Opaque and sky high bills are breaking Americans, and our health care system
vox.com
vox.com
I'm also really glad that people are starting to realize that Obamacare had critical conceptual failures. There was nothing in the ACA that tackled healthcare costs, it was only concerned with spreading healthcare costs. Affordable healthcare is not the same thing as affordable health insurance. The Democrats are certain that they already know the right answer, lack of data be damned. The Republican leadership on the other hand doesn't really grok yet that there is a problem (or rather currently they think that Obamacare is the problem, when in truth Obamacare is neither the problem or the solution).
Great summary of the situation !
That's because it was a political solution. If it tackled healthcare costs, it would have been swiftly killed by the health care industry.
Awkwardly, it's the other way around. Providers and private insurers would actually love a transparent pricing system. The entity that benefits the most from the lack of transparency is Medicare, and that's why it's almost certainly never going to happen anytime soon. Implementing a transparent price in the market would make it much more difficult for Medicare to extract money from private insurers via sub-cost reimbursement rates, and so they'd pull out all the stops in preventing it from happening.
That's actually what happened with the ACA itself, and it's why the ACA explicitly didn't tackle pricing transparency at all. It wasn't an accident.
US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc.
Other countries spend less government money per person on Universal healthcare than the US spends right now. Considering it's far from a universal system it's already subsidizing healthcare costs.
"Extra funding to keep rural healthcare facilities open" is exactly what I'm referring to.
Medicare rates are below what would be needed to sustain practices if they operated solely off of Medicare reimbursement rates. Medicare reimburses about 7% less than the costs of supplies, which means they're already losing money even before they have to pay things like staff wages, building maintenance, etc. The way they stay in business is by charging privately-insured patients much more, in order to cover the difference.
Some providers don't see a lot of privately-insured patients, and for those, Medicare provides two different payment programs (separate from normal reimbursements) in order to keep them in business. Otherwise, they would end up closing shop[0], because there's no way that they could sustain themselves off of Medicare reimbursement rates alone. For various reasons, this is more common in rural areas than it is in urban areas, though the program you're referring to does apply to some non-rural hospitals too.
So yes, when you say "Medicare pays extra funding to keep rural healthcare facilities open", you're actually referring to the exact reason that private insurers would love a transparent pricing system. It's not like Medicare pays this money to any rural facilities - they are forced to pay extra money to facilities that don't see enough privately-insured patients to cover the losses that they're making on Medicare patients. Private insurers (and providers) would love to have a transparent pricing system, because that would mean they wouldn't have to bend over backwards just to break even on their Medicare patients.
This isn't hypothetical; Medicare paying extra to these hospitals is a relatively new practice, and it was passed by Congress after a large number of hospitals were forced to close because they went bankrupt treating mostly or exclusively Medicare patients.
[0] Or just stop seeing Medicare patients, which is what many have done.
edit: corrected typo
Citation for what? I'm explaining the context of the subsidies that the parent commenter mentioned (themselves without citation). Of the 49 comments on this thread at the moment, there's only one other that includes any links at all, neither of which I'd really qualify as citations of factual information.
This is part of a broader pattern I see on Hacker News when the topic of health care comes up, where comments that present anecdotal information or reasoning that fits into the narrative of the article are accepted without evidence, but those which provide mitigating contextual information are held to standards which are comically high for an Internet comment.
Even in this case, we're talking about the correction I provided to information that OP mentioned without citation. The information about the critical access program is easily verifiable on Google (or even Wikipedia), so I'd hope that OP would feel comfortable verifying it (and providing a citation) before commenting with the misinformation.
Midicare is often providing a disproportionate amount of funding relative to the amount of care being provided. In other words Medicare may be 70% of the fund but < 70% of the costs. But, that's frequently not enough to keep the doors open so the government added some back doors to hand out funding without strings attached.
Except that's not the case. Medicare's standard reimbursements are significantly less than COGS, and that doesn't even account for overhead.
This is pretty obvious to demonstrate, because other payers are generally required by law to set their reimbursement rates above what Medicare offers for their services. So there's mathematically no way that Medicare could be providing a disproportionate share of fee-for-service reimbursements.
And I'm not sure what point you're trying to make with the link you provided. FORHP is distinct from the critical access stipends that Medicare provides, which is what's relevant here (even though critical access hospitals may also receive funding through FORHP programs).
> But, that's frequently not enough to keep the doors open so the government added some back doors to hand out funding without strings attached.
There are plenty of strings attached. One of those strings is that the hospital's payer mix must exceed a certain threshold of Medicare patients. Again, that's not accidental - the whole point is that hospitals who don't exceed this threshold of Medicare patients will use their privately-insured patients to subsidize the costs of care for Medicare patients.
Many people receive services then pay 0$.
And really that's the core problem. A hospital can send a clam to collections but collections agency's pay penny's on the dollar. And if someone dies in debt there is nobody to collect anything from by law unless someone is dumb enough to voluntarily takes on that debt.
See here: https://en.wikipedia.org/wiki/Health_insurance_coverage_in_t...
That's actually not really true - at least not the "many" part of it. For most hospitals (including critical access hospitals), the default rate on medical bills is nonzero, but nowhere near the amount of money they lose on Medicare patients. The difference is a few orders of magnitude.
"hospitals uncompensated care costs -- medical care for which no payment is received -- jumped nearly five percent to $41.1 billion in 2011" And that's just for 0$, they also get paid >0$ but less than full costs which is a separate number.
https://www.forbes.com/sites/brucejapsen/2013/01/07/unpaid-h...
Numbers for the same time period:
https://www.beckershospitalreview.com/finance/12-statistics-...
