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Comment by roganartu | Hacker News Reader

As an Australian living and working in the US with a wife who has a chronic medical condition that costs our insurance company on the order of $100k/yr for her regular treatments, all I can say is "Almost $1k" sounds like a gross underestimate.

An anecdote I like to share with friends back home is related to a routine blood test that she has every few months. The price the provider bills varies significantly, but one time they billed $2900. Our insurance paid them $27 like they usually do and the remainder was written off.

Imagine being sick, having no insurance, maybe no job, and receiving that bill in the mail with absolutely no way for you to know that they would probably accept over 100x less than billed. I can understand why medical expenses are the #1 cause of bankruptcy in this country.

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This econtalk episode[1] provides some interesting background on how this happens with medication. There are man-in-the-middle companies (Pharmacy Benefit Managers - PBM) that negotiate plans with pharma companies. These companies get paid a commission based on the delta between list price and the deal they got. The Pharma companies need these deals, so both benefit by the pharma company increasing list prices every year and then cutting better deals to those PBMs. If someone is offering a generic that's cheaper, there is less incentive for PBMs to add them to their plan, because the prices are too cheap to begin with and they have a smaller market share initially. It's all a giant Rube Goldberg machine of a mess.

EDIT: One more interesting detail from the podcast and the book it's based on: Those deals between PBMs and pharma companies are secret. Not even the insurance companies know the details of what's in there.

It's also fun to point out that typically this is everyone involved in a consumer getting their drug: * the consumer * the consumer's employer who selects the insurance * the insurance * a PBM who get a Pharma benefit plan for the insurance * the Pharma company that manufactures the drug * the pharmacy you actually buy the drugs. On top of that the actual payment apparently happens often months after you received the drug.

Edit2: Clarifying "PBM"

[1]http://www.econtalk.org/robin-feldman-on-drugs-money-and-sec...

"Those deals between PBMs and pharma companies are secret."

In some cases pharma co.'s created their own PBMs.

There is a long and storied history of litigation on American drug pricing. If you want to understand the Rube Goldberg machine, I recommend searching the keywords "Average Wholesale Price" or "AWP".

In terms of consumer protection, some states are better than others. Maine was a leader in this area. However it looks like the pharma industry has prevailed.

https://www.policymed.com/2011/06/maine-set-to-repeal-unfair...

And what's the root cause of this absurd arrangement that doesn't exist in unregulated markets?

As I understand it, employer provision of health insurance originated as a way to sneak around legal maximum wages (during WWII?).

Sounds about right. Extending this, and considering employer-provided health insurance as effectivly a tax on your income, and suddenly the US is heavily taxed.

I'm sure this analysis[0] has plenty of critique waiting to pounce, but it's something to consider.

[0] https://www.peoplespolicyproject.org/2019/04/08/us-workers-a...

Medicine and testing isn't available on an actual physical shelf and the prices aren't advertised.

Send out a flier in the Sunday newspaper and the margins on medicine will reduce to as close to zero as possible just like food.

Fortunately there’s a natural experiment of precisely this: drug ads targeting consumers were illegal until 1985. The result has been an explosion in drug prices; the ads were used as a way to try to go around any pricing constraints.

I worked for a time in pharma and believe me direct to consumer was seen as a boon to profit margins, not a constraint.

I see ads for drugs.

But I never see ads for cheap drugs.

So I think you're talking about different things.

I'm talking about grocery store ads selling baby back ribs for 2.99/lb not "got milk?" ads by the milk board.

Public transparent pricing that will drive consumers to pick and choose their health care providers would do great things for the ridiculous situation we are in.

That is an entirely predictable result when you have direct-to-consumer advertising but not direct-to-consumer supply. You just get all the demand the pharmaceutical companies can manufacture without any competition on the supply side to drive down prices.

These things happen all the time in real world free unregulated markets. The seller looks at you, tries to understand how much you can afford and what are your alternatives right then, and to get the highest price possible.

If you are desperate and your life is at risk, they can literally strip you naked - just see how many unscrupulous people become rich during wars.

