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(Full-time co-founder of a healthcare startup here): W/r/t the US specifically: it seems there is no shortage of inefficiencies and obvious solutions to the inefficiencies in the US healthcare system. To me, the real problem seems to be a system that has almost diabolically evolved to create competing interests that deadlock all sides into a sub-optimal solution. Specifically-- patients, payers, physicians, pharma, facilities and insurers almost all have indirect but competing interests much like the Dining Philosopher's problem we're familiar with in Computer Science.

I'm not sure what the solution is short of a total swamp draining, but our startup went overseas to develop/trial our product in a country with a single payer system. Not perfect, but much more amenable to finding efficiencies.

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In the united states we can't successfully implement negotiation on drug prices for MediCare. They literally can't negotiate with their suppliers. By law.

Anybody thinking software is going to solve that is way in a bubble.

http://healthaffairs.org/blog/2016/09/19/the-politics-of-med...

I just realized that my last two posts are poo-pooing Silicon Valley's recent unwillingness to stay in its lane. I'm not trying to be negative here, it's just... man, it's a big old world and software isn't eating everything.

I like a nice website as much as anybody. I think YC has done real well with their websites. If they wanna move fast and break things, I'm gonna wish them godspeed. I still think they're crazy, but that's the point, right?

> In the united states we can't successfully implement negotiation on drug prices for MediCare. They literally can't negotiate with their suppliers. By law.

On the flip side, Medicare sets reimbursement rates for services essentially by fiat[0], which can be below the marginal costs of providing service. Most providers cannot legally refuse to treat Medicare patients, so they are forced to accept the rates that Medicare sets (they have no ability to properly negotiate). Medicaid is a whole different system, but in this aspect, it also works the same way.

This turns into a system in which privately insured patients subsidize Medicare patients through their premiums[1] (separately from their tax money, which also goes towards Medicare)[2]. Medicare has no incentive to change this, because it allows them to increase their (effective) operating budget without requiring Congressional approval.

The reason Medicare drug price negotiation was blocked is that people (both pharmaceutical companies and policymakers) were afraid that it would turn out just like Medicare's "negotiated" rates for inpatient and outpatient services.

[0] And private insurers are legally prohibited from reimbursing less than Medicare does

[1] And uninsured patients receive the same (inflated) bills that private insurers receive. (Whether or not they actually pay their bills is a separate matter).

[2] If you've ever wondered why the sticker prices for inpatient services seem so high, this is the underlying reason. Privately insured patients and uninsured patients aren't just paying for their own care (and for the care of others in the same risk pool). They also have to cover the amount of money that providers lose on Medicare and Medicaid patients.

> Most providers cannot legally refuse to treat Medicare patients

My understanding is that doctors can choose not to take Medicare patients. Do you have a link or something that explains this?

> My understanding is that doctors can choose not to take Medicare patients.

Sort of. For example, most emergency rooms in which physicians have admitting privileges to an associated hospital are required to take Medicare[0]. And those emergency rooms are prohibited from refusing patients based on insurance status. So right off the bat, that's an enormous source of patients who could be publicly insured (Medicare/Medicaid) or uninsured, and they have no legal way to refuse them. (Once a patient is in the ER, if they need to be admitted, you can't (legally!) refuse to admit them based on their insurance status).

I'm kind of oversimplifying, because there are a lot of tricks that hospitals try to use to stop the bleeding - for example, Bellevue is a public hospital, and it operates an emergency room, but its private counterpart that is literally across the street does not. NYU can do some (perfectly legal) maneuvering to keep most of the patient population of Langone limited to privately-insured patients. As a result, Langone has undeniably better[1] care, despite having access to the same set of medical staff[2] and being associated with the same medical college.

It's true that private practices can refuse Medicare for outpatient services easily. And incidentally, many do. There's a reason that, except in "critical access" areas[3], most of the top physicians who operate purely private practices don't accept Medicare. However, private practices are a dying breed, so that's a moot point in 2017.

[0] Conversely, free-standing emergency rooms are prohibited from accepting Medicare. A rather cynical view of this would be that Medicare does not want to encourage free-standing emergency rooms, because it's much more difficult to use private emergency care to subsidize Medicare care than it is to use private inpatient care to subsidize Medicare care (the orders of magnitude in costs are vastly different).

[1] More expensive, but vastly better

[2] Well, sort of. Staff isn't shared between the hospitals day-to-day (a nurse at Langone will typically only work at Langone unless he or she also has a job at Bellevue), but the allocation draws from the same pool a priori.

[3] Rural hospitals that Medicare pays handsomely, because otherwise those regions would have no medical access at all.

> Staff isn't shared between the hospitals day-to-day

It probably is; it's quite common for fair numbers of hospital staff (e.g., OR staff that are needed only for certain types of procedures), AFAIK, to be provided by third-party contractors that provide service to multiple hospitals in the same area, and the same staff may work at different hospitals on different days based on need.

> It probably is; it's quite common for fair numbers of hospital staff

Sort of, yes - in NYC, nurses are almost all members of 1199SEIU, for example, and the shift-work nature of nursing makes it easy for them to be employed simultaneously by multiple hospitals. Though my point is that this is usually handled on an individual level (by the nurses who choose where to work), rather than the hospitals themselves directly coordinating staff schedules in tandem.

Thank you for the explanation. Has anybody tried to estimate the magnitude of this implicit subsidy to Medicare?

They can refused to treat any Medicare patients, but they can't pick on chose which Medicare patients their serve.

I see this argument in many places. Who dictates the cost of providing services? Why are these costs so high? My pet theory is the insane costs (money, time, high selectivity) of medical training and office overhead. Medical professionals feel entitled to $$ for their risk. Perhaps older specialists who didn't have these costs are spoiled. I would love to see how tuition amnesty would affect price elasticity.

The costs you typically see quoted are from the chargemaster that hospitals are required to keep. That's not what's actually paid, but rather the starting point for a negotiation (or what you are billed if uninsured).

One reason for the inflated chargemaster prices (e.g. $100 for a tylenol) is that payers (Medicare is a big one) simply negotiate by saying "I'll pay you 50% of your chargemaster". Then when the hospital updates their chargemaster, they tack on another 20% and the payer comes back and says "I'll pay you 25% of your chargemaster".

It's a vicious cycle where the chargemaster prices have no bearing on reality.

Perhaps we need to borrow a tactic from countries fighting currency inflation and introduce an alternate 'chargemaster' with more realistic (ideally public) prices.

Physician and staff salaries (outside of staff to manage insurance companies) are not what drive increasing medical costs. Most physicians don't make that much money, all things considered.

An insurer last month for a relative's pediatrics practice announced that they were having difficulties with their accounting system and so they would only be making a half payment on their outstanding AR (and naturally, they announced this problem right before the payment was due to be sent). My relative's practice has no practical recourse other than to wait for the full payment to be sent. This is not an uncommon occurrence. My relative's practice is regrettably not able to use the same argument for their bills that are due.

It costs my relative money to administer vaccines in their peds practice, i.e., most insurances pay less than what it costs to purchase and give the vaccine. My relative continues to offer many vaccines at a loss because they believe vaccines are one of medicine's greatest gifts and because they have good success in persuading unsure parents to vaccinate their children. From a pure numbers perspective, it is a mistake.

Insurance companies not paying physicians on time as agreed drives up costs. Insurance (Medicaid included) not paying what it actually costs for a procedure drives up costs. Insurance companies arguing against the best course of treatment for a patient, requiring additional staff to be hired in order to deal with the pushback, drives up costs.

When you say insurance isn't paying what it costs for a vaccination, what determines the cost of the procedure? Is it the vaccine itself? Office overhead? Liability insurance? I know pediatricians are generally overworked and underpaid. But, it seems we desperately need innovation on the cost side.

Maybe we need to drop kiosks into pharmacies that can read biometric markers, get doctor approval, and deliver vaccines.

> When you say insurance isn't paying what it costs for a vaccination, what determines the cost of the procedure? Is it the vaccine itself?

The vaccine itself. Medicare and Medicaid are notorious for this, as they have no mandate to cover marginal costs of supplies (and they have the ability to force providers to accept less than that).

So, depending on the practice, those providers could very well be losing money on every Medicare patient they treat before they even have a chance to think about paying for their office space, paying their staff, etc.

Yes, in my relative's case (being peds) it is Medicaid.

It's a really frustrating thing, as a physician you want to treat everyone, but accepting Medicare and Medicaid can really hurt the operation of your business.

Do you have any idea of the distribution of vacine prices between providers (ie hospital networks vs private practices)? Is there a large discrepancy, or do hospitals use this as a 'loss leader'?

Practicing physicians are the most highly paid workers in America. In what way do they not make that much money?

> Practicing physicians are the most highly paid workers in America. In what way do they not make that much money?

Doctors take home a lot less than people think.

The "salary" numbers you usually see cited aren't comparable to salaries in fields like software engineering, because doctors still have to cover their own business costs (the big one is malpractice insurance, but other expenses like CME, etc. are all on their own dime). And these are almost invariably not tax-deductible, because AMT doesn't allow for deductions for business expenses.

In any case, physicians' earnings account for only about 10% of total medical spending in the country. In other words, even if every doctor decided to work for free and pay for all their business expenses out of their savings... we'd still be spending 90% of what we currently are.

Oh it's absolutely complicated, but hilariously inefficient and corrupt on both a macro and a micro level. On every level you examine the system it's a bugfuck.

It's important to realize that what private insurance is billed is the same as what uninsured/self-pay patients are billed, but what private insurance pays is negotiated rates that are often pretty close to what Medicare is paying. There's a certain level of shell game going on in there.

> It's important to realize that what private insurance is billed is the same as what uninsured/self-pay patients are billed, but what private insurance pays is negotiated rates that are often pretty close to what Medicare is paying. There's a certain level of shell game going on in there.

Yes, private insurers don't pay entirely what they're billed. Though they still pay significantly more than Medicare pays. The negotiated agreements between private insurers and hospitals are almost always pegged at multiples of Medicare (e.g. "200% or 350% of Medicare rates for $X service").

