent-seeking in a modern economy is spending money on lobbying for government subsidies in order to be given wealth that has already been created, or to impose regulations on competitors, in order to increase market share.
> The concept of rent-seeking would also apply to corruption of bureaucrats who solicit and extract "bribe" or "rent" for applying their legal but discretionary authority for awarding legitimate or illegitimate benefits to clients.
What is it about a feudal lord or moneylender that the way they spend money is better than the way the merchants would have spent it? Further, just because the money has downstream effects doesn't mean that it was rightfully earned. All of your arguments could equally apply to pirates or bankrobbers.
Just because rent seekers spend their money does not make them productive members of society. In nature parasites have their own parasites, which can again have their own parasites. I suppose in a zero sum economy rent seeking doesn't hurt the economy (just certain members of the economy), but in a positive sum economy, if non-productive rent seekers are taking money from productive people this will cause the economy to be worse than it could have been. If people who would otherwise be productive are lured into rent seeking by the potential profits then it's a double loss. Not only are they taking capital from productive people that could have been used to create more wealth, but they themselves could have been producing wealth instead of being a drag on wealth creation.
There are certainly situations where organizations that seem like rent seekers are not entirely rent seekers, though. Government is the main example. Taxes can seem like a drag on wealth creation, and sometimes they are, but they also fund infrastructure, education, and stability, which are wealth multipliers.
The issue is also complicated by the fact that the world economy is very connected, but economic growth is often measured on a per country, corporation, or even individual basis. Also, aggregate wealth is not the be-all end-all metric. Wealth redistribution can sometimes lead to greater aggregate happiness, even if the amount of wealth stays the same or even decreases.
Overall, though, I think that the majority of rent seeking hurts the economy and the people in the economy more than it helps, but I would be very interested to see empirical data showing otherwise.
What's missing is the Bender solution: "I'll make my own system! With blackjack! And hookers!"
Barriers to entry are too high for a really free market to emerge.
Are the barriers too high? I've seen a lot of "modern" medical offices pop up in recent years, like One Medical and Carbon Health. Not to mention the scores of startups that specialize on more narrow parts of healthcare.
> Every year America spends about $5,000 more per person on health care than other rich countries do. Yet its people are not any healthier.
I think part of the reason Americans spend more on healthcare is precisely because they're unhealthy. According to the American CDC the obesity rate has reached a staggering 42.4% of adults[0], which brings with it a slew of health problems. This accounts for an additional $147 billion in healthcare spending, or $1,429 per person (with obesity).
Obesity, CHF, smoking, poisoned by air pollution or ground water waste, cancer due to the above...sedentary lifestyle, non examined mental life, glued to the TV and basing all opinions on cable news, no exercise and crappy diets...it's not a good way that many americans live.
A counter argument I see sometimes is that the reason Americans spend more on healthcare compared to other rich countries is that American consumers spend more on just about everything than most other rich countries (and also earn more money). I don’t really know how much merit the argument has.
And as a result we have bigger homes, bigger cars, bigger TVs.... but worse healthcare outcomes? Seems like some of that excess spending yields us more returns than others.
The things you mentioned are almost all inversely related to better healthcare outcomes, to grossly oversimplify a contributing factor.
* Bigger homes means you feel more comfortable being lazy and spending all your time indoors
* Bigger cars means you are incentivized to drive 20 miles to a restaurant in comfort instead of walking over to a closer one
* Bigger TVs means you spend all day "watching the game" instead of going out and playing a sport.
Once again, these are grossly oversimplified, but should drive home the central point that spending on some things can actually worsen outcomes of others.
> Bigger cars means you are incentivized to drive 20 miles to a restaurant in comfort instead of walking over to a closer one
For many (most?) people in the US, the idea of walking anywhere of consequence from their home is simply ludicrous. Restaurant, convenience store, grocery store, all are completely inaccessible except by car.
Suburb planning has explicitly disallowed that sort of living for most people. It has also made it nearly impossible to serve neighborhoods with any sort of reasonable public transit.
> Restaurant, convenience store, grocery store, all are completely inaccessible except by car.
This particular aspect of USA struck me as quite bizarre whenever I visited on business trips. More so as I’m from India where it’s almost a given that things that you need on a day to day basis (grocery, bakery, pharmacy, convenience store etc.,) are available within walking distance. Apart from an opportunity to get some fresh air it’s also a good way to interact with my neighborhood community.
I assumed this is how it’d be in any developed country until I moved to Netherlands. It’s not too different from India at all in that respect here.
So now I wonder, what factors lead to that kind of city planning in US. It was a real ordeal for me to get a meal outside in US, had to either walk for an hour or order taxi service (those were pre-Uber days).
Initially U.S cities were built according to a grid plan (grids being the most efficient means of urban planning at the time). This also made public transport easier. Grids however do not work well for cars. In response to increasing car ownership, T junctions were introduced to improve flow of traffic. The car also made it possible for people to live far from their place of work, thus the popularisation of suburbs. Other countries followed suit.
> So now I wonder, what factors lead to that kind of city planning in US.
A car requirement (and hence minimum fuel purchasing requirement) helps keep lower socioeconomic classes out of higher socioeconomic classes’ neighborhoods. This results in marked improvements in economic performance of children in school, as the public school students are determined by the area they are in, and spacing things out results in a populace with a minimum level of financial security who can afford to travel further.
The original impetus may not have been exactly that, as people generally like their space anyway, but it’s affects are well known. Historically, I’m sure there was also a racial component to it, with white people moving to more expensive areas that non white people couldn’t afford.
* Bigger homes means you feel more comfortable being lazy and spending all your time indoors
I call BS on that. Accordingly to this logic homeless must be the healthiest people. That aside, rich people (who also happen to have bigger houses) actually exercise more than the poor.
* Bigger cars means you are incentivized to drive 20 miles to a restaurant in comfort instead of walking over to a closer one
You telling that person with the smaller car would rather walk to the store (often VERY long walk in the US)? I call another BS here.
* Bigger TVs means you spend all day "watching the game" instead of going out and playing a sport.
Same argument as for size of the houses. I think you pulled these arguments right out of the place where the sun does not shine.
I think this is a reasonable criticism. The post you’re replying to appeals to common sense but I don’t see much reason to believe it would be borne out by facts
> American consumers spend more on just about everything than most other rich countries
Do you have a source for that?
In my experience living and working in a slew of countries around the world, the USA has the cheapest alcohol, cigarettes, cars, electricity, clothing, electronics, gas (and diesel), food at the supermarket, food at the restaurant and many other things of any developed country.
Because taxes are so low, stuff in America is extremely cheap compared to countries with tax-funded healthcare, higher education, etc.
I’m not saying things are more expensive but that the total spent is more. What do you think Americans do with their relatively higher incomes? Evidence would suggest that for the most part they aren’t just putting the difference straight into their savings accounts.
America spends 18% of GDP on healthcare, in the UK its about 9%. Arguably the UK could do with spending more but right now we get broadly similar outcomes for half the spending.
I'd argue it's unfixable for low income workers. Excessive sugar in all the cheap food is a trap they can't avoid. They don't have money to buy better food and don't have time to shop and cook for themselves. That's assuming they recognize this problem at all.
Since there is a higher incidence of smoking among poorer folks[0], couldn't the same argument apply to the massive sin tax on cigarettes? We justify such sin taxes as being to the benefit of discouraging a harmful health behavior and personally I see the same link with higher sugar consumption.
> It was tried and rolled back in chicago because it was deemed as unfairly targeting the poor.
There's no reason why you couldn't pair taxing sugar with price-subsidies on non-sugary foods. The US already knows how to subsidize food production. Just stop subsidizing corn syrup and shift the subsidies to something less clearly destructive.
