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Comment by sailfast | Hacker News Reader

> Industry groups are mobilizing to fight back, saying any requirement that hospitals and insurers disclose negotiated rates would go too far.

This kind of effort is what is required in order to allow for comparison shopping to occur. Maybe this even enables consumers to shop better for their insurance plans depending on their common needs. That would likely allow folks with certain recurring conditions to shop for the best insurance plan for them (thus also raising the risk level for that insurer and changing prices?) but that's a bit more like how a market is supposed to work.

I can't speak specifically to whether the order just increases legal ambiguity or whether it will be enforced, but I'm happy to see any initiative toward price transparency in medicine that will allow the public to start making better decisions.

> But the order doesn’t say if hospitals would have to disclose the average of all rates they get from insurers or the specific rate they get from an individual’s insurer. That detail matters: The average rates would have a milder effect on local markets as insurers and hospitals still wouldn’t get clarity on rivals’ specific secret rates.

PRECISELY. If everybody understands the negotiated rate, then any size organization can argue for that rate. This would make it easier for smaller-scale companies to get the same rates as larger plans and also reduce some of the incentives for large insurer / care company mergers that seem to be really rent-seeking given the industry comment on this order.

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This is easier to solve by just passing a law that insurance companies move to reference pricing. Meaning that private insurance cost is always Medicare + 30%. This is what most private insurance negotiates anyway. It is completely unnecessary bloat to have all this maneuvering on price for no benefit. The insurers (payors) will push back because they see themselves as gatekeepers and this as their differentiation. They need to go back to only making their money on their float against premiums. Additionally, we should also add that paying cash means you get the Medicare price.

Price controls don't work. This will only lead to a shortage of doctors that take an insurance plan.

> we should also add that paying cash means you get the Medicare price.

Medicare doesn't pay enough. What if the doctor doesn't accept medicare?

Medicare's reimbursement rates are already higher than every other developed nation. The idea that it doesn't pay enough is, frankly, bs.

Of course, reimbursement rates are hardly our only problem. We also use more expensive treatment options for the same conditions, give doctors (and thus patients) a level of flexibility unheard of elsewhere that allows to spend money on unnecessary medicine just to make a patient happy and have ridiculous administrative overhead costs.

We overtrain docs and we’ve built hospitals that focus on private rooms instead of wards. Both of those hugely increase the labor cost and will take a long time to undo.

Not really.

You tell the working parents that they can deliver the baby in the shared room for no additional cost or upgrade to the private suite for $100k.

What are you trying to say? It wasn’t clear.

Perhaps that the actual cost to use private rooms for delivery is being subsidized?

I did not mean exactly that, but this happens too.

Not every new parent can afford the expense of birth. So the hospitals try and squeeze out as much as they can from every party to try and even it out.

As a high income earner, I'm specially vulnerable to this practice.

No judge or newspaper or activist has particular empathy that I got charged $200k for a delivery or $6k for an 2 mile ambulance ride.

I can afford to pay it so why am I being so picky about it?

Are you serious with the $200k?!?

You seem surprised.

It's such a regular occurrence that it does not make news anymore.

Much higher amounts make the news now:

https://www.theguardian.com/us-news/2018/jan/16/why-does-it-...

https://www.cbc.ca/news/canada/saskatoon/jennifer-huculak-ki...

See, the OP said:

> We overtrain docs and we’ve built hospitals that focus on private rooms instead of wards. Both of those hugely increase the labor cost and will take a long time to undo.

If I was a patient at a hospital, I would not be able to control this:

> We overtrain docs

That part is outside my control.

... but, I, as a patient at a hospital, would be able to control this:

> we’ve built hospitals that focus on private rooms instead of wards

Infact, some of hopitals in the U.S. do have ward deliveries - I believe Kaiser Permanente have shared rooms?

However, that is the rub - people are not explicitly requesting private rooms - hospitals just have them so they can charge as much as they can.

If you walk into a hospital, you cant ask to have a ward delivery. They take you to a private room by default - no questions asked. That's all they have.

Then the bill comes and the game begins - if the insurance company does not pay, the hospital will then come after you. They will put you on a payment plan.

If you can't make payments, they will sell you to collections. Some hospitals might settle for an upfront cash payment but then it cannot go through your insurance and you are out of money AND you did not meet your family deductible either.

If there was a choice to new parents between ward deliveries for $50k and private rooms for $150k, I know which one I would take.

I don't have that choice because my employer might not be offering care though Kaiser Permanente and the hospitals in network might only have private rooms.

So change employers because I prefer ward deliveries?

OK thanks. I was confused. I thought you were saying patients wouldn't accept shared rooms and this is built into our cost structure.

My pleasure.

Thank you for pointing out where I can end up confusing a reader. I write occasionally. Example: https://www.quora.com/Do-all-citizens-have-a-right-to-afford...

> Medicare's reimbursement rates are already higher than every other developed nation. The idea that it doesn't pay enough is, frankly, bs.

Medicare's reimbursement rates could just as well be published by Gosplan. If you squint hard enough, they are almost an application of the Labor Theory of Value: There is an intrinsic value of everything determined by how much labor went into producing it. That, of course, leads to all sorts of fun stuff like seniors in Florida loading up on cosmetic surgery and ED medication on the backs of the younger generations.

