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Comment by legitster | Hacker News Reader

"You're never as careful when spending other people's money."

I briefly worked in healthcare at a tech startup. The thing you quickly learn is that the market for healthcare is fundamentally broken. You could invent something that saves a patient $10,000 and they will never know. The hospital and doctors won't care about saving money. And the insurance company has no leverage to make them. And it will never make it onto the patient bill in a way that they understand.

And as much as doctors and hospitals love to paint insurance as the bad guy, the only reason things like prior authorization is a pain in the ass is because doctors don't actually put in any effort into prescribing generics or really learn how much anything costs. This is highly unusual in most professions: Imagine if your roofer grabbed whatever shingles they liked best and billed you for it after they were up. Now imagine every roofer worked the same way.

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I'm from Germany and here it's exactly the other way around.

Public health insurences (there are over 100, but they are all organized in an umbrella organization) give out licences to doctors to be allowed to practice on publicly insured patients. The doctors get some amount of money they can spent on patient-specific prescriptions, but in general the doctors only prescribe the active ingredient. When the patient goes to the pharmacy to get their prescription, the pharmacy looks up the insurence and hands the patient the medicine that the insurence dictates. A doctor can prescribe a specific medicine but has to pay for it themselves (mostly from the money the insurences previously provided, see above).

Insurences check about 10% of all hospital bills and just don't pay what they deem unnecessary. Hospitals are therefore careful not to do things the insurences didn't approve of. There is an open catalog of therapies that the public insurences will definitely pay and how much it may cost, so it's not a secret.

They will also push for modern treatments if they reduce recovery time and have less risks.

There is a lot more to the system but that's the gist.

Ironically despite the lower cost, the German medical system also provides a wider range of services than are provided in the US.

For example my mother in law had an unusual cancer and after her treatments she had a rest spa paid for; once the treatments could no longer help she had in home care. In the US, good luck.

I came here to extol the virtues of the German system. There's a lot more to it:

- It's priced according to income, not health condition

- You will never, ever be refused necessary healthcare, and you'll know it's covered before work begins

- You are not punished for using your insurance, and the premiums won't change

- There is no deductible, except a 5-10€/month co-pay for prescriptions

- Your employer/employment has no impact on your coverage, or the insurer you choose

This is for the public system. The private system is a bit more complicated, but generally, the same rules apply. The only difference is the pricing structure, and the possibility of having a deductible (usually ~1000€/year).

American expats tend to have trauma that affects their insurance choices. My job is to reassure them that our system is completely unlike the American system.

If you want a plain English overview of the system, you can have a look here: https://allaboutberlin.com/guides/german-health-insurance

One important caveat to the German system is that if you make over a certain amount and are healthy, the private system will actually be cheaper since it's not tied to income.

I'd say the average programmer makes $120k/yr USD after about 5 years in, which is roughly €100k EUR. What would a German citizen making 80k-100k EUR pay in healthcare monthly? I think my employer subsidizes about $200/mo into a medical program for just myself. Curious how it stacks up to Europe (which seems to do health care better than the US by leaps and bounds?)

The article linked in the comment chain you responded to gives numbers. For public insurance (which covers all essential care with no deductibles)

> The ninimum is 200€, [...] If you make more than 58050€ per year, you pay around 400€ per month. This is the maximum contribution (Höchstbeitrag). If your salary is higher than 58050€, you will not pay more.

For private insurance (possible if you earn above 64k or are a freelancer) its not linked to your income so rates vary.

> Private is cheap when you are young If you are young and healthy, you could pay as little as 175€ per month (350€ for freelancers) for private insurance. If you make a lot of money, this is much cheaper than public insurance.

But there are deductibles and fees can go up if you have frequent health issues. Freelancers cannot be covered by the public system so it only works when you're an employee, otherwise you're on private insurance.

An employee would pay a little under 350 euros and their employer an equal share. It is calculated as 7.3% of your salary until your salary passes about 56k euros. Then it’s calculated as 7.3% of 56k regardless of much you earn. Not working spouses are automatically co-insured without any extra cost

It's not really 7.3%, since you need to account for the Zusatzbeitrag, and the Pflegeversicherung. In total, it's half of (14.6 + ~1.2 + 3.3)%, so around 9.5% assuming you don't hit the price limit.

