I imagine there's a cost to set this up, but is that cost less than the marginal cost of each employee and the savings they would (presumably) receive if enough people joined?
The average annual premium for families for health insurance was $5,791 in 1999. The median was even lower. Today it's closer to $18,000.
The system worked at $5,791, the average family could afford that without much problem. At $18,000 the system breaks apart and fails for the typical family. Wages for the US were even further beyond comparable nations back in ~1999. With very modest real wage growth since 1999, especially at the median, that $18,000 cost essentially represents money in the economy that should have in part gone into wage growth.
These large companies now have a powerful incentive - for several different reasons - to begin hammering down the cost of healthcare. Their action on this front is a positive fortunately, these companies are extraordinarily powerful, both politically and economically. If they're dead set on bringing down the cost of healthcare, that's exactly what will happen, and they'll gather other very willing partners and the momentum will likely roll.
Do you happen to know the sources of inflation? Are we consuming a lot more services? Are healthcare providers being paid more? Are healthcare companies getting rich?
All across healthcare, providers, scientists, administrators are faced with millions of tiny choices every day: should we spend more money to improve outcomes. Should we add that extra feature to this device - costs more but improves care a little. Should we use this more expensive material - costs more but is probably safer. Should we do additional testing - costs more but we'll be more sure it's safe. The calculus of incremental value vs. cost is subconsciously seen as inhumane across the industry -- it's seen as starting down that slippery slope that ends with a "dollars per life" number which feels wrong to everyone. Nobody wants to be the person who traded someone's health for a buck.
I'm not necessarily condemning it, I want the best possible care for my children, but I do think that (like a lot of big socioeconomic problems) this comes back to incentives.
That's not what's going on though, is it?
All across healthcare you have groups trying to provide an evidence base, and other groups trying to decide whether that evidence base means something is value for money or not. In England that's going to be NICE, in the US it's insurance companies.
The US has a serious problem of over-testing. The reason isn't because they think it improves outomes. They know it doesn't, they know it makes things worse. They over-test because it means they're less likely to get sued. The cost of the test is lower than the cost of getting sued, even though too much testing is causing harm.
The US spends 2-3 times what the rest of the OECD countries spend on a per-capita basis. https://data.oecd.org/healthres/health-spending.htm
For all that spending, we have lower life expectancy and worse stats in a variety of outcomes. http://www.commonwealthfund.org/publications/press-releases/... http://www.latimes.com/nation/la-na-healthcare-comparison-20...
Not only does healthcare not have to be expensive, it isn't (comparatively speaking) in the rest of the developed world.
[1] https://fee.org/articles/the-chart-that-could-undo-the-us-he...
Administrator salaries don't seem to explain this: https://www.statnews.com/wp-content/uploads/2016/03/ASPE1.pn...
Nor this: http://static3.businessinsider.com/image/556494646da8110d29e...
This sort of thing probably doesn't help, either: http://www.foxnews.com/us/2018/01/30/drug-companies-flooded-...
One could argue drugs cost too much, but you can't argue they are a major reason for soaring healthcare costs.
https://www.statista.com/statistics/184914/prescription-drug... says we've gone from $121B/year in 2000 to 360B/year in 2017.
As the other comment noted, there has been a vast expansion of administrative bullshit cost in the system.
Pharma drug costs have gone up a lot (that's around 10% to 15% of the $1.x trillion cost problem the US has). The US is spending about ~20% of its GDP on healthcare, or roughly twice the OECD average (~70-80% more than countries like France or Belgium). That's up from 12.x% in 1990, and 14% in 2000 (that 6% representing an added $1.x trillion in cost). That 12% figure in 1990, is comparable to what nicer developed nations spend today.
US wages are high, healthcare workers typically earn far above the median (eg US nurses and doctors are very well paid), and we've hired a lot of healthcare workers in the last 20 years. The number of healthcare workers has roughly doubled since 1990 from eight million to around 15-16 million today. A near 100% increase vs a population increase of about 30% or so over that time. That is guaranteed to generate a massive cost spike for that part of the problem, and that cost isn't being distributed across a further 100% larger population base. Healthcare workers have also seen their wage growth exceed the median wage growth, they've mostly done ok. So the net cost per capita for each healthcare worker in the US, has soared.