• Total net revenue: $821.3 billion • Total expenses: $756.9 billion • Cumulative profit: $64.4 billion
Critically, it's only hospitals in prosperous areas that are doing well and those see a much lower percentage of unpaid bills. Medicare is basically break-even, but hospitals need a lot of profit to offset these write-offs.
PS: Having trouble finding public sources for total write-offs. But this is from 2005 (As a result, hospitals write off 40-50% of what they charge.) http://classic.ncmedicaljournal.com/wp-content/uploads/NCMJ/...
It's not; I'm not sure why you'd assume I'd be talking about the sheer number of bills that default (at any size) as opposed to the amount of bad debt (which is closer to the relevant figure).
> Medicare is basically break-even
Medicare is not even close to break-even. From the very first page of the link you provided:
> For the first 18 years of Medicare's existence, the program paid hospitals for the "cost" of the care provided. However, since 1983, the payments have been slowly declining in relationship to the actual cost of providing care, and now hospitals are receiving less in payments than the actual cost of the care. How do hospitals recover this shortfall? Simple: they pass it on to other payers.
The amount of money that hospitals need to make to overcome this shortfall, both the operating expenses and the amount needed to cover the overhead, is a few orders of magnitude greater than the amount of noncollectable debt from uninsured patients.
$41.1 billion = 5% of total revenue. A few orders of magnitude would mean the shortfall is greater than all of their income combined.
You're not comparing apples to apples. $41 billion is the aggregate of the bills for which they cannot collect; that doesn't mean they don't receive any money from them, and it doesn't mean $41 billion is the amount they've actually lost.
I know you "don't trust" GAAP accounting, but understanding the basic terminology and concepts makes it a lot easier to follow what's going on here.
So, no this is not all 'underpayment' but I agree it's relative to charges not costs.
They are called Disproportionate Share Hospitals. If every hospital has a disproportionate share of Medicare patients (say 100%) then DSH payments go away and hospitals go under.
More info: https://www.cms.gov/Outreach-and-Education/Medicare-Learning...
Both private payers and taxpayer dollars are required to keep Medicare/Medicaid afloat, as those programs have 40M and 70M people respectively covered. Soon there won't be enough leftover people to fund these programs.
"Applies to hospitals that serve a signi cantly disproportionate number of low-income patients; and Is based on the disproportionate patient percentage (DPP)."
Medicare pays enough to cover care and operating overhead. It's not enough to cover significant writeoffs for non Medicare patients.
Medicare does not even pay enough to cover costs of care, let alone operating overhead: http://classic.ncmedicaljournal.com/wp-content/uploads/NCMJ/...
> For the first 18 years of Medicare's existence, the program paid hospitals for the "cost" of the care provided. However, since 1983, the payments have been slowly declining in relationship to the actual cost of providing care, and now hospitals are receiving less in payments than the actual cost of the care. How do hospitals recover this shortfall? Simple: they pass it on to other payers.
Many hospitals do operate just fine with high numbers of Medicare patients and few private medical facilities reject Medicare patients. Remember, when a 3rd party agrees to cover costs the incentive to lower costs gets messed up.
However, many hospitals also have issues which is why there are supplemental payments.
Excluding those which receive extra stipends for qualifying as DSHs or CAHs, no, most hospitals aren't operating "just fine" if they have a high number of Medicare patients. Unless you call overcharging private insurers and uninsured patients just to stay afloat "doing just fine".
> There is a fair amount of Hollywood according going on with what overhead is included in those costs. Medical groups for example often have profitable out patient facilities in the same area as s failing hospital.
There's no "Hollywood accounting". This is straightforward, textbook GAAP accounting that we're talking about. Medicare reimburses less than COGS. That's a well-documented fact - so well-documented, in fact, that you yourself linked to it with that article.
If Medicare reimburses less than COGS, there's no way for hospitals to subsist on Medicare reimbursement rates alone. You can try to tease the numbers any way you want, but that's exactly why GAAP exists - it gives a common framework for comparing these cases, and here the numbers are as clear as you can get.
"Most notably, the share of total spending on hospital inpatient services declined by one-third between 2006 and 2016, from 32 percent to 21 percent, while payments to Medicare Advantage (private health plans which cover all Part A and Part B benefits) doubled, from 15 percent to 30 percent, as private plan enrollment has grown steadily since 2006." https://www.kff.org/medicare/issue-brief/the-facts-on-medica...
Anyway, I still disagree with how many of these things are calculated. You need to look at the indirect cost part of COGs critically and in context of other related government spending.
Again, the problem with GAAP it assumes all spending is prudent which is far from the truth.
> Anyway, I still disagree with how many of these things are calculated. You need to look at the indirect cost part of COGs critically and in context of other related government spending.
Medicare doesn't cover COGS. Private payers do. You can't get away from that fact, especially when you've now provided two separate links that corroborate it.
Incorrect. back room deals and discounts is how providers and insurers jockey for advantage.
> The entity that benefits the most from the lack of transparency is Medicare,
Again, incorrect. Medicare ENFORCES a transparent pricing scheme, see https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Paymen... for details.
Unfortunately for most of us, we can't simply pay the medicare rates out of pocket, because... f-you, pay more.
We can't pay Medicare rates because Medicare rates are not high enough to be self-sufficient in the absence of other payers[0].
If everyone could pay Medicare rates, every hospital and practice across the country would close up shop immediately, because they'd be operating at an actual loss.
[0] http://classic.ncmedicaljournal.com/wp-content/uploads/NCMJ/...
This is incorrect, and you're going to need a better citation than industry self reporting on how they simply want more money.