That's a vast over simplification of the issue and ignores issues around implementation.

First off, Medicare Part D plans are run by private insurers and they certainly do negotiate on price. In fact, they tend to get better prices than commercial plans. Those savings are used to compete for Medicare dollars to cover those patients (i.e. savings are passed on to Medicare).

Second, physician administered drugs are paid for at a rate that is the average of what private payers pay. So no negotiation, rather a piggybacking on discounts to private insurers.

Finally, if you roll in the 340B discount (23% minimum), Medicare is getting a pretty good deal on drugs.

I would argue that unless Medicare threatens to NOT cover some drugs, it won't reduce costs one bit. Currently there are a number of protected classes where Medicare HAS to cover those drugs. That needs to be fixed first.

If you don't believe me, look at the CBO estimate of savings if Medicare is allowed to negotiate. Their findings were "minimal savings".[1]

CBO estimates that enacting S. 3 would have a negligible effect on direct spending and would result in spending from appropriated funds of $2 million in 2008 and less than $500,000 annually in subsequent years. Enacting S. 3 would have no effect on revenues.

[1]https://www.cbo.gov/sites/default/files/110th-congress-2007-...

  Medicare Part D plans are run by private insurers and 
  they certainly do negotiate on price.

Why is a third party negotiating for Medicare, rather than Medicare negotiating directly? Because they're smaller, and have less leverage.

  physician administered drugs are paid for at a rate 
  that is the average of what private payers pay.

Why is a third party negotiating for Medicare, rather than Medicare negotiating directly? Because they're smaller, and have less leverage.

From http://www.cnn.com/2015/09/28/health/us-pays-more-for-drugs/

-- Gleevec (a cancer treatment): $6,214 (per month/per customer) in the United States, compared to $1,141 in Canada and $2,697 in England.

-- Humira (for rheumatoid arthritis): $2,246 in the United States, compared to $881 in Switzerland and $1,102 in England.

-- Cymbalta (for depression): $194 in the United States, compared to $46 in England and $52 in the Netherlands. In fact, there is also a generic version of Cymbalta so these prices reflect having a cheaper alternative.

Some molecule. Different price.

Switzerland, England, Canada, the Netherlands... which negotiator in any of those countries is not smaller than Medicare?

well none of them, since Medicare isn't a negotiator?

To extend GPs point, there are negotiators in the US who are bigger and therefore seemingly have more leverage than several of those countries. Therefore, perhaps it's not just a size/leverage thing.

England has a single-payer (the NHS) and a population of 53m people. So I guess the answer is England?

> England has a single-payer (the NHS) and a population of 53m people. So I guess the answer is England?

GP was being rhetorical, but if you really want to know, Medicare has 55 million beneficiaries in the US.

Nope. Medicare has 55.3M beneficiaries.[1]

[1]http://www.ncpssm.org/Medicare/MedicareFastFacts

57 million, but that oncludes 17.6 million that are in third-party at-risk plans where Medicare is just paying a portion of the premiums (Medicare Advantage), not traditional "single payer" Medicare, so don't count in Medicare's negotiating power. So there's just under 40 million in traditional Medicare.

http://kff.org/medicare/fact-sheet/medicare-advantage/

You need to be careful with that definition. For prescription drugs, Medicare just pays premiums to private insurers under Part D. Following your logic, Medicare has zero negotiating power for those drugs.

The NHS is for the whole of the UK, which is 64 million people.

The NHS is for the whole of the UK, which has a population of 64 million.

Technically there are four different NHS', one for each nation in Britain. Wales, Scotland and NI each report to their government rather than Westminster.

What is preventing legislation that simply opens borders / trade for filling prescriptions?

Corruption. However, the line is generally described as: If companies can't discount per country then all countries end up paying high prices without discounts. However, if they can discount prices in some countries then that maximizes profits which increasing the customer base.

It's much more complicated than that. Sales in the US where they can charge more are what actually offer pharma companies good ROI. Effectively the US is subsidizing R&D for the rest of the world.

Agreed. Pharma is managing their expenses and profitability based upon the ability to charge much higher prices in the US. Take that away and suddenly everyone outside the US will have to pay more -or- Pharma will have to rethink their business model. The more this connection is obfuscated the easier it is to confuse decision makers.

Pharmaceutical companies do a lot more than just R&D making said subsides horribly inefficient and thus a lie. But, yes that's the line used.

This is a lie.

Saying it's a lie makes it sound like you think it's deliberately mendacious. In fact, it seems more likely that the poster believes it. It might be more constructive and interesting to say something like 'this is incorrect because/as this reference shows...'

The implication of the 'subsidy' argument is that there's a certain level of profit required to drive a certain amount of product development and innovation. In other words, to get the current level of drug discovery / development / etc., pharma requires the current level of return.

The question for me is how how inelastic this relationship is. The pharma companies would have you believe that if some kind of price controls of some kind were put in place, and the total amount of profit to be had was reduced, then the inexorable result would be a scaling down of the whole process: a sinking tide lowering all ships. Is that a realistic model? I don't know. Is there way to know? I don't know that either.

It's easy to make religious claims from either side, but it would be nice to have a better sense of the system dynamics here.

Not for European drug companies (and there are quite a few of them) who must negociate price in Europe, yet still cover all their R&D.

Those same comapnies then sell the same drug with pure profit (minus marketing & regulatory cost) in the US, for 4x the price because they have a monopily on it.

This ammendment almost made it to the floor:

https://www.congress.gov/amendment/115th-congress/senate-ame...

You can see who voted for / against it: https://www.congress.gov/amendment/115th-congress/senate-ame...

40 Rebublicans said No

12 Democrats said No

Feinstein (D), Sessions (R) refused to vote.

(Roughly)

"What is preventing legislation that simply opens borders / trade for filling prescriptions?"

US suppliers sell to Canada at a different price than they sell in the US.

If 'borders were open' - the price in US would go down, the price in Canada would go up, roughly to the same price.

I understand that it seems odd, but I reject the idea that it's 'corrupt' to sell to one country at a different price than another.

Drugs are essentially IP, so it would be like the US selling Canada the 'Superbowl' and then Canada selling and broadcasting it to the rest of the world at a discount.

I think something should be done about that - but drugs are not like most goods. And of course, many goods have different controls and regimes.

Another aspect: it's not really 'free trade' when a government entirely regulates the economy for a good. So when gov of Canada 'sets prices' for a good, it kind of flies in the face of regular trade rules and potentially gives one side or another advantages, so it really doesn't fit well under things like WTO or NAFTA.

Surely we could have some new thinking about this though ...

Why would drug companies allow it? When a lot of Americans were filling their prescriptions in Canada, the drug companies simply applied quotas to their shipments to Canada. They know how big the markets are, so why would they ship 500% of estimated demand to Canada knowing it would flow back into the US?

As a result, a lot of pharmacies (and some gov'ts) restricted sales to out-of-country patients to prevent shortages in their own countries.

A complex tango between drug companies that want to maintain their margins, and European governments that want to drive drug prices artificially low to force American payers to make up the difference.

You're getting downvoted, but you're right. Currently, the US is implicitly subsidizing other countries in this regard. If we removed the trade barriers for prescription drugs, US prices would fall and other countries would end up paying more.

An alternative scenario might be that drugs would get cheaper in the US, European drug prices stay the same and pharmaceutical companies somehow scrape by with lower (but still positive) profit levels.

Seriously, if drug companies were making a net loss in European and other countries, they'd just stop supplying in those countries and subsequently enjoy higher profits. Unless you're suggesting companies like Pfizer and Merck & Co do it anyway out of the goodness of their hearts. And prices the US pay are in no way related to what other countries pay: it's simply a function of market power and being in a much weaker bargaining position.

Most of these countries have 'single buyers': essentially a panel of medical practitioners and economists who negotiate prices on the basis of cost-benefit ratio on behalf of the entire country. So the lower drug prices in European countries (and other single buyer/universal insurance countries like Britain, Australia, Canada etc.) is simply drug companies supplying the market at the price it will bear. They are price takers in such countries, because those countries are monoponsy markets.

I realise Pfizer (net income: $7.74 billion) and Merck & Co (net income: $4.44 billion) are really doing it tough, but I think they'll be OK if Americans realise it's insane to pay close to double (>15%) the OECD average (7-8%, medical spending as a % of GDP). Although I hear US medical treatment is top notch if you're rich, otherwise statistically (and conservatively) 25% of the time it will send you bankrupt, assuming you make it out of the waiting room alive (compared to, say, the UK where medical costs account for %5 of households that report 'financial difficulty'). [0]

It truly baffles me when I hear Americans talk about this issue, as they always argue it's actually really a good thing that they're getting rogered by most of the private medical industry in their country (hey, they're nice people, we cuddle afterwards). There's some crazy mental gymnastics going on if you truly believe that paying double the 'rich country club' average on health care costs for basically the same outcomes (apart from the much higher bankruptcy rate) is in some way a good thing.

It's almost like some weird form of buyers' remorse: 'Yeah, but we treat cancer better that anyone. USA #1!'

[0] http://www.snopes.com/643000-bankruptcies-in-the-u-s-every-y...

You aren't taking into account the very high fixed costs but very low marginal costs for developing drugs.

> An alternative scenario might be that drugs would get cheaper in the US, European drug prices stay the same and pharmaceutical companies somehow scrape by with lower (but still positive) profit levels.

You're treating this as if it's a question of "fairness" to the drug companies, and it's not about that at all. If you could drive drug company profits to $0 with no collateral effects, it'd be unambiguously the right thing to do.

The question is, though, what does that do to the market? If you're an investor that has a billion dollars lying around, do you put it into drug development or social media? Both are highly risky, but the former is burdened by a regulatory regime that thinks companies in that sector should just "scrape by," while the latter has unlimited upside.

You're basically sending a signal to the market that the more valuable your business is to society, the less money you're going to make from engaging in it. That's ass backwards.

> Seriously, if drug companies were making a net loss in European and other countries, they'd just stop supplying in those countries and subsequently enjoy higher profits

They continue to sell in European countries because they don't make a marginal loss there. But if their revenue levels in the U.S. were at the level they are in Europe, they absolutely could not justify their enormous fixed costs.