I think a multipronged approach is needed. Many families in the food deserts lost the know how to cook properly. But it’s very unfortunate that the most subsidised crop is corn. If beans were, I am sure it would be perverted too somehow but maybe not as bad.
My general point is that the incentives today are all wrong. Many things need to be fixed and subsidies of corn syrup is one egregious thing.
More than 40 million Americans are on food stamps (govt food support). In reality, many food basics like milk, rice and beans are healthy and affordable.
Affordable, yes, but require more time and skill to cook a meal that hits the same reward centers as the edible junk sold in cheap restaurant chains... often both short in supply among those on food stamps.
Beans and all that isn't cheap overall: it takes will, effort and time to figure out what to buy and how to cook it. If that was packaged into cheap ready to eat burgers, spiced with something to make it more tolerable, then poor folks would switch to it. This approach isn't economically sound, though: it has 0 profit margins and it cuts deep into the fastfood & healthcare owners.
They are cheap if bought in bulk (which many poor people can't do because of upfront cost or lack of freezer space) and if there actually is a place to buy at least decent-quality vegs.
Personally I'm way more inclined to believe Americans are unhealthy because their health care system is too expensive, rather than the other way around. Obesity is treatable.
This is repeated a lot but if you actually look at the research you find that physical exercise has very little effect(except maybe as a preventative). That nutrition in general has a small effect. And dieting has a larger effect but is only temporary, and no dietary interventions have shown any real success over the long term.
Bariatric surgery is currently the only real effective treatment. With GLP agonists like semaglutide having similar effects at least in the near term.
I lost recently 70 lbs without any surgery. Talking about extreme cases I have no idea, never met any people above 300 lbs. I can only guess, that start is always the same. Personally I am not a friend of surgical interventions.
Oh sorry I'm not arguing that it never happens, just that in every clinical trial I've seen that followed participants for 5 years it was so rare to keep the weight off that the average weight loss for the group was insignificant(clinically not statistically).
That’s probably the same effect as with Weight Watchers where long time success is rather limited. I have been there too. After couple years old habits return, one starts eating bad things, something happens (let’s take some illness) and exercising ends. Pounds are coming back and cycle starts again.
> This is repeated a lot but if you actually look at the research you find that physical exercise has very little effect(except maybe as a preventative).
This baseless assertion is simply outright wrong, and utterly absurd on so many levels.
> Sorry there was some confusion. By long term I meant 3-10 year follow ups.
That only happens if the patient relapses into his previous unhealthy lifestyle.
You can't simply follow a poor high calory diet and a sedentary lifestyle and still expect zero consequences from your actions. If your problem is behavioral then you fix it by fixing the problems in your behavior.
The most expensive conditions in terms of direct health care costs are diabetes, Alzheimer’s, and osteoarthritis.
The most common chronic health conditions in the U.S. are hypertension (high blood pressure), dyslipidemia, and osteoarthritis.
Obesity is by far the greatest risk factor contributing to the burden of chronic diseases in the U.S. [1]
> 2 nights at the hospital for delivering a healthy baby may cost $50k-$100k to the insurance for healthy baby and mom.
Maybe I'm misremembering, but we had a ridiculous high deductible ($10k?) when we had our first kid, and I don't think we met it.
That said, I complain about the price of healthcare and insurance to anyone who will listen, and I hope someday it gets sorted out. So far the only solution I've found is to get a better paying job, which isn't a solution for most people.
Private hospital in NYC: Just the hospital "room and board" line is north of $40k: $13k per night of "enhanced nursery" for the newborn and around $10k per night for Mom. That's before all the doctors add their services.
No idea how you can make it lower than $10k :) Where was that?
Iowa. I think the base rate here is about $1k / night. Could be wrong on that though. Our oldest is four and half now, so it's been a while. It's possible I just didn't read the bills correctly. Either way I'm sure it was less than what you describe.
My experience in one of the most expensive suburbs of NYC, at the most highly rated hospital in the state, a baby with standard 2 night stay and delivery and no complications cost $20k or so all together with about $5k out of pocket on a gold HSA plan a couple years ago.
We only paid $6k from HSA (maxing out the out-of-pocket) but that Mt Sinai hospital charges $80k (after adjustments) and the insurance pays the rest. I should add there was a C-secyion that barely added $10k to the bill.
$1,000 sounds high. I just had one this morning in Russia at a very nice modern private clinic. The entire thing including anesthesiologist was under $75 completely out of pocket. It was amazing to me compared to my experience with healthcare in the US (I'm an American) - they gave us a price up front.
We pay way more per procedure than other countries, we get more procedures, and we get more expensive procedures.
I doubt obesity makes a very large difference because even though it increases morbidity I think it has a larger effect on mortality. If you're obese you might have to retire a few years early, but you'll also die even earlier missing out on years of being taken care of in a nursing home while you suffer from Alzheimer's.
Agreed. Look at the CDC's leading causes of premature death. A significant number are preventable (i.e., diet and lifestyle). Interesting enough, many of these are diseases that Covid 19 does well to exploit. If you are in good health, the chances of being taken to the grave by Covid 19 are rare.
What's odd is that the concept of comorbidies has been abandoned in the C19 era. There is little transparency when it comes to C19's co-conspirators.
Editorial: It troubles me when article after article about the high price is insulin fails to mention demand; and that close to all the demand created by Type 2 is avoidable.
Might there be manufacturer price gouging? Perhaps. But it's universally agreed that demand will increase price.
> Everyone hates pharmaceutical firms, but their share of health-care rent-seeking is relatively trivial, especially once you include the many midsized and small firms that are investing heavily.
This article misses the point.
People hate pharmaceuticals because of ridiculously high drug costs, and that's about it. If they can't produce drugs at profit without gouging potential end users then it should be nationalized or subsidized.
Pharmaceutical companies have massive advertising/marketing budgets, which a nationalized drug R&D program would not need. That lowers overall costs. The R&D and manufacturing costs would also be spread across all Americans instead of only the patients who need the drugs, so the costs would be much lower for the patients as well.
At least some of those marketing costs would still be needed, they'd just be called "education" or "outreach" or "access" programs. Patients and doctors still need to be informed of new advancements to improve outcomes.
For the second point, cost spreading helps particular people in particular circumstances, but doesn't lower overall cost. You're just running a wealth transfer or insurance program in addition at that point.
Patients do not need to be informed of new drugs, and never were until pharmaceutical companies lobbied Congress to remove the ban on direct advertising, which had been put in place as a consumer protection law due to 19th century "snake oil" salesmen/con-men. For doctors, a monthly publication of drugs currently in development, their status, and their uses would be adequate. It'd be much better for doctors to get their information from a published journal than the advertisements in some trade magazine or attractive reps handing out free samples.
Regarding You're just running a wealth transfer or insurance program in addition at that point. Yes, that would be a major purpose of nationalizing drug R&D and manufacturing. You could say the same about every public service.
That article provides pretty strong evidence that DTC ads, overall, are bad for patients:
58 percent [of physicians surveyed] agreed strongly that DTC ads make the drugs seem better than they really are.
Physicians thought the ads did not convey information about risks and benefits equally well. Seventy-eight percent of physicians believe their patients understand the possible benefits of the drug very well or somewhat, compared to 40 percent who believe their patients understand the possible risks, and 65 percent believe DTC ads confuse patients about the relative risks and benefits of prescription drugs. In addition, about 75 percent of physicians surveyed believed that DTC ads cause patients to think that the drug works better than it does, and many physicians felt some pressure to prescribe something when patients mentioned DTC ads.