The article linked above gives better, more recent figures on those limits.

Yes, the Pflegeversicherung is a separate thing, but it's charged by the health insurer, it's mandatory, and private insurers include it into the price. It's much simpler to bundle those things together.

I have no idea what those words mean, but long German words are cool.

The caveat of this caveat is that if you're employed and you choose to go private and you stay private for 5 years, you won't be able to switch back to public.

Exceptions being if you're under 55 and earn less than the limit amount (something like 65k EUR roughly) or if you earn under 450 euro per month (the so-called mini job).

If you're older than 55, you're f'ed, good luck with your private insurance in old age, 'case you're not allowed to go public. They've taken this measure because people were using private insurance for long stretches and then switched to public as they were reaching retirement, straining a system they haven't contributed to

Yes. Just to illustrate that, a high-earning self-employed developer would pay the maximum ~895€ amount, while they'd pay roughly half on the private system.

The point about no deductibles isn't entirely true: if you are publicly insured, you have to pay 10€ for every day you spend in the hospital. There is a hard cap at 280€ per year, after that the insurance pays the 10€ per day. Also you don't have to pay it if you are underage, are on state-aid, or for a few other, rare reasons.

I should correct that to "deductibles are a non-issue"

This is awesome. Can you think of any major downsides to an approach like the German system takes?

The private system is a bit of a problem. People with a high income (and the self-employed) end up switching to it save money, depriving the public system from their high contributions. It also means wealthy people get better access to healthcare, particularly mental health.

It also means that in a bid to save money, self-employed people pick an option that's cheaper now (private), but will cost them a lot more over time, with no option to switch back.

Normally, if you switch to private, you must stay on private. This prevents people from getting cheap private insurance when they're young, and cheap public insurance when they're old. In practice, you can just get a low income job for a year at age 50, and get forced back onto the cheaper public system. It's a solid financial decision.

This is similar to the Situation with affordable care act in the US. I think max vs min age premiums are capped. Which means old people get a deal, and young people overpay. If people paid their true cost to the system, insurance would cost $50 if you are 20, and $2,000 if you are 70.

The same thing ultimately happens here where the young and healthy leave the public pool, leaving the older and sick. As rates go up, the cycle continues.

I don’t see how anything except a $0 for everyone really works. Otherwise you just have people gaming the system (like the 50 year old in your example working a year of low paying job to qualify)

Yes. The system is broken from the ground up. From doctors working with other doctors to make sure to limit new doctors coming into the workforce, to our multi-node insurance systems.

Anyone selling you an easy solution is lying. Anyone selling you a "reform" solution is also lying. We need a holistic approach to this that means the government needs to hire a bunch of experts that are given a lot of power to change the system to make it work.

Everyone complains about the cost of healthcare and nobody asks why the AMA operates like a cartel. The number of doctors allowed to graduate hasn't changed in 40 years.

Which is why Nurse Practitioners are the best thing to happen for patients in decades. Better access to healthcare means better treatment.

It's a tough road for NPs in California at least https://www.usnews.com/news/health-news/articles/2019-07-03/...

A lot of people talk about that, actually. I've heard it several times and it comes up in most of these discussions. However, doctor's pay is not enough on its own to explain even a small fraction of the cost problem. In reality it's an issue permeating every single component of the system, each one making a small contribution to the overall pile. I've heard of this situation being called "cost disease."

Perhaps in small, private forums, but in public physicians are a protected class. Not many op-eds criticizing the AMA vs the big, evil pharma companies. That said, it's not a panacea, but not great when a 15-min visit to get a $.10 pill costs $200.

Oh, of course, it just hadn't occurred to me to consider op-eds a meaningful participant or representative of the public discourse.

They set the Overton window of allowed policies.

Not great, but also: people above this asked why the system doesn't get reformed, and the answer is that doctors are popular with the voting population, and tackling their salaries will only have a modest impact in reducing costs.

This is not to say that doctor's pay shouldn't be addressed, but the system doesn't get reformed because every discussion on fixing it gets derailed into a discussion of doctor's pay, which is literally the highest-effort lowest-payoff part of the problem. And the situation stays bad because of this dynamic.