> And prices the US pay are in no way related to what other countries pay: it's simply a function of market power and being in a much weaker bargaining position.

It's true that drug companies are in a much weaker bargaining position in European countries, but only because European governments exercise seller-side market power to artificially drive prices below what they would be in a market with many buyers and many sellers.

> I realise Pfizer (net income: $7.74 billion) and Merck & Co (net income: $4.44 billion)

Fun fact: Facebook's net income is about 30% higher than Pfizer's even though its total revenue is only about half. Obviously Facebook's product is much more valuable to the world and should be incentivized accordingly.

> But if their revenue levels in the U.S. were at the level they are in Europe, they absolutely could not justify their enormous fixed costs.

Maybe the public could help them substantially lower the costs by not allowing to advertise prescription drugs to laypeople?

Agree with the GP. There is some massive Stockholm syndrome going on here.

Some countries have well-functioning health care systems since the 18XX, not just since the feel-good story of "Murica is subsidizing other countries because we are such a great nation" became a thing.

Working health care is not rocket science, but it looks like everything that doesn't fit the American narrative of exceptionalism is conveniently ignored these days.

> Maybe the public could help them substantially lower the costs by not allowing to advertise prescription drugs to laypeople?

That argument, though oft-repeated, is mathematically non-sensical. Unless companies are currently operating irrationally, one less dollar spent on advertising will result in more than one dollar lost in revenue.

Every dollar earned by advertising prescription drugs to the general population is a dollar that shouldn't have been earned in the first place.

See the Opioid epidemic that is still taking lives in the US for more than 20 years. Imagine what an economic benefit it would be for the populace if all those average middle-class Jane and John Does wouldn't have had their life shattered by addiction and instead would be holding down a steady job paying taxes.

Or imagine how much cheaper it would be if the US' reckless abuse of antibiotics in both humans and livestock wouldn't cause such a rise of multi-resistant strains of diseases.

Why is a third party negotiating for Medicare

Look back at the last paragraph in my response above. Medicare is required to cover a number of classes of drugs. they can't say "no, we're not paying for it."

As a result, Medicare has no negotiating power. Unless you can walk away from the table, why would drug companies budge?

And if Medicare did have the power to say "no", how would that work politically? I'm guessing the AARP would be up in arms if Medicare said "no, we're not paying for that drug, find an alternative."

And the price you quote are comparing list prices in the US to net prices (that's usually what's published in the EU and Canada).

Humira is significantly discounted in the US. 40 to 50% discounts are not unusual for large payers.

A great example are the HCV drugs. When a 2nd class of products entered the market, the drug manufacturers rushed to discount their products to maintain market share. As a result, the US price is lower than the prices in Europe.[1]

[1]http://www.forbes.com/sites/johnlamattina/2015/12/04/for-hep...

> Medicare is required to cover a number of classes of drugs. they can't say "no, we're not paying for it." > As a result, Medicare has no negotiating power. Unless you can walk away from the table, why would drug companies budge?

Those statements are only true for drugs with no alternatives - which doesn't apply to all (most?) drugs. And, even for those, couldn't the government say "we're not going to pay $(RANSOMPRICE) for drug X. If you insist that we do, we will not buy any other drugs from you but will instead source from your competitors at all times."

we will not buy any other drugs from you

Private payers are free to do that, but don't. The reason why they don't is because they have customers and telling someone "no you can't have this drug" makes people really upset.

I'm not sure Medicare would have much more success in that area. I could imagine politicians phones ringing off the hook with call from retirees stating "why won't you pay for my drug"?

Because most patients are not competent to source alternatives.

Lets be honest, apart from generics, are you able to dive through source material to find older, equally effective, but with different side effect drugs?

I would argue that having Part D coverage handled directly by medicare, with the power to negotiate prices, would have a positive effect on prices for Part B medication as well. By having Medicare only provide certain medications, it makes it more difficult to bring proper purchasing power. It would also make it a lot easier on people who are on disability to manage their health. I'm on disability, and when I have a problem with a prescription, it's an absolute mess trying to figure out if I need to contact Medicare, or if I need to contact my Part D provider. To make things more complicated, there are times I need to contact Medi-Cal, because I have a certain amount of my coverage handled under Medicaid.

If you think that policy is pure benefit for consumers and the only costs are to greedy mustache-twirling men, then there may be another bubble going on.

It would mean that the US uses its leverage to push drug prices down to marginal costs, which would almost be the last domino in payers willing to pay for something like the value of new drugs. But drug development doesn't make sense if you can only charge marginal costs.

The downsides of such a policy are going to be felt long-term; nothing is as simple as "we pay less and they get less".

Funding research through banning a buyer from negotiating with its suppliers is pretty much the definition of a Rube Goldberg device.

I don't think anyone would dispute that that's a major way that research is currently funded, but it's fundamentally stupid. You've got a bunch of free riders, and it obscures where and why costs are actually incurred.

Allow negotiation, and then figure out clear, rational funding mechanisms.

>Funding research through banning a buyer from negotiating with its suppliers is pretty much the definition of a Rube Goldberg device.

It's exactly how normal (non-monopsony) markets work in every context, including markets for intellectual works/IP.

Note: in this context, "negotiating" means "turning the national market into a monopsony". It's generally recognized as not-a-pure-good-thing when e.g. Walmart comes close to doing that and forces sellers to nearly take a loss in return for access to Walmart's market.

(And before anyone makes the obvious point, yes, I know "health care ain't a can of beans etc etc etc". But with respect to the dangers of monopsonies, it's close enough.)

Or we could start funding medical research through our system of universities and the like. We have immense public and non-profit institutions that can take over. Maybe we'll even be able to see more benefit in treatment of rare and neglected diseases that way.

It also means that a large number of people could actually afford medication, doctors, etc. I have friends who can't afford going to the doctor, can't afford medication, so go without. Their quality of life would greatly improve by them being able to get into the system.

Yes, it is definitely a possibility, that we could refactor the whole system and eliminate patents and set up a completely new model for drug development to work. That would affect a lot of stakeholders and be complicated politically, but yes, it's one route to take.

I was only trying to establish that it's not a matter of "here's a single, obviously bad policy that can be clipped out and which only has downsides for greedy capitalists".

Indeed, there are not enough incentives for pharma companies to target third world or not-so-common disease, but instead to push things like Viagra. That's one of the things Gates Foundation is helping address but ideally we do it at the government level. Research through grants to universities and labs already fuels a lot of great R&D in the US and I feel like we need to have even more of it for medicine.

> Indeed, there are not enough incentives for pharma companies to target third world or not-so-common disease, but instead to push things like Viagra.

Viagra was originally developed as a medication for cardiovascular disorders and hypertension, which are major problems in both the "third world" and in developed nations. It was only later on that they discovered its use for erectile dysfunction.

As for marketing Viagra - why is that a bad thing? Given that they've already done the bulk of the R&D for it, making money off the blockbuster drugs is exactly how pharmaceutical companies can afford to pour research into drugs that are a lot less likely to succeed, or which target poorer populations.

Or, if you don't want to look at Pfizer, look at Gilead. While it's easy to criticize them for charging so much money for Sovaldi (or charging so much for Tenofovir a decade ago) charging the patients who can afford it for the early years is exactly how they recover their costs and justify things like clinical trials for PrEP (which, it's easy to forget today, were a massive risk at the time), or direct market subsidizes of PrEP for people who can't afford it otherwise. I wouldn't be surprised if they did something similar for Sovaldi in the next decade as well.

Viagra is the only expensive drug that people willingly pay full price for.

If the system you're describing is easy to set up and promises similar (or better) results at lower costs, why aren't other countries adopting it?

If the government wants to fund drug development, it can fund it directly by buying research studies and proposals for studies rather than drugs from the drug companies. Something needs to be done to remove the incentives to falsify or exaggerate results and endlessly pursue me-too drugs.

Agreed. US healthcare is a horribly corrupt system designed to redistribute wealth from the most vulnerable into as few hands as possible. It is one of the few industries where I think expropriation and corporate dissolution is entirely justifiable.

I think in many respects Medicare is a prime example of how easily the US might/can jumble up a single payer system.

Medicare is socialized medicine, and should be single payer, yet insurance still manages to get in the middle and increase costs while reducing patient outcomes.

Specific example that almost no one talks about: Medicare Insurers come to town and start buying up primary care practices, then, then the Insurer cancels contracts to the remaining providers and those who don't sell. This means patients lose their doctors of years and are stuck going to the primary cares the Insurance companies own, and then provide waterdowned care to patients (e.g. RX that is cheaper for the insurance company even when the Med is proven less effective, less refferals to specialists than the market average, etc...).

There have been some lawsuits against Medicare insurers for this specific behavior, but to my knowledge those have resolved in settlements where the insurers temporarily agree to allow existing patients to continue seeing their doctors, but unfortunately the reality of those cases are the doctors aren't fighting for their patients but seeking their own buyout from the insurers.

> Medicare is socialized medicine, and should be single payer, yet insurance still manages to get in the middle and increase costs while reducing patient outcomes.

Wait, what? Medicare Advantage (the portion of Medicare that is privatized) consistently beats Original Medicare on cost, medical outcomes, and patient satisfaction scores.

Amusingly, when people talk about the high patient satisfaction of Medicare, they're talking about the high patient satisfaction of privately-insured Medicare patients, because even the very lowest satisfaction score of all the major injurers who provide Medicare plans is still higher than Original Medicare's satisfaction rates.

http://thehill.com/policy/healthcare/237492-poll-seniors-mor...

Patients like Medicare Part D because millions of patients couldn't afford their drugs and now they can, not because of insurance companies or the market is privatized.

