Hacker News Reader

Comment by specialist | Hacker News Reader

I currently believe rising administrative overhead accounts for most of the cost increase. Single payer is a straightforward proven solution.

Switching from fee-for-service to prevention (capitation) would give us another 25% savings.

But I'm newly interested in notions related to cost disease. Am keen to hear anything anyone has to say about mitigation.

View on HN

The biggest administrative costs in health care are the insurance companies' costs. [0] To the tune of more than $200 billion dollars/year.

[0] https://time.com/5759972/health-care-administrative-costs/

You have to be able to see that the numbers do not add up, right? 200b is how much out of 3+ trillions? Also, just because Canadian adminstrative costs are hidden, does not mean they are proportionally lower than in the US

The Canadian comparison had nothing to do with my comment, or the GP post to which I replied. I cited a cost, and provided the source for it. You're assuming I was in some way affirming the other conclusions of that article: I was not, and did not consider them one way or another. The GP comment was about rising administrative costs. I gave the source & amount of those costs. That was all. I otherwise agree with you: administrative costs are not the prime culprit in understanding why US costs are so high.

What do you mean, the numbers don't add up? From the article: "Insurers’ overhead, the largest category, totaled $275.4 billion in the U.S. in 2017, or 7.9% of all national health expenditures, compared with $5.36 billion in Canada, or 2.8% of national health expenditures."

What I meant is that if insurance costs disappear completely, US healthcare will remain 5 times more expensive than Canadian. It is percentage based markup on already super overpriced system. Therefore, real reasons for why it is so expensive are elsewhere

Thanks. I've reluctantly come to agree with your conclusion. There is no silver bullet.

Repeating myself:

Another low hanging fruit is transition from free-for-service to rewarding wellness (capitation). Some are already doing this.

I'd like to understand if, how, why cost disease is a factor. https://en.wikipedia.org/wiki/Baumol's_cost_disease I have zero understanding, intuition about this. Feels like black magic. But some of the experts I've read say it's important.

There's no shortage of management efficiency and quality of care innovations to explore. In the spirit of Atul Gawanda's book Better, like specialized clinics for cystic fibrosis, diabetes, and whatnot. And whatever we're calling people traveling for procedures. Like USA people going to Thailand and Mexico clinics.

USA's R&D and regulatory overhead (FDA) carries the world. That first adopter expense might be easier to accept if the accounting was transparent.

Any way.

I designed, implemented, supported 5 regional healthcare exchanges. Even in our little corner of the problem space, there was so much room for improvement. Alas, most of it was prevented, because our participants were competitors, so the incentives were all wrong. A single payer system (or rough equivalent) completely moot most of those roadblocks.

One snare is that that a lot of overhead takes the form of jobs in the insurance industry. Any reasonable plan to reduce that overhead means eliminating all of those jobs.

1. FWIW this is a recognized problem under M4A plans those people would be taken care of.

2. Nobody has a right to earn a living by causing suffering to others.

1. That’s a good idea. I’m personally concerned about the political fallout of “m4a causes job losses”.

2. Is a good slogan, but understand that most of those people don’t think they’re doing a bad thing. Spending too much time demonizing the line level workers at insurance companies is probably counterproductive.

2. Yeah I have dealt with these people a lot as I and my wife have a chronic condition. I sympathize with them, most realize they have a horrible job and just need to make money to eat. Some are just bad people because systems like that everywhere tend to be selective over time for people who don’t care. (The ones that do try to leave.)

But the principal still stands, no matter how much I may sympathize with someone they don’t get any right to make income from causing other people suffering.

If they’re being “taken care of”, how is the plan to eliminate their jobs supposed to save money?

Well probably not by just giving them their salary anyway. I guess there are many other options so I imagine it would be one of those!

I think it’s important to have a solid answer to this question. When people believe that a plan is weak on the details, this is what they are talking about. It gives the impression that the promises of the plan stated upfront (we will save money by moving away from wasteful health care system) are some sleight of hand, moving costs from a well-defined bucket to a mystery bucket we don’t measure.

