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Comment by tynpeddler | Hacker News Reader

Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around.

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).

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I would say that Obamacare is a problem, in several ways:

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.

The architects of Obamacare (ACA) didn't penalize people buying insurance for themselves on exchanges. In fact low income consumers receive subsidies. Being forced to buy insurance might seem like a penalty to some people who formerly went without, but in reality those people were freeloaders because if they showed up at an emergency room then the rest of us ended up paying for them indirectly. Although there are certainly flaws that need to be fixed, on balance the system is now fairer and more people have access to care.

>That's not a healthy private health insurance market; that's an opaque, balkanized system.

"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.

The UK has a national health service that is excellent and yet some people are happy to pay for additional health insurance to cover non-essential and service-related things.

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.

It is understood that there will be those who buy bottled water where public utilities provide clean drinking water for all. Roughly 10% of the UK population are contributing to private health plans (https://www.theguardian.com/business/2017/jan/16/private-med...). Apparently, the % of population fully covered by such plans is lower still (at under 1%). While this is a huge waste, this is not what I was alluding to. I have no argument to make if everyone in the US had access to health care comparable to that provided by the NHS.

Switzerland solves this problem by disallowing group policies: everyone is thrown into the same pool individual market and companies cannot provide health insurance.

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.

Not just that, but you have to consider the sticky wage effect - If group healthcare was outlawed, by how much do you think your employer would increase your salary? Would it be politically feasible for govt employees to receive the salary increase commensurate to the previous value of their healthcare benefits? There's a lot of questions there, and most of the intuitive answers aren't good for the average employee.

It's funny, because why the USA has health insurance as an employer benefit in the first place is because of the wage freezes during WW2.

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.

Price transparency is basically a red herring.

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.

This is a great summary. Emphasizes changing the incentives in the system is the key. If we incentivize a healthy overall population over fee-for-service quotas we get out of these conflict-of-mission scenarios where the system appears to be about making profits for some actors over everything else.

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.

> The ACA also reduced health care induced bankruptcies.

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.

It's pretty easy to find on Google.

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-obamac...

Yeah, that's the problem, that's some crappy data - it's a whole bunch of correlation, and not a lot of causation. I want to see some actual data that suggests that the cause was the ACA, not a recovering economy post-massive recession.

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.

Read the primary research papers cited in the article.

https://assets.documentcloud.org/documents/2153989/daniel-au...

Did you read it? It does quite successfully make the case that Massachusetts' healthcare system has probably improved medical bankruptcy rates. It doesn't make any such claim for the ACA at large. In fact, it possibly suggests the contrary - look at Tables 3 and 4 - their estimation is that overall, the percentage of bankruptcies that are medical in nature has risen, and the distribution of medical bankruptcies in the "basket" jurisdictions - the percentage of bankruptcies reporting medical debt increased sharply post-2010! This paper even specifically calls out the Himmelstein paper (which was broadly used as a justification for the ACA) as having far to broad a definition of medical bankruptcy.

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.

Wouldn't a good compromise be treating medicare reimbursement rates as price maximums? Since CMS effectively sets the prices by being a monopsony of sorts, codify it into law.

> Wouldn't a good compromise be treating medicare reimbursement rates as price maximums? Since CMS effectively sets the prices by being a monopsony of sorts, codify it into law.

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.

What if CMS works with providers to understand why exactly do their rates not work. Is it a matter of unit economics? That alone cannot explain the cost increases in healthcare costs.

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.

> What if CMS works with providers to understand why exactly do their rates not work. Is it a matter of unit economics? That alone cannot explain the cost increases in healthcare costs.

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.

I’m not sure you understand what a red herring is. If you do, then why do you contradict yourself in the first paragraph?

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.

> But the bulk of their revenue comes from medicaid/medicare patients so prices basically round down to those reimbursement rates.

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.

>This is totally wrong. Private insurers reimburse several times what Medicare does. In fact, they're literally required by law to pay more.

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/

> 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).

I tend to agree. Pick any healthcare service and call around to your local hospitals and try to get them to tell you what it costs. Half the time they'll tell you THEY don't know. The other half of the time they'll just refuse to tell you. It's insanity, and I suspect it's because you are not the customer. The insurance companies are. The incentives are all wrong.

If they do tell you it's not like they'll fine it binding either. Or good luck finding an error in billing in what they give you and then successfully contesting it. There area also all the ways they slap on random charges. The article mentions a $40 holding baby fee! I think a big part of why this isn't seen as a bigger problem is most people don't have direct experience with it. I've managed to be healthy and avoid any surprise medical bills so far in my life so it would be easy for me to assume this stuff would be taken care of by my insurance if anything happens. I know enough people who have horror stories to know that isn't the case though.

I believe the fees like 'holding a baby' are a result of them determining an overall cost to charge you, average, per hour, then itemizing it out for legal or tracking reasons. So you weren't being charged $40 to hold the baby for a minute, it's you are being charged $40 for a minute, during which you held the baby.

I don't think that is correct in this instance. The example comes from this same author a previous time here: https://www.vox.com/2016/10/4/13160624/medical-bills-birth-d... . Here is a quote from an uninvolved pediatric nurse on where the charge comes from: "doing 'skin to skin' in the operating room requires an additional staff member to be present just to watch the baby. We used to take all babies to the nursery once the NICU team made sure everything was okay. "Skin to skin" in the OR is a relatively new thing and requires a second Labor and Delivery RN to come in to the OR and make sure the baby is safe." I think the charge is justifiable, but keep in mind no one is telling the new parents "Do you want to hold your new baby right now? It'll be $40." They are just offering and allowing people to accept not knowing they'll be charged.