Eight percent of physicians said they felt very pressured to prescribe the specific brand-name drug when asked.
Doctors believe that patients understand that they need to consult a health care professional about appropriate treatment. Eighty-two percent responded either "very well" or "somewhat" when asked whether they believe that their patients understand that only a doctor can decide whether a drug is right for them.
Note the last point means that 18% of the doctors believed that their patients thought they knew better than the doctor about whether or not a drug is right for them.
The few positive aspects, about patients being better informed about drug therapies that might help them, could be solved by making the monthly journal info I described available online. People go to Google and type in their symptoms and/or the name of their disease if they know it, and end up on sites like drugs.com and webmd.com. If Google were indexing the journal I described, and those other sites pulled from it too (publishing license should allow that, as it would be publicly funded), then patients would see all of the good information about the drugs, without the advertising bias.
I'm not sure a monthly roundup is a drop-in replacement. Presumably that could exist now, but isn't as effective for whatever reason.
On the other point, subsidizing drugs for those who need them is a perfectly reasonable goal. It just seemed to me (incorrectly, it appears) like you were suggesting this cost shifting lowers the total cost.
Why would a nationalized R&D program not need marketing? I can assure you that the doctors who are aware of new drugs in development is a very thin slice of all doctors.
Even if run by the government, you’d still need to market (educate) about new drugs.
And R&D in the big pharma firms is spread out across the entire population. That diabetes drug that sold $1B last year is paying for the cancer R&D this year.
It wouldn't if they were subsidized? I think a lot more auditing should take place. We are told drug corps spend a lot on R&D and that's factored into the price. That doesn't 'rhyme' with Gilead CEO's open letter[0] which says they base drug prices on the 'value it provides', not on the costs absorbed. My feeling is that drugs would be far cheaper if they would actually base them on the costs absorbed.
Subsidizing doesn't stop the price gouging though, it only distributes the cost and in fact may increase the incentive for price gouging since payment would be nearly guaranteed.
Why not free the intellectual property here instead?
Because without patents and exclusivity, the return on the massive R&D involved doesn't exist. Naturally that removes the incentive for R&D (in the market as it exists today.)
The incentive is that they get to market first as well as the inherent value of the medicine. They could also be paid the cost of R&D or a market price for the initial release of the information rather than a royalty (ransom model).
Do we have good data on what happens if you change the IP laws around drugs to reduce the moat that the developers get?
A common claim by big-pharma defenders is that if you take away the gouging aspect, drug development will stop. Is there some way we can test this experimentally on a subset of the drug market?
One way to do that would be to publicly fund research for clinical trials in drugs that do not have that moat.
It is totally possible to develop drugs without that moat, it just requires getting the money from somewhere.
I have no idea which method would produce better outcomes. Back when there was more science leadership at large pharma, I thought they would be more likely to take crazy bets that work out, that wouldn't necessarily happen at an NIH grant review panel. But last I checked most upper management in pharma are people that tout a PhD on their name, but it's for a field outside of a relevant science.
> It is totally possible to develop drugs without that moat, it just requires getting the money from somewhere.
US taxpayers seem to be able to find hundreds billions for R&D of fighter jets and aircraft carriers. Perhaps this is not as necessary as developing medicine. Or not invading and occupying random countries.
The military is used to protect "The American Order". There are some non-trivial benefits of the American Order:
1. Secure maritime trade for all. Protection against piracy and gone are the days when countries would just steal each other's cargo.
2. Global trading currency that is backed by the biggest economy in the world.
3. Establishment of a global trade network. Industrialised countries have access to more natural resources than ever without needing colonies.
Remember how the world was before the American Order. Colonies and hostility all over the world. Europe was in two world wars and would have probably been in another one with the Sovjets.
Generally speaking, people trust the American rule of law and trust that the US will help her allies. This only made relevant by having an ultra beefy military. It's hard to put a price on these things, and which portion the US tax payers have to pay.
Note that the current administration wants to cut back on these costs. European countries are benefitting a lot from the American Order, and should perhaps shoulder more of the costs.
Maintaining that superiority does not require trillion dollar useless fighter jet boondoggles, or invading a country for no country wide gain, or being stuck occupying said country for decades due to a fabricated problem, or the use of mercenaries (private military contractors) who have connections to politicians.
There is zero valid reason the world’s mightiest military should need mercenaries.
A far better plan to remain as the world leader would be to court the world’s top minds and lure them into living in the US permanently. And all it would have required is handing out green cards at graduation. But that is another topic.
Look at China’s aggression in the past couple of months, especially with India. It would never have happened 10 or 20 years back with a strong America. Yes, the US does serve as the world’s policeman.
The idea that the US could simply threaten the world’s factory with 4x the population of the US is ludicrous to me. They are top down, focused, and the only problem they had was lack of education, which is solved by time.
The only way for the US to have been able to threaten China without using force would have been to sow political discord and break it up into smaller countries. The US has 330M people, mostly getting older. China has 1.4B. Both have nukes so it’s not in anyone’s interest to engage militarily, and both have sufficient resources to not have to depend on someone else. And both need each other economically.
The US's strength has never solely been about it's individual strength. Together with the EU, Japan, Australia, SE Asian countries in general, it really evens up the numbers game. Plus the US has dominance in its hemisphere.
I don't know how prevalent this is but i remember watching AOC questioning gilead execs on "stealing" HIV patent for the drug and selling drug back to public for exorbitant prices.
(I'm using 2015 figures because they were the latest available the last time I challenged this bullshit)
Nope, drugs sales in the EU alone are enough to cover pharmaceutical R&D costs worldwide. What they aren't enough to cover is Marketing costs, but that's OK since most EU countries don't allow direct marketing of drugs.
That's what the US covers. Not quite so noble sounding that you're covering the cost of advertising though, is it?
Pharmaceutical R&D spending in 2015: USA $47B, Europe: $33B.
A big element here is that the free market is being choked out. Consumers walk into healthcare facilities without any idea what they will be paying when they walk out, and therefore have no ability to choose one facility over another based on price.
Because that ability doesn't exist, there is no downwards price pressure anywhere at the consumer level for medical services.
I think we'd see a lot more results if we asked 'why aren't these facilities putting more efforts into reducing costs' rather than asking 'what makes this so expensive?'
There are plenty of healthcare related things that one can shop for, such as this COVID test. The price could easily be advertised on the healthcare facilities website. But it’s not because it would hurt revenue since price transparency benefits buyers, and price obfuscation benefits sellers by allowing them to price discriminate and charge each seller the most each seller is able to pay.
> But it’s not because it would hurt revenue since price transparency benefits buyers, and price obfuscation benefits sellers by allowing them to price discriminate and charge each seller the most each seller is able to pay.
Are you against a monopsony in healthcare? If you care about having a fair-shake for every consumer, then that's the most consistent way of wielding power against would-be price gougers.
There’s a balance to be had, a marketplace functions best when there are many buyers and many sellers. Obviously, health issues aren’t a perfect marketplace due to buyers not being able to shop around many times, and due to buyers not having sufficient knowledge about what they are buying due to the complexity inherent in medicine.
In all cases though, I think price transparency is always good as that is what helps to properly allocate resources in the long run. And I think that published healthcare prices coupled with high deductible health insurance is a good idea as it would allow proper information about pricing to be transmitted, at least for minor issues such as covid tests or broken bones or routine visits and procedures.
For more complex cases, I would have to defer to those with expertise on how to ration resources.
> A big element here is that the free market is being choked out.
Given that every developed country has much lower per capita and per GDP costs, and pretty much none have more of a free market in health than the US, I'm pretty sure that's not the problem driving US prices high. I get that free market fundamentalism is one of the most influential religions in the US, but it's popularity doesn't make it contentions true any more than the popularity of Christian fundamentalism does for young earth creationism.
