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This is Why Healthcare Costs So Much! Thanks AMA and Big Insurance.

Captain Adverse

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I was just cruising YouTube and found this interesting video about American healthcare costs.

It talks about hospitals but I believe it applies to pretty much any medical practice thanks to a need to qualify for inclusion as a medical provider in Insurance coverage plans.



I think it's humorously entertaining and informative at the same time.

Essentially, in order to afford discounts on services demanded by Big Insurance, medical facilities create extreme prices for medicine and services in order to discount those prices and still make major profits for both.

I've known (and sensed) it was something like this that had to be in play.

IMO it's a travesty affecting us all; especially now with the government compelled requirements of the ACA which depends on such Healthcare Insurers and medical providers.

Congress addressing such inflated pricing might go a long way to alleviating problems with public healthcare expenses.

THAT would be a real healthcare initiative. :yes:

Thoughts?
 
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I like it

A bit dramatic and used poor terminology regarding fake prices but it got the point across
 
I was just cruising YouTube and found this interesting video about American healthcare costs.

It talks about hospitals but I believe it applies to pretty much any medical practice thanks to a need to qualify for inclusion as a medical provider in Insurance coverage plans.



I think it's humorously entertaining and informative at the same time.

Essentially, in order to afford discounts on services demanded by Big Insurance, medical facilities create extreme prices for medicine and services in order to discount those prices and still make major profits for both.

I've known (and sensed) it was something like this that had to be in play.

IMO it's a travesty affecting us all; especially now with the government compelled requirements of the ACA which depends on such Healthcare Insurers and medical providers.

Congress addressing such inflated pricing might go a long way to alleviating problems with public healthcare expenses.

Thoughts?


I don't click on videos because I pay for bandwidth but I think I got a clue about what it's about from your summary.
Here's another reason why it's so expensive in the US...

http://www.tampabay.com/news/canada-keeps-malpractice-cost-in-check/1021977

The story is from 2009, but the situation it describes has probably only gotten worse. In a nutshell, "For neurosurgeons in Miami, the annual cost of medical malpractice insurance is astronomical — $237,000, far more than the median price of a house. In Toronto, a neurosurgeon pays about $29,200 for coverage. It's even less in Montreal ($20,600) and Vancouver ($10,650)."

So the neurosurgeon in Miami has to make a quarter-million dollars just to pay his insurance for a year. Then he has to pay for the rest of his overhead, and then he can start to make money for himself.
The story goes on to offer two reasons for this disparity...

" In 1978, the Canadian Supreme Court limited damages for pain and suffering. Adjusted for inflation, the cap now is just over $300,000. The United States has no federal cap on damages, though a few states, including Florida, have imposed them.

• Instead of buying insurance from a for-profit company, as most U.S. doctors do, Canadian physicians are covered through their membership in the nonprofit Canadian Medical Protective Association."
 
But we could make it "single payer" like our K-12 public schools and only have the third highest cost in the world and the only down side is that quality would suffer a bit. ;)
 
Just to be clear, if you're an inpatient at a hospital the hospital is very likely being paid a flat fee for your stay. The hospital might generate some itemized list of charges but it's really being paid a fixed fee spit out by an algorithm based on your diagnoses.

That's not to say percent-of-charges reimbursement doesn't happen in various circumstances but it's not quite right to suggest that's the way hospitals get paid.
 
Essentially, in order to afford discounts on services demanded by Big Insurance, medical facilities create extreme prices for medicine and services in order to discount those prices and still make major profits for both.

I've known (and sensed) it was something like this that had to be in play.
Uh... yeah, some of us have known about all that for some time.

Steve Brill wrote about the role of chargemaster rates in 2013.
Bitter Pill: Why Medical Bills Are Killing Us - TIME

Another aspect Brill points out is that health care doesn't benefit from market systems, because it's not a normal market. If you have a heart attack, you can't call up 5 hospitals and pick the one with the lowest prices; or if you have cancer, you're not going to be able to pick and choose your chemo based on Yelp reviews. Even critical needs like food and shelter work fine (for the most part) within market structures, but health care does not.


