Comment by hedora | Hacker News Reader

Comment by hedora | Hacker News Reader

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What “federal health expenditures” are you talking about?

The Obamacare tax was something like 3%, and only for the extremely wealthy.

In contrast, 33% of US healthcare costs go to insurance overhead, and >17% of our GDP goes to health care, so nearly 6% of the gdp goes to private insurance middle men.

Source on 17%: https://www.statista.com/statistics/184968/us-health-expendi...

Now, the entire federal government is currently spending 37% of GDP (though that includes deficit spending), so you posit that at least ~ 1/6th (6/37) of government spending is some healthcare program.

Source on 37%: https://tradingeconomics.com/united-states/government-spendi...

Medicare and health costs ~ $1T of the government’s $3.8T budget, which is a bit over 1/4th of the federal budget. That does meet the threshold of your claim, but only if much less than half of Medicare spending goes to actual health care.

Source on 1T Medicare, etc spending: https://www.nationalpriorities.org/budget-basics/federal-bud...

This study from 2001 concluded Medicare is about 80% efficient (20% waste): https://www.nber.org/papers/w8395

Note that the 20% Medicare waste number from the NBER study is not apples to apples with the 33% administrative overhead number, since it includes ineffective medical care (and all other wasted spending) that did not improve patient outcomes in the 20%, but the 33% number for insurers only counts useless paper pushing, and not ineffective care, etc, etc.

So, private insurers really are squandering many more healthcare dollars, and are also much less efficient than the federal government.

> In contrast, 33% of US healthcare costs go to insurance overhead, and >17% of our GDP goes to health care, so nearly 6% of the gdp goes to private insurance middle men.

6% of GDP to private insurance? Math doesn't add up on this back-of-the-napkin math. That's an entire Apple of operating costs every year.

The biggest insurance company, UnitedHealthcare, is worth 200 bill in the market. The gov could buy the big 5 insurance companies with half its yearly medicare budget.

Don't confound paying to insurance and paying to providers!

> So, private insurers really are squandering many more healthcare dollars, and are also much less efficient than the federal government.

I will answer seriously in a second, but for real: how is it so obvious that the private market beats the government on almost anything at any time, even this very government (for example, education) and still, the level of debate is "government is more efficient". Government is never more efficient, because it doesn't care about efficiency.

The comparison of efficiency between medicare and private insurance is grossly misrepresented by Bernie Sanders. First of all, there are some disingenuous numbers: it uses a measure of efficiency of total cost/admin costs, but that skewes severely in favor of medicare bacuse it has an older population that has more expensive treatment. Some economists looked into this and the cost of administration per patient is similar.

Second, a great part of why medicare has less admin burden is that its collections are done through payroll taxes. This means the admin staff is included in other government agencies. This is not a public-advantage, because you can also use payroll taxes to pay for private insurance if you wish so, something that exists in some other countries. ( to my dismay, for the following topic). Another trick here is that medicare collects from everyone and pays for a few. That is a great way to never have to market, administrate or manage people on your plan: you are not going to use it? tough luck. You dont like it? tough luck. You don't have quality coverage in your area? Tough luck.

This trick is so pervasive that even Bernie Sanders claims how medicare patients are so happy: why wouldn't they, the premium they should pay to maintain it is about 1k a month, and they pay 150!

Forth, it is key to understand that medicare offerings are not market competitive. They pay half of what private insurance pays, and there is no way in hell you make that work. Private insurance subsidizes medicare patients, and doctors would abandon the network if they were forced to accept medicare rates.

This is a long topic, but to re-frame the conversation: what makes healthcare in the us expensive is NOT private insurance. Most of the world has private insurance! even Canada! Even France! Spain, Norway, etc. US healthcare is expensive because it is one of the most tight regulated expensive markets in the US.

Right, a lack of regulations is why things are expensive. Deregulating has worked so well as a cap on prices for internet, mobile, finance, etc. If only we'd let the free market Porcupine fairy handle everything it would be better. You completely left out that Republican Congress specifically denied Medicare the ability to bring in cheaper drugs from other countries and isn't allowed to negotiate drug prices, oh and they've underfunded every single regulatory agency for ages to be able to claim government doesn't work. Why is it that other countries can somehow pay more for the same or better care of their public options and we don't. I can promise you it's not that they are less regulated in Europe. You're never going to have a cheaper private option with a profit motive on anything versus an option that doesn't require a profit motive.

Without a strong profit motive would companies still have much incentive to pour 100s of millions of dollars into R&D for new drugs and treatments though? How much progress in healthcare is driven by the fact there’s a lot of money to be made, and how much does the US’s high prices basically subsidize cheaper healthcare for the rest of the world?

That is a sub-problem of the pharma industry, that while significant (15% of healthcare spending) is not the same debate as banning private insurance.

What people dont get is that private insurance fiercely competes to lower costs, while the government's only effective mechanism is to not pay anything at all. Socialized medicine in the us would usher a new era of Cash pay.

> Right, a lack of regulations is why things are expensive.

You might guess right now that I will argue the exact opposite point.

> ou completely left out that Republican Congress specifically denied Medicare the ability to bring in cheaper drugs from other countries and isn't allowed to negotiate drug prices, oh and they've underfunded every single regulatory agency for ages to be able to claim government doesn't work.

Aren't you taking into the calculations that socialized medicine will have the same political risks?

> Why is it that other countries can somehow pay more for the same or better care of their public options and we don't.

The U.S. has a specific regulatory framework that is chaoticly expensive. Regulatory capture is grotesque in the healthcare market, and you can read up what health economists say if you want details. You could aim to do a healthcare reform that just plain reduces the cost of care by 10, 20% easily by just doing less as a government.

> You're never going to have a cheaper private option with a profit motive on anything versus an option that doesn't require a profit motive.

1) Medicare is also more expensive than other countries socialized systems 2) Some of the biggest insurance companies are non-profits 3) The combined market value of the top insurance companies is less than half the yearly Medicare budget.

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