Investor-Owned Health Care: The Hidden Blight on America’s “System” | Hacker News Reader

Investor-Owned Health Care: The Hidden Blight on America’s “System”

journals.sagepub.com

44 pointsrustoo50 comments

There is also the 3rd party payer problem[0]. The money flowing through the system starts with the wellspring of premium payments made by businesses. 3rd party payer is also implicated in rising college tuition, where the wellspring is student loans.

[0] https://mises.org/library/how-third-party-payers-drive-medic...

I feel sorry for my American friends living with their health care system :(

I’m based in Australia, I can change jobs, be unemployed, and walk into a public hospital for important care without concern for a bill.

I really hope you switch the system, but I don’t see it happening any time soon.

The australian system is an interesting one. It has a public level of service and then once you reach a certain income level they push you into private health care and off the publics balance sheet. Ive always been curious if there exists to levels of care.

Either way getting health care without paying the bill has its perks. I do think absolutely free health care allows for abuse of the system. Small copay might make sense (for people who can afford it). Not to dissimilar to tech companies charging a nominal fee for food at lunch to reduce waste.

" I do think absolutely free health care allows for abuse of the system"

Americans are always concerned about people abusing the system but if you look at other countries this is simply not the case except maybe a few isolated cases. What are you going to do if health care is cheap or free? Get surgery for the fun of it? Or have a tooth pulled every few weeks?

Right now the american system is abused big time by providers and insurers. that's what you should be concerned about. I don't see how patients would abuse a system.

I don't disagree with you about the American system and that the insurers and private investors have messed up the incentives.

What you misunderstand on my comment is that there is value in adding some level of negligible cost to each transaction. A quick internal spot check if they really need to see a specialist/doctor etc.

Don't equate my comment as proof that the American system works. And just because you can't see it doesn't mean it doesn't happen.

But why bring up a tangential point that's not an issue in the real world? The whole discussion about health care in the US is littered with distracting issues.

In the end the real problem is tying health insurance to employment and the lack of transparency which allows a lot of parties to charge outrageous prices and get away with it.

Its not tangential - its a comparison of systems in an ad hoc way. My point is that a lot of people assume that the canadian / australian / british model is the gold standard - I just think we can aim for better than those models. And our key points were about how the incentive systems are misaligned - in the US one and in the "free" care model - in different ways.

The private system is better for some things (especially wait times).

In general the public system is extremely good if somewhat overloaded.

RE abuse of the system - many clinics charge a fee on top of the government subsidy, but you can always find one that doesn't. You still have to make an appointment, show up, wait in a room full of sick people, etc. It may not cost you money, but it's far less desirable than eating free food. In practice it doesn't seem to be an issue.

In the country I reside they don't charge a fee, the wait times are ridiculous. One person I know needed a angioplasty to decrease his high risk of a heart attack - they said to wait a year before he could get one and to not do any strenuous activity until then. Another person needed a hip replaced because they can't walk properly - they need to wait 3 months before their case gets put in front of tribunal who will then decide if they can get their hip replaced in a years time.

In both cases they don't pay for the service - which is great - but also that kind of delay is slightly insane (at least to me).

To your points - theres lots of people who think a free health care system is a cure all. It isn't - it is full of trade offs. Some are good, some aren't as good.

What kind of abuse? Very few people go to a hospital if they don't have to, they're unpleasant places. Even in countries with free medical care, they still have to heavily encourage people to go more often to discover problems while they're still cheap to fix rather than waiting for them to become extremely acute.

I'm curious what people here think of all the healthcare startups that many of you likely get recruiter emails from regularly. Aside from the ethical questions of making money in the American healthcare system, a lot of them would likely have a vested interest in that healthcare status quo to an extent right? If something like Medicare for All happened, it would upend so much of the system (in a good way in my opinion) that a lot of these companies might have to pivot massively. It's enough to make me just not want to work in that sector.

Not saying this applies to all healthcare startups. There's a lot of "luxury" healthcare companies that would likely be fine because their customers are high paying companies that would still want it as a recruiting tool.

it's nice to see a comprehensive explanation as to why and how our healthcare system is so messed up. I hope we can make an equally lucid plan for how to fix it (by moving power in the healthcare system away from investors and toward the people.)

There are very powerful forces that do not want it fixed.

Those powerful forces are the sum of the tens of thousands of entities that have their hand in the "easy money" jar.

Every group from doctors to hospitals to insurers to equipment suppliers to drug makers, etc, etc, will resist any change that has the potential to even marginally stem the flow of easy money.