When you are in a medical emergency, and you need a treatment right there and right then - no time to shop around - why should an unregulated, shareholder value maximising business, not extract from you as much as you can afford?

Find me a loosely regulated market where prices fluctuate on the same order magnitude as they do in medical.

Gouging related to temporary situations is a laughable comparison.

Find me another market where people need to urgently make choices that affect their life and death, or that of their loved ones.

The comparison isn't laughable at all.

That herring is so red it may as well be a cooked lobster. The overwhelming majority of medical care is not urgent care. The overwhelming majority of medical costs are costs that can be foreseen long enough in advance to shop around. Even if you think you might have skin cancer you're still in a position to choose where you go to get your tests.

Hospitals won’t tell you the costs of treatment ahead of time, even for easily predictable items like baby delivery. It’s impossible to shop around.

https://youtu.be/Tct38KwROdw

Yes. And that's exactly the problem I'm complaining about and challenging you to find an example of in a loosely regulated market.

There’s no regulations preventing them from quoting prices to you.

There's regulations that prevent them from being undercut by entities that are willing to have transparent pricing. The problem here is not lack of regulation. It is a lack of competition. Regulation forces providers to adopt a particular business model and that model allows the kind of pricing shenanigans we see. At the end of the day everything comes down to dollars and a lack of pricing information means it is not possible to compare like services across providers. Being able to compare supposedly interchangeable goods/services is a core part of the free market and it is missing from healthcare in the US.

>When you are in a medical emergency, and you need a treatment right there and right then - no time to shop around - why should an unregulated, shareholder value maximising business, not extract from you as much as you can afford?

In a free market, you'd also have choice via competition to drive that price down. Right now, hospitals can literally veto their competition by claiming "there isn't enough demand to justify another hospital in this area". So bing, no new hospital, no competition.

And of course, this assumes your provider is out to screw you at every turn. This turns out to not be the case for obvious reasons; your provider still wants your business in the future. In the case of a single hospital/provider (a la regulation) they've got your business no matter what.

Competition is a key force in markets, and regulation in the medical industry provides huge barriers to competition.

> In a free market, you'd also have choice via competition to drive that price down

Not really though. Like, if I am having a heart attack the correct answer to "Which hospital do I go to?" is always going to be "The closest one equipped to handle it". Well technically the one I get can to the fastest that can handle it but you see my point.

This kind of choice via competition would work for things like optometrists and GPs (assuming you live in an area with more than one general practice) but just plain doesn't for emergencies.

Yeah, the moment you have a heart attack is not the time to start comparison shop. This is the argument everyone always brings up all the time, because it's so obvious.

An because it's so obvious, people will want to be prepared for it. By having insurance (real insurance, not the bizarre "health insurance" construct we have today), or subscribing to some service like you do for when you car breaks down etc.

I'm not sure what exactly would happen, but I'm certain it won't be that people will just never think about this until they all, one by one, have a medical emergency and have to unexpectedly pick a hospital on the spot.

Right, but what I'm saying is even if I did my comparison shopping before hand it doesn't matter because unless I stay within a certain radius of the hospital I've chosen I can't then it is kind of moot.

Because if hospital B isn't my choice but I'm closer to it when the emergency happens I am going to hospital B

> These things happen all the time in real world free unregulated markets. The seller looks at you, tries to understand how much you can afford and what are your alternatives right then, and to get the highest price possible.

But that is not at all what I'm asking about. You clearly didn't read the post I commented on.

If my basement is flooding and I sound rich and dumb to the plumber I call, I might get quoted triple the price of one of his regular customers, sure.

But there won't be a Plumbing Benefit Manager company as a middle man that has a "negotiated special hourly $800 rate" with the plumber so I don't have to pay the "official $9340 rate".

That sort of complex plunder reeks of regulation to me. I can't imagine how it arises. Which is why I asked.

So what looks bad to you isn't the fact that a medical company will try to get all your money when you're most vulnerable, but the fact that they need to resort to a middle man to be able to do that in the face of regulation? Cool.