So with true state provided healthcare:

The “price” is really just the unit cost. Companies seem to have no problem computing unit costs (and thus margins!), no gosplan-like apparatus is required for this beyond supply-chain management and accounting. The U.S. situation is complicated considerably by all the different parties involved which I guess is why this idea might work less well there.

Correspondingly I suppose the “true value” would be the value provided to the recipient of the procedure and society as a whole, and as you observe is much more subjective and probably best not even measured in dollars. I think “quality of life adjusted years” is a thing. The major problem is when the you and the state disagree on the value of a procedure and whether it justifies the costs...

Another way to look at it, “socialised medicine” is just health insurance collected by the state with full vertical integration; your insurer also runs the hospitals and provides the care. The upside is you’re covered, the downside is you don’t get to choose a plan.

Why people downvoted this. Price control doesn't work. Just read any economic book and you will realize it's true. It hurts, but it's true. If price control works, then why prices never were freezed. Why don't freeze it forever? Because it doesn't work.

Price control works in other countries for healthcare.

Which ones and for how long?

Largely because the US continues to subsidize medical R&D. Free riding is a good gig if you can get it.

Now that advertising drugs to the public had ballooned marketing budgets beyond R&D is that still true?

I imagine that dollar-for-dollar a non-profit with the right incentives and oversight could out do the VC-backed leeches driving up prescription med prices.

The US subsidizes drug development, that's about all. Other medical R&D doesn't really come out of any publicly funded research system, it comes from medical practitioners. The cost of US drug development subsidy is maybe $40 billion, accounting for basic research and development by pharmaceutical companies. This is pretty much peanuts compared to global healthcare spending. Also, this money is arguably not really that well spent, since most of drug development is useless, and nations can improve their health systems and outcomes much more through things like routine care and monitoring than they will through expensive research.

Can't we keep paying for the R and D and just not let a minority of private actors profit?

The private actors are the ones who pay for the R&D, to the tune of $70 billion/year. That's on the same order as total annual venture capital spending nationwide ($70-$80 billion/year from 2014-2017, though 2018 was an outlier at $130 billion).

These amounts are small enough where the U.S. government could pretty easily cover the expenditures. So by your logic, why do we need Silicon Valley venture capital? Why not just have the government pay for the R&D and make the results freely available to everyone?

Either the government is good at allocating capital for high-tech R&D or its not. Whether you're talking about medical tech or computer tech doesn't make a difference.

The vast majority of pure research has funding generated directly from government funds. Medical funding is roughly half from public funds. This wouldn't change with price controls. More profits don't lead to more research.

You're assuming that the profit on the item is enough that it's still worth it if the price is reduced. Why do you make that assumption?

Medicine will never not happen. People will continue to get sick. People will continue to become doctors. We've literally seen this before.

Price control doesn't work on healthcare. I give you an example: Spain, "free" healthcare: they realized people went to socialize to hospitals, making impossible to address the demand. People went to hospitals for headaches, colds, creating an incredible ammount of problems. How they solved it? They charged money (little) for any consult you wanted to do. This reduced instantly a big ammount of the consults and false positives. This was tested in Barcelona and in other provinces. This was also a case for Singapur, where everyone have access to healthcare (starting from 16$/mo) and healthcare is subsidised by demand.

> Just read any economic book and you will realize it's true.

In theory, theory always beats practice. In practice, however...

Case in point: nearly every other developed country.

Why you say theory, when you never readed about price controls in economic books: they're filled with factual data, not with opinions.

Why don’t you read on how every other developed nation does it then?

> Price control doesn't work. Just read any economic book and you will realize it's true.

This sounds like a bit of an oversimplification.

Sounds that way, but it isn't. Price control doesn't work.

A theory that isn’t validated in practice isn’t much of a theory. I’ve lived in several countries with price controls (at least on reimbursements, you’re free to get price gouged at some doctor but not many people will follow) and things are fine.

If anything I ended up having issues at the few parts that _arent_ price controlled (eyecare in France is a pain, though I think mostly because supply of optometrists are limited)

I wonder whether it’s price discovery that controls price. It’s hard deny service for a price you’re already accepting/accepted elsewhere.

Price control is not a theory. There are several books, papers (Hayek, Mises, Friedman), topics that address this topic. If it is so good, why isn't implemented? It's the same argument than communism: if it is so good, why we don't implement it? Because it doesn't work. It never worked.

Price control generates scarcity. Because bureaus can't have all the information about the market, it's impossible. The moment a bureau determinate a price you're generating an impact on the different areas without having the possibility to address it. The gov. is not the market, the gov can't be an omnipotent entity that knows everything, that's why they screw everything.

> Hayek, Mises, Friedman

What a diversity of thinkers!

Do you want more? I've read others. You want me to bow before Marx or Keynes? LOL

It's more or less implemented for medical care in most other first-world countries and it seems to work better than ours* in all of them.

I lived in Canada for three years, and growing up in a fairly conservative area in the US, I was prepared for the worst - six-month wait times for life-saving procedures, etc. What I saw was more like Star Trek - people who needed medical care went to a clinic or hospital and got it, and they didn't have to worry about being bankrupted in the process.