IMO it's a travesty affecting us all; especially now with the government compelled requirements of the ACA which depends on such Healthcare Insurers and medical providers.
Yes, we really should have gone single payer or socialized medicine. Ah well.


Congress addressing such inflated pricing might go a long way to alleviating problems with public healthcare expenses.
Okay. And how do they do that? Should Congress regulate the prices on every single procedure and medication? What happens when the hospitals and/or insurers say they will go out of business?
 
I was just cruising YouTube and found this interesting video about American healthcare costs.

It talks about hospitals but I believe it applies to pretty much any medical practice thanks to a need to qualify for inclusion as a medical provider in Insurance coverage plans.



I think it's humorously entertaining and informative at the same time.

Essentially, in order to afford discounts on services demanded by Big Insurance, medical facilities create extreme prices for medicine and services in order to discount those prices and still make major profits for both.

I've known (and sensed) it was something like this that had to be in play.

IMO it's a travesty affecting us all; especially now with the government compelled requirements of the ACA which depends on such Healthcare Insurers and medical providers.

Congress addressing such inflated pricing might go a long way to alleviating problems with public healthcare expenses.

THAT would be a real healthcare initiative. :yes:

Thoughts?


Pretty obvious.

Inelastic good (healthcare) with no price controls and compromised comparative shopping (i.e. the conditions for charging nearly as much as you like to a largely captive customer base) + profit motive (at every level, each adding their own profit seeking bloat; insurers, providers, suppliers) + administrative and marketing costs associated with dealing with third parties/maximizing profits + political cronyism/lobbying defending, solidifying and consolidating the existing system (on behalf of the insurers, suppliers and providers) + fragmented payer market (where not even the big insurers have nearly the bargaining power of government) + fragmented buyer market for medical _supplies_ (such as pharmaceuticals, machinery, etc) + uniquely insane supply costs due once again to political cronyism/lobbying (US pays by far the most for pharmaceuticals in the world) = insanely inflated costs for health care that is at best comparable to that enjoyed in other first world singlepayer/UHC nations.

It's a pretty basic calculus and one many will be willfully ignorant of due to cognitive dissonance and a fundamental conflict with their entrenched world views, or donor/lobbyist money (including sadly among Democrats and self-described 'liberals'; just look at the Dem lead attempt to kill singlepayer in California per Anthony Rendon).
 
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For all the details, I see the problem as with the big picture:

We are trying to use free-market solutions to a problem that can't be solved (at least totally) by free-market solutions.

The rest of the 1st world knows this, and so do the educated amongst us. But the monied entities controlling our political process have so far defeated the needs of the citizenry, while poisoning the body politic with their propaganda.
 
Healthcare is not 17%GDP because of a flaw in the pricing structure, it is too high because we do too much (very often including doing the wrong thing or something that will not help) , we do it inefficiently, with loads of profit taking at many different points. I'll throw in all the legal costs of the system as a special category but in my opinion it is a chosen huge inefficiency.
 
For all the details, I see the problem as with the big picture:

We are trying to use free-market solutions to a problem that can't be solved (at least totally) by free-market solutions.

The rest of the 1st world knows this, and so do the educated amongst us. But the monied entities controlling our political process have so far defeated the needs of the citizenry, while poisoning the body politic with their propaganda.

Until people pay for their own healthcare (and seriously at $10K spending per person per year that will not happen) free market solutions will not work, because if it is not their money people generally dont care about the bill. How so many spill so many words over so many years on healthcare without bothering to learn this very basic fact IDK.

Maybe they know but pretend to not know, Americans are big on dishonesty now.
 
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We are trying to use free-market solutions to a problem that can't be solved (at least totally) by free-market solutions.

I wouldn't say that.

There are market failures and quirks that make health care different from other markets in many ways. Arrow articulated the biggest ones fifty years ago. But that doesn't mean you can't have any kind of market dynamics in health care. Unfortunately we're not doing particularly well on that front. People by and large remain insulated from the actual cost and prices of different options and so it's still rare for those factors to enter individual decision-making. Hard to have a functioning market without that piece.