Other developed countries' public health facilities ration care based on medical need rather than ability to pay. There is always concierge medicine but it's not nearly to the extent in the US. Rationing of care this way means fewer medical procedures on the whole.
I've seen numbers to the effect that health outcomes are 30% genetic, 30% diet, 30% lifestyle, and 10% medical intervention. Frankly Americans don't need as many procedures done as they have done. Medical care is rationed everywhere and there is no way for supply to meet demand. The only question is how do you ration it. Turns out rationing by ability to pay leads to unnecessary procedures with no boost in outcomes.
The hard part to accept is that the system that imposes a 3-6 month wait for non-life threatening treatments is better because some number of cases resolve themselves during that time period and reduce total demand.
Overall medicine has limited tools to improve health compared to diet and exercise. We like to believe an intervention by someone else - surgical, pharmaceutical, etc. - can fix our problems, but that's not the case for many people. Medicine can really help with things such as pain management and trauma, but to an unsettling degree we rely on the body to heal itself.
Most developed nations have highly regulated healthcare systems, and part of the government involvement is in setting prices.
The U.S., through everything from safety regulations to IP laws to insurance regulation has destroyed competition, but outside of medicare isn't involved in determining prices. The result is predictable.
Markets work great when the incentives are right. It's hard to get incentives right in healthcare and most nations want medicine to be part of a government safety net, so they go the direction of socializing healthcare. Almost anything would be better than the system the U.S. has now.
> pretty much none have more of a free market in health than the US,
US healthcare doesn’t have a free market by any definition. You would need a buyer and seller agreeing on a price, and without price information, there is no market.
> Personally I would seek to understand why the doctor is billing so much and how that can become more fair for everyone involved.
For the same reason a McDonald’s worker bills closer to minimum wage - because that is the most the buyers are willing to pay. Solution to bringing prices down is to increase supply and/or decrease demand, and increase price transparency.
For who to blame, I think it is shared. The govt could have set a price ceiling for testing so people actually get tested. Yes, I think the bill was too high for the service provided, which was the test and checking vitals. For me I essentially had to get tested because I had a fever and my wife was not allowed to go back to work until I was cleared. Maybe I could have shopped around better.
Part of the issue is that the supply of doctors is kept artificially low in the US. Another part is: why the heck do you need an office visit for this? Why can’t you go directly to the lab?
A huge factor is multiple insurance companies add a lot of overhead to the system as they all try to negotiate lower prices. It’s common for a doctor to spend more time dealing with your insurance company after a visit than you. Which clearly means they need to dramatically raise prices to cover that overhead.
> It’s common for a doctor to spend more time dealing with your insurance company after a visit than you. Which clearly means they need to dramatically raise prices to cover that overhead.
How do you know the doctor wouldn’t be billing erroneously anyway? People have no idea what doctors do or what is appropriate. The insurance company serves as an educated advocate for the patient (they employ doctors and pharmacists) to reduce over billing.
Yes, the people working at insurance companies could be over zealous, but the same applies to healthcare providers.
If doctors didn’t want to deal with insurance, they are free to hang a sign that says $50 per 15 min consultation.
> The insurance company serves as an educated advocate for the patient (they employ doctors and pharmacists) to reduce over billing.
Insurance company profits are capped at a percentage of payout, and they are part of oligopolies protected by high barriers to entry, why would they reduce overbilling or advocate for patients?
Because if they payout too much then they have higher premiums compared to their competitors, which means customers would opt for a different insurer?
Obviously not forcing everyone to go through healthcare.gov crippled the ability for numerous health insurance to exist and compete, but that is a political problem.
With single payer systems it’s much easier to sanity check what’s going on. For example billion one organization for 20 hours of work per day is laughable, but spread that across 10 companies and they can’t tell. Similarly, having more data allows for better statistical analysis when combined with random sampling.
One option is to separate the verification process from the insurance companies. In other words you have some list of pre defined standards that are covered at some rate and then an independent agency applies those standards and looks for fraud.
Aka a hospital might negotiate a separate rate for stitches with each company, but they don’t get to decide if it was needed on a case by case basis. Alternatively, apply the Japanese system where all procedures have a single agreed upon rate negotiated regularly.
That function is also performed by insurance companies in the US, sometimes known as managed care organizations. Many large companies self insure and use health insurance companies’ resources to implement their health benefits.
Most, if not all, states outsource the implementation of their Medicaid plans to large insurers like Anthem or UHC or Humana, etc.
An agency outsourcing that function to a private company for all care in a state does not invalidate the savings. It’s a question of efficiency and conflict of interest not inherently a government function.
That said, outsourcing them back to the same insurance companies which also offer plans has major issues.
Different countries have different methods of counting. In Belgium, suspected cases in care homes are included in the figures, without any testing being done (https://www.euronews.com/2020/04/22/analysis-can-we-trust-be...), so the official figures are an overestimate. In the UK, there are two different figures published. The headline figure is for confirmed deaths (i.e. with COVID-19 being listed as the cause of death on death certificates), but the Office of National Statistics less frequently publishes excess deaths (i.e. compared to previous years). The Belgian per capita suspected death count, which is probably similar to its excess death count, does exceed the UK confirmed death count but is well below the UK excess death count.
The per capita figure in https://multimedia.tijd.be/oversterfte/ for VK (United Kingdom) is for confirmed deaths (62.2 per 100,000). In mid June, the total figure was at 42,000, while excess deaths totalled 65,000, so that would make UK excess deaths 96.3 per 100,000, significantly higher than the Belgian suspected figure of 84.4 per 100,000.
The U.S. health system is what happens when corruption goes on so long you just call it the culture. "All professions are a conspiracy against the layman." was said by either G.B. Shaw or Ambrose Bierce, depending on your reference point.
It's a form of business that is orthogonal to producing things people want, where instead it's mainly in the business of depriving people of what they need. Rent seeking is what professions and institutions are designed to do, to create scarcity in exchange for a promise of quality, but somehow that latter part gets lost.
Some years ago when "disruption" was the popular idea, I put together a list of vulnerable industries. The sharing economy was an attack on businesses whose profits depended on a regulatory bar to entry (Uber/AirBnB etc.) The list was based on the presence of labour unions and professional associations, using the hypothesis that their existence creates a price premium that tips the economics of their industry in favour of automation, or at least in favour of economic substitution away by customers to a new tech that meets %80 of their need. Maybe we have the technology now to create an economic rentier map that lays out parts of the economy that have artificially propped up rent-seeking groups, as a means to develop new tools to avoid them.
Regarding the rentierism of the health business, I've noticed an anecdotal trend among some aging boomers who are rejecting that system altogether, and choosing palliative care and to die at home instead of in the hallway of a hospital, or worse, spending years in a long term care home. The best thing that could happen to healthcare is that instead of seeing it as broken, we should recognize that it looks like that because works for someone where we can't see who or how, and the goal is not to problematize and fix it, but to make it work for everyone else.
> either G.B. Shaw or Ambrose Bierce, depending on your reference point.
I googled it, it's from Shaw's Doctor's Dilemma. (I'm a big fan of both those guys.) Only 3 hits on the internet saying it was Bierce - all 3 are your comments on HN! hehe.
EconTalk has many great episodes digging into interesting aspects that are touched on here: why the US healthcare so expensive for so little extra value.