After I moved back to the US, I got to see what it was like for most people - delaying or never getting critical procedures done, people with teeth rotting in their heads because they can't afford to go to the dentist, almost everyone 1 unexpected medical bill away from permanent financial ruin. Our system is objectively bad, and we deserve to feel bad for sticking with it.

You can cite all the market theory you want, but the US is a perfect empirical example of why those theories are wrong.

* Except for the tiny minority of the ultra-wealthy who can afford to pay any price for health care.

You can read Forty Centuries of Wage and Price Controls by Robert Schuettinger and Eamon Butler, first published in 1979. The case against price controls is not merely an academic exercise, restricted to economics textbooks. There is a four-thousand-year historical record of economic catastrophe after catastrophe caused by price controls.

In the case of price controls for medical services and products, there are a bazillion cases of it working. Your theory goes up against the universe's facts on this specific case.

I'm not arguing for price controls on everything in general. I'm pointing out that _in this context_ price controls are a proven strategy and work and mean that people don't _die due to not affording their insulin_.

The best healthcare system in the world is private and it's made on Singapur. Every single citizen can afford it, since it starts from 16$/mo. I want to hear one case of those 'bazillion' of price-controlled system.

People call economics the dismal science but the truth is that it isn't even a science. Its predictive power is laughable and it seems to consist mostly of just so stories told after the fact.

You can't just claim something which is demonstrably functional somewhere doesn't in fact work because your half baked theory trumps actual reality. This is why this sort of comment is downvoted.

> You can't just claim something which is demonstrably functional somewhere doesn't in fact work because your half baked theory trumps actual reality. This is why this sort of comment is downvoted.

What actual reality? Because there's price controls doesn't mean it works. It generates scarcity, always.

Go to SF, put all rentals to 100 dollars and see the effects of the price controls. They will be the same there and in China.

I am not surprised people who deny the fact of economic science is downvoting this.

There is more than enough money in the system to pay for the actual health care providers.

Some of the middle men would have to get bent.

Not true. Not forever. Proven already. Same argument as Universal Wage.

There's countless volumes of information on price controls and their failures to have the desired outcomes.

Price controls force efficiency gains. If wages go up you don't stop paying your employee wages, you either train cheaper employees, find a way to get more work out of them, or find a better way to do it. The same applies to price controls.

This is not true. The moment you set a red line, you're making impossible for the lesser trained to join the wagon for getting a chance to climb the ladder. Also, you're making the capitalist not paying for not hiring lesser people, since none has to hire, there are not faults. The idea is that investors should fight to get you in, but if they're denied, they get the monopoly since no one can enter the market to compete with them by hiring people who is willing to work for less than the regulated wage price is meant is. Plus, wages will not go up easily, since you're killing the force supply by setting a line on it. Milton Friedman explained this properly, you can see his speech on Youtube.

Milton Friedman is only one school of economic thought. Nothing is proven in economics and likely won't be since it involves human psychology. When gas prices rose dramatically economists expected the US to move away from large vehicles. That's not what happened. The rational thought is almost never what happens in economics. People buy high and sell low, their purchases are often emotional, and investors pour money into acting blockchain.

Or stop competing in that business.

That's already been happening though, so I'm not sure how much that would change what's already been happening.

Parent comment didn't mention price controls.

Price controls have been demonstrated to work in a number of other countries. I agree, in general, but when you have a proof by existence of efficacy, you can't really claim that they don't work in medicine.

Which countries? Price control doesn't work. It generates scarcity and supply problems. The case against price controls is not merely an academic exercise, restricted to economics textbooks. There is a four-thousand-year historical record of economic catastrophe after catastrophe caused by price controls. This record is partly documented in an excellent book entitled Forty Centuries of Wage and Price Controls by Robert Schuettinger and Eamon Butler, first published in 1979.

I live in Ontario where prices for medical care are negotiated by the provincial government, which you might regard to be a price control. The result is excellent, and one of several reasons I would never consider living in the United States.

Switzerland is one of many examples.

The system is universal, but not complete. In fact, you should pay and that's how it works and it doesn't generate scarcity. There is 3 types of services in Switzerland: public with 2500 bed, subsidised private and private.

I will quote:

> The insured person pays the insurance premium for the basic plan up to 8% of their personal income. If a premium is higher than this, the government gives the insured person a cash subsidy to pay for any additional premium.

So, it's a basic insurance that doesn't cover everything. Also quoting:

> "Health insurance covers the costs of medical treatment and hospitalization of the insured. However, the insured person 'pays part of the cost of treatment' and 'For hospitalisation, one pays a contribution to room and service costs'."

As you can see, there's no 'free' but subsidizied basic healthcare treatments, but then you should pay everything.

I believe we were discussing price controls, not whether it is "free".

Simple don't let doctors choose patient by insurance plan or negotiate a higher rate. Everyone pays the same. There are first world countries wherein the massive profit potential at every step between patient and care just doesn't exist and they in general have better health outcomes than we do.

I’m pretty certain that would violate the Constitution. Any lawyers around that could comment on this?

What part of the Constitution covers medical billing? Doctors can get tort protection but patients can't get billing protection? Wages have been set by the U.S. government before so I'm not sure you could argue that, and there's no personal expression protection with accepting insurance. I'm really unsure of where this could possibly become Constitutional other than the right to life.