Assuming medicare prices are fixed, and assuming that insurance companies negotiate deals on par with medicare, and assuming that most uninsured people don't pay their bills... where are these magic "other payers" that are keeping hospitals open?
In fact the opposite is true. If hospitals could get 100% of their patients to pay their bills at medicare rates, they would save money on defaults, billing overhead, and the people who spend hours on the phone fighting with insurance companies.
This is why so many health care professionals advocate for single-payer; having 100% of bills paid according to a fixed price list means greater efficiency and less waste. (and I mean individuals, as an industry the corporations involved prefer the status quo, as it entrenches insurance companies,creates barriers to entry, and drives consolidation)
== EDIT ==
Just to clarify. I'm talking about a situation where 100% of all services provided by a hospital are covered at medicare rates. If 50% are covered by medicare, and 50% are written off, obviously hospitals would have a problem. But medicare is currently reimbursing at break-even rates, kill the collections and billing and insurance departments, and hospitals make a profit at medicare rates.
They can't. By law, they can't reimburse less than Medicare does. In reality, they end up pegging their reimbursement rates to multiples of what Medicare pays.
> In fact the opposite is true. If hospitals could get 100% of their patients to pay their bills at medicare rates, they would save money on defaults, billing overhead, and the people who spend hours on the phone fighting with insurance companies.
No, and there are multiple links downthread that disprove that claim.
> But medicare is currently reimbursing at break-even rates,
Medicare does not reimburse at break-even rates, or anything close to that.
I agree with you, but this will almost certainly never happen in the US, because Medicare benefits too much from the lack of transparency to allow it to pass. Politically, actual price transparency is a non-starter for Democrats. In theory it could be for the Republican party, but as you point out, they're not really acting rationally at the moment either, to say the least.
Services simple cost what the government says they cost.
Medicare is the root of price opacity in the medical system. Medicare determines prices by fiat, with no mandate to ensure that the rates are sustainable. As a result, Medicare's reimbursement rates are about 7% less than COGS in the aggregate. In other words, even if hospitals cost nothing to run and everyone worked for free, they would still lose 7% on each Medicare patient (on average) in purchasing the supplies necessary to treat them.
How is that the providers still manage to stay in business? By marking up prices for private insurers (and therefore uninsured patients too, whom they are required by law to present the same price at the initial bill). Private insurers end up negotiating this down to some multiple of what Medicare reimburses, and this entire process is why there's no feasible way to have a transparent pricing system. It all depends on what the mixture of private-to-public insurance is for the patients that the provider sees, because they need to charge enough to make up for the loss that they're taking on Medicare patients.
The fact that Medicare reimburses below-COGS isn't a secret; Medicare itself even has not one but two separate programs to subsidize providers who see a "disproportionate" number of Medicare patients. In other words, they're pretty open about the fact that private insurance is subsidizing the cost of care for Medicare patients, preventing any possibility of price transparency.
Medicare doesn't have "negotiating power". It's a monopsony; it doesn't negotiate, by definition.
No other payer could do what Medicare does, because no other payer is enshrined in law the way Medicare is, as a mandatory payor [sic] for most major medical systems.
A while back, a whole string of providers who were required to take Medicare went bankrupt because Medicare didn't pay enough, and (unlike other providers) they didn't see enough privately-insured patients to make up the difference. Congress "fixed" that by forcing Medicare to pay an additional stipend to providers whose Medicare patient share exceeds a certain threshold. But for the rest, they're still forced to overcharge private insurers (and uninsured patients) to make up the difference. Or, if they are legally able to, stop seeing Medicare patients altogether, which we're starting to see more of again.
Price transparency is a band-aid on the real problem: we've corrupted the market with EMTLA. Since hospitals can't turn you away other people have to pick up that tab. Maybe what we should be asking ourselves is why we want healthcare to be a market at all? We have the capability to remove wealth from the equation of health entirely so why not?
All of which is to say that generally we seem quite uncomfortable with the idea of someone else being able to afford more "life" than we can. So maybe we should just toss the idea of marketizing our healthcare entirely.
Do we? I think the world needs at least one private healthcare market powerhouse to drive the advancement of medicine -- right now, it's mostly the US. If you are content with the current state of medicine, then yes, we can shut off the progress valve and more equitably distribute the healthcare technology we have now. Quality of providers will likely decay over time as well, once the incentives are gone. However, even this is easier said than done.
Or we can address how cheap most healthcare expenses ought to be (in terms of cost to administer / raw materials + manufacturing + R&D (much of which was done decades ago, for common medicine)), and ask why are they not?
Well, the reasons are pretty blatant. We have a combination of oppressive occupational licensing (it is too difficult to become a practicing doctor -- $$$ and decades of time), FDA-imposed pharmaceutical monopolies, inability to opt-in to experimental treatment (which also means malpractice insurance is always a major expense), artificial demand via Medicare and Medicaid (which artificially pump up the prices of all things they cover, especially drugs, and because they only apply to part of the population, they distort the market even more than universal health care would), overly broad and long-lasting IP law (patents, specifically), amongst others.
I think a more free healthcare system would advance faster, save lives, and be cheaper. We have one of the most government distorted healthcare economies in a world, including compared to countries with universal health care systems.
As an aside, re: the cost to become a doctor via Medical school, that is part of our expensive US education system, which is expensive for similar reasons (tuition prices are highly correlated with financial aid grants and federal student loan availability).
So basically, the common worldview that we need more government intervention is garbage. We just need government intervention in the right places (and nowhere else), preventing fraud and holding criminals liable.
1/3 of the research in the US is already publically funded, there's no reason that amount couldn't be increased and there's no reason why other governments couldn't also drive up public investment.