A $.10 pill that the person has been taking for years and is maybe even safer than many things sitting on the shelves of the hardware or grocery store.

> doctor's pay is not enough on its own to explain even a small fraction of the cost problem

Not on it's own, but doctor shortage can still contribute to medical costs.

Do doctors make more mistakes due to high patient loads?

Are preventable items missed because doctors can't spend enough time with patients?

Would people be less likely to abuse the ER and/or wait to address conditions if they could get a primary care appointment more easily?

If doctors had a little more slack in their schedules, might they innovate in other ways?

If we had more doctors, would it be harder for mega-hospital chains to gobble up the supply of doctors in your area, leaving more independent practices to innovate in other ways?

Also:

What if your pharmacist could do most of the practical things that matter to you about your medication, rather than requiring prescriber permission?

What if you could do X by going to a psychologist or optometrist, or some other profession that doesn't currently exist, instead of going to an MD or PA or LPN?

What if you could just buy certain things directly without a middleman?

US healthcare is over regulated in general (in many areas, even as it's arguably underregulated in others).

It's not doctor pay, it's economic repurcussions of monopolies. It's also not just limiting the numbers of physicians, it's locking out alternate providers of care and other models.

Right now US healthcare is very hierarchical, with physicians at the top, nurses close by. Other professions and services are subsidiary to them. You don't get to choose a provider based on skillset per se, you are forced to abide by this hierarchy.

That's the real economic cost, the restrictions in provider and service choice.

> Everyone complains about the cost of healthcare and nobody asks why the AMA operates like a cartel.

That's not entirely a bad thing. It would be bad for Medicine to turn out like Law, with a huge glut of unemployable graduates after a long, expensive training program (IIRC, an intense 7 years post-college, minimum). There's a need to balance demand with the need for all (or nearly all) the graduates to be able to find a job.

Also, you're neglecting Osteopathic schools, which aren't controlled by the AMA but graduate students with the same practice rights.

> The number of doctors allowed to graduate hasn't changed in 40 years.

Do you have any data to back that claim up? The Association of American Medical Colleges says enrollment rates are increasing:

> In response to concerns that a projected doctor shortage could impact patient care, the AAMC in 2006 called on medical schools to increase first-year enrollment by 30%. That target was reached in 2018-19, when first-year matriculation reached 21,622 students. Osteopathic schools increased their enrollment by 164% during this same time period, with 8,124 first-year students enrolled. (https://www.aamc.org/news-insights/us-medical-school-enrollm...)

Enrollment != graduation and licensure.

More people may be interested but nobody can practice until after residency, and you have a large pool of hopefuls basically in a lottery for residency slots.

You can get all the theory, but not be able to get the requisite practicum. Even if you do get a slot, you also get treated like a stevedore from what I have heard.

> Enrollment != graduation and licensure.

> More people may be interested but nobody can practice until after residency, and you have a large pool of hopefuls basically in a lottery for residency slots.

But my understanding is that residency capacity is matched to graduating class sizes, at least in the US. The selectivity is intentionally placed up front (at med school admission) so the path is clear to residency and licensure as long as the student doesn't totally fall apart (which the selectivity is supposed to guard against).

IIRC, it's foreign medical school graduates may have trouble getting a US residency.

That is not my understanding at all, as that would imply we never have med school admissions without a residency slot, and I have seen many mentions over the years about how the great bottleneck is not med school admissions, but residency slots.

https://www.fiercehealthcare.com/practices/more-medical-stud...

https://health.wusf.usf.edu/npr-health/2019-07-03/american-m...

The above sources indicate residency matching is decoupled from graduation from Med school, and if I recall correctly, there is actually a legal cap on the number of residency slots.

https://www.aha.org/news/headline/2019-03-14-bill-add-15000-...

So everything I've seen suggests we actually have a dysfunctional system with no up front brakes. Our Medical education system maximizes fiscal extraction from hopefuls, but the residency slots don't scale elastically or in any way matched with demand. Quite literally, it seems to take an act of Congress to change the calculus of residency slots.

I could still be wrong, and welcome the removal of the veil of mistaken impressions, but that's the gist of my current understanding.