Insurance companies have done exactly what you'd expect. They push prices as high as they can get away with, adding more cost bloat to the system.
The American diet deteriorated dramatically since ~1980. Obesity particularly soared from around the mid 1980s to 2015. That brought with it a lot of added healthcare costs, around cancer, diabetes, and so on. These people weren't/aren't dying so much as they are requiring expensive routine care for various health consequences of the obesity. Conceptually it's like the battlefield cost of having a vast number of wounded soldiers, rather than those soldiers simply dying instead; in this case the battlefield is the economy or society generally speaking.
And then the US population has aged quite a bit in the last 20-30 years. The boomer generation is going to be extraordinarily expensive from a healthcare standpoint. For now that's getting worse by the year as with most developed nations.
When I log in to check my 401(k) status, there's a button that will tell me my projected income and expenses down the road. Today, I'm 47 and spend very, very little on healthcare. However, when I'm 87, they project I will be paying more than $10,000 per month for healthcare. How is that possible?
Look at cancer outcomes. People that live 5 years with cancer consume a lot more medical care than people that die quick.
And all sorts of other things are similar. Trauma care is better, etc.
It's clearly not the only factor but I'm pretty sure it is a factor.
http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
Even so, your main point is taken. There's a broad directorship problem with many non-profits, higher eduction, and mutuals. General users of these public services either have no say -or- have no reasonable way to exercise their limited authority. For example, State Farm Mutual permits its subscribers to show up in person on a particular day once per year in order to vote from a set of directors that was selected by... the previous directors. I'm curious what sort of legal/social/technology solutions could be put to use in addressing this administrative capture.
Also another reason you couldn't start a big non-profit is because insurance companies are limited in reach by state/region. Sadly, that's one of the few things keeping them in check. If that regulation was removed, you'd see all the Blues and other companies start to merge into only two to three mega companies, similar to cell phone providers.
At least in my area Kaiser also likes to centralize certain specialties at a single one of their health clinics. For instance mental health providers are only available in one location. I live in a large metro area with severe traffic issues. The clinic mental health services are provided out of may be the worse location for the majority of the service area to reach. For me an appointment would have involved a 45 minute to hour drive each way.
A couple of years ago Kaiser decided not to renew their contract with the non-profit hospital system which dominates this area and instead signed a contract with a for profit hospital system. This means there is a single hospital within a reasonable drive of me which I would be able to utilize. Even then there are 3 hospitals in the non-profit system which are closer or equal distance. It gets worse if for some reason I would have had to use the next closest hospital Kaiser will cover. There are 5 hospitals in the non-profit system that would be closer. Also the non-profit system is nationally recognized as the top or a top 5 care provider for several specialties. The for profit is not.
I have no love for Aetna, Cigna, United Health, Anthem or any of the other large health insurance companies, but Kaiser also doesn't seem to be the model to follow.
See more on payer breakdowns vs quality at http://costatlas.iha.org
A full rewrite of this app with more data and better mobile design launches in February.
Likely the fact that many of these prices are basically standardized because of CMS. Providers basically look to what the Medicare/Medicaid standard is as a benchmark for pricing.
As a provider why accept a lower price from insurance when the gov't is providing a backlog of people at predetermined prices?
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Unless these companies are also looking to enter the provider space, they will likely only competing on marginally better insurance rates.
This isn't even an option on the table. Private insurers are generally required by law to pay more than Medicare does.
And besides, Medicare reimburses rates that are below COGS, so providers charge private insurers more in order to make up the difference. Otherwise, they wouldn't be able to accept Medicare patients at all; they'd literally lose money on a per patient basis.
Heck, we could even create a HN-cooperative that any of us could join, sign up and pay a nominal membership fee. Then we could off and all be independent contractors etc. without fear of losing benefits.