Decades ago lots of states directly regulated or set hospital prices. (There may be merits to that approach but it doesn't solve everything: Maryland has set hospital prices since the '70s and continues to today. Whereas the average annual spending growth on hospitals nationally from 1980-2014 was 6.9%, Maryland's was...6.7%).

Part of the reason those rate-setting systems unraveled where they existed was not only that they were cumbersome and in many cases no less opaque than hospital pricing is today, but policymakers wanted to move in the direction of competition: let managed care companies (insurers) compete with each other to negotiate the most favorable contracts with hospitals. That would provide a check on price growth for services.

And that worked for a time. The only time the cost curve has actually bent in the past half century (other than the past few years) was in the mid-to-late '90s when the employer market really embraced the managed care approach. Price growth was low, as it is today. But given the paternalism inherent in employer-based insurance, there was a backlash among employees who saw their choices restricted without necessarily realizing it was their own money that was being saved in the process. Employers relented and some of their proxy price consciousness when selecting insurance plans or provider networks dissipated.

The incentive is weakened (as is the motivation of the insurer) when the enrollee isn't the one directly shopping, choosing between competing insurers and products based on premium. That's the missing piece of the puzzle to make that approach work. But at the moment, outside of the exchanges that structure largely doesn't exist. People remain insulated from the financial implications of their choices (or the choices made by others on their behalf). That's why the exchanges remain so important in the long run. That's where the opportunity for market dynamics to pick up some of the slack is.
 
I wouldn't say that.
I would.

I have a tough time seeing major benefits for profit motives in health care. Maybe we can say that for pharmaceuticals, but they have so thoroughly abused the trademark / monopoly elements that it is difficult to defend their operations.


People by and large remain insulated from the actual cost and prices of different options and so it's still rare for those factors to enter individual decision-making. Hard to have a functioning market without that piece.
Perhaps. However, even if we cleared out some of those issues, we'd end up with a system where millions will be priced out of care, pharmaceuticals will abuse their monopoly positions, and patients might be forced to select less effective treatments based on pricing.


Decades ago lots of states directly regulated or set hospital prices...
Medicaid basically sets prices, by saying "we'll pay X for procedure Y." It isn't perfect, but it works quite well.


The incentive is weakened (as is the motivation of the insurer) when the enrollee isn't the one directly shopping, choosing between competing insurers and products based on premium. That's the missing piece of the puzzle to make that approach work.
What you're proposing is pretty much what the Exchanges offer. It puts the insurers in direct competition; it gives the potential insured a lot of information about the plans; it offers a variety of plans; it is up-front about pricing. It still doesn't work great, because the mandate is too weak to force healthier people into the system. That's why prices went up so much in a handful of states. Forcing employees to use the same systems wouldn't make it any easier, or more transparent, it would just change the lineup of plan offerings.

Even so, health insurance is incredibly complex, and made worse by routine billing errors, and of course the stress often caused by health issues.

Another issue is that insurance plans are sticky -- most people are reluctant to change plans once they've switched.

Ultimately, the best options are either socialized or single-payer systems. Unfortunately, getting there will be a tough slog.
 
I would.

I have a tough time seeing major benefits for profit motives in health care. Maybe we can say that for pharmaceuticals, but they have so thoroughly abused the trademark / monopoly elements that it is difficult to defend their operations.



Perhaps. However, even if we cleared out some of those issues, we'd end up with a system where millions will be priced out of care, pharmaceuticals will abuse their monopoly positions, and patients might be forced to select less effective treatments based on pricing.



Medicaid basically sets prices, by saying "we'll pay X for procedure Y." It isn't perfect, but it works quite well.



What you're proposing is pretty much what the Exchanges offer. It puts the insurers in direct competition; it gives the potential insured a lot of information about the plans; it offers a variety of plans; it is up-front about pricing. It still doesn't work great, because the mandate is too weak to force healthier people into the system. That's why prices went up so much in a handful of states. Forcing employees to use the same systems wouldn't make it any easier, or more transparent, it would just change the lineup of plan offerings.