>I think a more free healthcare system would advance faster, save lives, and be cheaper. We have one of the most government distorted healthcare economies in a world, including compared to countries with universal health care systems.
But your system isn't more free. Universal healthcare is obviously the most free system.
>So basically, the common worldview that we need more government intervention is garbage. We just need government intervention in the right places (and nowhere else), preventing fraud and holding criminals liable.
Why would we keep twisting and twisting this market? And where does the strange confidence come from that we just have to tweak it like this and then it'll all work? We have examples of well functioning healthcare systems. They're universal.
Lol. It is more free, as in freedom of the individual market agents to self organize and direct resources without a centralized authority. There is no 'free' lunch, by the way.
> Why would we keep twisting and twisting this market?
If you reread my comment, you may find that I am only suggesting we undo the twisting.
> And where does the strange confidence come from that we just have to tweak it like this and then it'll all work? We have examples of well functioning healthcare systems. They're universal.
As I said, the US generates most of the medicines and techniques used by the smaller countries with touted, socialized healthcare systems. And while some of them work better in small scale countries, they are far from perfect (and note how much worse they get with larger countries, like England).
However, even if we all got free lunch in your socialist utopia, people still die in their seventies and their health-span is typically a fair bit shorter than that, becoming dependent on universal drugs (Medicare) for the last decade of their lives. Why not aim for the best solution? Medicine has a long way to go, and a freer market is the most powerful force to advance it.
I know which type of free you meant. Marketized healthcare is a system where dollars become freedom-points so some already privileged people have tons of "freedom" and poor people have basically no freedom. Universal healthcare fixes that and gives us all a minimum baseline of freedom which no one can fall under. That's why it's more free.
>If you reread my comment, you may find that I am only suggesting we undo the twisting.
Well no... You're suggesting we twist it in a different way and totally ignoring all the reasons those laws you don't like came to exist in the first place.
>As I said, the US generates most of the medicines and techniques used by the smaller countries with touted, socialized healthcare systems. And while some of them work better in small scale countries, they are far from perfect (and note how much worse they get with larger countries, like England).
Yes and how much of the drugs we create are the result of publically funded research at some point in that pipeline? As well you're basically proposing a system where individuals in my country get gouged so that the rest of the world can get cool stuff for free. You argue against providing people healthcare through the Medi- programs but are find giving the whole world new drugs? Seems sorta like a welfare program to me.
>However, even if we all got free lunch in your socialist utopia
Universal healthcare isn't socialism and nobody thinks it's free. (Although it would be cheaper)
>people still die in their seventies and their health-span is typically a fair bit shorter than that, becoming dependent on universal drugs (Medicare) for the last decade of their lives. Why not aim for the best solution? Medicine has a long way to go, and a freer market is the most powerful force to advance it.
Have you looked at the healthcare stats in countries with universal healthcare programs? Now look at the US. You're just repeating blatant falsehoods. Unplug from Mises.org man.
Desperately disingenuous -- I made it quite clear on each point that the problem is overbearing regulation (not the existence of it outright, but the magnitude). Obviously, there is a such thing as too much regulation or a regulation that doesn't make sense, which you may not fully accept, (I accept there is a such thing as too little, by the way), and the scale is currently very unbalanced on the side of oppressive overregulation in this market.
> Yes and how much of the drugs we create are the result of publically [sic] funded research at some point in that pipeline?
I don't know -- you are very set on this point, so feel free to provide some data (I'm sure you can find one that leans in your favor). But then, the further data of relevance would be how much private vs. public medical research ends up in production.
> Unplug from Mises.org man.
Ad hominem will get you nowhere, but when you make them, you should consider how they may apply to yourself (unplug from WaPo/Vox/etc.). We all struggle to have rational discussions that require us to entertain ideas that our oppose deeply ingrained preconceived notions, and I am no exception to that rule, although I try to be aware of it.
I'll leave you with some thoughts that will hopefully broaden your scope of the issue:
1. Well implemented universal healthcare can be great -- I think Singapore's system, which is universally regarded as one of the best, is very good because it incorporates market-like incentives (for example, everything has an out of pocket expense, no matter how trivial).
2. However, universal healthcare will not solve all of the other problems I described, which other countries' acclaimed universal healthcare systems do not have to deal with. One way or another, we need a fresh start with much of our medical law (especially medical patent length, FDA requirements, and occupational licensing), or we will just be the worst universal healthcare country.
3. This one is the interesting one, which I was talking about in my first comment: The U.S. is the world's major net exporter of medical technology. Foreign dignitaries from UHS countries come to America for their important surgeries. Most of the medical technology used in foreign countries with UHS's came from the US -- it's a confounding variable making them look better, and no one knows what happens to medical progress when we take it away. Public research could offset this, but let's be real: public research does not typically translate to product, especially when your healthcare market is not a real market where you can make money for your value.
Why can't we have a system with dual public/private healthcare, like a medicare for all option for everyone, but with the choice to have other insurance companies?
1. It's important to note that people buying insurance for themselves is a small minority of the market (employer-provided and medicare/medicaid are the big parts of the pie), so it's absurd for the architects of Obamacare or any alternative health law to penalize (edit: or threaten to penalize, without conferring coverage in exchange for the penalty... no can do, that would be the evil public option!) the exact people they need to help the most: people whose employment doesn't provide insurance, and who don't qualify for medicare/medicaid.
If you're in a large health insurance pool with people negotiating for better coverage and pricing on your behalf, and the org behind the pool is already committed to paying the pool's insurance costs, things work pretty well. That's not a healthy private health insurance market; that's an opaque, balkanized system.