The evidence from health care systems in other countries suggests that this type of excessive rent seeking does not exist in regulated markets. It’s the lack of regulation in the US that is the problem, not the other way around.

I think a more nuanced explanation is that the problem isn't the amount of regulation but the nature of the regulation. If we simply add up all the rules, healthcare is probably more regulated in the US than anywhere else in the world. The difference is that in other countries the rules are designed with the intention of making healthcare accessible to everyone. In the US, the rules are designed to maximize profits.

A less nuanced explanation is to agree that in an unregulated market, this type of excessive rent seeking would not exist. The old and sick would simply die in the streets. (Actually that's not quite fair since in an unregulated market we wouldn't have streets.)

Policies can always be improved but the relationship between stronger regulation in health care and more access (lower cost) is pretty robust across the world. Nobody openly argues for policies that will lead to higher cost and less access.

Health care is an extremely regulated industry in the US. Possibly the most regulated one, though it's hard to come up with a way to measure that.

Obamacare alone added 20,000 pages of regulations.

US healthcare lack of regulation? Good god.

Price insensitive customers. You can get away with a lot when the alternative to buying your product is pain, suffering and/or death.

Yeah but then there's drug rebates, cash discounts for medical services, and costs negotiated down after services. The whole thing is a clusterfuck and 10 patients likely pay 10 different prices for the same thing.

When my father was in the hospital and had a hard time eating, they told us we couldn't bring in anything and he could only eat food from inside the hospital. I asked his lead doctor if he had any special nutritional needs, and he said no, he just needed to eat anything he could get down. But when we asked if we could bring anything in, they said we had to talk to the nurses and see if it was allowed. I checked with a friend of mine who had privileges at the hospital. He got back to me and said the outside food ban was normal, but enforcing it wasn't. The hospital had a hospitality and vending machine contract that required them to train all the staff in being firm, explicit, and proactive about the no outside food policy.

Of course the vending machine was full of junk food, and the contract was with the same company that controlled the pharmacy. These people need to be put out of business.

I love that podcast! I look forward to it every month.

The costs of giving birth is another interesting example. BBC journalist recently said that even though it costs 4x as much under America's privatised system versus a socialised one (Finland), America has a worse record overall in terms of outcomes.

https://open.live.bbc.co.uk/mediaselector/6/redir/version/2....

I think the US is good at the high end of the distribution, it's just that the average isn't very good. If you want and can afford the best care in the world, you'll find it in the US. But if you get basic care, not so much.

This kind of discrepancy makes these debates somewhat pointless as different sides talk past one another.

There's probably a reason why most world leaders choose to get treated in Switzerland/France when they get sick.

Citation needed for that. (And by world leaders do you mean politicians, or wealthy people? Many world politicians have other reasons for avoiding the US.)

Even if there is citation here, would this data around super wealthy people be of use for public health?

There isn't much motivation to release such data to public, those affected know this very well, rest shouldn't care (according to them). From living in Switzerland for 9 years and having fiancee as a doctor I can tell you it is at least somewhat true, nobody here bats an eye if some powerful person is treated in hospital across the street (or more likely private clinic in some nice place).

There are many reasons - high quality of medical staff, top notch equipment, just a good place to be. Also, Suisse is long term perceived as creme de la creme in many aspects of life, so this fits the overall picture, be it real or some wishful thinking (mostly real though).

What perhaps makes it crazier is that they never expect to get the whole $2900. They bill that and the insurance company will always reduce it by a huge amount. Individuals without insurance are expected to also "negotiate".

I keep hearing this "negotiate" thing, but I tried it when I was billed $254 for a strep test (after being quoted $25 at the walk-in clinic), and the provider refused to negotiate. I appealed with my insurance, the appeal sort of disappeared (I received a letter saying it had failed the first round of review, and they were sending it elsewhere, and then I never heard back again) - and after fighting it for four months, I gave up and paid. Should I not have?

It sounds like their system is working as intended. closes ticket

It’s like the PayPal and EBay dispute process. Lots of unnecessary manual lookups, waiting periods and then an arbitrary deadline, and my favourite: waiting for them to make an automated decision. Like, why not stall when they already have my money.

