Sky-High Deductibles Broke the U.S. Health Insurance System | Hacker News Reader

Sky-High Deductibles Broke the U.S. Health Insurance System

bloomberg.com

40 pointsMarkusj124 comments

Employers are already paying more and more for health insurance and so are employees, it's eating up this country. 20% of GDP on healthcare is absolutely ridiculous.

They're not really focusing on the root cause of the problem: the sky high medical bills. We need to figure out what's causing such high costs and mitigate it. There are many causes: limited number of doctor/nurse seats available, monopoly problems, etc. Healthcare is not something that should be merely governed by the free market. This is the one area where govt can be a force for good. Step in and put some cost ceilings on the most predatory pricing: for example pills and ambulance service for 4000$ should be an absolute no-no.

Drugs eat up a tiny fraction of total medical cost. If you dig into the breakdowns of where money is spent, and look at other countries, you'll find we are more expensive at every step. This includes doctor and nurse salaries, and litigation costs. It includes forcing drug companies to lower costs, which will reduce R&D since many rare conditions need high cost drugs to cover the R&D to bring a drug for a few people to market. It includes forcing everyone to pay into the system, so the insured aren't paying the medical bills of the uninsured emergency visits, which is proving difficult to do. It would involve denying care to those costing too much, which we do to some part, but not like many countries.

If you want to make our costs similar to other countries, we'd need to lower costs at each place, including doctor and nurse salaries (which will be politically impossible), cap litigation (which consumers complain about), and dozens of other components.

There is no one area that is the cause. It's death by 1,000 papercuts.

> There is no one area that is the cause. It's death by 1,000 papercuts.

Yup. A few minutes (of unnecessary) oxygen in an ambulance cost my insurance company about $500. A single oral dose of generic Keppra while in the hospital cost more than the cash price an entire month’s supply from CVS. The room I stayed in was billed at about $7300/day, but hey, it did include unlimited room service.

In fact, the only clearly reasonably priced item from my hospital stay was the generic Tylenol, I assume because it’s common enough to generate complaints.

I've been charged (or rather my insurance was) $42 for two slices of white bread, a slice of turkey, and 12 ounces of skim milk. Prices are outrageously padded everywhere.

It really boils my blood that I can take my dog to a vet and get a procedure done or procure drugs that would cost one or sometimes two orders of magnitude more if I was the one getting work done. I'm half tempted to dress up like Goofy and see if they'll be fooled...

On over priced drugs-- there's an episode of Dirty Money on Netflix on Valeant Pharmaceuticals' price gouging and fraud... It's mind boggling and depressing.

I'm not even sure they're overpriced. Profit/revenue for the pharma industry is not terribly high when taken over all pharma companies. They do well, but it's no where near the highest profit/revenue industry. I think industry profit margins are around 15%, which is not unreasonable for a high tech industry.

Hmm. I’m with you on most of these being areas of inefficiency, but I don’t agree it’s death by a thousand cuts.

Labor costs dominate healthcare.

Doctors and nurses are very popular. No one wins elections saying “hey, let’s pay healthcare providers half as much, like they do in other developed countries”. But that’s my understanding of what it would take to actually move the needle on US health care costs.

Agree with most of your points. These high deductible plans were supposed to encourage a "free market" approach to healthcare that would bring down costs, in that... "If I as the patient am paying out of pocket I will be responsible with the money". The problem is most doctors didn't get the memo, they continue with their pricing strategy, so that consumers of healthcare are not able to shop around. I don't mind if high deductible plans are the solution or if socialized medicine is the solution, as long as the end result is that health Care costs come down to what the rest of the developed world pays.

We still don't have price transparency, so it's not surprising the customers of health don't shop around.

I went to a grocery store health clinic without insurance and asked how much it would cost to see the doctor.

They were surprised I asked how much it cost, since they just assumed my insurance would pay for it. After insisting, I finally was able to get them to look it up. They told me it would be $100, but during my exit (and payment) they increased the price to around $200 based on my diagnosis. I asked why it should cost me more money for the doctor to diagnose me with something else, when the doctor didn't do any other special tests (e.g. I wasn't paying for a medical test), and they said "That's just the way it works."

Every time I've paid out of pocket, I paid for the procedure ahead of time. I never considered it, but this is one of those good examples of why to do it.

Nothing stops them from sending you a bill after.

Each time I signed a form saying that I was paying for this service at the agreed cost. There was no open ended clause about paying them anything else which is usually signed when insurance is involved. So no you are in fact entirely wrong.

And you're in the US? Have never heard of that.

Yes.

And honestly it makes a lot of sense. The main point of those "we can charge you whatever forms" is because they often don't know off hand what their deal is with your specific insurance company and furthermore they don't necessarily know which people involved are in which network, etc. yet they just want to make sure that you are left holding the bag when the final bill comes due. But if there is no insurance company involved, they only need to decide what they will charge you and it's done. In that case, the open-ended contract is entirely unnecessary.

Created an account to comment on this, so I'm new, but I read the Welcome and Guidelines.

This is something deeply interesting to me and I'd love to see more comments around it. Here are some questions I have, as someone who has been in the health insurance brokerage space for 3 years early on in my career.