Roberts is well-read and diplomatic, but I wouldn’t exactly call what he does with his show thoughtful engagement. The very few instances he has guests that truly diverge from his ideological dispositions, he mostly dismisses their arguments without the same rigor that he defends those within his biases. His conversation with Elizabeth Anderson on workplaces as a form of private government is a good example of this:
Ya. It'd be nice if the Freedom Markets™ advocates would remain mindful of the "freedom from coercion" parts of libertarianism. I remain mystified by the application of different standards for governments and corporations.
Russ isn’t 100% unbiased (is anyone), but what I like about his podcast (been a while since I last listened) is he is willing to bring people on with very different views and let’s them have the floor for a bit.
He also does a nice job of “O.K., this is where we have differing opinions”. Unlike a lot of media that covers politics issues, it’s much more civilized to me.
In the case of health care, consolidation has probably made things worse by muting competition. There are now five big insurance companies, three big wholesalers, three large pharmacy chains and three big benefit managers. In the case of health care, consolidation has probably made things worse by muting competition. There are now five big insurance companies, three big wholesalers, three large pharmacy chains and three big benefit managers.
That is the situation I see with pretty much all businesses. 2 to 3, maybe 5 large organizations who can outcompete everyone due to economies of scale, especially due to advancements in technology.
Healthcare administration isn't really a high tech business though.
I think the culprit here is obamacare; after all it was written by the insurance companies. Who's surprised that it benefits them the most? Insurance stocks absolutely took off after it was passed.
Databases, instant communications, time And chart tracking all allow healthcare facilities (and every other private business) to scale up much easier and with far less labor than ever before.
I can right now download all my health info into Apple health app from my healthcare provider’s website and use that anywhere I want, whereas that might have required a few calls and someone’s time.
As I see it consolidation isn’t the root cause. The central problem is that pharmacy benefits manager have been allowed to invert the normal market. Normally for someone arranging the “resale” of a product from a producer to costumers would make more money if the price got negotiated down. But since PBMs have forced rebates of 70%+ that means that they are making most of the money on a drug sale. So even thought they are representing the buyers at the negotiation table, they want the prices as high as they can be.
Producers are sitting down at the table and outbitting each other not on how low the price could be, but how high they are willing to make it, it’s absurd.
And you’d think the insurance companies or pharmacies would object, but often they are owned by the same group so they all just share the proceeds from ripping of the people.
I mean sure it’s an effect in the sense that when it happens we call it consolidation. My point is that none of the groups owning the insurance companies are buying up the pharmaceutical companies. And why should they? They are pulling home 2/3 of the profits of the price hiking campaigns they are driving and go about blaming it all on the companies who’s day-to-day is focused all about how we can make these drug cheaper, yet that never reaches the consumer.
I can't read due to pay wall, but have a guess. Data systems, such as Epic, seem unnecessarily close walled. Is Epic the big winner, pharma, or something else?
> The excess profits of the health-care firms are equivalent to $200 per American per year, compared with $69 for the telecoms and cable TV industry and $25 captured by the airline oligopoly. Only the five big tech “platform” firms, with a figure of $250, are more brazen gougers.
Actually, you are wrong. PCPs start at 90-100k salary. If you are quoting gross income before expenses then its about 200k. The overhead of running a physicians office is high. In terms of specialists, it's come down quite a bit. Just check the ads in the back of professional journals. 400k is more like the 70s.
Also you can look at the training of all the recent physicians, - many are from abroad. Same thing that the Silicon valley industry has been doing , hiring foreigners at lower pay. Education for physicians abroad is FREE. Whereas here you have to go to college (>50k a year tuition x 4) AND medical school (60k a year x 4) and then training 3-7 years at low income (40k a year) and crap life style.
That being said, the overall point is correct. There is a HUGE opportunity cost to becoming a physician. People would rather ignore that because it doesn't support their argument. It's much easier to cherry pick point-in-time data without looking at the larger picture.
It's my perception, not saying it's necessarily universally applicable to the US or all types of doctors, that nobody sees a doctor any more. You see a nurse practitioner or a physicians assistant. There might be one actual doctor per practice.
So talking about what doctors make might be misleading.
My wife is a resident physician. I'm a software engineer. I will out earn my wife for most of our careers - even with her at a $250k salary. My wife will eventually out earn me, but I doubt her career wages ($/hour) will ever come above mine. It's really easy to rip on doctors when you only look at a single data point without understanding the larger picture.
That $250k salary looks outrageous because you're ignoring all of the opportunity cost that went to get there.
* 4 years of med school. $40k tuition/year. $160k in principal total.
* 4 years of med school. No salary. $100k/year opportunity cost. $400k total.
* 4 years of residency. $60k salary. Yay, she's making an income. Boo, it's literally all going towards student loans. $80k/year opportunity cost. $320k total.
* Congrats, you're now an attending. You're living the "good life". Oh, don't forget that $160k of tuition, it's full cost is roughly $300k.
* $400k + $320k + $300k = ~$1M in the hole. That doesn't include a bunch of misc. expenses - exams, re-locations, interviews (residency programs don't pay for your travel).
During that entire time, my wife is consistently outworking me by 50% to 100%. Step exams, board exams, residency interview season (holy shit that's a stressful time), volunteering, research, etc, etc, etc. Even when she's an attending, she still has a bunch of things she needs to do to maintain her licensing.
This is also $1M in the hole in a critical part of building a life/savings. A good portion/all of that $1M could be going towards long term investments like retirement, college funds, etc. We're basically 10 years behind on retirement. That's easily $500k of interest lost.
----
Physician pay is only 8.6% of health care costs [0]. You could cut physician salaries in half and the effects on your health care would be trivial.
I recently got a shock when I went for a tooth extraction. A nurse and a surgeon spent an hour to complete the procedure. It came out to ~$6000. I had to pay for $700 for calcium grafting right then and there and they were going to get back to me for the remaining after consulting with insurance plan. I am still waiting for the call, albeit terrified of the possibilities.
I understand there are many parties in the food-chain. Still $6K for two people for an hour, feels like ripped to the gills - almost dirty.
reminds me of an old joke: 15$ for positioning a screw, 10.000$ to know where to put that screw.
If the US wants to tackle its healthcare costs, it not only has to get rid of the pointless middlemen everywhere and the notion of uninsured people whose bills have to be picked up by the rest, but also enlarge its supply of new doctors, and reduce the student debt they have to pay off.
This paper says 4% of cost goes towards "excess profits". I accept this without reservation.
But it remains unsatisfying.
What about the other overheads? Marketing, customer acquisition and retention? Health plan negotiators? Payment processing? Executive compensation? Etc, etc.
Many others have guesstimated USA healthcare costs 50% more per capita than Canada. So eliminating administrative overhead would whack 1/3rd of the costs, right?
Advocates for single payer could better emphasize all the unnecessary inefficiencies of our Freedom Markets™ health care system. All those "bullshit jobs" David Graeber has been telling us about.
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[ 3.3 ms ] story [ 218 ms ] threadAlso historically feudal lords had been constantly in debt spending more on representation then they have earned. Some moneylenders might have taken all this rent from river chain. Or the feudal lord have spent that income on luxury items stimulating demand for art or trade with far away corners of the globe.
This is an example of how economist have no idea how making money works..
https://en.m.wikipedia.org/wiki/Kinney_Parking_Company
> An example of rent-seeking in a modern economy is spending money on lobbying for government subsidies in order to be given wealth that has already been created, or to impose regulations on competitors, in order to increase market share.
> The concept of rent-seeking would also apply to corruption of bureaucrats who solicit and extract "bribe" or "rent" for applying their legal but discretionary authority for awarding legitimate or illegitimate benefits to clients.
What is it about a feudal lord or moneylender that the way they spend money is better than the way the merchants would have spent it? Further, just because the money has downstream effects doesn't mean that it was rightfully earned. All of your arguments could equally apply to pirates or bankrobbers.