Why do some professions get the benefit of cartel protection? Note that pharmacists don't have such restrictions and have similar training.

For the data, I had done a quick search and found this (which only goes to 2010):

https://www.researchgate.net/figure/Trends-in-the-Number-of-...

However, digging more, even the AAMC is saying you need residency slots:

https://www.medicaleconomics.com/view/enrollment-rates-rise-...

Increasing first-year enrollment is a good first step, but doesn't move the needle on the number of doctors who can actually practice because the number of residencies is still limited.

> However, digging more, even the AAMC is saying you need residency slots:

Which are determined by federal government Medicare funding, btw. From your link:

> Federally supported residency training slots have been capped by Congress for more than 20 years, limiting the spots for medical school graduates to undergo additional training in a residency program before they can practice medicine.

So maybe this is more of a "call your congressman" issue.

Your congressman probably listens to the AMA more so than you when it comes to medical matters, here is one example of what they have to say on the subject I could find with a quick search:

> In March 1997, months before the Balanced Budget Act was enacted, the AMA even suggested reducing the number of US residency positions by approximately 25% from 25,000 to fewer than 19,000. “The United States is on the verge of a serious oversupply of physicians,” said the AMA and other physicians’ groups in a joint statement. Since most states require at least some residency training for medical licensure, reducing the number of residency positions would curtail the supply of doctors in the US.

> Fast forward two decades, and what once seemed like a glut now looks like a shortage. The growth in the number of residency positions—and thus the number of doctors—slowed after the passage of the Balanced Budget Act. From 1997 to 2002, the number of residents in the US increased by just 0.1%. Although the number of positions has increased since then, each year thousands of residency applicants fail to secure a position. Factor in an aging population and a projected increase in demand for health care services, and the US is now forecasted to experience a shortage of 46,900 to 121,900 physicians by 2032. Absent a meaningful response from Congress, it will be doctors—particularly residents—and their patients who pay the price.

- https://qz.com/1676207/the-us-is-on-the-verge-of-a-devastati...

Honestly I don't understand why Congress needs to fund these slots as much as they do. Hospital residents do a big chunk of day-to-day work seeing and treating patients. They routinely work well over 80 hours per week based on the people I've talked to (despite this being illegal). And yet the government pays teaching hospitals $120k per year for each resident, while residents get something like $60k in salary from the hospital. It feels like a broken and exploitative system.

If I were king, I'd look into retraining biomedical grad students/postdocs to go into medicine. We've got a massive (taxpayer-funded!) glut of the latter and many of them have a relevant background and even skills.

Yet, only a few places currently try to convert PhDs to MDs; most places are overwhelmingly geared up for undergrads coming straight out of pre-med programs.

The problem with this is that it's sensible.

Politics does not do sensible, it does what is expedient.

Consider the US preaching about democracy and consent of the governed and then funding radicals to do a coup and start a civil war to oust a democratic president they don't like in a sovereign state. Why?

what is this "allowed to graduate" business? What authority do they have to dictate such a thing and is it in writing anywhere what said quota is?

The number of residency spots is an artificial barrier to being able to properly practice medicine. That number is controlled by doctors.

Is this the organization where the barrier to entry is enforced? https://en.wikipedia.org/wiki/National_Resident_Matching_Pro.... What does it look like precisely to the aspiring physicians who don't make the cut? Where exactly do they get communicated to that you didn't meet, get selected, etc for stage XYZ.

> The number of doctors allowed to graduate hasn't changed in 40 years.

In stark contrast, the number of hospital administrators, along with their salaries has ballooned over the same time period - even at non-profit systems.

Does anyone know of any general literature on this administratively top-heavy structure? It shows up in higher education as well, and I'm sure in other places too. I'm curious about patterns across domains and links to economic issues. Seems too coincidental that this type of structure is emerging in two of the most economically controversial areas of society.

How much of medical care is distributed through hospitals vs private practices?

Seems like a healthy person would go to hospital only for emergencies or major projects like birth. On the other hand, I know there are entire hospital systems in southern states that cater to elderly and are basically Medicare billing factories.