2. The (increased) number of insured is commonly cited by proponents of Obamacare as the metric demonstrating success. The numbers I've seen, however, show that while yes, more people have insurance, fewer people can actually pay their medical bills if they actually have to use their insurance. I have every reason to believe that's true, due to opaque pricing, massive deductibles for most plans, and the rapidly ballooning price of even the most basic plans. How is more coverage a success when most of those newly covered people can't pay their bills?
3. The obvious: healthcare insurance costs are skyrocketing. Obamacare can't be a success if just the cost of health insurance is going to start pushing massive numbers of lower-income people out of the marketplace.
1a. A tangent from point 1: The tie between employers and health insurance must die. There's too much incentive to do things that are just awful when most larger corporations will just eat the cost of reasonably good health insurance, and tweak their business elsewhere (increase prices; decrease other employee benefits) to make up those health insurance expenses if they go up.
"Healthy private health insurance market" sounds to me like an oxymoron. I certainly haven't heard of one. There should be no market for health insurance, or organ trade, or public transportation, or water supply/sanitation. These are costly (in a deregulated economy like in the US) and require heavy subsidies, not a for-profit race to the bottom.
Want gourmet meals and a playstation in your room? That is a perfectly fine use of "extra" health insurance.
Everyone had a right to free primary and secondary school education yet some people opt for private schools - this too is okay.
Obamacare is just romneycare...a dumbed down version of the Swiss system. But they left out this very important detail and now it's coming back to haunt us. It is also politically difficult to eliminate employer provided plans.
Many of us know exactly how much our employers are spending on our health insurance premium. Some even talk about your total compensation package, if that number goes down, you'll definitely know in that case. More to the point, wages are used to attract employees, and employers still have to compete on that.
Incidentally, since I wasn't eligible for housing fund match or 401k-style matching at my last employer because of my nationality, they gave us a 10% adjustment on our salary. So that just didn't disappear in smoke.
USA is ROTTEN when it comes to healthcare. How can I be charged $200 for a blood test when insurance pays like $11 ??? I understand bulk pricing, but WTF???
You can do dozens of blood tests in some Eastern European countries for around $50 and get the results 3 hours later at private clinics. I am 110% that the labs came from Western Europe and maybe even USA. Want to be sure, do them at another clinic!
Young people are better off getting used to paying $100+ in cash to see a nurse that time a year they get sick and have catastrophic insurance.
I am certain that a nice chunk of employees that get paid in healthcare have nothing to do with patient care, but bureaucracy. Need to start fresh but ...good luck on that. Those making the money can buy Congress several times over.
Prices are largely set by the CMS (medicare and medicaid) and sometimes insurance companies will pay a little bit on top sometimes depending on their clout and competition from other providers / insurers. The hospital counters with the "master charge" sheet which is overinflated fiction. Then they have a giant song and dance negotiating prices / threatening to pull their patients etc... But the bulk of their revenue comes from medicaid/medicare patients so prices basically round down to those reimbursement rates.
Then the ACA keeps costs down by having doctors focus on quality rather than quantity. If patients are readmitted they get dinged on their medicare reimbursement rate. There are also other provisions in there as well to regulate reimbursement rates as well.
The ACA also reduced health care induced bankruptcies. You still may have high premiums but those were addressed by subsidies in many cases. Taking on people with pre-existing conditions was also addressed by subsidies. The expectation is that as these people get healthier, the whole system will eventually converge to a steady state where cost is mostly regulated by the CMS.
If insurers don't want to play ball then the government should just let people buy into medicaid. We already pay medicaid and medicare taxes anyway.
However, Trump's E.O. to kill the subsidies essentially destroys the ACA completely. We're left with a baroque, Kafkaesque flourish on the status quo before the ACA.
Do you have a source for this? I actually went looking for this info a while back and couldn't find anything either way. Chapter 7 bankruptcies have declined since 2010, but it's insane to pin that on the ACA given that we were coming out of the Great Recession and we'd had a massive spike of personal bankruptcies as a result. I couldn't find any credible information on the impact of the ACA on medical bankruptcies, and IIRC, personal bankruptcy rates are just now coming back into line with where they were in ~2006 post-BAPCPA.
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-obamac...
That article uses two crazy misleading graphs: One starting in 2010 (right after the recession, when personal bankruptcy had just peaked) and one starting in 2006 (right after the passage of BAPCPA). There was a massive dip in personal bankruptcies in 2006 (2.1m filed in 2005 because of people rushing to file in 2005 before BAPCPA, 600k filed in 2006) and a massive spike in bankruptcies during the recession (peaking at 1.6m in 2010).
Using those data as bounds, then suggesting that the ACA and not bankruptcy legislation or the prevailing economic winds are the cause is statistical malpractice.
https://assets.documentcloud.org/documents/2153989/daniel-au...
I am very willing to accept that the ACA reduced medical bankruptcy rates (it makes intuitive sense!), but I maintain that there's practically no data that validates the claim, and the way that the statistics are manipulated to support that point via correlative inference makes me especially suspicious that it's not actually happening.
If we did that, most providers would literally shut down overnight.
A couple of decades ago, there was a whole string of hospital closures because those hospitals saw mostly Medicare patients, and Medicare reimbursements aren't enough to sustain a practice (they're subsidized by private insurance reimbursement rates).
To fix this, Congress forced Medicare to pay an additional stipend to providers who see too many Medicare patients. The reimbursement rates are the same, but they get an extra subsidy, because otherwise they'd go under.
So no, you couldn't do this unless you drastically raised the reimbursement rates first.
There was a story in New Yorker about a small startup that made a safer syringe, but it did not achieve widespread use to due to obstacles in the hospital procurement process. Makes me wonder if there are other analogous issues that also contribute to the cost increases.