[1] https://en.wikipedia.org/wiki/Rent-seeking
There are certainly situations where organizations that seem like rent seekers are not entirely rent seekers, though. Government is the main example. Taxes can seem like a drag on wealth creation, and sometimes they are, but they also fund infrastructure, education, and stability, which are wealth multipliers.
The issue is also complicated by the fact that the world economy is very connected, but economic growth is often measured on a per country, corporation, or even individual basis. Also, aggregate wealth is not the be-all end-all metric. Wealth redistribution can sometimes lead to greater aggregate happiness, even if the amount of wealth stays the same or even decreases.
Overall, though, I think that the majority of rent seeking hurts the economy and the people in the economy more than it helps, but I would be very interested to see empirical data showing otherwise.
I think part of the reason Americans spend more on healthcare is precisely because they're unhealthy. According to the American CDC the obesity rate has reached a staggering 42.4% of adults[0], which brings with it a slew of health problems. This accounts for an additional $147 billion in healthcare spending, or $1,429 per person (with obesity).
[0] https://www.cdc.gov/obesity/data/adult.html
* Bigger homes means you feel more comfortable being lazy and spending all your time indoors
* Bigger cars means you are incentivized to drive 20 miles to a restaurant in comfort instead of walking over to a closer one
* Bigger TVs means you spend all day "watching the game" instead of going out and playing a sport.
Once again, these are grossly oversimplified, but should drive home the central point that spending on some things can actually worsen outcomes of others.
For many (most?) people in the US, the idea of walking anywhere of consequence from their home is simply ludicrous. Restaurant, convenience store, grocery store, all are completely inaccessible except by car.
Suburb planning has explicitly disallowed that sort of living for most people. It has also made it nearly impossible to serve neighborhoods with any sort of reasonable public transit.
This particular aspect of USA struck me as quite bizarre whenever I visited on business trips. More so as I’m from India where it’s almost a given that things that you need on a day to day basis (grocery, bakery, pharmacy, convenience store etc.,) are available within walking distance. Apart from an opportunity to get some fresh air it’s also a good way to interact with my neighborhood community.
I assumed this is how it’d be in any developed country until I moved to Netherlands. It’s not too different from India at all in that respect here.
So now I wonder, what factors lead to that kind of city planning in US. It was a real ordeal for me to get a meal outside in US, had to either walk for an hour or order taxi service (those were pre-Uber days).
What other countries? The US is very much an outlier. The only one I can think of is maybe Australia?
A car requirement (and hence minimum fuel purchasing requirement) helps keep lower socioeconomic classes out of higher socioeconomic classes’ neighborhoods. This results in marked improvements in economic performance of children in school, as the public school students are determined by the area they are in, and spacing things out results in a populace with a minimum level of financial security who can afford to travel further.
The original impetus may not have been exactly that, as people generally like their space anyway, but it’s affects are well known. Historically, I’m sure there was also a racial component to it, with white people moving to more expensive areas that non white people couldn’t afford.
I call BS on that. Accordingly to this logic homeless must be the healthiest people. That aside, rich people (who also happen to have bigger houses) actually exercise more than the poor.
* Bigger cars means you are incentivized to drive 20 miles to a restaurant in comfort instead of walking over to a closer one
You telling that person with the smaller car would rather walk to the store (often VERY long walk in the US)? I call another BS here.
* Bigger TVs means you spend all day "watching the game" instead of going out and playing a sport.
Same argument as for size of the houses. I think you pulled these arguments right out of the place where the sun does not shine.
Not to put too fine a point on it, but maybe "bigger $things" and "worse outcome" are on the same side of the graph.
Do you have a source for that?
In my experience living and working in a slew of countries around the world, the USA has the cheapest alcohol, cigarettes, cars, electricity, clothing, electronics, gas (and diesel), food at the supermarket, food at the restaurant and many other things of any developed country.
Because taxes are so low, stuff in America is extremely cheap compared to countries with tax-funded healthcare, higher education, etc.
But mostly they're buying the stuff I talked about above. Consumerism.
It was tried and rolled back in chicago because it was deemed as unfairly targeting the poor.
[0] https://truthinitiative.org/research-resources/targeted-comm...
There's no reason why you couldn't pair taxing sugar with price-subsidies on non-sugary foods. The US already knows how to subsidize food production. Just stop subsidizing corn syrup and shift the subsidies to something less clearly destructive.
That makes a big assumption that people aren't buying more spinach because of price of spinach.
beans and rice are already super cheap. Much healthier and cheaper option than mcdonalds.
Why are you slyly shifting from "sugar" to "mcdonalds"? Minus drinks and desserts, McDonalds' offerings are not high in sugar.
> That makes a big assumption that people aren't buying more spinach because of price of spinach.
The price per calorie of spinach is extremely high. Micronutrients are great and all, but you can't live off micronutrients alone.
Aren't carbohydrates sugar though?
Why is the distinction between sugar in drinks and sugar is burger buns relevant to the discussion.
> Micronutrients are great and all, but you can't live off micronutrients alone.
Why did you slyly ignore 'beans and rice' in my comment. I wasn't suggesting people get their calories from spinach, what a weird interpretation.
my mexican family of 5 ate this combo every single day ,growing up. spinach + rice+ beans and occasional meat was afforable on one gardner's salary.
My general point is that the incentives today are all wrong. Many things need to be fixed and subsidies of corn syrup is one egregious thing.
McDonalds is not cheap, but it’s easy. It astounds me how many people eat out almost every meal.
How?
Bariatric surgery is currently the only real effective treatment. With GLP agonists like semaglutide having similar effects at least in the near term.
This baseless assertion is simply outright wrong, and utterly absurd on so many levels.
* https://www.acpjournals.org/doi/abs/10.7326/0003-4819-133-2-...
* https://www.nature.com/articles/0800499
Please don't spread misinformation.
Weight loss from diet/exercise will definitely persist for a year or even a couple.
Also specifically about exercise your study says "[Weight] did not change in the exercise without weight loss [group]"
That only happens if the patient relapses into his previous unhealthy lifestyle.
You can't simply follow a poor high calory diet and a sedentary lifestyle and still expect zero consequences from your actions. If your problem is behavioral then you fix it by fixing the problems in your behavior.
1. https://milkeninstitute.org/reports/costs-chronic-disease-us....
The fact that hospital/physicians charge as much and insurance accepts to pay is not due to some unhealthy habits or chronic diseases in the US.
Edit: of course your point stands and the higher rate of chronic diseases makes it worse.
Maybe I'm misremembering, but we had a ridiculous high deductible ($10k?) when we had our first kid, and I don't think we met it.
That said, I complain about the price of healthcare and insurance to anyone who will listen, and I hope someday it gets sorted out. So far the only solution I've found is to get a better paying job, which isn't a solution for most people.
No idea how you can make it lower than $10k :) Where was that?
I know, couldn't believe it either
I doubt obesity makes a very large difference because even though it increases morbidity I think it has a larger effect on mortality. If you're obese you might have to retire a few years early, but you'll also die even earlier missing out on years of being taken care of in a nursing home while you suffer from Alzheimer's.
What's odd is that the concept of comorbidies has been abandoned in the C19 era. There is little transparency when it comes to C19's co-conspirators.
Editorial: It troubles me when article after article about the high price is insulin fails to mention demand; and that close to all the demand created by Type 2 is avoidable.
Might there be manufacturer price gouging? Perhaps. But it's universally agreed that demand will increase price.
This article misses the point.
People hate pharmaceuticals because of ridiculously high drug costs, and that's about it. If they can't produce drugs at profit without gouging potential end users then it should be nationalized or subsidized.