Nope this was my experience too. I also heard that they'll knock 50% off or more if you offer to pay cash on the day of. This was also not true (at least in Alaska).

In Utah I've gotten further, but usually if they knock off 20% I've had a good day. It's insanity. The market is completely messed up.

50% cash discount is almost unheard of. 10% is a norm, 20% if you are lucky.

How often have you tried in non-emergency situations? I got 50% of at UCSF seeing a specialist there.

My dentists always gave me 10% off for paying cash. Collection agencies often gave me 10 to 20% for paying the whole balance by credit card on the phone. Hospital sometimes gave me 25% for paying a year old balance within 1 month. These were all insurance repriced bills, except of the dental. Many bills were over 1 year old, because of billing errors and numerous back and forth between me, service provider and insurance company.

Same deal. Strep test, $250 plus a $50 "outside of business hours" clinic charge. I visited at 9am on a Monday morning. The billing dept claimed it was a standard charge they charged everyone. I fought them for months about it. Only after it reached collections did I pay it. The extra fee was missing, but $250 for a strep test is a rip off regardless!

There is no real negotiation or defined process. . You have to be willing to play hardball and outright refuse to pay. Also be willing to call every day or get a lawyer that writes nasty letters. Also be willing to deal with collection agencies.

It’s a stupid game about who is the biggest bully. Not many people have the nerves for this.

Negotiate with whom? I don’t think there’s anyone at the hospital you’ll have access to that can guarantee you a lower price (or can probably even tell you what the price will be). After you’ve had the treatment and finally given the bill you don’t have any negotiating power; you can only beg at that point.

You might have to just refuse to pay until someone calls you about it. Then you could offer to pay a portion. It may very well be a collections agency calling, and late payment could reflect poorly on your credit rating.

This actually can work, but you have to remember to check up art the right time before they send to collections. Don't forget about it or a collector will be calling you.

That's actually my point. Eventually someone will call you and want to negotiate to get partial payment.

Yes, and you can negotiate with the collector, but at that point your credit report is damaged so probably not worth it.

The funny thing though, it is so common for medical bills to get to collections that it doesn't effect your credit rating like other bills would.

I heard that too. I have 2 bill in collections from 6 years ago, still negatively impacting my credit score. The 7 year mark is coming up in two months so I will see how it affects my credit.

Can you negotiate with the collector to get the bad credit entry deleted and pay and a discounted percentage of the bill ?

I read somewhere that’s how to fix your credit rating, wonder if it’s also good for s discount ;)

Yeah, that's called "pay for delete."

You have a much better negotiating position at that point. They can't reposess your treatment!

That's actually backwards. You are in a better negotiating position, when you've had the treatment and been given the bill. You can simply say, I can't afford that bill and I can't pay it. Don't beg or ask. Tell them. The people trying to collect money from you are paid a commission based upon how much they collect.

Interesting, as an outsider, I've heard horror stories, including how US insurance companies treat patients with chronic medical conditions - trying to avoid compensations as much as possible, even invalidating insurance policies, stating as pre-condition, etc... May I ask, how you (and your family) were treated? Did you got lucky with some particular insurance company, or is it a norm in case one has a decent job?

Also interesting, e.g. what happens if you lose your job, decide to go indie or until you find another job... In other words, how safe you feel? (compared to living in Australia with their universal healthcare)

Health insurance companies are not allowed to deny coverage based on pre existing conditions, and they all have out of pocket maximums (for in network providers - doctors/hospitals that they have deals with), and you can purchase health insurance at healthcare.gov if you don’t have a job.

Unless your employer pays a portion for you, expect to spend $4,000 to $8,000 per year per person on health insurance premiums, depending on your age, plus up to $3,000 or so on out of pocket costs assuming you need medical care.

It’s just your lifetime’s, up to 65 or whenever Medicare (taxpayer funded care) kicks in, health costs amortized over your whole life and then discounted for age since younger people don’t need as much healthcare.