Perhaps it’s the ambiguity when I read the parents post about not allowing doctors to charge different rates. Does that mean not allowing me to charge more than you, or not allowing a doctor to charge one patient more than the former.

When I originally read it, it seemed like the former, but given everyone’s responses it must be the latter.

I'm for capping costs AND not allowing a provider to charge different rates to different patients for clarity.

Neither would violate the constitution. It's not that long a document and written reasonably clearly. If you disagree please cite the section.

USA already has the common carrier law which states that certain services are not allowed to discriminate against specific customers, everyone pays the same price. So all you would need is institute a similar law for medical practice, like a "Common Health Provider" law. If you think that net neutrality is a good idea then you should also think that this is a good idea.

So you're saying we have too many doctors? Because this is how you get rid of doctors.

I would gladly pay more to be seen sooner by a more qualified doctor. If I have to fly to another place to do that, I would.

Only a fraction of the population can afford to fly somewhere to be seen. We are trying to improve the situation for everyone else.

Other counties pay less and have plenty of doctors per capita plus waste far less on middle men.

I wonder what happens when we create a market where prices are transparent, without disclosure of performance or quality too.

What do you mean? Aren’t we talking about the price of hospital visits, etc., meaning the performance/quality is expected to be good?

Medical care is not uniformly good. Your parent is alluding to a theoretical race to the bottom on quality.

There is a standard of quality one can expect that is defined by malpractice law.

Well I'd say it's better than a market where both are pretty opaque

There's too many points of negotiation between many, many entities for there to be transparent pricing in our current system.

A single payer system would eliminate those points and drive costs to their equilibrium point.

> PRECISELY. If everybody understands the negotiated rate, then any size organization can argue for that rate. This would make it easier for smaller-scale companies to get the same rates as larger plans and also reduce some of the incentives for large insurer / care company mergers that seem to be really rent-seeking given the industry comment on this order.

The fallacy is assuming large insurer / care companies are interested in paying more to providers or keeping a lot for themselves.

Insurers work on margins, floats and risk pools.

More the better.

They would rather have more insured to have a larger float, a more diverse risk pool and lesser margins but more volume.

Also, why would a large insurer be OK with a smaller-scale company getting the same rate?

No market I know of works that way - a larger negotiating body always gets an advantage over a smaller negotiating body.

Which is WHY smaller companies want to become larger companies.

Otherwise it would not make sense - it's way easier and cheaper to run a smaller company than a larger company for example.

You and I can't start NewCo and demand the State of Alaska give us tax credits.

Alaska will bend over backwards for Amazon.

That's how it works.

I wrote a response to this article here: https://news.ycombinator.com/item?id=20281150

Would love any input!

Nah, let's just replace the whole thing with Medicare for all. The federal government can then negotiate prices which will be far lower than any smaller org can do.

Works in Japan where prices are super low and the system is very good (far more private doctors per capita than in USA).

I'm interested to know why you think the government is incentivized to negotiate the best pricing for citizens. They would fill the same role as existing insurers, but instead of multiple black boxes there would be one. There is no way to tell if the price we are paying is at all good value for money compared to what it could cost. I'm not sure this solves our health care cost escalation problem, and the government would still be fighting against providers that would continue to grow and merge together so they would be able to negotiate with the government. This reduces overall service and competition.

I think that because it happened in Japan and other places. Japan has a single payer health insurance system called NHS. The government pays 70 percent of the cost of all health procedures, if you’re a low-income or elderly resident, it pays as much as 90 percent. The remaining 30 percent is covered by private health insurance.

The government is EXTREMELY good at negotiating prices. In other words, there are already examples of it working really well, so it's pretty clear it can work well here too with enough care.

Japan is known for really high-quality care that is insanely cheap and has more doctors per capita than in the USA. So the worry that overall service and competition would decline is unfounded.

So let's take really good working examples and try them here. The USA can do so much better, it's not even funny.

https://www.bloomberg.com/opinion/articles/2017-09-19/want-a...

High quality care in Japan? this claim is debunked when you see doctors dont spend more than 5 minutes with patients, barely do any tests before giving out medications by the dozen for most medical conditions. If that is high quality care it is seriously laughable.

To be sure you'd have to run a study where you compare outcomes vs spending a bunch of time with each patient and doing a bunch of tests..

Oh wait...

One issue that's talked about less frequently is how high US doctor incomes are compared to other countries. The average doctor in Japan made ~$105,000 USD [1] in 2014, whereas in the US the average primary care doctor made $195,000 and the average specialist made $284,000 [2]. Anecdotally, I had an eye infection in Mexico and was seen by an ophthalmologist the same day for an $8 consult fee and treated with antibiotics that cost $20, using the exact same techniques and equipment that would have cost me hundreds of dollars in the US.

We're paying our doctors sometimes double what they make in other countries and receiving inferior health outcomes. It's easy to vilify the AMA but our doctors also have an unusually high amount of risk and obligation when it comes to malpractice, which wouldn't go away if everyone magically was on Medicare For All tomorrow.

To reduce health care costs, someone needs to get squeezed... but who? Reducing doctor salaries will lead to a shortage of doctors unless there's some additional action on easing the education burden they presently have to take on.