Medicare rates are too low because... they're too low. Assume that a vaccine is sold by manufacturers for $100/unit wholesale. Medicare decides that they will pay providers $93 for every Medicare patient who receives the vaccine from that provider. There's no way to make those numbers work - if you're losing money per unit, you're going to lose money overall.
This post is so misinformed, that I’ll just tackle one: doctors are not incentivized by quality.
“Quality” as defined by the ACA is poorly defined, and half of primary care physicians say the proliferation of quality measures to assess their performance has had a negative effect on quality of care.
http://files.kff.org/attachment/report-primary-care-provider...
The ACA is a horrible piece of legislation, which, while it may have been the best of intentions, certainly has not turned out that way.
This is totally wrong. Private insurers reimburse several times what Medicare does. In fact, they're literally required by law to pay more.
Medicare prices are so low that providers can't sustain themselves on Medicare reimbursements alone; the government provides a special subsidy to providers who see a lot of Medicare patients because otherwise they'd operate at a loss.
That's not true.
http://money.cnn.com/2014/04/21/news/economy/medicare-doctor...
And check out table 1 in https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5375010/
Both of the links you provide corroborate what I said. Mass-market media tends to do a terrible job with reporting nuanced details like the medical billing process (or computer security), but even this watered-down CNN overview notes:
> The differences can be stark. Private insurers allow an average of $1,226 for low-back disc surgery, while Medicare will only permit $654, for instance. And the gap can grow wider depending on where the patient is. In New York, insurers allow $1,352 for a gall bladder removal, compared to $580 for Medicare. Some services are more comparable. For office visits by established patients, for instance, Medicare will allow 92% of what insurers do.
As for Table 1 in the paper you linked, every single city listed there receives less from Medicare than the black-box FAIR estimates. In the case of San Francisco, Medicare basically pays 33% of what the private insurers are estimated to pay.
And that's just tracking Level 3 office visits, which is where the Medicare shortfall is generally the smallest (generalized and routine care).
This isn't true.
It's reasonable to argue that there are potential cost control efforts that weren't included or implemented correctly or that what was included/implemented wasn't effective enough.
But it is false to state that there was nothing in the ACA that was meant to address healthcare costs. There's a lot you can read about this. Here's two examples:
https://www.newyorker.com/magazine/2013/12/09/controlling-he...
https://www.rwjf.org/content/dam/farm/reports/issue_briefs/2...
(RWJF has a ton of stuff worth reading, btw.)
That first one is particularly important to digest for anyone who thinks price transparency should be among the primary solutions to health care costs issues. If you think incentives matter -- and I'd assume anyone who's hoping price transparency is a solution does -- then it's worth considering the fact that fee-for-service itself has an incentive built in that's inimical to cost control, and transparency and competition may not be enough to solve it.
I'd also say that even if there were no other consideration than expanding access, you could credibly argue that is itself a cost control, at least if the HotSpot theory of expenses is correct:
https://www.newyorker.com/magazine/2011/01/24/the-hot-spotte...
People have been talking about this for a long time: emergency interventions are expensive. Preventative care might control costs. Expanding access to services and making preventative care affordable removes incentives against seeking it. There's a tension here between that, of course, and letting consumers bear some first-dollar costs to give them incentives to do some rationing. It's almost like there's no easy answers.
And if you're really concerned about health care generally or the ACA specifically, make sure you actually read the bill:
https://www.healthcare.gov/where-can-i-read-the-affordable-c...
You might even find out that some of the people who worked on the bill included provisions to have US hospitals "establish and make public a list of its standard charges for items and services." Or you might find that there's an entire section called Title III that's about "Improving the Quality and Efficiency of Health Care."
Almost like the people who worked on this really had thought about the relevant issues as much as a reasonably intelligent random citizen working in the tech industry has. :) Doesn't mean there aren't problems with it or we couldn't do better. But we can't do better as long as people who care to talk about it don't have a clear and accurate idea of what has actually been done.
1. They often enjoy state-sanctioned monopolies in the form of overly restrictive licensing laws. They're basically unions that enshrine certain false assumptions about what form of training is necessary to accomplish tasks.
2. They don't even have to be held to any cost agreements.
How can you have competition or any kind of viable health care economy when no one actually knows the price of a service until it is set by the provider after the fact, and there is no way of offering an alternative means of offering the service?
It's absurd. I don't even understand how most of this is legal. The price should be set beforehand, or at least there should be an estimate on request, and the final price should be with in a small fraction of that estimate, and licensing should be dramatically loosened or eliminated, to allow providers who are competent but have alternate educational paths (e.g., optometrists expanding their practice, or psychologists prescribing, or nurses or pharmacists increasing their role).
Healthcare is a service like none other. The consumer is not knowledgeable about the details and trusts a third party (doctor). They often buy the service when they are not in the best frame of mind. They may not have the ability to exercise choice in location or provider in an emergency situation. All these factors make it hard for consumers to make a rational decision when it comes to healthcare services. Since these factors are unlikely to change I don't think we should rely on a traditional market-based approach where competition will solve all ills.
More important than transparent pricing is a singular price for a procedure regardless of if the patient has insurance or not. That alone will solve many problems.
Also known as “second opinion”.
The information asymmetry is bad for many reasons, as I do appreciate what you're saying that we really don't want people self-diagnosing; but at the same time, should we really have people going into debt just to get a minor biopsy done? My last biopsy cost $6300 when it was all said and done and insurance refused to pay any of it on the basis that it was "unnecessary", never-ending that three separate doctors were extremely concerned as they had no idea what a lesion on my leg was and they were fearful it was cancerous. I'm not really sure how that can be deemed unnecessary; even from a straight cost perspective, $6300 out of their pocket now means saving potentially hundreds of thousands on costs later.
