Don't assume high spending necessarily means poor overall health. Two people in my household are on modern fancy drugs for autoimmune conditions (upadacitinib and etanercept). They work spectacularly well and cost our insurance company thousands of dollars a month. And the family members taking them are doing great!
both my cousins have a similar condition, one of my cousins cannot live without these drugs/transfusions. his prior insurer cut him off once he hit 1m lifetime care, he had a rough childhood
Wow, didn’t know that kind of “max cost” cutoff existed. I thought the whole point of insurance was “I’ll probably be fine but if things really go south, good thing I have insurance.”
One of the underappreciated accomplishments of Obamacare was the end of those 1m caps. One of the ongoing failures in health care policy is out of control drug costs.
Yeah; I'm on a biologic for psoriasis. $25k buys me a single milliliter of fluid that I self-inject once every twelve weeks. It works wonders, but yikes.
Oh, in that case your comment highlights the difference between the obvious and direct cost to the patient $5, and the less direct cost of $100k/yr which the patients are also paying.
In the US you might have the copay $5, but you also pay for your insurance plan, which might be like $30k/year for a good family plan.
Don't worry, Americans don't understand US healthcare either.
One of the biggest challenges to reform here is the costs are all hidden away from most people. People think their health insurance costs $100/month because their employer chips in the other $1900/month towards the premium.
The other challenge is the decision maker for what is covered is separate from the payer.
People choose different plans, but my understanding is that they dont differ much at all in healthcare access. Instead, they differ in the average percentage of healthcare expenses that will be paid by the plan.
I'm on a similar deal for my Psoriasis medication, Cosentyx.
The Insurance company is billed some ungodly amount, and my copay is small or $0.
There has to be some financial shenanigans going on: someone is marking up the price, and writing it off to some reasonable level for some benefit. It's not sustainable to the insurer or the insured to be paying these kinds of prices for what amounts to a 'forever' medication.
The stress of maintaining the discount programs, induces quite a bit of anxiety.
Right. PBMs and insurance make large profits, and that is additive to that of the manufacturers. I wonder what the total cost to patients of the drug is.
I'm not sure if it was the point, but both United Healthcare Insurance and OptumRx are both owned by United Health Group. Also I think it's about 1 in 10 doctors in the US work for them in one form or another. They've been in the news a bunch this year.
In America we have some pretty bed economics around health, i could easily see this number inflated by the exorbitant cost of insulin, or HIV meds, or cancer meds. life saving medications whose costs are quite controversial.
also, end of life care for the elderly. this is a statistic that needs some serious context and fact checking IMO
Yep. Probably people who are on drugs that cost very little to make but are being sold for enormous amounts of money.
The medical industry seems to operate a lot like gambling where outsize profits are available from a small percentage of "whales". These whales have the combination of some condition, the treatment of which can be made very expensive, combined with access to the financial resources to pay for the treatment.
Sure, but are they marked up to "return on investment" prices, or "make all of the executives so enormously wealthy that it's actually disgusting" prices?
>Sure, but are they marked up to "return on investment" prices, or "make all of the executives so enormously wealthy that it's actually disgusting" prices?
The healthcare sector's 5 year profit margins is 10.0%. That puts it in the middle of the pack when it comes to the other sectors.
How does that article add to the discussion in any way? It's just repeating the same infographic that's in the stackexchange post, and is seemingly making the same mistake of rounding off "Selling, marketing, and administrative" in financial reports to "sales and marketing".
Here in Norway we have this deal where oil companies can get refunded a significant fraction of their expenses searching for oil if they didn't make a profit[1].
On the flip side, once they start making a profit, they have to pay a similarly high fraction in taxes.
This is to incentivize searching while also letting the profits benefit the majority.
Had a shower thought if such a model might have worked on the pharmaceutical market as well.
Is this over a lifetime or any given year? If it's the latter it's just a different 1 percent every year which will eventually include you. Clickbait framing of data.
Yes. Thankfully we're not all seriously ill. And when someone does have that misfortune, we should spread the cost around, so that whomever needs care can get it.
I doubt it's much different in other more social health care systems.
Some people just need a whole lot more aids and meds than most people. Take wheelchairs for example, they are as complex as single speed bicycles but easily cost 10k because reasons.
The "reasons" are mostly unit economics, with a bit of regulatory capture thrown into the mix.