[1] http://nbakki.hatenablog.com/entry/Annual_Salary_by_Occupati... (2014) [2] https://www.businessinsider.com/how-much-salary-does-a-docto... (2014)

Healthcare admin jobs should be drastically curtailed.

in the US, you are allowed to buy a ferrari or a geo.

in mexico, they only make geos. So prices reflect that.

in the US, you are only allowed to supply healthcare if you buy into $500,000 of loans and give up 6 years of your life. The AMA and government have mandated it to be so.

That's the price of a ferrari. US Medical salaries reflect that medical ferrari

The AMA most certainly needs to be vilified. It actively lobbied to limit the number of residency slots thus leading to doctor shortage and higher prices. It even indulged in price-fixing and opposed retail clinics that could offer competitive pricing.

https://washingtonmonthly.com/magazine/julyaugust-2013/speci... https://mises.org/library/how-government-helped-create-comin... https://www.washingtonexaminer.com/thanks-to-doctors-there-a...

I’d argue part of the cost of healthcare should be educating and training doctors. So there is control over number of doctors. Best way to reduce their salaries is increasing supply.

> They would fill the same role as existing insurers, but instead of multiple black boxes there would be one.

Because larger purchasers have more leverage to negotiate better discounts/bulk rates. When your choice is, "take the offer or you don't get any payment", you take the offer.

==I'm interested to know why you think the government is incentivized to negotiate the best pricing for citizens.

I can think of two. First, so they can spend the money on other things they want (military, social security, education, etc.). Second, is so they can get re-elected by those same citizens.

==There is no way to tell if the price we are paying is at all good value for money compared to what it could cost.

We could look at the dozens of other developed countries who work like this, should give us some clues.

I don't think "frugal" fits the description of many or any of our lawmakers. With few exceptions, they all want either higher taxes or higher debt to pay for their favorite things.

> I can think of two. First, so they can spend the money on other things they want (military, social security, education, etc.). Second, is so they can get re-elected by those same citizens.

Respectfully, is there any reason to think that the US government would actually do this, based on past behavior? Government spending is famously wasteful, both parties spend like it's going out of style when it aligns with their interests, government debt continues to explode, and spending continues to grow year-over-year effectively unchecked. I may just be overly cynical here, but I don't think that responsible spending is the primary election issue for hardly anyone today.

> Second, is so they can get re-elected by those same citizens.

American politicians are not elected by voters or citizens, they're elected by contributors. This unhinging is either a root or partial cause to many problems.

Sorry, that's total BS. Complain all you want about "campaign contributions", but the politicians absolutely are elected by voters on Election Day. The only thing contributors can do is try to change opinions by funding campaigns which goes to advertising. The final choice is made by the voters, and they are the ones ultimately to blame for the results.

That's fantastic, are they also to blame for the duopoly of political parties in America? Because the way our system is set up, first past the post, it is almost guaranteed. Are the voters to blame for the structure of our government which was written 250 years ago?

Yes, they absolutely are. If they didn't like it, they would fight to have it changed. They've fought to have many other things changed, and various Constitutional Amendments have been passed as a result. Did you forget the 18th Amendment, which was passed because of a bunch of Temperance activists? (and then the 21st that was passed because the result was a disaster) The system is set up this way because the voters don't want to change it.

Because HHS / CMS negotiates all of these rates I think it might be hard for voters to draw a path between rates / expenditures and their care, for the same reasons they fail to draw a line between their current insurer's negotiated rates and cost of care. A single negotiator will likely only make pricing more opaque, rather than less, so there will not be a strong incentive to perform better at the HHS level without transparency. Further, if Medicare for all is biased toward removing private plan competition there will be no incentive whatever for Medicare to be more efficient. Rate issues can be easily blamed on the providers.

==for the same reasons they fail to draw a line between their current insurer's negotiated rates and cost of care.==

Insurance companies are not subject to FOIA requests like the government. People tie Medicare to the Government, why would this be different?

==A single negotiator will likely only make pricing more opaque==

Not sure it's possible to be more opaque than today. All of the other country's who do it this way have far more transparent pricing than the US, so I'm not sure I buy this reasoning.

We know it works because we have examples. It is quite frustrating to see you not even try to go and get those examples. It only takes a simple google search.

Here are three good ones: the UK, Japan and Canada. All different systems, all providing medical care for much less cost than we do in the US.

Additionally, your reasoning is flawed at best. The government can legislate that providers can only charge $x for y service, which private actors cannot. 300 million+ people is a very large market to leave just because you are slipping on profits. There are many other levers a single payer who is the government can pull as well.

"The U.S. has higher prices for most health care services and prescription drugs, according to available internationally comparable data."

"While available data are limited to select services and drugs, we find that higher prices – more so than utilization – explain the United States’ high health spending relative to other high-income countries." [1]

Perhaps the US is closer to those other countries than you claim.

1. https://www.healthsystemtracker.org/chart-collection/how-do-...

We like to talk about healthcare like it's a free market but it's not. If I'm at the hospital I'm there for treatment. I'm not leaving until I get it, damn the cost. I will not consume less healthcare because the price is higher when the other option is death.

We need some price setting regulation to protect consumers from getting fleeced. When the hospital knows that I'm going to say yes, why not price every surgery at $100k?

We've tried letting the insurance companies regulate the price, but they've proven themselves incapable either because there are so many secrets making the market not fair or because they don't have an incentive. It is time to try something else. The government is our mechanism for regulation. Let's use it.