For the second point, cost spreading helps particular people in particular circumstances, but doesn't lower overall cost. You're just running a wealth transfer or insurance program in addition at that point.
Regarding You're just running a wealth transfer or insurance program in addition at that point. Yes, that would be a major purpose of nationalizing drug R&D and manufacturing. You could say the same about every public service.
https://www.fda.gov/drugs/drug-information-consumers/impact-...
The FDA identified several benefits of DTC ads.
58 percent [of physicians surveyed] agreed strongly that DTC ads make the drugs seem better than they really are.
Physicians thought the ads did not convey information about risks and benefits equally well. Seventy-eight percent of physicians believe their patients understand the possible benefits of the drug very well or somewhat, compared to 40 percent who believe their patients understand the possible risks, and 65 percent believe DTC ads confuse patients about the relative risks and benefits of prescription drugs. In addition, about 75 percent of physicians surveyed believed that DTC ads cause patients to think that the drug works better than it does, and many physicians felt some pressure to prescribe something when patients mentioned DTC ads.
Eight percent of physicians said they felt very pressured to prescribe the specific brand-name drug when asked.
Doctors believe that patients understand that they need to consult a health care professional about appropriate treatment. Eighty-two percent responded either "very well" or "somewhat" when asked whether they believe that their patients understand that only a doctor can decide whether a drug is right for them.
Note the last point means that 18% of the doctors believed that their patients thought they knew better than the doctor about whether or not a drug is right for them.
The few positive aspects, about patients being better informed about drug therapies that might help them, could be solved by making the monthly journal info I described available online. People go to Google and type in their symptoms and/or the name of their disease if they know it, and end up on sites like drugs.com and webmd.com. If Google were indexing the journal I described, and those other sites pulled from it too (publishing license should allow that, as it would be publicly funded), then patients would see all of the good information about the drugs, without the advertising bias.
On the other point, subsidizing drugs for those who need them is a perfectly reasonable goal. It just seemed to me (incorrectly, it appears) like you were suggesting this cost shifting lowers the total cost.
Even if run by the government, you’d still need to market (educate) about new drugs.
And R&D in the big pharma firms is spread out across the entire population. That diabetes drug that sold $1B last year is paying for the cancer R&D this year.
[0] https://www.gilead.com/news-and-press/press-room/press-relea...
Why not free the intellectual property here instead?
https://www.wsj.com/amp/articles/how-other-countries-freeloa...
A common claim by big-pharma defenders is that if you take away the gouging aspect, drug development will stop. Is there some way we can test this experimentally on a subset of the drug market?
It is totally possible to develop drugs without that moat, it just requires getting the money from somewhere.
I have no idea which method would produce better outcomes. Back when there was more science leadership at large pharma, I thought they would be more likely to take crazy bets that work out, that wouldn't necessarily happen at an NIH grant review panel. But last I checked most upper management in pharma are people that tout a PhD on their name, but it's for a field outside of a relevant science.
US taxpayers seem to be able to find hundreds billions for R&D of fighter jets and aircraft carriers. Perhaps this is not as necessary as developing medicine. Or not invading and occupying random countries.
1. Secure maritime trade for all. Protection against piracy and gone are the days when countries would just steal each other's cargo. 2. Global trading currency that is backed by the biggest economy in the world. 3. Establishment of a global trade network. Industrialised countries have access to more natural resources than ever without needing colonies.
Remember how the world was before the American Order. Colonies and hostility all over the world. Europe was in two world wars and would have probably been in another one with the Sovjets.
Generally speaking, people trust the American rule of law and trust that the US will help her allies. This only made relevant by having an ultra beefy military. It's hard to put a price on these things, and which portion the US tax payers have to pay.
Note that the current administration wants to cut back on these costs. European countries are benefitting a lot from the American Order, and should perhaps shoulder more of the costs.
There is zero valid reason the world’s mightiest military should need mercenaries.
A far better plan to remain as the world leader would be to court the world’s top minds and lure them into living in the US permanently. And all it would have required is handing out green cards at graduation. But that is another topic.
Look at China’s aggression in the past couple of months, especially with India. It would never have happened 10 or 20 years back with a strong America. Yes, the US does serve as the world’s policeman.
The only way for the US to have been able to threaten China without using force would have been to sow political discord and break it up into smaller countries. The US has 330M people, mostly getting older. China has 1.4B. Both have nukes so it’s not in anyone’s interest to engage militarily, and both have sufficient resources to not have to depend on someone else. And both need each other economically.
China has India right next door.
https://www.nytimes.com/2019/11/07/business/gilead-truvada-h...
is corruption only explanation of how this happened?
Nope, drugs sales in the EU alone are enough to cover pharmaceutical R&D costs worldwide. What they aren't enough to cover is Marketing costs, but that's OK since most EU countries don't allow direct marketing of drugs.
That's what the US covers. Not quite so noble sounding that you're covering the cost of advertising though, is it?
Pharmaceutical R&D spending in 2015: USA $47B, Europe: $33B.
Total drug sales Europe 2015: $190B
The government for not collecting taxes from you and using that money to pay the doctor?
The doctor for billing too high for the visit?
The insurance company for not covering more of the price?
Personally I would seek to understand why the doctor is billing so much and how that can become more fair for everyone involved.
Because that ability doesn't exist, there is no downwards price pressure anywhere at the consumer level for medical services.
I think we'd see a lot more results if we asked 'why aren't these facilities putting more efforts into reducing costs' rather than asking 'what makes this so expensive?'
It's important to note that the downward pressure you'd see here is only for elastic goods which most healthcare-related things likely aren't.
Are you against a monopsony in healthcare? If you care about having a fair-shake for every consumer, then that's the most consistent way of wielding power against would-be price gougers.
In all cases though, I think price transparency is always good as that is what helps to properly allocate resources in the long run. And I think that published healthcare prices coupled with high deductible health insurance is a good idea as it would allow proper information about pricing to be transmitted, at least for minor issues such as covid tests or broken bones or routine visits and procedures.
For more complex cases, I would have to defer to those with expertise on how to ration resources.
Given that every developed country has much lower per capita and per GDP costs, and pretty much none have more of a free market in health than the US, I'm pretty sure that's not the problem driving US prices high. I get that free market fundamentalism is one of the most influential religions in the US, but it's popularity doesn't make it contentions true any more than the popularity of Christian fundamentalism does for young earth creationism.
I've seen numbers to the effect that health outcomes are 30% genetic, 30% diet, 30% lifestyle, and 10% medical intervention. Frankly Americans don't need as many procedures done as they have done. Medical care is rationed everywhere and there is no way for supply to meet demand. The only question is how do you ration it. Turns out rationing by ability to pay leads to unnecessary procedures with no boost in outcomes.
The hard part to accept is that the system that imposes a 3-6 month wait for non-life threatening treatments is better because some number of cases resolve themselves during that time period and reduce total demand.
Overall medicine has limited tools to improve health compared to diet and exercise. We like to believe an intervention by someone else - surgical, pharmaceutical, etc. - can fix our problems, but that's not the case for many people. Medicine can really help with things such as pain management and trauma, but to an unsettling degree we rely on the body to heal itself.
The U.S., through everything from safety regulations to IP laws to insurance regulation has destroyed competition, but outside of medicare isn't involved in determining prices. The result is predictable.
Markets work great when the incentives are right. It's hard to get incentives right in healthcare and most nations want medicine to be part of a government safety net, so they go the direction of socializing healthcare. Almost anything would be better than the system the U.S. has now.
US healthcare doesn’t have a free market by any definition. You would need a buyer and seller agreeing on a price, and without price information, there is no market.