There are two kinds of costs that go into a product, the costs you have to pay upfront, like factory construction, and the costs you pay per unit, like materials and shipping. Even if those are the same for wheelchairs and bicycles, you make far fewer wheelchairs than you make bicycles, so you have far fewer units to spread the upfront costs over. The per-unit costs are never actually the same, as ordering parts in larger volumes is usually cheaper.
Then there's the "regulatory capture" part, you need far fewer permits and far less government paperwork to open up a bicycle company than to open up a wheelchair company, especially if you want to work with insurers and/or national healthcare systems. This means that a bicycle company racking up margins would be quickly outcompeted by others, while overbroad government regulations favor those shenanigans in the healthcare industry.
It's probably roughly the same as how hospital bills work. Drug maker says they want $25,000 for this drug. Insurance company says they'll only pay 5,000. Drug company takes $5,000 for the drug and writes the other $20,000 off as a loss so they don't pay taxes.
As I age I find myself increasingly becoming a healthcare spender. For a lot of people that's just a part of the chromosome shuffle and not so much about their life choices. But I can't say that. I've made very bad choices, over and over and over, knowing the consequences, across more than five decades now. My chromosomes are far from perfect but they would have done fine without my indulgences. Therefore I don't think it's right to impose my higher spending on the rest of you. I should just suck it up, walk it off, or suffer and die early, because it isn't fair for me to charge you for my pleasures. You don't owe me. I identify with the Inuit grandma choosing to drift off on an ice flow. But she has a much better claim on the support of her tribe.
I mean you can personally refuse care, but the subtext I get is that others should martyr themselves similarly. That's not a choice you get to make for them.
The Inuit grandmother is directly helping her family by drifting off. The health insurance customer, not so much. Probably not a good deal for you and yours to take the ultimate sacrifice in service of 0.0001% lower insurance premiums.
If you offered someone end of life healthcare or 500k for the grandchildren, they would probably choose the 2nd. If you offer them them healthcare or $1 for 500,000 random children they dont know, the will take the healthcare.
Is this year by year? I’ve heard that we use something like half of our lifetime healthcare spending in our last years life. Which explains the numbers in the headline, but also shows why it’s misleading.
It probably is similar if you look at "final year spending". Some people have very expensive conditions, some are otherwise healthy (or appear so) and suddenly drop dead.
Careful. I smell inadvertant eugenics arguments approaching.
<1% of people commit 99% of all murders. <1% of people cause 99% of fatal trafic accidents. <1% of people are responsable for 99% of tax fraud. <1% of people ride those stupid three-wheel bikes. If only we found and isolated 1% of people, all our problems would go away!
> <1% of people ride those stupid three-wheel bikes.
I’m curious what you have against tricycles or tricyclists.
(I was a tricyclist for just shy of ten years, but just gave it up this month as part of moving to India to marry, loving a particular woman considerably more than my Greenspeed GT3. And I’m rather surprised to encounter tricycles grouped along with murders, fatal traffic accidents and tax fraud, because in cumulatively several months of solo cycle touring in AU, US, CA and NZ, I think I encountered a negative reaction expressed about six times, whereas positive or curious reactions happen multiple times per day.)
For most commercial companies you'll see pharmacy benefits split similarly: 1% - 2% of people on the health plan will account for ~50% of the pharmacy drug spend. That's regardless of overall health of the rest of the members. It's great there's been a lot of innovations for newer drugs that help more people with rare diseases, but specialty drugs just cost a lot. It takes a long time for generics or biosimilars can make it to market.
This was going to be my comment as well. Same with insurance, those that have car accidents or house fires or floods will disproportionately account for the cost of insurance. This is how it works.
I don't have a link, but I remember a study that looked at this specific issue for the few outliers in health care that were a causing the use of the most resources. It turns out that identifying them and giving them a more holistic care approach dramatically reduced costs and improved outcomes for those people. Part of the problem was the segmented approach to healthcare.
This comes as a surprise to whom exactly? Seems like the ideal scenario for ... insurance. Good health almost always costs nothing, but when an intervention is required, it's crazy expensive. -> everybody pays a negligible amount into the kitty. Since everyone pays in and almost noone takes anything out, there's enough there to cover crazy expensive treatments for the few who need them.
This. Why are we blaming people who need medical care for the fact that the system won’t contain costs and is built to maximize extraction and profit? Should these people go without care?