You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible). It's also incorrect to pretend that all healthcare goods have the same elasticity of demand, as well as to pretend that even emergency healthcare is perfectly inelastic.

The reason this matters is that we don't see the same problems in other inelastic markets - for example, automotive gasoline is highly inelastic (estimated to be at -0.02 - https://www.eia.gov/todayinenergy/detail.php?id=19191), but we don't have the same pricing pathology with it that we do with healthcare (emergency healthcare estimated to be at -0.04 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/). Therefore, we can't conclude that the problems are specifically due to inelasticity.

> You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible)

Next time when a bone in broken in your body, go comparison shopping because it's a free market and you should get the best deal while your bones hang freely.

Health care is a special case not comparable with any other market.

It's semantics, but they're important when you're talking about economics. You're describing inelasticity of demand, which is to say that I need the good irrespective of the price (and it may mean irrespective of the geographic inefficiency).

In a free market, I can open a hospital across the street from your hospital and charge whatever I want for similar (or completely different) services. Presumably, our hospitals would also have a brand reputation: I know lots of folks who say "I'll never go to X HMO again, it's so much better at Y public hospital" and would gladly drive an extra mile or two with their broken arm kid if it means they're fairly certain they'll save a few grand (or more).

A similar example is that I'm halfway down a 200 mile highway, and I need gasoline. There could be one gas station, there could be five, but the fact that I'm allowed to open a gas station next to the sole one that exists means it's a free market. If the government says "there shall be one [or two, or ten]" gas stations here, or that "all gas stations here shall charge this rate", then it's less of a free market.

You may be trying to describe the concept of perfect competition[1]. If so, I'd agree with you that health care can almost never achieve perfect competition because perfect information becomes harder to obtain as situations become more expedient or dire.

[1] https://en.wikipedia.org/wiki/Perfect_competition

In my community in western Kansas, there are two hospitals nearly equidistant from us. An ambulance crew asks which one do we want to go to.

Why would cost not play a role in that decision?

Cost should play a role but I don't think it should ever cross your mind or need to be a decision you have to make.

In your anecdotal situation let's say you fell and broke your arm and are now sitting in the back of the ambulance when they ask that question. North or South hospital?

With your one good arm are will you load up a cost comparison of services between the hospitals, checking what the procedure might be if the break is impacted, if muscle tissue is torn or needs to be repaired surgically, what followups or cast removal costs, and building a spreadsheet of possible scenarios based on the underlying medical statistics combined with the risk factors of your incident? Ar you comparing that against hospital ratings for those departments and doctors and their success rates combined with education or training in line with best practices or regulations? Then are you compiling this data to make a decision based on which hospital is the most viable economically vs the standard of care for your suspected injury and reaching a decision?

Are you going to do this for every viable healthcare situation in advance so you're aware of updated costs at South or the new star surgeon hired at North hospital?

There's certainly a market for that analysis but I don't think it's analogous to real life. Most people are going to call 911, get in the ambulance if needed, and go to the closest hospital with capacity. The price, quality, and other checks need to happen at a higher level while still be transparent and open. Medicare has tools to solve this just like how the FDA us meant to resolve food safety questions and other governing bodies are there to regulate and enforce standards. Unfortunately it's not as simple libertarian as "North or South?"

Well, in our community, we know which hospital costs more before we break our arms.

This greatly ignores the reality that in a community, when prices are known, there's a collective understanding of which places (regardless of industry) are more expensive than others. And whether the cost difference are justified based on, again, collective experience.

So, no, of course no one is going to fire up the equivalent of GasBuddy when they're in an ambulance. You no doubt already know this, so why make such a ludicrous argument?

Because deputizing the government to negotiate down prices is a saner alternative to keeping costs of emergency services down given that the actual cost depends on so many factors that your analysis is extremely faulty.

The only substantially cheaper across the board hospitals are those people go to die in because they are profoundly incompetent and understaffed.

Hi "Mason General Hospital" in Washington State.

> The only substantially cheaper across the board hospitals are those people go to die in because they are profoundly incompetent and understaffed.

...And tend to get sued out of business for malpractice.

Which is a form of government regulation allowing punishment of poor/illegal performance. Medicare for all or a universal solution could enforce quality across all healthcare providers while simplifying negotiation not only as the federal government would be the only client to barter with but could make policy restricting costs or overhead in a careful manner.

There would definitely be an app created for all that in no time. We will be able to do all that stuff with one finger and your smartphone. With the exception of the well-off and rich, people who are living on a budget are certainly going to look up costs for non-emergency medical treatment.

> Next time when a bone in broken in your body, go comparison shopping because it's a free market and you should get the best deal while your bones hang freely.

Or already know the price of how much it costs to get a bone set at different local providers and make your pick ahead of time.

Why assume people aren't going to shop around until something happens? "Hey ambulance driver, my preferred clinic is such and such take me there please."

Most medical situations are non-emergency.

Would you keep a mental record of every service at hospitals? Seems like a gigantic waste of effort for everyone to have to know that a bone fracture is cheapest at hospital A, but C is best for head injuries.

Unless of course you aren't conscious enough to direct the ambulance driver at all.