Ironically it was GW Bush who got Medicare Part D done (which is the antithesis of fiscal conservatism, and many might remember Bush losing a lot of support from his own party, though many say it was just politicians in the pockets of insurers). Alternatively, Obama originally wanted to do away with Part D because of the cost/waste (forcing millions into situations where again they would lose drug coverage would have been the antithesis of social liberalism, for this reason it was controversial within the party). Luckily there was compromise and instead of dismantling Part D Obama tried to flush out the waste using tools like Star Ratings and mandates to insurers to provide services like Medication Therapy Management to Advantage Chronic Care Patients, which alone has had substantial positive impact on patient outcomes, costs, and the competitive nature of the insurance markets (now insurers are rated based on quality metrics, insurers lose contracts with Medicare due to poor outcomes and only those with the best metrics and ratings can serve the market year round). Still its an inefficient system because of these middlemen, in fact it is arguable many of the "quality metrics" that give insurers better ratings are actually the things leading to bad behavior like buying up medical practices and cancelling contracts with other primary cares in the area to drive down the cost of care.

> Patients like Medicare Part D

I'm talking about Medicare Advantage, not Medicare Part D. Most Medicare Advantage plans do include a Part D plan, but not all do.

> not because of insurance companies or the market is privatized.

People like Medicare Advantage because they are actually able to book appointments without horrendous wait times, and they're able to see a better selection of higher-quality doctors. And the outcomes back this up - Medicare Advantage consistently outperforms Original Medicare on medical outcomes, not just on patient satisfaction.

>I'm talking about Medicare Advantage, not Medicare Part D. Most Medicare Advantage plans do include a Part D plan, but not all do.

I would have thought 9 out of 10 advantage plans have part D drug coverage but its actually 82% at an average cost of $40/month.

>Medicare Advantage consistently outperforms Original Medicare on medical outcomes, not just on patient satisfaction.

Outcomes is a buzz word, if you want to talk Star Ratings and Quality Metrics, then we can begin to discuss what "outcomes" really mean.

Just one example where a quality metric has both positive and negative patient effects simultaneously: say I'm Blue Cross Blue Shield, thru MTM I somehow manage to get all my Medicare Advantage Part D Chronic Care Patients to switch an average of 10 Rx/patient from 30 day to 90 day fills.

Its these little things inherent in the Star Rating/Quality Measure system that people regularly refer to as patient "outcomes". In my example, the Blue Cross Blue Star Star Rating might even go to 5 allowing me to sell insurance year round. Why? It starts with medication related incidents costing billions/year and resulting in millions of hospitalizations and that being some of the lowest hanging fruit to correct, so "medication adherence" is heavily weighted in Star Ratings, and somewhere there is a study concluding 90 day fill improve medication adherence by x% over 30 day fill (i.e. improved outcome). It all sounds great until you peel back the layers and find a doctor who refuses to change the script because morally the doctor wants to see that patient every 30 or 60 days (again these are all Chronic Care Patients so diabetes, blood pressure, cholesterol, etc...) before writing a refill. When these objections regularly occur from doctors, insurance has deemed them to expensive and drops them from the network, and as I stated in my initial post those patients will regularly be redirected to a practice owned by the insurer themselves.

Now in all fairness we all know there are doctors who do in fact milk the system with unnecessary patient visits but it is undeniable from the court cases by groups of doctors who have been dropped against the insurers and the reactions of patients losing a doctor they know and trust, there is very unsavory behavior by insurers.

Here is my final diatribe on my bone to pick with "outcomes", naturally one way to drive down costs care (thus improve Star Ratings and outcomes) is switching from name brand to generic. However, even when doctors feel a generic may be fine they may not want to change a therapy in instance when the patient has been on a continuous therapy successfully managing their chronic care condition just to save a few dollars, improve the insurers Star Rating, and claim better patient outcome. Though this debatable issue becomes a clear problem when insurers start pushing the doctor (and even the patient thru cold calling) to change the Rx to a generic that is clinically proven to be harmful to patients to save money (which may actually be happening with the diabetes Statin therapy).

> Outcomes is a buzz word, if you want to talk Star Ratings and Quality Metrics, then we can begin to discuss what "outcomes" really mean

If you want to talk about how metrics are imperfect, fine, but you can't claim that Original Medicare is somehow better unless you actually propose some concrete metrics on which it actually does outperform Medicare Advantage. As it stands, Medicare Advantage consistently beats Original Medicare on pretty much every metric you can conceive of.

Every single Advantage patient is enrolled in "oringinal medicare" parts A and B, the only difference is those parts are administered by private insurance...and all the additional benefits and cost savings by law on these plans. That is to say the benefits and cost savings of advantage aren't there because the private market they are mandated.

Take my 1 example MTM, Medicare Advantage patients don't get that benefit because the private market is driving competition and better care, it's because by law the Avantage plans have to provide MTM under penalty of losing their Medicare contacts.

I'm not denying Avantage is better than original Medicare, but to claim the reason Advantage may be better is insurance companies and not the legally mandated benefits and costs of Advantage plans isn't good faith, especially when you already minimized >80% of the patients get mandated drug coverage. Yes it's good but is has nothing to do with insurance creating the market conditions that created the drug coverage, its law and subsidies. Though it will become clearer as the insurance continues to consolidate and Medicare patients will only be able to go to doctors, hospitals and pharmacies owned by the insurer, because that's where it's going for Medicare Avantage patients, costs will go down but I'll be damned if I call that a "good outcome".

> Every single Advantage patient is enrolled in "oringinal medicare" parts A and B, the only difference is those parts are administered by private insurance

Again, it seems you're confused about what Medicare Advantage is. Medicare Advantage essentially replaces all Medicare coverage - parts A, B, and (usually) D. So no, Part C patients are not enrolled in Original Medicare in any sense. They are enrolled in Medicare, but not Original Medicare.

> Yes it's good but is has nothing to do with insurance creating the market conditions that created the drug coverage,

I'm not talking about drug coverage. Medicare Advantage provides a superior (in every measurable sense) way to obtain Part A and B benefits than Original Medicare does. That has nothing to do with drug coverage.

> its law and subsidies.

It's not a matter of "subsidies". Medicare Advantage is not subsidized by the government. The government pays private insurers a fixed amount that corresponds to what Original Medicare would "receive" for each patient, but that's not a subsidy. And when we say that Medicare Advantage outperforms Original Medicare on cost, we're saying that Medicare Advantage is able to achieve better outcomes for the same amount of money.

If you think that's just a fluke, then look at Medicaid. The same pattern holds with Medicaid, where privately managed plans again consistently outperform the government plans, even though the array of requirements differs widely.

> especially when you already minimized >80% of the patients get mandated drug coverage.

The drug coverage isn't "mandated" for Medicare Advantage patients, any more than it is "mandated" for Original Medicare patients who enroll in a Part D plan or a Medigap plan. Medicare Advantage patients who don't receive prescription coverage can get a Part D plan just like Original Medicare patients can.

Maybe you're trying to say that there's a beneficial selection occurring, but that's also wrong. Part D is well-segemented

That argument would basically boil down to "Medicare Advantage is only better than Original Medicare because most Medicare Advantage patients receive drug coverage", which makes no sense because (a) the same companies provide Medicare Advantage and Part D benefits (and oftentimes using same plans), and (b) Medicare Advantage provides superior coverage and quality (and at a lower price) when compared to Part D enrollees with the same prescription coverage.

Honestly, the existence of Part D is, if anything, proof positive of this effect, because it makes it so easy to tease out the difference between receiving Part A/B coverage through Original Medicare and receiving equivalent coverage through Medicare Advantage.

> Though it will become clearer as the insurance continues to consolidate and Medicare patients will only be able to go to doctors, hospitals and pharmacies owned by the insurer, because that's where it's going for Medicare Avantage patients

That's the way the entire industry is headed as a direct result of the ACA. But even that's still a lot better than Original Medicare where patients struggle to get appointments at all.

>The government pays private insurers a fixed amount that corresponds to what Original Medicare would "receive" for each patient, but that's not a subsidy.

Define it however you want, it leads to watered down care. Naturally, the Insurers have incentive to identify the primary care physicians who don't see their patients (especially chronic care) or don't order referrals to specialists. Have you followed a single lawsuit against the Medicare Advantage plans by physicians and physician groups? Insurers identify these practices (the ones that have minimized costs through watered down care) buy them/cancel other physicians out of the networks/funnel remaining patients to the doctor.

Let me ask you, how do you think an Advantage patient can set an appointment so easily when the networks have narrowed (less physicians, less patient choice) and the overall patients/doctor in network increases? Its because systematically the complicated chronic care patients are seeing the doctor less and less and the network doctors have more time to spread around and set appointments in 24-48 hours (you say improved outcome, I say yes for many but also watered down care for many). I will admit, patients like seeing their doctor in 24-48 hours and like seeing them 1-2 a year instead of 4-6, its convenient and cost them less (in co-pays if nothing else), but its still watered down care, especially to the chronic care Medicare Advantage patients.

I will predict this as well...the next step in all this is for Pharmacists to be labeled providers (can bill CMS under Parts A, B, C) and they will begin replacing physicians as the providers for Medicare Advantage chronic care patients. Again outcomes will go up because the patients are actually being seen and the Chronic Care CPT code will be billed/reflected on their EHR, but the care will be watered down (patients now forced to see pharmacists instead of doctors for chronic care management), but hey costs will go down right? Even the patients will be happy because they can just walk in to a pharmacy anytime without an appointment and see a pharmacist, plus the copay will probably be cheaper, again you/Insurers/even patients can say "improved outcomes", I'll maintain less choice and watered down care.

> Define it however you want, it leads to watered down care

I can't even follow what you're trying to say anymore, because you're conflating unrelated topics. And again, you're still not really actually defining the metrics that you care about, so it's hard to respond because you're not offering any concrete and systematic method for evaluating effectiveness. I've mentioned a few metrics (which happen to be the industry-standard, first-order metrics). You don't have to agree with them, but if you're going to dismiss them, then you need to propose something else or it's impossible to engage with what amounts to a flurry of anecdotal problems. (Anecdotal doesn't mean that they're not real or important, but it does mean that there isn't a framework for discussing them).

> Its because systematically the complicated chronic care patients are seeing the doctor less and less and the network doctors have more time to spread around and set appointments in 24-48 hours (you say improved outcome, I say yes for many but also watered down care for many). I will admit, patients like seeing their doctor in 24-48 hours and like seeing them 1-2 a year instead of 4-6, its convenient and cost them less (in co-pays if nothing else), but its still watered down care, especially to the chronic care Medicare Advantage patients.