In America, the voters want doctors and hospitals and drug makers to provide everyone, no matter how destitute, with services and medicine. But the voters also don’t want any to pay any additional taxes, so this is all a work around to that.

Poor people and old people get subsidized by Medicaid and Medicare (taxpayers) and they pay less or nothing at all, so the providers go after everyone else (middle class) for as much as they can. The bigger employers who have negotiating power can do well for themselves, but the smaller employers/individuals on healthcare.gov get screwed because they don’t have enough negotiating power to prevent getting taken for all they have.

> Poor people and old people get subsidized by Medicaid

Everyone assumes if youre dirt poor you get Medicaid. But at least for some states as I’ve found out that’s far from true. In Florida for example (we have a poor friend there who is sick) non disabled adults do not ever qualify even if they earn zero dollars.

Interesting. I have a non-disabled friend in the same state that is very poor (lives in a trailer home, cannot get a decent job as an ex-con, etc.), and Medicaid covers all of his medical expenses - even psychiatric. He's not always happy with some of the things they provide, but he's also the type of person that never would be. He gets what he needs, but not always what he wants. Perhaps your poor, sick friend just needs the proper guidance and/or motivation.

I don’t know how your friend qualifies but he is not a single non disabled adult, the qualification requirements are here and very clear:

https://www.benefits.gov/benefit/1625

> To qualify for this benefit, you must:

> Be over the age of 64; or > Be pregnant or have a child 18 or under; or > Be blind or disabled; or > Have a child, parent, or spouse in your household who is blind or disabled

By suggesting my friend needs proper motivation do you mean she should get pregnant so as to qualify?

We've been here for nearly two years now, but when I was interviewing with the intent of moving to the US I was very direct with employers about our insurance requirements to make sure her quality of care would not be reduced. I turned down some better offers because their insurance was worse (one company would've required her to move to a known-worse treatment until she demonstrated it didn't work for her. This escalating method of treating her condition is well known to have much poorer long-term outcomes but it's cheaper).

Re avoiding treating people with chronic conditions, my understanding is that used to be a (state-by-state) thing that the ACA federally outlawed. We live in NYC where the state had already outlawed it, so even if the ACA is rolled back we should be fine.

We have very good insurance atm. I would go so far as to say, ignoring the general craziness of dealing with the US system and the occasional billing frustration, we have better coverage now than we did in Australia because _almost everything_ is covered (even most things Australia would consider "elective" and hence one would pay for out of pocket). We pay a token $1/month for premiums because law says we have to contribute and my employer pays our deductible. As long as we stay in-network we have basically no out of pocket costs.

If I lose or leave my job I have to find a new one and transfer my visa within 30 days, or leave the country within another 90 days after that. There's a thing called COBRA which allows you to pay a relatively low fee (iirc it's ~$700/m) to continue with exactly the same insurance post-employment for a short period (I think 9-12 months? Unsure exactly). Otherwise we'd just move back to Australia. We're both Australian citizens and we aren't really interested in making the transition to being US permanent residents.

There's a thing called COBRA which allows you to pay a relatively low fee (iirc it's ~$700/m) to continue

Boy, are you going to be in for a surprise if you ever utilize COBRA. If there's a "we" involved, plan on about double that, because you will pay the full, undiscounted premium. They don't want you on that plan, and they only do it because of federal law, so they're going to make it as unappealing as possible.

insurance post-employment for a short period (I think 9-12 months? Unsure exactly)

18 months.

The "relatively low free" part threw me off. Is that a joke? COBRA was $600/mo the one time I might have needed it. That was 6x what I was paying at the job I was in before.

This was supposed to be the benefit of HMOs. There would be single-pricing, and all carriers are aware of this pricing beforehand.

What I think we need, however, is a model that doesn't depend on single-pricing to work, because the real world isn't single-buyer.

People tried to solve it by creating healthcare savings accounts, but the solution itself is very complex, and the end user is often in situations where they don't have the ability to negotiate (e.g. emergency health care). So in practice, the financial benefits seem to accrue with low-care patients, not low-cost-of-service patients, meaning it doesn't affect the system in the right way.