IMO the lack of price transparency is deliberate - it aids in price discrimination, AKA charging customers individually based on what they're capable of paying depending on their assets and insurance. Price discrimination in normal goods is limited by willingness to pay, while healthcare is degenerate in this sense because willingness is essentially infinite.

Let's see: 911 this is an emergency. My husband had a heart attack. Please send an ambulance from the cheapest hospital in our area and send it ASAP.

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.

> There was nothing in the ACA that tackled healthcare costs, it was only concerned with spreading healthcare costs.

That's because it was a political solution. If it tackled healthcare costs, it would have been swiftly killed by the health care industry.

> 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.

[Citation needed]

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.

> US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc.

"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.

As mentioned above, citation needed. You're bandying around a lot of statements without any links or stats to back it up. Having watched the health care debate pretty closely in recent years I can honestly say I haven't seen this theory on Medicare being the primary problem. Where are you getting your facts from?

edit: corrected typo

> As mentioned above, citation needed. You're bandying around a lot of statements without any links or stats to back it up.

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.

The problem with rural healthcare is rural people can't afford it. https://www.hrsa.gov/rural-health/index.html

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.

> 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.

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.

> So there's mathematically no way that Medicare could be providing a disproportionate share of fee-for-service reimbursements.

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...

> Many people receive services then pay 0$.

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.

The rate you're talking about is extremely deceptive. People may pay a 500$ bill over time, but not a 50,000$ one.

"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/...

> The rate you're talking about is extremely deceptive.

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.

> 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.

> $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.

"U.S. hospitals provided $41.1 billion in uncompensated care in 2011, according to the latest data from the AHA's Annual Survey of Hospitals. That's $1.8 billion more than in 2010. The total includes "bad debt" (services for which hospitals anticipated but did not receive payment) and charity care (services for which hospitals neither received nor expected payment because they determined, with help from the patient, the patient's inability to pay). It does not include Medicaid and Medicare underpayment."

So, no this is not all 'underpayment' but I agree it's relative to charges not costs.

The government literally has an entire class of hospital that receives extra taxpayers subsidies because they have a high proportion of Medicare patients.

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.

Having a high percentage of Medicare Patients is not enough to qualify on it's own.

"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 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/...

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.

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.

> Many hospitals do operate just fine with high numbers of Medicare patients

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.

That was from 2005 and there has been a world of changes in how things are paid for recently.

"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.

That KFF quotation is saying literally the exact opposite of the point you're trying to make. Though I guess if you don't understand how Medicare Advantage works, it's easy to make that mistake.

> 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.

I am not trying to get away from COGs by saying Medicare covers it because I agree it does not. I am saying the overhead included is misleading because it includes a portion of unpaid bills from other patients. Yes, it's part of a hospital's overhead, no it's not medicares responsibility.

> Awkwardly, it's the other way around. Providers and private insurers would actually love a transparent pricing system.

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.

> 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/...

> We can't pay Medicare rates because Medicare rates are not high enough to be self-sufficient in the absence of other payers

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.

> and assuming that insurance companies negotiate deals on par with medicare

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.

>Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around.

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?

Is EMTLA (had to google it, Emergency Medical Treatment and Labor Act) really the problem? Eg, do the costs of covering this "free" treatment make up the majority of hospital bills we get charged? If our prices are 2-4x other countries, I have a hard time believing that the "real" problem is emergency services for those without coverage. My wife works in a trauma center so I'm well aware of how much they do for the uninsured (along with what they do NOT do for them), but I have a hard time believing the scale is an order of magnitude.

What I mean to say is that there is an original sin in our marketplace and that sin in EMTLA. Our society doesn't really like the idea of the sick and poor dying just outside the ER's doors (like in a truly free market) so we have EMTLA to make sure that doesn't happen. It's also reflective of America's cultural attitudes towards death and the amount of money that is spent buying our loved ones just one more month, week, day.

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.

> We have the capability to remove wealth from the equation of health entirely so why not?

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.

>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.

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.

> But your system isn't more free. Universal healthcare is obviously the most free system.

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.

>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.

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.

> 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.

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.

> 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?

>> 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 !

I'm not a healthcare expert, but my understanding is that Medicare does address the cost transparency issue.

Services simple cost what the government says they cost.

> I'm not a healthcare expert, but my understanding is that Medicare does address the cost transparency issue. 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.

It's not that simple. If the payers other than Medicare had more negotiating power relative to large provider organizations then they could also drive down prices. The providers have a lot of room to stay in business and trim fat by eliminating waste, reengineering processes, cutting staff compensation, and squeezing suppliers.

> It's not that simple. If the payers other than Medicare had more negotiating power relative to large provider organizations then they could also drive down prices. The providers have a lot of room to stay in business and trim fat by eliminating waste, reengineering processes, cutting staff compensation, and squeezing suppliers.

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.

Medicare prices as a universal chargemaster would cause the industry to collapse quickly. Private insurance patients subsidize Medicare's losses in addition to paying taxes for Medicare in the first place.

Price transparency is a lingering issue in American retail, period. How many advertised prices have surcharges, taxes, tips, fees, additions, etc?

> There was nothing in the ACA that tackled healthcare costs

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.

> Price transparency is the number 1 hurdle facing American healthcare. How are you supposed to fix a cost problem if you don't know what anything costs? Worse yet, how can there be a market for a service if there are no prices??? Less than 10% of healthcare expenditures are emergencies, that leaves a lot of room for shopping around.

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.

Could you please explain further how Medicare benefits from the lack of price transparency?

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