This is completely and utterly wrong. I founded a heath-tech company aimed at coordinating care for this exact space. That statement is completely off-base.

>I've mentioned a few metrics (which happen to be the industry-standard, first-order metrics).

What metrics have you mentioned at all? You claim original Medicare patients can't get appointments and Advantage can, fine I'll chalk that up as a metric/outcome impacting insurance star ratings, but you ignore the fact people like advantage 8 out of 10 because they get drug coverage, that is not unrelated. Tell you what take away Part D drug coverage from 8 of 10 Advantage plans do you think the patients will still be happy with Advantage over Original Medicare (see my links below before you answer that the links below belie your statments appoint access/appointments between Advantage and Original)?

Moreover, Advanatage and Original Medicare patients report similar experience in getting primary care appointments, and in fact Original Medicare out does Advantage in getting Specialty appointments (only by 2% but still) [1] and the chart [2].

You completely ignored the metrics about I mention about: [1] 30 to 90 Rx transfers; or [2] Rx transfer to generics (including Statin which for Medicare Advantage Diabetes patients which is clinically proven fatal in a few cases out of every million).

[1] http://kff.org/medicare/issue-brief/medicare-patients-access...

[2] http://kaiserfamilyfoundation.files.wordpress.com/2013/12/85...

>This is completely and utterly wrong.

Please show me the data supporting any notion that on average Medicare Advantage patients have larger doctor networks than Original.

Alright, I can't continue this, because it's too dizzying to try and follow what you're saying, as it changes with every comment.

You were the one who brought up costs and patient outcomes:

> get in the middle and increase costs while reducing patient outcomes.

So I responded to that claim by talking about Medicare Advantage (Part C), at which point you bring up Part D, confusing it for Part C:

> Patients like Medicare Part D because millions of patients couldn't afford their drugs and now they can, not because of insurance companies or the market is privatized.

After I explain that, no, I'm talking about Part C (which provides Part A/B benefits) as opposed to Part D, and that the advantages to Part C are lower wait times and higher-quality doctors, which both lead to better outcomes, you go back and say that outcomes (which you initially talked about) aren't necessarily good, illustrated with an anecode:

> Outcomes is a buzz word... Just one example where a quality metric has both positive and negative patient effects simultaneously...

but don't actually propose any alternative metric to measure instead. I asked you to do that, and you demur, talking about costs but again dismissing outcomes, along with some other factual inaccuracies about Medicare

> Every single Advantage patient is enrolled in "oringinal medicare" parts A and B... additional benefits and cost savings by law.... but I'll be damned if I call that a "good outcome".

I correct those factual inaccuracies, and then you bring up insurance networks (which are related, but not the same as quality of care), and also go back to talking about wait times. You also say that this is "watered-down care", but don't actually define what that means (the only thing that's clear is that you don't mean "medical outcomes"):

> Define it however you want, it leads to watered down care.... you say improved outcome, I say yes for many but also watered down care for many

I say that no, your statement about wait times is wrong, and remind you that you still haven't defined the metrics that you're actually using to measure quality or effectiveness of medical outcomes. You respond by complaining that I haven't addressed your example of a bad metric:

> You completely ignored the metrics about I mention about: [1] 30 to 90 Rx transfers; or [2] Rx transfer to generics (including Statin which for Medicare Advantage Diabetes patients which is clinically proven fatal in a few cases out of every million).

...except that I'm actually willing to engage your point that some metrics are flawed - my whole question for you is what you're using to define medical quality if you're not using the industry-standard measures?

And to top it all off, you respond to my comment about wait times by saying:

> Please show me the data supporting any notion that on average Medicare Advantage patients have larger doctor networks than Original.

Except that I never said anything about larger doctor networks. Nor, for that matter, did you! I was responding to your claim about wait times, which is not the same thing as the size of the network.

I don't mind correcting misunderstandings about the fundamental structure of Medicare, because I understand that it's rather esoteric and most people here don't have any experience with it. But doing that while also trying to chase your goalposts in circles is immensely frustrating, and I don't have the time for that. Sorry.

It's sad because I am frustrated as well, and I believe we likely could have had a more civil and informative conversation, maybe in person or another medium. I'll leave it at this myself:

>So I responded to that claim by talking about Medicare Advantage (Part C), at which point you bring up Part D, confusing it for Part C:

You used Advantage and I did respond using Part D, but its not for any misunderstanding. Literally there is no Part D without Advantage/Part C, and Part D is included in 82% of all Advantage/Part C Plans. Moreover, the rule is that Advantage Plans include Part D, it is the exception for Advantage to not have Part D. The truth is this point doesn't even matter, It just keeps getting in the way of proper discourse, it makes me believe you are minimizing the importance of drug coverage in Advantage Plans and it makes you think I don't understand the structure of Medicare.

>And to top it all off, you respond to my comment about wait times by saying:

I also responded to your comment about wait times with CMS patient data that shows Advantage/Original patients are equally satisfied for primary care wait times and Original are more satisfied with specialty wait times.

Its clear you know a good deal about Medicare, but I question your intimate knowledge of how the following and is gamed in the interest of claiming better medical/patient outcomes: Star Ratings, Quality Measures, MACRA, MTM, Managed Care, ACO, CPT codes, etc...

>my whole question for you is what you're using to define medical quality if you're not using the industry-standard measures?

I think that is a very fair question, because I didn't expressly state a new or better set of measures/metrics/outcomes, mostly because I don't believe in a one size fits all solution to care, it must be individualized (i.e. its not always an improved outcome to switch a Chronic Care Advantage patient to a Statin; or even though 90 day Rx may improve medication adherence of patients on average it also shows patients show up to the doctor less so in the case of Chronic Care patients the 90 day Rx should be a quality measure/improved outcome). However, in a one size fits all approach I would say it is a bad patient outcome when Insurers shrink their networks, patients lose their doctor(s), and patients are funneled to Insurance owned practices (I think you issue is that those measures/outcomes are unrelated to "quality of care" as you put it, but neither are many of the current measures most of which are based on costs or medication adherence, though I would argue the quality of care has gone down when a patient loses their doctor of years).

Though if you refer to the YC Research OP, it doesn't mention anything about the US. Any number of other countries could be markets.

You're trivializing what is actually a very complicated economic issue. Medicare negotiating drug prices raises a serious buyer-side market power concern: https://en.wikipedia.org/wiki/Monopsony. You can't have a "real market" where something like Medicare exists. So you design the rules to try to mitigate various exercises of market power. That's really hard to do.

Of course, you can say "who cares if Medicare drives prices too low, the drug companies will just have to deal with it." But in the long term, that's bad for the customer. All around the country you can see regulated rates that are too low and drive out investment. A great example is water utilities. Almost everywhere, water rates are far lower than they should be, and as a result water infrastructure is crumbling, customers are drinking water through lead pipes that haven't been replaced in a century, etc.

> All around the country you can see regulated rates that are too low and drive out investment. A great example is water utilities. Almost everywhere, water rates are far lower than they should be, and as a result water infrastructure is crumbling, customers are drinking water through lead pipes that haven't been replaced in a century, etc.

It's too simplistic to blame this on government regulation. The rest of the world also regulates utilities, and far from all of it has the crumbling water infrastructure problem.

> It's too simplistic to blame this on government regulation. The rest of the world also regulates utilities, and far from all of it has the crumbling water infrastructure problem.

I'm not blaming the fact that government regulates utilities. I'm pointing out that using government regulation to simply drive prices lower is bad in the long term. Government regulation can work when prices are set at levels that balance investor incentives and consumer welfare. Doing that is really hard.

When the U.K. privatized British Telecom, it created a regulated monopoly (now BT Openreach) that owned the wires into peoples' houses. They spent a lot of time and intellectual energy into determining how to set BT Openreach's rates. As a result, that monopoly is more profitable than say AT&T (even including AT&T's lucrative wireless division). Unsurprisingly, BT Openreach has aggressively built out FTTN in the U.K. whereas U.S. telephone providers have been trying to limit investment in their networks.

My point, more specifically, is that the US healthcare system is in a state of regulatory capture due to various market failures in our implementation of employer-based health insurance. I would go further and say that employer-based health insurance is intrinsically unsound, and the only thing propping up our failed system is massive government subsidy.

This is literally our system:

When you're healthy, you get for-profit health care through your job. If you become infirm and cannot work, usually through age, but for whatever reason, you get expensive health care through the state after you have bankrupted yourself.

The entire premise of health insurance is having healthy people pay for the sick people to spread out the risk. But our system is "private insurance takes all the profits and the government takes all the costs".

And people wonder why things aren't working out.

I bet making structural changes so that cost of care is more visible to patients would help a lot in the US. Of course this means disincentivizing health care as a benefit rather than incentivizing it, so it will never happen. It is kind of happening with things like HSAs, but not really.

We should also work on removing arbitrary barriers to entering the supply side of the market. Not just for individuals that want to be a doctor or other sort of provider, but certificates of need and such too. Currently, lots of states dictate who can operate a CT scanner.

I agree, opacity is a big part of the problem. I'm super-excited about Castlight Health (http://www.castlighthealth.com/) and how they approach the problem (by presenting cost/value scatters and other ways)...but...how obscene is it that we as a country should even need such a service!?

Good point. I am a bit sad that Castlight seems to be struggling and the stock price is pretty low. I thought it had a good mission and solution.

My company uses CastLight and it is pretty great. It has been fairly accurate (+/- 10%) the few times I have used it.

Only partially. Often at the time of consumption cost isn't something one can use to make decisions. But for those other times, sure it would help.

Speaking of lack of info about pricing you might find this interesting: https://www.statnews.com/2017/02/06/health-insurance-high-de...

Great article. It's not just about pricing info, it's about the nationwide move to HDHP's and HSA's.

Personally I'm pretty happy with my HSA, because now the list of things I can spend my healthcare dollar on is much longer:

https://www.irs.gov/pub/irs-pdf/p502.pdf

Lots of those things would not be covered by a traditional health insurance plan.