Start with destroying pharma benefit managers and Medicare Advantage, and continue hacking and slashing based on cost/time/benefit ratio.
We don't blame them, but without any control we have the highest prices and not so good overall results. Add to that Trump with his industry 'self regulation' idea and you know what's coming...
My interpretation of this comment is "It's a shame medical care is so expensive that we need insurance to cover it, rather than being able to cover everything out of pocket even if we get extremely sick".
The issue isn’t spreading healthcare costs, but that healthcare costs have been skyrocketing, making costs higher whether they’re spread around or not. The price of insulin, which in theory is not protected by patents (there are incremental “improvements” which are, but even the “old” ones are still skyrocketing in price), has almost 10X’d since 2000. Something is very wrong. Same story with epipens and most of the rest of healthcare.
> everybody pays a negligible amount into the kitty
I'm not sure this amount can be negligible even if we were able to make the system economically efficient such that no entities have outsized profit margins.
Some things about modern medicine are just expensive. Discovering a new drug and bringing it to market takes a long time and probably has to if we want drugs that work and don't do more harm than good. Growing monoclonal antibodies, which are wonderdrugs for certain conditions, is a resource-intensive process. Even more mundane stuff is expensive. Surgery requires a team of highly skilled professionals. An MRI machine is expensive to own and operate.
Modern semiconductors are also expensive. Designing a new iPhone and bringing it to market takes a long time. Fabbing the semiconductors is a resource-intensive process. Even more mundane stuff is expensive. There's a team of highly skilled professionals who just deal with the waterproofing gaskets. A lithography machine is expensive to own and operate.
----
Essentially the same arguments apply to semiconductors as medicine yet I can buy an iPhone for <$2k and still give Apple an extremely generous margin on it. That wonderdrug might cost thousands more despite having a fraction of the people involved in its design/manufacturing, most being paid far less. Scale is part of it, but things like insulin or epinephrine are being produced by the ton with simple processes and still cost hundreds of dollars a year for people. It's not certification either, as other countries don't have the same issues or pay the same high prices.
Sure, insulin doesn't have to be expensive, and shouldn't be. Economies of scale work for insulin, and it doesn't require recent expensive research in order to be made commercially available.
Benralizumab and tebentafusp are probably very expensive to make and took a lot of work to develop and test. Not very many people need them, but the people who do are likely to die horribly without them.
I'd look at the costs in other countries as an example of what things could cost. Even domestically I've been looking at a doctor who runs his own surgical center for an operation I might need, and he claims he is able to keep the costs down and provide better care than going through a large hospital system (though he does that as well for patients who may require it). As an example, his facility charges $600 for an MRI which seems quite good.
This is a horrible way to frame the study's finding. "1% of people are responsible" sounds like some group is wasting resources, or taking up an uneven share.
The study looks at one year, and finds in that one year 24% of spending was on 1% of the people receiving care. That's not very surprising. 30 years ago I was in a bad car accident. I'm sure the cost of the ambulance, the emergency surgery, and the after-care was WAY more than most people average that year, and easily the most expensive medical year of my life. But it was just that one time.
Totally true. For a car insurer you are looking at what, 500 years of premium for a serious total loss collision? That means 499 people get nothing (drama?!). Actually this percentage (the “24%”) gets higher the more extreme the covered events are. Daresay, a low percentage suggests something shouldn’t be insured, since it’s a regular event and people shouldn’t pay the insurers overhead and margin for something they could save for. So the suggestion that “1%”-“24%” is a wrong combination gets the nature of insurance exactly wrong. I read the 5% in OP that once in twenty years you get a serious condition where no expenses are spared to save you. That’s amazing. (Opinions on absolute US health spending are another topic.)
I liked the comparison someone offered in a reply to the post saying "5% of people buy 50% of the houses", which of course isn't because of disproportionate house buying but because most people don't buy a house every year.
To be somewhat fair to the original poster, they do offer a graph further down talking about total lifetime healthcare spending by percentile, which is also somewhat imbalanced and would account for spikes in healthcare spending by individuals due to accidents or temporary sickness. But despite being a better dataset to cite to make their point, they clearly didn't lead with the lifetime spending graph because it's significantly less imbalanced than just picking a specific year and so makes their argument weaker (if also more accurate).
That's how the spending for anything work out when you have a wide spread in cost. This feels like a very unfair way to present a stat, blaming "people" for consuming more health care resources.