That sounds like a good thing.

It’s a political liability for the transition period.

Public healthcare in general, not necessarily single payer. Most of Europe is not on single payer, but they are doing fine on costs.

USA has a problem with 3 scams - student debt, dumb lawsuits, and health insurance.

All 3 are connected and make healthcare absurdly expansive.

Am keen to hear your thoughts.

One such common thread is the financialization of consumer debt.

I recently learned (from Michael Lewis' Against The Rules podcast) that removing ban on usury debt (high interest rates) opened the flood gates. Sorry, I forget which episode.

https://atrpodcast.com

Well - first you have absurdly expansive universities required to be a doctor.

They can be absurdly expansive because there is an expectation that students will indebt themselves with this one kind of debt you can't default on. So doctors have to earn more to be able to pay it back.

Then you have lawsuits where cost of lawsuit is paid by both sides, no matter who is at fault. So if it takes 2 years and costs 100 000 USD to determine you weren't at fault - you are still going to default (except yo ucan't default on your student's debt). So doctors are expected to be insured against lawsuits. Which is expansive. So they have to earn more.

Then there is a system where one drug company has 100 insurance provider customers who have to buy that drug. Who has more power in that relationship :) ? So you pay absurdly high prices.

Thanks.

re lawsuits, I advocate a specialized healthcare court for adjudicating those cases.

Our current system of legal precedent does not recognize progress of science. So we end up with nonsense like unnecessary c-sections for decades because a jury of laypersons determined vaginal births increases cerebral palsy.

https://web.archive.org/web/20090424115607/http://www.nytime...

We already have separate specialized courts. Bankruptcy, youth, etc. My local judges have innovated by creating separate courts for vets, addicts, and so forth. Much more fair, efficient, and effective.

re education. Yup, totally on board. We (society) need more healthcare workers, of all flavors.

re big pharma. I don't know enough to comment.

I never understood how precedent system works, doesn't even have to be about progress of technology. Morality has progress too.

If someone ruled once that Indians aren't people and can be expelled from their property is that still a law? It can't be, right?

Or how about when you legalize something?

It’s about separation of concerns. The courts use precedent to ensure fairness through uniform interpretation of the law. It’s the legislature’s job to update the law to reflect what’s best for a changing society: when the text of a law changes, the courts obviously need to take those changes into account.

Precedent isn’t really about outcomes, it’s about lines of reasoning. If the law says that something has to be purple, the courts may need to decide what standard to use for purpleness. If another case then comes along that requires something to be green, the courts will try to make their greenness test work the same as the earlier purpleness test as much as possible. That way, everyone can get an understanding about how the courts reason about color. If the legislature disagrees with the court, they can amend the law to specify more precisely which color they wanted.

There’s a little bit of extra subtlety in that the US court system is hierarchical, and precedent is only controlling if it came from a court in your part of the tree. Different circuits may apply different reasoning for the same issue, and that’s probably the most common kind of case for the Supreme Court to take: two competing standards are in use, and they need to decide which one the whole country should use.

Canada has single payer and rising administrative overhead is a major problem here too. Looking at spending on medical staff vs spending on administrative staff, the former has barely gone up at all while the later has gone up over 500%. Plus we deal with the serious problems of lack of care. I know several people who have waited over 2 years for important surgeries like hip replacements. My mother died because they didn't want to keep her alive, and we get no say in the matter. Single payer doesn't magically make health care work well.

Damn. I am very sorry for your loss.

Thanks for tip re Canada's admin overhead. Will research.

The NHS in the UK is suffering from huge administrative problems as well, due to ageing digital and organisational infrastructure which is becoming increasingly difficult to replace or modernise.

The government tried to centralise and digitise the whole thing but because it was mismanaged, most of the project was abandoned and cost billions to the taxpayer https://en.wikipedia.org/wiki/NHS_Connecting_for_Health

Now we are in a bit of a catch 22 where the costs keep increasing, and the government is always under pressure to spend more but there doesn't seem to be a solution to slowing down the increasing costs.

Reply on news.ycombinator.com