The US HC system basically runs as a "skim" operation. Since skim is fundamentally percentage based, the more money that flows through the system, the greater the absolute amount that is skimmed. Thus, no one has incentive, in the long run, to reduce costs. Short term, insurance companies might benefit from cutting costs, but they know that ultimately, when costs go up, they can justify proportional premium increases, which increase their skim in absolute value.

Not only that, no one has a financial incentive to improve outcomes. Surgeons are judged on outcomes, but no one judges them on whether they did the right surgery or just very skillfully gave everyone who came through the doors stents and spinal implants.

> "You're never as careful when spending other people's money."

That's a nice description of: https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...

> This is highly unusual in most professions: Imagine if your roofer grabbed whatever shingles they liked best and billed you for it after they were up. Now imagine every roofer worked the same way.

I mean, this basically is my experience with contractors, auto mechanics and most other professions where there's a lot of information asymmetry between consumers and providers. In a capitalist exchange, buyer and seller are opponents and both will use the others' lack of knowledge to their advantage (or be outcompeted by others that do).

It's a fundamental dilemma of our world. The more expertise a task requires, the more important it is to hire someone to do it instead of doing it yourself. But the more necessary that person is, the less qualified you are to evaluate their performance.

>I mean, this basically is my experience with contractors, auto mechanics and most other professions where there's a lot of information asymmetry between consumers and providers.

The unique feature of the medical care system that's different from most other professions is that there's multi-way asymmetry.

An auto mechanic generally does have some rough idea of how much a given repair costs (inclusive of labor and materials) or at least can easily inform him/herself. It's a basic two-party information asymmetry where the professional making the decision has more information than most consumers.

In medicine, physicians often have no idea themselves what the total cost of treatment will be, and there are various structural and economic factors that discourage or make it very difficult for physicians to find this information. This is a very different type of information asymmetry, where both the providers and the consumers lack information.

> doctors don't actually put in any effort into prescribing generics or really learn how much anything costs

I'm hesitant to blame doctors, since I myself find it impossible to learn how much anything costs until after being billed for it. Is it any easier for the doctors?

(Note: clearly the doctor in this article is scamming his patients, but I'm talking about the situation in general)

As much as Kaiser Permanente has been giving me awful, awful care, they tell you how much something will cost you before giving it to you, and you have to explicitly agree to pay that amount.

(In my case, I also pay before getting whatever it is, but it's possible to have the charge added to your bill instead.)

I have never, ever had the experience of getting an answer to how much a health care procedure will cost, and believe me I've asked. Also never had Kaiser - mostly BCBS.

How do you do that? I tried to get Kaiser to tell me how much my wife's delivery would be and what they told us was much less than the actual bill, even though there weren't any complications

I have not made any effort to get them to do that. Most of my experience with them has been really routine stuff -- "visit copay", "get a blood sample taken", or the like -- but this also happened for a stomach biopsy involving cramming a huge device down my throat, and for which they wanted to have me sedated, which seems like a pretty close analogy to a childbirth with no complications. :/

> because doctors don't actually put in any effort into prescribing generics or really learn how much anything costs.

Medicine is a pretty difficult art as is. I'm not entirely convinced that I want my MD to be price conscious over being outcome conscious. If it comes down to choosing one over the other, I'd rather my MD focus on their practice and not their billing.

I'd prefer not being destitute to many medical alternatives. Have you been homeless? It's actually really, really bad for your health.

I'd think being unhoused with a medical condition may be worse. Though in the suffer-olympics, no one wins.

Not sure if your comment is specific to the US, but my gf is a doctor working in public healthcare here. She has worked with private healthcare and doesn't enjoy it as she says half of the time is battling with insurance companies trying to get them to pay for the best drugs for the patient, while insurance companies always want to pay for the cheapest drug for the patients.

In a not life threatening situation, wouldn’t it make sense to try out the cheaper drug first? When you are paying the bills, that is what you do. Roof springs a leak? Try a $20 patch first. Don’t immediately spend $8,000 tearing off and installing a new roof. But when you are spending other people’s money, it’s real easy to try and skip steps.

If insurance didn’t push back, costs would be even more bonkers!!

She specialised in a long term degenerative illness, so giving an inferior drug may lead to a big loss of life quality down the road, an increase long term costs of treatment and care.