Even so, health insurance is incredibly complex, and made worse by routine billing errors, and of course the stress often caused by health issues.

Another issue is that insurance plans are sticky -- most people are reluctant to change plans once they've switched.

Nevermind that in addition to all this you have layers of administrative, lobbying and marketing bloat from supplier to payer to provider (due to market/buyer fragmentation and profit incentive), and fragmented payers (insurers) that simply cannot offer nearly the kind of bargaining power a government single payer can.

Calling exchanges/increased insurer competition a fix is either mistaken or insanely disingenuous when they do nothing to fix the fundamental underlying problems that actually make prices so high: the profit incentive is still going to demand its pound of flesh in a sphere where demand elasticity is low and competition is compromised (at every level) in terms of maximizing prices and minimizing value for the end consumer (from providers to buyers to suppliers/inputs), there will not be sufficient enrollment of the healthy to balance the risk pool and minimize insurance prices, and the myriad of private insurers are still going to lack the requisite bargaining power to effect lower costs on par with the rest of the first world.
 
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But we could make it "single payer" like our K-12 public schools and only have the third highest cost in the world and the only down side is that quality would suffer a bit. ;)

Hmm, if only there were other examples of health care models we could compare costs to. You know, since you're implying single payer costs more. It would be great evidence if you could show us all those single-payer systems that are more expensive than ours. Can you do that?
 
I was just cruising YouTube and found this interesting video about American healthcare costs.

It talks about hospitals but I believe it applies to pretty much any medical practice thanks to a need to qualify for inclusion as a medical provider in Insurance coverage plans.



I think it's humorously entertaining and informative at the same time.

Essentially, in order to afford discounts on services demanded by Big Insurance, medical facilities create extreme prices for medicine and services in order to discount those prices and still make major profits for both.

I've known (and sensed) it was something like this that had to be in play.

IMO it's a travesty affecting us all; especially now with the government compelled requirements of the ACA which depends on such Healthcare Insurers and medical providers.

Congress addressing such inflated pricing might go a long way to alleviating problems with public healthcare expenses.

THAT would be a real healthcare initiative. :yes:

Thoughts?


I'm getting an immunotherapy cocktail called Opdiva. The doctor's office bills Medicare $18,000 a treatment. I get it every two weeks. Medicare pays just over $6,000. I agree with you. Healthcare pricing is smoke and mirrors.
 
Hmm, if only there were other examples of health care models we could compare costs to. You know, since you're implying single payer costs more. It would be great evidence if you could show us all those single-payer systems that are more expensive than ours. Can you do that?

The fact that some other government has contained costs without sacrificing (or even attaining better) quality of service does not automatically transfer to all governments. I used the US (state government) K-12 single payer systems as an example to illustrate that just because one government can do better does not mean that all governments can.

I would be great evidence if you could show us that US states (or counties) with single exchange insurance providers have lower costs than those with multiple exchange insurance providers? Can you do that?
 
The fact that some other government has contained costs without sacrificing (or even attaining better) quality of service does not automatically transfer to all governments. I used the US (state government) K-12 single payer systems as an example to illustrate that just because one government can do better does not mean that all governments can.

I would be great evidence if you could show us that US states (or counties) with single exchange insurance providers have lower costs than those with multiple exchange insurance providers? Can you do that?

"The United States is uniquely and irreversibly incompetent" is an argument I must reject outright.
 
"The United States is uniquely and irreversibly incompetent" is an argument I must reject outright.

OK, then defend the VA, Medicare and Medicaid costs. It is not as if we lack ample evidence of US government run medical care (or insurance) attempts. Even if Medicaid offers lower per procedure reimbursement rates it still, somehow, pays more per patient than many private insurance companies and has fewer doctors (care providers) that accept it.
 