But of course, it means we have chosen to forego health care and services in some cases, like the author of the article above. In one case we turned down an ambulance and drove ourselves to the hospital, which saved some money.

we have chosen to forego health care and services in some cases

Only in America do you choose to forgo healthcare when you are at a conference and caught food poisoning because you aren't really sure if the hospital will take your health insurance. Where do I apply for my medal for saving the system some money?

"because now the list of things I can spend my healthcare dollar on is much longer:"

Longer than what? 8 years ago, I could use HSA funds to pay for over the counter medications. Not anymore, and OTC is generally the first step before visiting a dr or clinic, but OTC is not HSA-usable.

This, times 1,000 !!

Imagine you go in for an oil change. You ask how much it costs, and find out it's $20. Great. You get the oil change. One month later you get a bill for "environmental disposal" for $35. The next month you get another bill for "Safety specialist" for $15.

This is how healthcare works in the US. If retail worked like this, we'd be in a worldwide depression in about 6 months. Lunacy.

yes.. another 1K. I blame doctors and insurance companies (but mostly the latter.. the former was taken for a ride long ago by the latter). An example of just how ridiculous this is: my son (who is almost 15), was recommended to have a 'pediatric echocardiogram'. The children's hospital that I took him to (a Tier 2 facility in insurance parlance.. which roughly means that my insurance company doesn't own them) indicated that this procedure MIGHT cost up to $5000. So, I asked my insurance company (which I pay 1000 per month to for my three kids and I, in a addition to a 3500 per year deductible), what Tier 1 facility in NJ I could go to, and how much the procedure would cost.

They did not know of a facility where this procedure could be done at first. They had to 'research it'. They found a facility, but when I called, they could not perform the procedure because it called for a 'pediatric echo', which they were NOT allowed to do (mind you, it's like the same echocardiogram that you and I would receive). When I presented this information to my insurance company, they had to again, research it. I ignored it, and found it on my own after calling the heart group at one of the teaching hospitals in my state (NJ). So, I asked my insurance company how much it would cost, they refused to tell me. They indicated that they do not dictate pricing; this is the job of the provider. I noted to them that I did not believe them because I knew that they have contracted rates with all of their Tier1 and Tier 2 facilities and they knew exactly what they would reimburse for. They flatly denied that they had any knowledge of pricing and that this was the responsibility of the provider. My response was a question: so, if the provider charged you 1 MILLION DOLLARS for this procedure, you would, in fact, pay it. They indicated that they did not have any pricing knowledge whatsoever. I ended up getting a second opinion and found out the echo wasn't necessary based on follow up findings. It was one of the most frustrating examples of federally mandated RIPOFF I had ever seen. My son's health was at stake, and they simply wouldn't help me. The doctor's are literally at their mercy because they control the money and EVERYONE lets it fucking slide. It's a crime.

That sounds brutally frustrating, distressing (given your child was involved) and an epic waste of time. And that's on top of paying $1k/mo for insurance.

That is outrageous. I am happy that I left the US and that my son has access to universal healthcare in Europe. I am happy to pay 50% of my income to taxes if it guarantees that I won't have to suffer a situation like you did (and that my kids can enjoy affordable higher education).

What do Americans think of the typical European system? (Paying more taxes and receiving almost free healthcare & education)

To be perfectly frank, it would be fine with me, as I'm basically paying what amounts to a tax anyway. At least it would be explicitly stated as such, instead of this 'bait-and-switch' bullshit foisted upon us here in the US. I suspect that Obama threw down the gauntlet here with the ACA knowing full well it would modified down the road.. I believe his ultimate goal was, in fact, a single-payer system managed by the government (similar to, um, every other country in the world).. but of course couldn't call it that. It's not clear what the Republicans will do, but the 'cat is already out of the bag' as they say. If it's a tax, call it that.. we pay Social Security as a tax so we have some safety net when we're older.. nobody bitches about that (and Americans can really bitch.. just watch the news)... it's like 5%. Why not a similar tax for healthcare? Furthermore, why do we even need insurance companies? They have too much power over services and do ABSOLUTELY NOTHING with respect to our personal health. They're essentially payment clearing houses.. if we're going to privatize health, then we should mandate better price visibility of services and also better risk assessment of the ultimate receivers of the health care.. Currently, their risk assessment models are far too naive (blanket premiums with high deductibles).. Healthy people should pay less for their health care.. sick should go into higher risk pools and be paid out of the tax largesse managed by the government. Long ago, insurance companies began to amortize (health) risk through HMO's..when before that it was ostensibly pay-for-service through the doctors. They began to collect the money.. and then the service fees began to sky rocket (sounds like the US housing market, doesn't it?) Now the insurance companies know they have a huge target on their backs and are buying up all the hospitals and the private practices so now they own the 'last mile' of health care. Unfortunately it's a 45 year-old morass of legislation that no one (not even Google) wants any part of it. A good start is to mandate visibility into all services and let the consumers bitch and complain to the paymasters (their government, doctors, and insurance companies).. something will change. Until we know exactly how much things cost, we'll never be able to effectively optimize any of it.

Oh wow, I encountered this exact problem today for the first time. It's absolutely insane!

I went for a routine doctor's visit a month ago, and paid the $30 copay or whatever it was before the visit. Today I got a bill for $208 where my insurance covers $193, which comes out as them wanting exactly $15 extra from me.

I have Kaiser insurance, I went to a Kaiser facility, saw a Kaiser doctor. It is completely incomprehensible to me how they couldn't know that my visit was actually going to be $45 beforehand, such that I could have paid that instead of the $30 I did. The $208 is obviously just a bullshit number some system pulled out of its ass, and the insurance coverage is just bullshit - 15. I don't get it, it's pure madness!

> I bet making structural changes so that cost of care is more visible to patients would help a lot in the US.

It would, but it would be politically infeasible. Medicare would never let it happen, because providing price transparency in the private market would undermine the convoluted system that allows them to use private insurers to subsidize the care of Medicare patients.

Explain how. I thought Medicare was rife with fraud and overbilling, so that they end up subsidizing private payers.

Medicare is about 1/6 of US healthcare spending so it obviously isn't subsidizing private payers, even if you make a ridiculous assumption like 100% of payments are fraudulent.

And then in reality fraud rates seem to be quite low, at most a few percentage points of overall Medicare spending.

What I meant by fraud, was not cases of outright fraud where someone bills Medicare for services never performed, although I'm sure that happens all the time.

I meant cases like the late night commercials "call now and get a free motor scooter! Just fill out a simple form and we will bill Medicare."

And more relevant are the cases where hospitals bill medicare huge amounts for long patient stays. Medicare always pays what they are billed, after all it's the government paying, they just write a check.

Meanwhile if you bill an insurance company they will negotiate, argue, refuse to pay, deny coverage, etc. If you bill an uninsured person they can also just decide not to pay in favor of paying more important bills like food and shelter.

So, the hospital is actually fine with this, they simply write off the unpaid amount on their taxes as a charitable expense, and increase rates, which Medicare will pay.

So, as you can see, Medicare (plus tax breaks) create a situation where the government subsidizes and distorts everyone else's health care costs.

cost of care is more visible to patients

In the US you get to see the cost of care every time you have reason to see the physician - there's the copay for the physician visit and medications, and then there's the explanation of benefits, where you, as a patient, get to reconcile accounts. In NIH Britain OTOH, you get to see nothing of that sort (except a small copay for medication), and healthcare costs are better contained. It's the US that is the outlier, and shifting even more burden on the patient won't fix matters, it hasn't fixed matters in the past.

People with employer provided insurance don't have much reason to figure out how much their employer is kicking in for the insurance and if they have a modest deductible they also won't care a great deal about the EOB.

I do agree that a single payer system that mandated prices would also likely result in lower prices, but I think that is less likely for the US than incremental changes to our current system.

> In the US you get to see the cost of care every time you have reason to see the physician

I feel it's important to point out that you see the cost in the bill. There's no reliable way to see the cost beforehand.

What's seeing the expenses going to do, what mechanism is supposed to lower cost? When you need healthcare you need healthcare. No one goes to the physician for fun, elective procedures like breast enlargement or Lasik excepted.

The free market argument goes that informed consumers will chose healthcare services, and thus will either drive up quality, or drive down prices.

The problem is that the customers cannot see the prices, and thus can't negotiate before hand. This isn't just for emergency care, but for stuff that shouldn't be too hard to get pricing for. There's a nice Vice(?) video about a couple having a baby. They find it impossible to get even an indication of cost before hand.

This patient choice stuff made its way to England, and frankly it's dumb. People don't change their utility suppliers even though they'd save large amounts of cash. They don't change their GP unless they've moved house; they don't have enough information to make an informed choice of hospital if they need to go for surgery. It's a lot of bureaucracy that has very little benefit.

Yeah, in England the GP sometimes asks which hospital you'd prefer, and the answer is always "you're the expert, I'll do what you recommend"

How do you account for the cost of a delivery? Do we just assume a totally fine birthing experience? What if there's complications? The emergency blood transfusion sure isn't free. It's also not predictable individually.

Ooh I know we'll calculate the cost across the mean population. Of course almost everyone has children or was a child, or knows someone who will and is invested in their well-being. And we can't account for when births happen so we need to keep facilities staffed in downturns, and account for future expensive deliveries where neonatal care is needed.

So really, the best strategy would be some scheme where we charge everyone a little - and the more people we add in the pool the smaller it'll get.

If only there were a name for such a system...

Well, not all healthcare procedures are emergency. If I need something done, especially that which requires many separately-billable groups, the final cost can be extensive. Right now, it's very difficult to even estimate this cost in some cases. Using that data, timing can be better planned and in some cases, compared around for other similar options. The lack of transparency in pricing until you receive the bill is a big deal, in my opinion.

There are frequently multiple providers available, and they often have wildly different costs. Some insurers have experimented with incentivizing people to choose lower-cost providers with some success. If I could easily see that provider X was even 10% cheaper than provider Y, but has comparable ratings, I would probably go with X unless it's especially inconvenient, and I'm probably less price-sensitive than most people.