Why is there no incentive for the insurance company to be frugal? That's how it works elsewhere, and they have a lot of bargaining power.

There is some incentive, but when you tell someone you can only make a profit of (for example) 10% of what you pay out; it warps their incentives.

They don't want to bankrupt themselves, but they can raise rates and keep more money when they pay more.

This assumes they don't have any competition looking to take their market share (which reduces their intake).

It can be the case that the market isn't very competitive, but it isn't the case that the companies can just arbitrarily raise rates.

Once a year the company can shop around, but you as an insured have no say. Your HR picks, and they may or may not be competent. They may optimize prices for family, or for single people, or any number of weird things.

HMOs often have a negative public image due to their restrictive appearance. HMOs have been the target of lawsuits claiming that the restrictions of the HMO prevented necessary care.

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

Short term, yes. But when costs go up, they know that they can then later use it justify a proportional increase in premiums.

Incentives are there, they are just not going in the right direction. First, the buyer does not care that much since it is all tax-deductible.

And there are other dynamics in play. Here is a nasty example:

Employers care that premiums only increase by X% per year. Fine. As such, insurance will try to protect its contract with employer by going to the hospital provider, and demanding a low premium increase.

Hospital says fine but "OK - but you agree to our increase of list price by 50%.... don't worry, we give you a discount on that amount. Insurance won't pay that increase"

Insurer says "Great! In fact, let's push it to 100%? OK?"

How did we come to this? Insurer and Hospital agreeing to increase price by 100% and discount that 100% back down?

Its because of the incentives.

Insurance will use this to go back to employer and say. "We got you that x% cap on increase in premiums. Employer, by the way, you still owe us money from the 100% discount we got you from the hospital bills " Employer says OK and pays a ~3% premium on the 100% 'discount' ("claims repricing" in industry parlance).

Meanwhile, Hospital goes back to the government. "We had losses from discounts given to govt patients totaling X in discounts". Now hospitals recoup some of that money. (in industry parlance Disproportionate Share Hospital (DSH))

Meanwhile, people with no insurance have to pay these inflated list prices...with no insurance discount whatsoever. HR staff gets promoted or leaves the job, because they did a great job securing that X% cap. The new person does not know what "claims repricing" is. It remains in the contract.

Premiums go higher next year.

They don't actually have a lot of leverage. A hospital has a near monopoly on it's region/patients, but insurers have to compete with a dozen others to be accepted by the hospital. If the hospital wants to charge their patients, insurance just has a minimal amount of bitching they can do over prices.

Large insurers can stand up to smaller practices by threatening to exclude them out of network in favor of cheaper providers.

What seems to be happening lately is a consolidation wave on every level of medical business in order to counter-act that. Most of the smaller private practices in my area have been bought up by large healthcare organizations named after various medieval saints.

> And as much as doctors and hospitals love to paint insurance as the bad guy, the only reason things like prior authorization is a pain in the ass is because doctors don't actually put in any effort into prescribing generics or really learn how much anything costs.

The only reason? Don’t put in any effort? How is this comment not flagged dead?

This is patently false and essentially slanderous. (I guess libelous since we’re on a written medium)

If you and the rest of the public had any idea how much your insurance company literally does not give a shit about you, when you are for example battling cancer, there would be pitchforks in the street.

I have also worked in and around healthcare in various capacities (both tech and non-tech) and this is totally wrong. There are /many/ reasons the US healthcare system is broken, and I agree the issues are more systemic at this point, than any one bad actor, but if there /is/ a bad actor, it is definitely the health insurance companies.

There are a lot of good people in the health insurance industry that want to improve health outcomes and make a profit and are swimming upstream as well against those systemic forces (just maybe the market isn't the best way to distribute healthcare...) but as a whole it's not the health insurance companies reining in the costs of frivious doctors and hypochondriac patients, it's the incredible layer of bureaucracy and arbitrary decisions there that soak up a ton of monetary resources, constrain doctors into not even being able to do the preventative care work they want, and lead to all sorts of perverse incentives like showing up in ER 5x a year, instead of getting to show up at your GP and nutritionist every week, etc

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