> Seems like a gigantic waste of effort for everyone to have to know that a bone fracture is cheapest at hospital A, but C is best for head injuries.

Imagine a world where prices are openly advertised, and as a result they start to drop.

Take laser eye surgery as an example. Prices are insanely competitive! They have been going down for years, and equipment manufacturers have been hard at work making more reliable and cheaper to operate equipment that has less side effects!

We have a free market for literally curing blindness and it works really well.

Now take more urgent but not life threatening cases. Last couple times I broke something, it was of the "well that sucks and it is kind of swollen but whatever" type, and I got to choose where to get an X-Ray at.

That is a perfect case where open pricing would drive the market price down and save me money.

As another example, physical therapy prices are often advertised on the open market. So are therapeutic massage prices. Both are price competitive markets.

Sure life threatening emergencies will still be subject to price gouging, but if the entire medical system is running more efficiently then even emergency services may see a reduction in costs in places. Maybe not for the trauma center, but for the hospital stay outside the ICU, why not?

They’re really not very competitive. In my experience there were discounts offered to people with mild myopia to get them in. People who need glasses to drive or see a blackboard pay more. People with large pupils pay much more. I think it’s likely the prices are suggested and discounted by the machine manufacturers who own patents.

The nominal price of Lasik is trending slightly down at the same time that the technology and procedure is getting better. It's a pretty stark contrast to most of the rest of the medical industry, IMO.

Lasik usually costs a few thousand dollars. Mayo Clinic charged me $1400 for someone to look back over an old MRI of mine.

I wouldn't have done said yes to that if I had known the price.

Will they even give you the prices in advance like that? And what is to say that they just won't change?

The idea behind price transparency is to make those prices available.

It is also illegal to change advertised prices, not to mention a great way to lose business!

> Next time when a bone in broken in your body

I definitely would, why wouldn't you? Broken bones are urgent but usually not life threatening - in that situation I'd definitely take a few minutes to decide how exactly to handle the situation - call an ambulance, or have a friend drive me to the hospital? ER, urgent care, or GP? Lots of options with different trade-offs, even if cost wasn't one of them!

Urgent, life and death situations are obviously a special case but are also a pretty small percentage of medical care at least IME. My wife has had quite a bit of medical care over the last few years including having 3 kids and several unrelated, important but not immediately life or death surgeries. In every case we evaluated several options before picking a Dr and a hospital. We looked at price, recs from friends, distance from home, reviews, etc just like picking a restaurant or a new car. Even in the few urgent life/death ER visits we've had we still picked where to go, we just picked ahead of time - when we get a new insurance plan we usually glance through it to make sure we know what are the closest ERs and urgent cares that are covered, and if there are multiple options we'll pick a default. Again I don't know why someone wouldn't do that, even if our healthcare were free we'd still compare on other metrics.

You're right, healthcare as I am describing it is a perfectly inelastic service. I cannot think of any other example where someone would show me an absurd price and I'd still take like. Like $1M absurd. I'd rather push my car than buy gas at some point. The same cannot be said about my health. There is no point at which I'd rather just die.

The government needs to regulate markets like this.

If healthcare is perfectly inelastic and inelasticity is the dominant factor in pricing, shouldn't we expect all procedures cost $LIFE_SAVINGS each already? I'm not trying to be glib; my point is that a) healthcare is _not_ perfectly inelastic, and b) even in the presence of high inelasticity, we can observe that market forces can exert downwards pressure on pricing. I think that arguing for a remedy solely on the basis of elasticity is misguided and potentially ignores larger problems within the market.

Consider the example of food, in general. Demand for food is wildly inelastic - without it provided regularly, for your entire life, you _will_ die. If elasticity were the only consideration in pricing, we should expect food to be break-the-bank expensive, but it clearly isn't. What else is different between the healthcare and food markets?

(To be clear, I'm not defending the current state of our healthcare system. It's broken in a lot of ways, and is way more expensive than it needs to be. I'm just arguing against the idea that the cause of its dysfunction is inelasticity of demand.)

I think for many many people, all procedures already do cost $LIFE_SAVINGS. Don't > half of Americans live paycheck to paycheck?

Yes, nearly 80% of Americans live paycheck to paycheck[1].

[1] https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...

> If elasticity were the only consideration in pricing, we should expect food to be break-the-bank expensive, but it clearly isn't.

Because welfare (and subsidy) programs exist so people aren't desperate for food, just like people who are covered under medicaid are not desperate to pay for health services.

There is really no mystery here.

> We like to talk about healthcare like it's a free market but it's not.

Emergency medical care isn't.

But most other things are.

It should be possible to shop around for imaging and testing services. The regular "family doctor" is something families can (or at least should) be able to choose at will.

Heck people shop dentists all the time. They shop physical therapists, and even mental health providers.

If all the local X-Ray providers near me publish their prices online the fact is prices will drop, and that will likely carry over to what price is paid during emergency services as well. It will be hard to charge someone 5k for an X-Ray in the same imaging center that has a price of $120 listed on their website!

In Australia elective procedures on medicare are much more limited or not covered at all. A system can start by just covering the most essential and required care, then later expand to additional things.