For the same reason a McDonald’s worker bills closer to minimum wage - because that is the most the buyers are willing to pay. Solution to bringing prices down is to increase supply and/or decrease demand, and increase price transparency.
How do you know the doctor wouldn’t be billing erroneously anyway? People have no idea what doctors do or what is appropriate. The insurance company serves as an educated advocate for the patient (they employ doctors and pharmacists) to reduce over billing.
Yes, the people working at insurance companies could be over zealous, but the same applies to healthcare providers.
If doctors didn’t want to deal with insurance, they are free to hang a sign that says $50 per 15 min consultation.
Insurance company profits are capped at a percentage of payout, and they are part of oligopolies protected by high barriers to entry, why would they reduce overbilling or advocate for patients?
Obviously not forcing everyone to go through healthcare.gov crippled the ability for numerous health insurance to exist and compete, but that is a political problem.
Aka a hospital might negotiate a separate rate for stitches with each company, but they don’t get to decide if it was needed on a case by case basis. Alternatively, apply the Japanese system where all procedures have a single agreed upon rate negotiated regularly.
Most, if not all, states outsource the implementation of their Medicaid plans to large insurers like Anthem or UHC or Humana, etc.
That said, outsourcing them back to the same insurance companies which also offer plans has major issues.
On your own initiative ( partially paid back):
- 9.6€ for the Covid test
- 17 € for the doctor visit
By Government:
- fully paid back by our health care, including doctor visit
I love transparent pricing :)
The per capita figure in https://multimedia.tijd.be/oversterfte/ for VK (United Kingdom) is for confirmed deaths (62.2 per 100,000). In mid June, the total figure was at 42,000, while excess deaths totalled 65,000, so that would make UK excess deaths 96.3 per 100,000, significantly higher than the Belgian suspected figure of 84.4 per 100,000.
NY has ~19M people, death per 1M ~1700 Belgium has ~11M people, death per 1M ~840
The US has 5 states with a far higher death rate than Belgium: https://www.worldometers.info/coronavirus/country/us/ So far.
Belgium counts any suspected Covid death as a confirmed one, so we have approx. 2* as much deaths in statistics.
It's mentioned a lot, but I guess not everyone knows ;)
It's a form of business that is orthogonal to producing things people want, where instead it's mainly in the business of depriving people of what they need. Rent seeking is what professions and institutions are designed to do, to create scarcity in exchange for a promise of quality, but somehow that latter part gets lost.
Some years ago when "disruption" was the popular idea, I put together a list of vulnerable industries. The sharing economy was an attack on businesses whose profits depended on a regulatory bar to entry (Uber/AirBnB etc.) The list was based on the presence of labour unions and professional associations, using the hypothesis that their existence creates a price premium that tips the economics of their industry in favour of automation, or at least in favour of economic substitution away by customers to a new tech that meets %80 of their need. Maybe we have the technology now to create an economic rentier map that lays out parts of the economy that have artificially propped up rent-seeking groups, as a means to develop new tools to avoid them.
Regarding the rentierism of the health business, I've noticed an anecdotal trend among some aging boomers who are rejecting that system altogether, and choosing palliative care and to die at home instead of in the hallway of a hospital, or worse, spending years in a long term care home. The best thing that could happen to healthcare is that instead of seeing it as broken, we should recognize that it looks like that because works for someone where we can't see who or how, and the goal is not to problematize and fix it, but to make it work for everyone else.
I googled it, it's from Shaw's Doctor's Dilemma. (I'm a big fan of both those guys.) Only 3 hits on the internet saying it was Bierce - all 3 are your comments on HN! hehe.
This episode about the Oklahoma group that has had low cost & transparent prices for surgeries for many years. http://www.econtalk.org/keith-smith-on-free-market-health-ca...
This one on why we get such expensive drugs with marginal benefit: http://www.econtalk.org/vinay-prasad-on-cancer-drugs-medical...
This one on benefit management companies terrifying behavior: http://www.econtalk.org/robin-feldman-on-drugs-money-and-sec...
(Also PS Russ Roberts on this show is a treasure. His way of thoughtfully engaging with others is something I try to learn from.)
https://www.econtalk.org/elizabeth-anderson-on-worker-rights...
He also does a nice job of “O.K., this is where we have differing opinions”. Unlike a lot of media that covers politics issues, it’s much more civilized to me.
I think the culprit here is obamacare; after all it was written by the insurance companies. Who's surprised that it benefits them the most? Insurance stocks absolutely took off after it was passed.
I can right now download all my health info into Apple health app from my healthcare provider’s website and use that anywhere I want, whereas that might have required a few calls and someone’s time.
Source: worked for an independent specialty pharmacy that was purchased by a PBM that in turn merged with a major national insurer
wow!
The base rate of the profession is around 250k per year. Specialities are not included in that calculation.
Specialities are closer to 400k to 500k per year.
This is not natural. This is 130+ years of regulatory capture. Other countries pay their physicians half as much.
Not to mention outcomes are basically the same.
Also you can look at the training of all the recent physicians, - many are from abroad. Same thing that the Silicon valley industry has been doing , hiring foreigners at lower pay. Education for physicians abroad is FREE. Whereas here you have to go to college (>50k a year tuition x 4) AND medical school (60k a year x 4) and then training 3-7 years at low income (40k a year) and crap life style.
That being said, the overall point is correct. There is a HUGE opportunity cost to becoming a physician. People would rather ignore that because it doesn't support their argument. It's much easier to cherry pick point-in-time data without looking at the larger picture.
So talking about what doctors make might be misleading.
That $250k salary looks outrageous because you're ignoring all of the opportunity cost that went to get there.
* 4 years of med school. $40k tuition/year. $160k in principal total.
* 4 years of med school. No salary. $100k/year opportunity cost. $400k total.
* 4 years of residency. $60k salary. Yay, she's making an income. Boo, it's literally all going towards student loans. $80k/year opportunity cost. $320k total.
* Congrats, you're now an attending. You're living the "good life". Oh, don't forget that $160k of tuition, it's full cost is roughly $300k.
* $400k + $320k + $300k = ~$1M in the hole. That doesn't include a bunch of misc. expenses - exams, re-locations, interviews (residency programs don't pay for your travel).
During that entire time, my wife is consistently outworking me by 50% to 100%. Step exams, board exams, residency interview season (holy shit that's a stressful time), volunteering, research, etc, etc, etc. Even when she's an attending, she still has a bunch of things she needs to do to maintain her licensing.
This is also $1M in the hole in a critical part of building a life/savings. A good portion/all of that $1M could be going towards long term investments like retirement, college funds, etc. We're basically 10 years behind on retirement. That's easily $500k of interest lost.
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Physician pay is only 8.6% of health care costs [0]. You could cut physician salaries in half and the effects on your health care would be trivial.
[0] https://www.beckershospitalreview.com/compensation-issues/ph...
I understand there are many parties in the food-chain. Still $6K for two people for an hour, feels like ripped to the gills - almost dirty.
If the US wants to tackle its healthcare costs, it not only has to get rid of the pointless middlemen everywhere and the notion of uninsured people whose bills have to be picked up by the rest, but also enlarge its supply of new doctors, and reduce the student debt they have to pay off.
But it remains unsatisfying.
What about the other overheads? Marketing, customer acquisition and retention? Health plan negotiators? Payment processing? Executive compensation? Etc, etc.
Many others have guesstimated USA healthcare costs 50% more per capita than Canada. So eliminating administrative overhead would whack 1/3rd of the costs, right?
Advocates for single payer could better emphasize all the unnecessary inefficiencies of our Freedom Markets™ health care system. All those "bullshit jobs" David Graeber has been telling us about.