For non-emergency care, knowing the cost beforehand means you can:

* Shop around

* Plan your cashflow around the healthcare expense

Some of us have more significant medical expenses than others. My prescription medications alone would be $2k/month if I had to pay it out of pocket, and that amount's pretty set in stone. The alternatives, which I've tried, don't work for me, or make symptoms worse. Shopping around wouldn't do anything for me.

"I feel it's important to point out that you see the cost in the bill. There's no reliable way to see the cost beforehand."

There's at least one exception:

http://surgerycenterok.com/

Maybe it would help, or maybe it would do the opposite. Having an HSA and seeing prices upfront can also make one not go to doctor because they do not want to drain their HSA. This can cause people to skip preventative care steps and to not nip potential problems in the bud before they get bad (and expensive). A lot of diseases/conditions are much cheaper to cure/fix if you catch them early, so maybe you don't want to incentivize people to stay away from the doctor.

And if more and more people were not going to the doctor, the providers would lower the price (to some degree no?)

Or they raise their prices to get money out of a smaller pool of subscribers. Medical care has a pretty inelastic demand curve.

> but certificates of need

But they came about to protect the consumer from high prices.

If I own a hospital and buy a $300,000 MRI machine I need to make that money back over the 10 year life of the machine. I charge one price if it's used by 10 people a day; I need to charge double if it's only used by 5 people a day. The extra supply reduces demand and thus increases prices to the customer.

And it's unethical to just scan more and more people, because of the problems of overtesting and overdiagnosis.

EDIT: Citation that CONs came about to reduce prices: http://www.ncsl.org/research/health/con-certificate-of-need-...

> The basic assumption underlying CON regulation is that excess capacity stemming from overbuilding of health care facilities results in health care price inflation. Price inflation can occur when a hospital cannot fill its beds and fixed costs must be met through higher charges for the beds that are used. Bigger institutions generally have bigger costs, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual need or demand.

Sure, in theory. In practice it just means that hospitals that do not have local competition use them as a revenue center (MRIs in the US often cost $1000-$2000...paying off your 10 year machine in a few months with 5 patients a day).

The US Federal government tried them in the 1980s and quickly decided they were counterproductive.

You are literally creating a monopoly (one hospital) to justify that will produce lower prices.

Please give me one other example in an unregulated market where your MRI machine example makes sense. It sounds good on paper, but that doesn't happen in any other market in the western world.

If there are two competing gas stations, prices get cheaper. Two competing airlines, prices get cheaper.

I don't agree with it!

I'm literally quoting the Americans who support certificate of need laws.

Don't forget farm subsidies dumping cheap corn syrup into the bellies of our entire populace. Health care in the USA must deal with the reality of our obese and overweight masses (no pun intended).

Mental health in this country is similarly crippled by rapid societal changes, but that would take longer to explain in detail.

I thought subsidies for corn-based ethanol and tariffs on sugar (lowering sweetener supply) made corn syrup more expensive.

Subsidies for corn have been in place, depressing prices (relative to high-tariff sugar) long enough, that food manufacturers have incorporated corn products into almost everything you can buy at the supermarket. Once the supply chain is in place, even if corn prices rise marginally, it's going to take a large effort to eliminate it from the typical American diet.

* Tariffs on sugar increase demand for corn.

* Subsidies for ethanol increases the cost of all food, including corn.

* Subsidies for corn for lots of other things[0][1] decrease the direct price of corn to consumers and food manufacturers.

As a single data point, I come from Kansas, from a family of farmers. It used to be known as the "Breadbasket of America" because of all the wheat that they grew. Its number one crop is now corn[2].

[0] https://farm.ewg.org/progdetail.php?fips=00000&progcode=corn

[1] https://en.wikipedia.org/wiki/Agricultural_subsidy#United_St...

[2] https://www.nass.usda.gov/Statistics_by_State/Kansas/Publica...

That chart shows around 7 billion for corn. The text later says:

> US corn ethanol subsidies are between $5.5 billion and $7.3 billion per year.

Doesn't that mean most non-ethanol uses of corn aren't really subsidized too much?

It does also list: "Feed grains, mostly corn 2,841" (million)

Am I right that that is just $9 subsidy per citizen, and lots of it is going to feed farm animals?

The numbers are all from different years so there could have been some major changes.

More like, there's too much sugar that people are using. It's doesn't matter if it's corn syrup or not.

Yes, but I would posit that the greatest reason that it has become such a problem is because of the subsidization that makes corn syrup so inexpensive. It's a massive negative externality that is completely unpriced.

In part, but there is sugar or corn syrup in so many products, especially US products, where there is really no good reason for either.

They're cheap, addictive calories. HFCS and sucrose also don't trigger our satiety responses well, so that also allows us to eat more than our body needs[0]. It's a battle over space in our stomachs, and sugars are a massive weapon in that competition. Food science is practiced by food companies not to make us healthier, but to ingest more.

[0] https://www.ncbi.nlm.nih.gov/m/pubmed/18065574/

It's so difficult to eat healthy in the US because we're still in this false mindset of "reduce fat intake" when in reality is we should be reducing starches/sugars (carbs except for fibre and limited sugar alcohols).

Most of the "light" and "healthy" foods in stores are LOADED with sugars or starch. The FDA really needs to revisit the weight given to carbohydrates when creating the total calorie count.

https://www.youtube.com/watch?v=dBnniua6-oM

A pregnant women spending a day in hospital after childbirth with zero complications pays about $2000. During this time she sees a doctor for perhaps 15-20 mins total and a nurse for perhaps 30 mins total. There is no medicine or any other procedure cost. It's day light robbery if you ask me by the people who run the hospital and have figured out how to game the healthcare system using political means. I'm surprised by the statement that major component of healthcare is apparently "operational inefficiency".

Exactly! Hospitals don't care about inefficiencies because insurance pays for it. Patients don't care either again because insurance pays for it. Insurance can't negotiate with hospitals as patients don't ever want to lose their doctors and revolt if insurance even brings up dropping a hospital for charging exorbitant rates. Add to it an insane 4 years in college + 4 years med school curriculum that does not incentivize more people to even attempt getting into med school.

It is however possible to consider at least some technology solutions - build a more transparent system. Let patients do some cost comparison and incentivize them to find cheaper (but good options). People do care about their health and they can and should be trusted to make these decisions.

Start more clinics like the One medical group (just an example) to make preventative care easier and accessible.

>> Add to it an insane 4 years in college + 4 years med school curriculum that does not incentivize more people to even attempt getting into med school.

While I agree with your points in general, this point is wrong. There are far more applicants for medical school (both MD and DO programs) than there are slots. I've been told this was done by the AMA to keep the supply of physicians in the US low to maintain high wages (and arguably high quality).

I do think we could allow students to go to medical school directly after high school, which is what some nations do.

Residency slots are the limiting factor, not medical school slots. There's no point increasing medical school slots if you're going to create a bunch of people shut out on Match Day with $200K+ in debt. It should be noted that licensing requirements of doctors mean that medical school graduates are also competing against foreign

Blaming the AMA is a dated view. I believe that used to be the case, but certainly isn't any longer. They are in favor of legislation that would increase the number of residency slots.[1]

edit: Forgot to add that US medical school grads aren't only competing against each other for residency slots. Foreign doctors that want to practice in the US also have to do a residency here due to licensing requirements.

[1]: https://www.ama-assn.org/content/ama-applauds-members-congre...

> Blaming the AMA is a dated view. I believe that used to be the case, but certainly isn't any longer

It's both dated and wrong. The AAMC, not the AMA, formerly capped the number of medical students in the country. But over ten years ago, they decided to lift the cap.

As you said, though, the residency slots are the bottleneck, so exactly what has happened is that we now have even more people graduating with debt from medical school who are unable to train in residency and eventually practice medicine.

Residency funding is subsidized by Medicare, so they're the ones who have the power to expand GME, if they want to.

If there really is excess demand for a kind of labor, then the labor can borrow enough to pay for it; it wouldn't make sense to blame an insufficient subsidy as a bottleneck.

> If there really is excess demand for a kind of labor, then the labor can borrow enough to pay for it;

You're right, but the reason that doesn't happen is that the price (ie, expected future earnings) is effectively fixed[0], and the current trajectory of that is already on the threshold of discouraging people from entering the field. As it is, a person who enters medical school at the age of 22 can reasonably expect to pay off their final student loan payment in their 40s[1]. That's a pretty hefty gamble to take at that age - you're assuming (against all evidence![2]) that medicine will continue to pay roughly the same in the future as it does today, and based on that assumption, you have to be willing to take a gamble that won't even break even until you're past normal childbearing age. That's a really tough sell, and I say this not hypothetically, but from experience.

It's similar to the "engineering shortage" in Silicon Valley - we know for a literal fact that the largest companies colluded to suppress wages, but simultaneously complain that they can't find enough workers that price. Except, we don't have to take out large amounts of debt before we can start working, whereas would-be doctors do.

[0] Not exactly fixed, but far from an actually competitive market that would allow proper consumption smoothing like you describe

[1] There are a lot of factors that determine this, like which specialty you choose, and where you practice, but that's a pretty reasonable rule-of-thumb estimate for someone who's still only thinking of applying to medical school in the first place.

[2] Physician earnings have been dropping steadily over the last few decades

Thank you, that's the first responsive answer I've gotten when I've asked the question of how a subsidy can be relevant to a well paying field; usually, I get a bunch of further confusions in the response and an insistence that I must lack critical domain knowledge (that they can't can't explain either).

With that said, why do you say doctor wages are fixed (and forseeably so)? Is there a variance in pay and legit competition for doctors and so on?

Also, I don't see why the long loan repayment period or anything else suggests doctor wages are hitting the "too low to get people into the field" level. Remember, there are still far more qualified people than med schools are willing to accept, which means there's still excess supply (in the sense that there isn't in SV tech labor).

Plus, being an MD has a level of prestige that doesn't show up in the wage, and which has numerous fringe benefits (like easier loan terms, since they know you'll probably always find employment).