OK, then defend the VA, Medicare and Medicaid costs. It is not as if we lack ample evidence of US government run medical care (or insurance) attempts. Even if Medicaid offers lower per procedure reimbursement rates it still, somehow, pays more per patient than many private insurance companies and has fewer doctors (care providers) that accept it.

You should recheck those medicaid numbers ;)

Medicare and VA costs should be obvious: you're selecting for the most expensive patients on the planet and then comparing them to a population that includes 22 year olds.
 
Healthcare costs so much because Americans are so fat. It's that simple.
 
You should recheck those medicaid numbers ;)

Medicare and VA costs should be obvious: you're selecting for the most expensive patients on the planet and then comparing them to a population that includes 22 year olds.

Actually, except for children, so are Medicaid patients but the point remains the same - the cost cutting claimed by Medicaid is simply achieved by lowering the reimbursement rates. That, in turn, reduces the pool of care providers that will accept it - if one has to travel many miles to visit even a "free" (discount?) doctor then they are more apt to forgo care in the early stages of an illness which eventually turns chronic and requires more expensive (often ER) care and often leaves lasting (otherwise preventable) damage.

If SNAP was run like Medicaid, paying food providers 75% (or less) of market prices, it would be the same deal (reducing the number of food providers that will accept it) forcing those with limited access to (more distant?) "discount" food providers to go without their "free" benefits or to switch to diets which lack many important, but perishable, food items to permit one monthly (long distance) shopping trip.
 
Actually, except for children, so are Medicaid patients but the point remains the same - the cost cutting claimed by Medicaid is simply achieved by lowering the reimbursement rates. That, in turn, reduces the pool of care providers that will accept it - if one has to travel many miles to visit even a "free" (discount?) doctor then they are more apt to forgo care in the early stages of an illness which eventually turns chronic and requires more expensive (often ER) care and often leaves lasting (otherwise preventable) damage.

If SNAP was run like Medicaid, paying food providers 75% (or less) of market prices, it would be the same deal (reducing the number of food providers that will accept it) forcing those with limited access to (more distant?) "discount" food providers to go without their "free" benefits or to switch to diets which lack many important, but perishable, food items to permit one monthly (long distance) shopping trip.

Reducing the reimbursement rate would save billions in healthcare costs. And in single payer it is take it or leave it. In Canada doctors are not starving
 
Actually, except for children, so are Medicaid patients but the point remains the same - the cost cutting claimed by Medicaid is simply achieved by lowering the reimbursement rates. That, in turn, reduces the pool of care providers that will accept it - if one has to travel many miles to visit even a "free" (discount?) doctor then they are more apt to forgo care in the early stages of an illness which eventually turns chronic and requires more expensive (often ER) care and often leaves lasting (otherwise preventable) damage.

If SNAP was run like Medicaid, paying food providers 75% (or less) of market prices, it would be the same deal (reducing the number of food providers that will accept it) forcing those with limited access to (more distant?) "discount" food providers to go without their "free" benefits or to switch to diets which lack many important, but perishable, food items to permit one monthly (long distance) shopping trip.

No, no, your point doesn't remain. You claimed that the per-patient spending was higher than private insurance, and it's not. It's lower.

You've also implied single-payer "could be" more expensive than our current system when literally 100% of existing examples say the opposite.

Cost is the absolute dumbest argument against single-payer because it has been cheaper in every single method in every single example and in every single country that it has been attempted. And, what, your evidence is Medicare? A system full of old people? Per-patient spending on people over 65 is higher than private insurance (which essentially only covers people below Medicare age)? No ****, sherlock.
 
Reducing the reimbursement rate would save billions in healthcare costs. And in single payer it is take it or leave it. In Canada doctors are not starving

Folks do not spend 7 years (or more) in extra schooling, while foregooing income, to prevent "starving". I agree that in single payer it is take it or leave it. Doctors, like other highly skilled professionals, are not fools and realize that there is an international demand for their skills and they also tend to be very bright and thus have many opportunities to switch career study fields to a more profitbale major (or medical specialty).

Canadian doctors still make dramatically less than U.S. counterparts: study | National Post
 
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