I live abroad and my work colleagues are continually flabbergasted when I explain how health care and insurance works in the US - they cannot fathom the idea of paying for a service that can just decide not to hold up their end of the bargain for whatever reason, or that the answer to the simple question "Let's say I break my leg - how much can I expect to pay to get it fixed?" is "I really can't say, it depends on a lot of things." Here, they're used to pretty dead set figures; an X-Ray is this much, a cast is this much, each follow up visit is $X, and this is all provided ahead of time so that they know the total cost up front.
So yeah, I do get what you're saying - we don't want people just going to WebMD and thinking they have SuperCancer. But the alternative is people terrified of the potential costs and having absolutely no idea what they're getting billed for or why, and an Insurance system that just dictates prices to them.
ps: hope your biopsy was ok. Must be a very stressful thing to go to, and then have to deal with payment issues after.
this definitely would be helpful.
It's not that nobody actually knows the price of a service because it's set by providers after-the-fact. It's that it's infeasible to predict what an individual patient will be required to pay until after it's submitted to insurance. That generally happens before the service is provided, particularly for outpatient services or planned procedures.
Providers can't feasibly predict how much patients will be responsible to pay for a whole number of reasons, one of which is that they themselves don't always know how much they'll be paid by the insurers.
We are already seeing Nurse Practitioners and Physician Assistants delivering more basic care. This saves a lot of money compared to using Physicians for every little thing.
My insurance paid most of it ($4000ish) and I'm "only" responsible for around $500, but I'm extremely soured by the experience. I've had major surgeries that cost around that much. An MRI anywhere else would have cost me $50 total. I feel completely bilked by UCLA and I wish I could avoid giving them any more money, but I don't have very many choices around their campus when it comes to accepting my insurance.
It makes me never want to set foot in a hospital again unless I'm literally dying.
Well, a couple of days after my initial visit, my insurance company had someone call me and say "hey, just so you know, we authorized your MRI at Stanford, and we will cover it to the tune of 90%, but the price is higher than most in your area, so we want to make you aware of more affordable options." I'm a pretty stubborn person, and I hate feeling like my insurance company is trying to screw me, so I thanked him for his time and declined.
Then, after a few minutes, I started coming to my senses. Yes, I have good insurance. Yes, they'll pay. That said, should I really have a $5000 MRI instead of a $750 one? Yeah, I can afford the $500 copay, but do I really want to? I'm used to just taking whatever services are recommended, but this time I went ahead and cancelled the Stanford MRI and took the $750 one instead. Saved myself some money, saved my insurance company a lot of money, and sent all of those dollars to a provider giving me a service at a reasonable cost.
(sort of related, my wife was recently in an accident where she went to the Stanford ER and was in the hospital for almost a week, plus some surgery. We accidentally gave the wrong insurance info so of course I got an Explanation of Benefits from my insurance company a few weeks later, saying "you owe your provider: $200,000" which is quite a funny thing to receive. Maybe it it was $20k it would be stressful, but once it hits the hundreds of thousands you realize you're not going to pay for it anyway. Amusingly, I think it didn't even include the surgery, or at least not the anesthesia, so I'm quite sure the true cost was north of $300 or $400k, and wouldn't be surprised if it broke a half million dollars after followups)
I can easily afford the $500 and I'm really grateful for that, but I feel like I was taken advantage of.
How much did you pay in the end for Stanford ER?
So I've never seen the EOB for her insurance and supposedly we owe $0. I've never seen a bill, and I called Stanford to confirm there was once a balance for a visit on or about that date, and that the balance is now $0.
I dispute almost every bill I get. Prices get reduced or insurance agrees to pay more in almost every case. They are banking on people just paying.
In a way this is a bit of a cop out because no one can/will up end the entire system.One thought experiment I like to run is what happens to prices if we use to government to subsidize supply of services? Provide free schooling and other government benefits for people willing to train to become medical workers. Take the rural dentist crisis. IMO the government should be training people who live in those communities to become dentists for free.
We have limited examples in places like Cuba. I'm not saying that full on socialism is a magic bullet, but I think smartly applied it works better for markets like healthcare.
A single payer system can (and should) still have competition. Not when someone in need of services is going to a doctor, but when the single "insurance plan" is deciding which local doctors to contract with at a given rate.
I honestly don't understand why we can't make the military's medical system available as such a source of competition; if government waste is so rampant and procurement so expensive, surely private companies can easily beat them on price if they are also in the market.
Elisabeth Rosenthal recently published An American Sickness. These lines from Insurance policy: How an industry shifted from protecting patients to seeking profit [0] concisely summarize the medical industry's current business model:
>> The very idea of health insurance is in some ways the original sin that catalyzed the evolution of today’s medical-industrial complex.
>> The people who founded the Blue Cross Association in Texas nearly a century ago had no idea how their innovation would spin out of control. They intended it to help the sick. And, in the beginning, it did.
>> A hundred years ago medical treatments were basic, cheap and not terribly effective. Often run by religious charities, hospitals were places where people mostly went to die. “Care,” such as it was, was delivered at dispensaries by doctors or quacks for minimal fees.
[0] http://stanmed.stanford.edu/2017spring/how-health-insurance-...
Court-ordered psychiatry is the biggest racket of all because the doctors (who think they know what they're doing) don't have to get their patients' informed consent [1] before hurting them.