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[ 3.4 ms ] story [ 198 ms ] threadhttps://www.healthsystemtracker.org/chart-collection/health-...
Don't assume high spending necessarily means poor overall health. Two people in my household are on modern fancy drugs for autoimmune conditions (upadacitinib and etanercept). They work spectacularly well and cost our insurance company thousands of dollars a month. And the family members taking them are doing great!
Would it be cheaper to fly somewhere?
I don't think it's sustainable on the national scale much longer; the insurance premium costs me twice my mortgage each month.
In the US you might have the copay $5, but you also pay for your insurance plan, which might be like $30k/year for a good family plan.
One of the biggest challenges to reform here is the costs are all hidden away from most people. People think their health insurance costs $100/month because their employer chips in the other $1900/month towards the premium.
People choose different plans, but my understanding is that they dont differ much at all in healthcare access. Instead, they differ in the average percentage of healthcare expenses that will be paid by the plan.
The Insurance company is billed some ungodly amount, and my copay is small or $0.
There has to be some financial shenanigans going on: someone is marking up the price, and writing it off to some reasonable level for some benefit. It's not sustainable to the insurer or the insured to be paying these kinds of prices for what amounts to a 'forever' medication.
The stress of maintaining the discount programs, induces quite a bit of anxiety.
There is absolutely some shenanigans going on, but most of that goes on with the Pharmacy benefits manager.
All these parties (ultimately 2?) are doing something to their balance sheets.
https://www.propublica.org/article/when-buying-prescription-...
https://www.propublica.org/article/take-the-generic-drug-pat...
https://www.nytimes.com/2024/04/07/us/health-insurance-medic...
In America we have some pretty bed economics around health, i could easily see this number inflated by the exorbitant cost of insulin, or HIV meds, or cancer meds. life saving medications whose costs are quite controversial.
also, end of life care for the elderly. this is a statistic that needs some serious context and fact checking IMO
The medical industry seems to operate a lot like gambling where outsize profits are available from a small percentage of "whales". These whales have the combination of some condition, the treatment of which can be made very expensive, combined with access to the financial resources to pay for the treatment.
This entirely ignores the cost of R&D, clinical trials, and most importantly, all the other drugs that didn't make it to market.
My bet is the latter
The healthcare sector's 5 year profit margins is 10.0%. That puts it in the middle of the pack when it comes to the other sectors.
https://insight.factset.com/hs-fs/hubfs/1)Insight/2024/04.20...
https://skeptics.stackexchange.com/questions/16472/do-typica...
https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
On the flip side, once they start making a profit, they have to pay a similarly high fraction in taxes.
This is to incentivize searching while also letting the profits benefit the majority.
Had a shower thought if such a model might have worked on the pharmaceutical market as well.
[1]: https://www.nrk.no/klima/xl/leterefusjonen_-disse-selskapene...
If it's per-year then the graphs are useless. You can be in the 1% one year, and in the bottom 50% the next.
Some people just need a whole lot more aids and meds than most people. Take wheelchairs for example, they are as complex as single speed bicycles but easily cost 10k because reasons.
The "reasons" are mostly unit economics, with a bit of regulatory capture thrown into the mix.
There are two kinds of costs that go into a product, the costs you have to pay upfront, like factory construction, and the costs you pay per unit, like materials and shipping. Even if those are the same for wheelchairs and bicycles, you make far fewer wheelchairs than you make bicycles, so you have far fewer units to spread the upfront costs over. The per-unit costs are never actually the same, as ordering parts in larger volumes is usually cheaper.
Then there's the "regulatory capture" part, you need far fewer permits and far less government paperwork to open up a bicycle company than to open up a wheelchair company, especially if you want to work with insurers and/or national healthcare systems. This means that a bicycle company racking up margins would be quickly outcompeted by others, while overbroad government regulations favor those shenanigans in the healthcare industry.
So I say we just save them all, and let god sort ‘em out.
Even in the US, insurance still decides what is covered and what's not. There's always someone deciding in any system unless it's cash.
If you offered someone end of life healthcare or 500k for the grandchildren, they would probably choose the 2nd. If you offer them them healthcare or $1 for 500,000 random children they dont know, the will take the healthcare.