I wonder if hospitals are not pushing for more residency slots due to sufficient labor. Residents generally make barely minimum wage for the number of hours they work (often 60-80 hours per week). They aren't allowed to work more than 80 per week, but apparently for many positions that's done anyway because they don't have time to do all their patient notes at work.

Don't forget a minimum of 3 years in residency making 30K-45K/year.

You're right about the AMA limiting the number of medical school students. DO schools are not regulated by the AMA. Unfortunately, there are not enough residency spots for all the DO and MD students that graduate each year and they compete with foreign students. Increasing the number, which the AMA is doing without increasing the residency programs is just going to leave more students with 100,000s of thousands of student loans and no income.

You forget one part: patients do not care what insurance costs because their employer chooses what they use and what price they pay.

If I could buy health insurance separately from my company I'd look into it. I know my company pays at least as much as I do for my insurance, but if I go off the company plan I can't get that money to use for insurance I like.

The result of this is I have incentive to not care what anyone charges. The only thing I can do is lower my satisfaction job rating if the doctor I want to go to isn't covered by my plan. If I actually could choose insurance I would would look into cheaper plans - if they tell me the doctor I want is more expensive so I need a more expensive plan to cover using him I would then have incentive to choose: see if I like a cheaper doctor, or pay more for the one I like.

The result of employer providing my health insurance is a large source of dysfunction in the health care market. I illustrated one, but there are others. (Note, there are other dysfunctions in the health care market - always it is complex)

Seconded. Health insurance should be completely decoupled from employment. I consider my employer provided insurance to be wildly extravagant and would prefer a much more bare bone version if it was up to me.

> If I could buy health insurance separately from my company I'd look into it.

You can. It's probably not in your best interest, because the individual market plans are more expensive, but there's nothing stopping you.

> I know my company pays at least as much as I do for my insurance, but if I go off the company plan I can't get that money to use for insurance I like.

That's your employer's choice. They could provide a cafeteria plan, which would give you the choice (but again, since individual plans are always going to be more expensive for the same level of coverage[0], they'd have to pay more money overall to provide the same tier of benefits).

[0] simply due to basic actuarial math

> If I could buy health insurance separately from my company I'd look into it.

You can always venture away from your employer and visit healthcare.gov or a relevant state exchange.

From what you're describing I think what you're looking for is an HMO - either a branded facility like Kaiser or a "provider network" that agreed to guarantee prices to that specific insurance company.

You won't gain much transparency though - every provider works off the master price list, and the insurance company then negotiates a discount highly correlated with the size of that insurance company and general presence in the region.

Technically I can. However the cost to me is much more than what I pay now, even if I go with the most basic plan (which isn't even very basic - the law requires a lot of coverage that a true basic plan would exclude).

Late to this thread, but what sibling comments fail to mention is that employer-provided healthcare also benefits from a tax advantage: healthcare benefits are paid for with before-tax money and are not taxed as income.

So a middle-salary employee is looking at a 25% increase in healthcare costs due to paying with after-tax money.

This comment demonstrates a lack of familiarity with how health insurance pricing in the US works.

0 - One medical, which charges an annual fee, makes preventative care more accessible? How do you possibly draw that conclusion. (I say this as a happy subscriber).

1 - purchasers of insurance, mostly still employers, do care about costs

2 - insurers aggressively negotiate with hospital groups, so you do see pricing power differences in action. Fewer hospital groups and condensed ownership in a geographic region gives hospital groups more pricing power. See eg Boston public employees insurance group attempting to cap payments at 160% of medicare [1].

3 - It's well known that for many common procedures, regional hospitals vs teaching hospitals can offer 3-4x price differences with no (or even better!) outcomes at the regional hospitals. It's the insurers choice not to pass any of those cost differences, except in the broadest sense, ie narrow vs wide networks, on to insurees. Insurers also exercises unilateral control over that decision.

4 - People aren't incentivized to get into med school? That's news to the many applicants. The admissions are capped, in many ways, by government choice: see medicare resident limits.

[1] http://www.bostonglobe.com/business/2017/01/23/state-health-...

I agree wholeheartedly.

One thing that bugs me is how limited my choices are. I believe that over-regulation drives that. Getting an x-ray for my dog is much, much cheaper than me getting one, which is just one example of an unregulated market (relatively, obviously there are licensing & safety standards)

Seems that this would be a shot. If it doesn't work, lets try something different. I'm not wedded to any solution, but I think we probably agree that healthcare is mostly broken in the US (and was even before Obamacare).

Final note - I don't distinguish between healthcare & insurance for sake of simplicity in this post.

Be careful about this though. We generally place a higher value on human life than on a dogs life. If the x-ray used on your dog sometimes kills a dog it is not the disaster that it would be if a human was killed. Thus we spend a lot more on quality control for medical devices for humans.

You might not agree, but that is how society see it.

Seems like in the US the easiest way for universal healthcare would be to extend Medicare to all. Most people seem to like Medicare. I'm sure their would be some tax increases, but I'm sure overall it would lower health care costs for everyone.

https://www.congress.gov/bill/114th-congress/house-bill/676/...

That's the simplest way to do it, sure. Not the best, the most efficient, or really workable, but simple.

I wouldn't say it's not unworkable, but you are correct, it'd be simple and it's something that most people could understand. No "death panel" discussions.

> Most people seem to like Medicare.

Except for the doctors that can't afford to treat Medicare patients due to the criminally low/skewed reimbursement rates for some services. There's a reason so many private practices don't take Medicare patients...

On another thread, it was explained to me that Medicare reimbursement for a vaccine doesn't even cover the cost of the vaccine itself. I'm sure there is a Byzantine reimbursement model, but something tells me that if the entire country switched over to Medicare overnight, vaccines would quickly get much more affordable.

> something tells me that if the entire country switched over to Medicare overnight, vaccines would quickly get much more affordable.

Quite the opposite - if the entire country switched to Medicare overnight, Medicare would have to dramatically increase its reimbursement rates, or else hospitals would literally go out of business, and doctors would close up shop. The only reason most can afford to stay in business currently at all is that they can make up the money the lose on Medicare by treating patients on private insurance.

This would result in extreme tax increases - not the proportional amount that you'd expect to cover the remainder of the population, but enough to make up for the difference that's currently being subsidized by private insurance premiums.

Medicare is a large and complex beast that typically underpays doctors and hospitals. My specific point, is that supply and demand allows the producers of vaccines to charge prices above what Medicare reimburses. In a single payer system, pricing power would force vaccine prices down. Apparently, by paying high prices, the USA is subsidizing the rest of the world.

> a system that has almost diabolically evolved to create competing interests that deadlock all sides into a sub-optimal solution

The system embodies large amounts of collective dissonance; a natural reaction to the soft corruption that has to be practiced to satisfy policy. Cost shifting is among the most pernicious causes of this; there is little to no correspondence remaining between actual service and the fee that gets billed; it's all about who the patient's payer happens to be, what policies are in play and how much providers can get away with in each case. The seemingly arbitrary outcomes have to get reconciled somewhere and in the doing of that we build up a lot of scar tissue.

Completely agreed. There's something called a Certificate of Need necessary in many states[1] that effectively allows hospitals to veto any new facilities that they don't "need." I don't think it would surprise anyone that low-cost upstarts about to cut into revenue streams aren't needed by any hospitals.

Whenever you have a $500 bottle of orange juice, I think it screams that you're not in a competitive market.

[1] https://en.wikipedia.org/wiki/Certificate_of_need

> patients, payers, physicians, pharma, facilities and insurers but competing interests

I think this is made harder to see by a certain stripe of market fundamentalism that almost blends into the background for many people at this point. At this level of analysis, it's assumed that every transaction is cooperative in nature and competing interests are correctly balanced if not aligned by the time a transaction takes place. Since that's the general assumption, of course it's the specific assumption that the market will do the right thing (regulated or unregulated -- the regulations are just clothing on the incentives).

I'm talking about the general level of lay discourse that defends the recent history (and even the ACA status quo), of course. Scholarship and policy research recognizes the problem.

"Assumption that the market will do the right thing"

I find it difficult to consider healthcare a true market, since you get to find out the price/cost many weeks later. You generally have transparency over primary care visit prices, etc, but anything complicated is a total crap-shoot w/r/t what you'll be charged, by whom, and whether everyone involved is in/out of network. Ever have surgery? You get bills from parties you've never heard of all of them coming independently and its rocket science to even figure out deductibles at that point since there is no centralized ledger or central party to deal with.

> I find it difficult to consider healthcare a true market

I can see why -- I've had the same terrible experience with billing shrapnel -- and I almost put a clause in my comment knowing this kind of response was almost inevitable.

What I did put in instead was that a lot of our details are different kinds of clothing on the fundamental incentives.

I strongly suspect that if you started a system from scratch around the central assumption that medicine should be handled as a market for medical products/services and the financing behind it should be private & for-profit, my guess is that you'd get very much the same thing.

The skill investment required for some interventions would lead to several consequences: required specialization to be effective, and a proliferation of specializations. Since the skill investments are costly, those costs are passed on in the form of high service rates. Few people know in advance which interventions they'll need, which makes planning for financing care risky, so an insurance market would develop. Insurers would have the same basic incentives to sell to those who are least likely to need their services, avoid those who are likely to need them completely, and independently negotiate their own payout deals with providers, which of course, varies by insurer, so few patients are going to be really sure how much anything costs even if they do understand how all the specialists interact in a given intervention.

And at that point, you have the recipe for the billing shrapnel problem everyone hates.

As a doctor and founder of a healthtech startup based in Aus - well said. I worked in the US for 2 months as a medical student. The mind boggles.

Nationalize it. Don't apply free market or for that matter multi sided platform exonomics to these problems. Education, Health, Military, Law enforcement, Internet are basic foundational needs that need to be owned by an entity who is not looking to make a profit on these.

Not disagreeing, but could you provide a few examples of inneficiencies that you see? I'm not familiar with the field.

> much like the Dining Philosopher's problem we're familiar with in Computer Science.

Worst attempt at an analogy I've seen.

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