[1] https://en.wikipedia.org/wiki/Informed_consent
edit: 'racket' above changed to 'business model'
Because if I would have known the price, I would have chosen not to "consume" the services. I would love to see a lawsuit based on this very area, with complete lack of informed consent with regards to cost and health benefit.
Because the way it's currently handled is like if I went into a Walmart, loaded up with lots of stuff, and walked out the door. Then 3 months later, I get letters saying I owe X*$1,000 on threat of all sorts of things (garnishment, lawsuit, etc).
Another question: Can they be sued for price gouging? I'd love to see them legally justify before the court some of this garbage pricing that varies by tens of thousands of percent between providers for commodity items like saline, bandages, and generic drugs.
When I read some of these horror stories, I suspect that I would declare bankruptcy out of principal were I to have this misfortune to get hit with one of these bills. The whole health care industry in this country has become a cancer on society. What's the hidden cost of the stress and anxiety this causes in our day to day lives. When an ER visit can financially ruin you for years, how much better is this than living without modern health care at all?
No, and in fact, self-paying (ie, uninsured) patients can pretty much always tell the hospital, "No, I'm not going to be able to pay $10,000, but if you give me a discount to $500, I can pay in cash today". Of course, most patients don't know they can do that.
> Can they be sued for price gouging? I'd love to see them legally justify before the court some of this garbage pricing that varies by tens of thousands of percent between providers for commodity items like saline, bandages, and generic drugs.
It's not really price gouging the way we generally use that term. Hospitals lose money per-patient on Medicare and Medicaid patients that they treat, and they have to make it back somehow. They way they do that is by marking up the rates for private insurers. By law, they can't present different initial prices to patients (or their insurers) based on their insurance status, so that means that uninsured patients end up seeing an initial bill that's really intended only for private insurers. Hospitals are able to discount that later on, but of course most patients don't know to ask for this.
Medical billing is separate from health insurance, and it's a whole complex messy beast in its own right.
(Though I agree with your frustration 100%)
The reason the ER facilities charge is so high is that people abuse the ER and threaten the lives of people who actually need saving. The ER can't legally turn people away and asking them to pay a bill is pretty fruitless, especially for underbanked Americans. Meanwhile, the hospitals jack up the charges to offset the losses on the aforementioned patients.
Taxpayers subsidize these losses in addition to paying for health insurance.
Poor people in the ER isn't what is driving health care or hospital costs.
They make up for it by overcharging Americans I guess ;)
Same with hospitals. Your radiology department is more expensive than the others? We'll stop contracting you and send our customers to another hospital.
One week later, you get a $30 for environment remediation.
And other week later, and you get a $15 bill for an engine-rev specialist and another $2 bill for an oil plug specialist.
One month later you get a statement (not a bill !) from your car maker that the $187 cost is partially paid by them. You don’t know why, and still aren’t sure how much you owe. So you ignore all the bills and continue on your merry way.
60 more days later you get a letter from a debt collector. You have not paid $103 in oil change bills, and you have two weeks to do so or your credit score will be impacted.
Nervous, you call them up, and a very rude woman tells them you better pay the bill or else!
This, ladies and gentlemen, is healthcare in America.
My impression is that price transparency is the least of the healthcare industry's problems. On aggregate, Medicare pays out about 25% of what the hospital or physician asks for, and private insurances apparently about 50%. The pricing for the uninsured is the initial price that hospitals/physicians set to get the maximum they can out of different insurance companies, and are not meant to be the charge for uninsured patients. There's been studies talking about how price transparency doesn't change physician behavior in hospitals that tried it out. Some patients report trying to compare prices for procedures across physicians and hospitals, but didn't get the quality of treatment due to picking the cheapest one.
Instead, the #1 concern you hear about all the time is EHR (electronic health records). It's the #1 reason physicians give for feeling burned out, according to some surveys. The popular opinion on electronic healthcare records seem to be that they're glorified cash registers for keeping track of claims data to bill insurance, but doesn't contain much clinically relevant data - for example, I hear physicians complaining online about how they can find when a patient went to an ER and through what means, but they have trouble finding what clinical reasons the patient went to the ER for. Granted, apparently a few percentage of physicians think that their EHR contain clinically relevant data, but most EHR systems that people are using right now aren't that sophisticated, usually due to cost and to the stupid time it would take to update to the new system and train people to use it properly. Word is that it takes years for a practitioner to learn how to use the EHR system (EPIC, Cerner, etc.). Different hospitals use different systems, which makes interoperability impossible, since there aren't good standards for recording EHRs, or they're over-complicated, or something according to people who develop EHRs. I also hear hospital C-level people talking about how expensive EHR systems are - one hospital reported upgrading to a new one cost about half a billion dollars, which was a third of their net patient revenue. Independent physicians are opting for direct primary care models (where you directly pay the physician some monthly fee, circumventing insurance) or to be employed by larger hospitals or physician groups, because the federal government requires that you try to implement some level of EHR, which is too expensive for independent physicians that can't afford hiring IT people on top of everyone else. Some surverys say that physicians spend half their time on looking at / putting data into EHRs, which can be twice as much time as they spend on seeing patients face-to-face.
Health insurance billing being extremely complicated doesn't help, either. You have to learn CPT/ICD-9/ICD-10 codes to bill correctly and get reimbursed, and it's so complicated that apparently some people get paid ~$40,000 a year just to convert diagnoses/procedures to CPT/ICD-9/ICD-10 codes. Hospitals/physicians end up needing to pay for those jobs as well, on top of IT people for maitaining/upgrading EHRs. In fact, there's a lot of consultation groups out there that advise you on how to bill insurance / submit required documents for Medicare / set up EHR.
There's a lot of other administrative overhead costs that contribute to healthcare costs seems to need higher priority, to me.