Ultimately, I think the only way to fix it is to start adding negative pricing pressure in small ways to the system, not trying to tackle the whole problem at once.

For example, waive deductibles for treatments which are billed below average (mean? median? in any case, this has to be independent of list price). That creates a financial incentive for insured patients to both seek out billing information, and to lower it.

What's great about that (for insurers) is that you're specifically altering behavior of your most cost-conscious customers, who tend to be your lowest margin customers, without mucking about with the profit margins on your most valuable customers.

>So in practice, the financial benefits seem to accrue with low-care patients, not low-cost-of-service patients, meaning it doesn't affect the system in the right way.

Why is "use less, pay less" a bad thing?

At first glance, it's not a bad thing, but it does nothing to solve the pricing problem that America's healthcare system has.

Going a bit deeper, however, it will most likely increase health care costs over time. This is because it splits the population into two separate risk pools (low-risk low-use, and high-risk high-use).

To save myself the time of explaining it in full, just compare it to the current state of the credit card market. When Discover pioneered the idea of splitting the risk pool (by offering cash back rewards to low risk clients), then it created upwards pressure on credit card fees (because the general risk pools slowly became high-risk pools, meaning that existing risk fees didn't cover the necessary spread). The traditional cards now started charging more to merchants, which left room for larger rewards for the low-risk pool in a vicious cycle.

AFAIK there’s rule in Germany that a lawyer can chose to be paid 10% out of the difference they saved for the client. I wonder this rule would help with those shenanigans.

>Imagine being sick, having no insurance, maybe no job...

Sorry no.

Long term unemployed people in the US qualify for free medical care, celphones and basic dental work. The process is arduous, yes, but it is comprehensive. I had entire recurring blood panels, multiple MRIs, neurological impairment tests , every hospital visit and all of my prescriptions provided for free.

Lumping all levels of poor together is just lies that obfuscates larger issues.

It’s the working middle class that get soaked.

What program are you referring to? AFAIK, This is only in states that expanded Medicaid so it's a real situation for millions in states that didn't. Or are you talking about some other program?

California programs, so yes expanded Medicaid. But as the state that consumes the most in welfare, it seems highly relevant when discussing the needs of the 'poor'.

Programs: California Medi-cal (which covered all of my medications, tests, etc), Denti-cal (all dental work thats not cosmetic), my obama phone, calfresh (for ebt food) and calworks (cash monthly stipend) are the only programs I can speak to.

I'm grateful for what I had to fight to receive during a bad period of my life and hate seeing misrepresentations like this being spread without specific context.

Had I not been able to finally get working again, I would have eventually qualified for free housing, utilities and all the other benefits available from programs that are funded from various sources. I made several friends through the course of going to these offices over a long period of time who were admittedly worse off than me (mentally) but somehow knew all the inside information on how to game the system. (Ex: if you are considered impaired you can get free bus/subway/van service card, which they all knew how to easily acquire). I had to ride my bicycle or walk everywhere to get back and forth from these appointments.

https://www.marketwatch.com/story/no-other-state-comes-close...

I'm glad you were able to get healthcare, but the parent comment you're responding to and your own comment are both talking about the entire US. What you wrote is simply false. There are 14 states that still haven't expanded Medicaid and millions of poor people are without health insurance. California isn't the US and pretending like it is misleading and helps no one.

https://www.kff.org/health-reform/state-indicator/state-acti...

Well then, serious question - not just passive-aggressive snark - why does this happen?

https://www.theguardian.com/news/2016/nov/23/enormous-pop-up...

And other articles too. People inside the USA, travelling ( sometimes for days) to queue (sometimes for days) for a dentist. Why are there organistations in the US whose purpose for existence is to travel around, providing free dental care to any and all comers? Like a medical mission to a country suffering enormous poverty.

I think the cue is at “Virginia is one of 19 states refusing federal dollars to close the healthcare “coverage gap” for people not poor enough for Medicaid, but too poor for anything else.“

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