My insurance company calls me after I schedule a service like lab/imaging to tell me of cheaper options. My doctors are attached to professional building at big local hospital chain, so I usually just go there because it’s easy, I know my way around, they are on same IT platform so I don’t have to chase down results, or long term they have all my medical history localized. Due to being attached to hospital though, cost of MRI for example is usually 10x versus competition. I still don’t care, because I have insurance and have no incentive to reduce the cost.

So if you want to make people price shop, it has to be coming out of their pockets for it to work. Dentists, PT, etc that you listed have much higher rates of cash/self pay.

>> The federal government can then negotiate prices which will be far lower

I'm not convinced that the government can get a better rate - especially when you look at other sectors where government contracting has become a lucrative business like IT, military or space where the private sector does things much cheaper than what the government does.

>> Japan where prices are super low ... far more private doctors per capita than in US

I think the real reason in Japan might be that costs are low because there is more competition due to more private doctors. The cost of becoming a doctor are lower (lower education costs, lower malpractice insurances costs etc) and that incentivizes more people to become doctors and they are able to charge a lower fee as a result.

Let's look at the data.

https://www.statista.com/statistics/268826/health-expenditur...

https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...

The US is an outlier, because the US system is broken.

IMO the US healthcare market either needs to be properly regulated, or it should be converted to single-payer (a system which many other countries use with great success) - other developed countries are spending significantly less per capita for better outcomes while still allowing private healthcare for those who want it and can afford it.

This is all interesting but not responsive to GP comment. It is in fact quite plausible that lower costs for physicians could lead to more physicians and more price competition among physicians, even in USA.

It is in fact quite plausible that lower costs for physicians could lead to more physicians and more price competition among physicians, even in USA.

It doesn't matter what seems plausible to you, what matters are the hard facts of how much is spent for what outcome, and as you'll see from those graphs, the evidence is overwhelming that the US spends a lot (both per capita and as % of GDP), and gets less in return.

How do you consider these observations to say anything about the topic of this sub-thread? Yes, we spend a lot on health care, and we're spending more all the time. That indicates that we should make some changes, but it doesn't indicate that this particular change wouldn't work. "Hard facts" that are completely irrelevant are not convincing.

How do you consider these observations to say anything about the topic of this sub-thread?

I thought it obvious, but the first hypothesis from the OP:

I'm not convinced that the government can get a better rate

From the data:

Single payer system countries have far lower costs for similar if not better outcomes.

The other hypothesis:

I think the real reason in Japan might be that costs are low because there is more competition due to more private doctors

From the data:

Japan has dramatically lower costs than the US, while having a radically different system far more similar to 'Medicare for all'. The far more private doctors comment was I think addressing irrational concerns that private healthcare would somehow disappear under medicare for all (instead of just being a lot cheaper). Japan is the proof that doesn't have to be the case.

Obligatory Slate Star Codex link:

https://slatestarcodex.com/2017/02/09/considerations-on-cost...

" other developed countries are spending significantly less per capita for better outcomes "

What are better outcomes ? How are those measured ?

US is still the leader in healthtech, health quality, and health service timing.

Canadians are literally pouncing on new doctors like freshmen on beer, because existing doctors no longer take patients. The UK NHS has waiting times that are measured in months.

The only thing we struggle with is cost. So again, what are better outcomes ?

Kaiser Permanente is a counterexample to "it wouldn't work in the US".

Govt wouldn’t run the hospitals and generally I don’t think govt contracting is super lucrative it’s just big dollars to match big costs. Also running hospitals is very different than running R&D from a cost perspective.

In Japan the social security is deep in the red and everyone knows it is unsustainable. Really bad example.

Why is it unsustainable? Japan can run a deficit indefinitely. It's the magic of owning your own currency. There is hardly any inflation in Japan despite this, and they are trying hard.

Japan has a serious issue with it's declining birth rate.

https://www.theguardian.com/world/2018/dec/27/japan-shrinkin...

I was just in Japan, and I saw no shortage of children and young people while I was there. In fact, I saw far more children than I ever do in cities here in the US.

The difference over there is that kids are born into families that are at least middle-class, while here in the US a huge number of children are born in poverty and raised by single parents. I don't think having a higher birthrate is going to turn out well in the long run when that's the case, compared to a country where children have a much better upbringing.

In Japan, they have to worry about the younger generations supporting the elderly.

In the US, we have to worry about the productive generations (the ones of working age) supporting both the elderly AND all the children and families in poverty and not having that bite us in the ass when those kids become adults (e.g., committing crimes, something that Japan doesn't have much trouble with).

" I was just in Japan, and I saw no shortage of children and young people while I was there. In fact, I saw far more children than I ever do in cities here in the US."

I would prefer to trust actual stats compared to your powers of observation. In this case 1.4 births per female in Japan vs 1.8 in the US. +0.7% annual population for the US vs -0.2% for Japan.

The point is that the Japanese system isn't inherently flawed its dealing with the consequences of there being fewer working age people supporting a greater number of older individuals. This has nothing to do with your opinion on the relative social mores of the 2 countries.

You "were just in Japan and saw X or Y" is a pretty poor argument vs actually knowing a thing or two about Japan by living here for a long time. Being a tourist somewhere does not make you knowledgeable in any way to comment about whole country trends.

Downvotes indicate that Modern Monetary Theory is unpopular on HN. Interesting - i would have thought that this is an audience that would have been receptive to it.

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