In the case of the Jordans, they had a $2K deductible that the article fingers as the main source of their obligation. However, it further says that they ended the year owing ~$8K (on top of their monthly payments of $501). That just seems like a bad plan: high deductible, low lifetime max or bad coinsurance split. So on top of a high deductible, it offers bad coverage in the case of catastrophe. To me, that brings up two things: 1) lack of savings (I think there's a statistic that like 50% of americans couldn't get $500 together in case of an emergency) and 2) high deductible plans that can bury families. This strikes me as similar to the problem of treating addiction; it takes so many people to treat addiction: psychiatrists, therapists, internal medicine, financial support, job searching, housing support. Healthcare, specifically how an employee navigates it, seems to be a similar problem, requiring budgeting, finding time to find a doctor, etc etc. Are there any companies or people working on this kind of stuff right now?

It also appears that short-termism is another factor in play here. Because of changes to the tax code, companies began offering cheaper plans, thinking that it would cause employees to be more frugal but instead it just caused them to cut back on all preventative care. Does anybody know of example companies that didn't do that? That recognized the risk up front and resisted the short term gains on quarterly guidance?

Lastly, I think it's admirable what the new Gawande-led venture stands for, but I just had a vision of a future where only giant mega-corps will have the leverage—both financially and politically—to properly insure their select few Chosen employees. Is that at all likely? Or have I been watching too much 3%?

The theory behind high deductible plans (as the article notes) is that it'll make people shop around for health care and find better prices and so it should bring down healthcare costs the same way the free market works on other things.

Some of the reasons this doesn't work:

- A significant amount of care, especially the most expensive sorts of care, are not things where shopping around is something that's an option. (emergency care).

- Consumers are not and likely will never be, educated enough to actually make informed decisions about costs. Yes, generic vs name brand is typically easy. On the other hand, there's a half-dozen different medications to treat this thing, all with different price tags. Do I know if the cheaper one is good enough? No, I'm just going to follow what the doctor suggests. Same goes for most other conditions with multiple treatment options.

- Pricing is opaque, and not always unreasonably so. "What will this surgery cost?" is not a question most places can answer before you've had it done. Medicine is prone to wide variation in outcomes that make price estimation problematic. That surgery went well and you're discharged in a day? Cheap. It didn't go well and you're in intensive care for a week and with a dozen doctors working on you? Very, very expensive. Which one will you be? No one knows.

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To add to why it's breaking the market, high deductible plans are attractive to all the wrong people. They're attractive to:

- Broke people, because they get more in their paycheck, even though they can't afford the deductible if they do need care.

- The young and healthy who would be subsidizing the sickly in traditional plans, which is making the costs of those plans spiral.

"Consumers are not and likely will never be, educated enough to actually make informed decisions about costs."

Most consumers have no idea how their car works. But you can get estimates, and comparison shop. You can get an explanation, even if it has shortcomings.

Yes, and I've gotten called to approve additional expense because there was more work needed than they estimated once they got in there.

Or the door latch on my van seized up. Tried two different independent shops I like and they both referred me to the dealer. If your general practitioner says they can't help you and you need a specialist, what are you going to do?

There is a huge conflict of interest if the hospital can charge more when a surgery goes badly.

The incentive needs to go the other way. The better the outcome, the more money the hospital should get. Bad results should mean they get nothing or even pay out, even without clear malpractice. If the hospital gets less than normal pay because a procedure went badly, there are several options for where that money might go: to the patient, to an insurance company, to a government regulator... but it mustn't go to the hospital.

As for #2, I think the tax incentives make it prohibitive to offer nonconforming plans to those who want to resist. In a weird way, that’s some of what the Hobby Lobby litigation was about — you faced crazy high fines if you wanted to opt out of these “protections.”

What many folks don’t realize is that your premium is, effectively, the amount necessary to subsidize others in your pool who exceed the deductible. The premium will always, necessarily look like a waste to most people, not a “fair expense.” But it is fair, given the level and cost of heath care the market demands.

The cost of healthcare and need for health insurance prevent many people from becoming entrepreneurs. Case in point one of my best friends is a talented physiotherapist who has dreamed of starting his own clinic for years, however he has a chronic genetic health condition that keeps him reliant upon working for employers whom provide “good” health insurance. I think a nationalized health system would provide a boost to the startup economy.

Morally, as a single 30-something with no children, it seems preferable to pay the IRS fine than to purchase health insurance. Paying the IRS means there's a chance some of my money will go towards roads or schools or another beneficial cause. While if I buy the absurd amount of health insurance required by law - enough to insure a family of 5 - I'd only be lining the pockets of insurance executives.

The individual mandate is gone; you can stop complaining about it.

https://www.vox.com/policy-and-politics/2018/4/13/17226566/o...

> enough to insure a family of 5

Individual mandate is gone as other poster mentioned. Also, this makes literally no sense - you only have to insure yourself. Sure, it's stupidly expensive, but like - that's health insurance these days.

Assuming you do take that up, it's good to know that, if you end up breaking your leg or developing surprise cancer, you're going to stick everyone else with your grossly inflated, probably 5 or 6 figure bill (indirectly, of course). Thanks, I guess.

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