<1% of people commit 99% of all murders. <1% of people cause 99% of fatal trafic accidents. <1% of people are responsable for 99% of tax fraud. <1% of people ride those stupid three-wheel bikes. If only we found and isolated 1% of people, all our problems would go away!
https://www.wolframalpha.com/input?i2d=true&i=Limit%5BPower%...
I’m curious what you have against tricycles or tricyclists.
(I was a tricyclist for just shy of ten years, but just gave it up this month as part of moving to India to marry, loving a particular woman considerably more than my Greenspeed GT3. And I’m rather surprised to encounter tricycles grouped along with murders, fatal traffic accidents and tax fraud, because in cumulatively several months of solo cycle touring in AU, US, CA and NZ, I think I encountered a negative reaction expressed about six times, whereas positive or curious reactions happen multiple times per day.)
Makes sense to me. Is that supposed to be surprising?
Especially considering the pharmaceutical companies pay the generic manufacturers to stay out of the market. https://www.theatlantic.com/ideas/archive/2023/06/pharmaceut...
https://www.healthsystemtracker.org/chart-collection/health-...
I don't have a link, but I remember a study that looked at this specific issue for the few outliers in health care that were a causing the use of the most resources. It turns out that identifying them and giving them a more holistic care approach dramatically reduced costs and improved outcomes for those people. Part of the problem was the segmented approach to healthcare.
Or is it just like 1% of people have cancer?
Would love to see a good-faith analysis by somebody who has 50 hours to commit to it, a good grasp of statistics, and no interest in politics.
I'd like a unicorn too!
Start with destroying pharma benefit managers and Medicare Advantage, and continue hacking and slashing based on cost/time/benefit ratio.
https://www.wsj.com/health/healthcare/medicare-health-insura... | https://archive.is/de2f3 (“Insurers Pocketed $50 Billion From Medicare for Diseases No Doctor Treated”)
https://www.thebignewsletter.com/p/inside-the-mafia-of-pharm... (“Inside the Mafia of Pharma Pricing”)
“Your margin is our opportunity.”
We don't blame them, but without any control we have the highest prices and not so good overall results. Add to that Trump with his industry 'self regulation' idea and you know what's coming...
Countries with successful healthcare institutions use purchasing controls to negotiate.
They dont rely on the charity or good nature of suppliers.
Instead, they say "thats too expensive, lower the price or we will take the option 90% as good for 10% the cost".
https://auchincloss.house.gov/media/press-releases/release-a...
https://www.youtube.com/watch?v=_0oacWBHAJY
[0] https://www.wsj.com/health/pharma/america-is-running-out-of-...
I'm not sure this amount can be negligible even if we were able to make the system economically efficient such that no entities have outsized profit margins.
Some things about modern medicine are just expensive. Discovering a new drug and bringing it to market takes a long time and probably has to if we want drugs that work and don't do more harm than good. Growing monoclonal antibodies, which are wonderdrugs for certain conditions, is a resource-intensive process. Even more mundane stuff is expensive. Surgery requires a team of highly skilled professionals. An MRI machine is expensive to own and operate.
----
Essentially the same arguments apply to semiconductors as medicine yet I can buy an iPhone for <$2k and still give Apple an extremely generous margin on it. That wonderdrug might cost thousands more despite having a fraction of the people involved in its design/manufacturing, most being paid far less. Scale is part of it, but things like insulin or epinephrine are being produced by the ton with simple processes and still cost hundreds of dollars a year for people. It's not certification either, as other countries don't have the same issues or pay the same high prices.
Benralizumab and tebentafusp are probably very expensive to make and took a lot of work to develop and test. Not very many people need them, but the people who do are likely to die horribly without them.
The study looks at one year, and finds in that one year 24% of spending was on 1% of the people receiving care. That's not very surprising. 30 years ago I was in a bad car accident. I'm sure the cost of the ambulance, the emergency surgery, and the after-care was WAY more than most people average that year, and easily the most expensive medical year of my life. But it was just that one time.
https://www.kff.org/health-policy-101-health-care-costs-and-...
To be somewhat fair to the original poster, they do offer a graph further down talking about total lifetime healthcare spending by percentile, which is also somewhat imbalanced and would account for spikes in healthcare spending by individuals due to accidents or temporary sickness. But despite being a better dataset to cite to make their point, they clearly didn't lead with the lifetime spending graph because it's significantly less imbalanced than just picking a specific year and so makes their argument weaker (if also more accurate).