It's a very important lesson in how much wealth can be sapped from a country when you have "a little waste" in every portion of a major and necessary industry.

Very true. There are probably millions of people making a living off this craziness. It will be very hard to fix this without stepping on the toes of a lot of people.

Fix it investor funded startups! Disrupt the system. Oh wait we are just replacing it with a slightly more efficient system but the same incentives are still there.

The article abstract calls out regulation and a public insurance option, i.e. Medicare for All, as paths forward.

> More recently, private equity firms have accelerated this process, invariably with harmful impacts on access to affordable care, its quality, and profiteering, with little accountability

Predictable.

I am hardcore free market fundamentalist, but profit motive should not come anywhere near healthcare.

The healthcare market has the unique characteristic of having inelastic consumer demand - which is to say that you do not have much time or optionality to "shop around" for lower prices when you appendix is about explode. Instead, you call 911 and hope that the anesthesioligist on the surgical staff takes the same insurance as the ambulance.

So market participants on the supply side (hospitals, pharmaceutical companies, ambulance providers, medical device manufacturers, etc) have the ability to manipulate the supply side economics, where prices can be driven upwards in favor of the supply side participants, with little change from the demand side [1]. Read that to mean - healthcare costs are too high in America.

In aggregate, the US has the highest healthcare costs and nowhere near the best healthcare outcomes - this is why.

Wait, it gets worse. How Americans run the healthcare market is, in a way, a microcosm of American culture - short term profits, greed, self-interest above the long term common good of the community. IMO, the problems of healthcare are demonstration of American cultural values, and it permeates everywhere:

* corporations buying back stock over capital expenditures

* NIMBY-ism

* Fed policy keeping asset prices above fair market value.

* etc

Government intervention in healthcare won't fix healthcare. Instead, it will give you Obamacare. Fix the cultural values, and the healthcare problem (along with other problems) will fix themselves.

[1] There is a metric fuck-ton of data that supports this, OP's linked study is one.

> I am hardcore free market fundamentalist, but profit motive should not come anywhere near healthcare.

> Government intervention in healthcare won't fix healthcare. Instead, it will give you Obamacare. Fix the cultural values, and the healthcare problem (along with other problems) will fix themselves.

so healthcare shouldn't be provided by private industry, but also not by the government... so, what? non-profit orgs only?

>so healthcare shouldn't be provided by private industry, but also not by the government... so, what? non-profit orgs only?

That would be a good start.

One could argue that having a system design to profit from people’s ill health isn’t in accord with most religious and philosophical systems. This suggests health care should be considered more of a regulated monopoly than a profit centre.

To some extent, health insurers, the health care corporations which make the payments, are non-profit, but the other half is still for profit.

A step in the right direction would be to require all business in that area, to be non-profit, to lessen the shock of just taking away the industry altogether and federalizing it.

For those who think it's only the US that is plagued by rent-seeking investors: Germany has a similar problem, with investment funds getting 18% ROI out of care homes by ruthless cost cutting and exploitation (per https://www.boeckler.de/de/magazin-mitbestimmung-2744-monopo...).

> 18% ROI

that's not that high a return for the amount of capital required to be invested.

In what world is 18% ROI is not a high return?

in a world where a tech company's ROI is in the mid 30%'s. How do you incentivize investment into care facilities, if these don't give high ROI? You'd end up with poor facilities.

Or the alternative is socialized care - aka, a taxpayer funded system without a private system. I much prefer that, but it's just not reality in the US of A.

> that's not that high a return for the amount of capital required to be invested.

It's double of what you can expect when putting your money into a S&P 500 ETF. Just how much more do useless rent seekers deserve?!

>not a privilege based on ability to pay.

Hospitals mostly negotiate with other investors in the form of insurance. Maybe insurance is the actual problem, and codifying it in various ways just makes it worse.

I do not know what you mean by codifying, but the government actually sets all the rules and codes via Centers for Medicare and Medicaid Services (CMS) and uses the insurance companies (better referred to as managed care organizations) to implement all the rules.

The reason the USA can't fathom going to single-payer system is because Americans are so unhealthy. Regardless of how you feel about obamacare, I think it's a great step 1, Obama talked at great length about the challenges of going to single payer. It would mean millions of jobs lost, what are those people going to go do? It would mean a budget so large that it can never be paid for.

Defund the craziest, largest military in the world and you wouldn't pay for 10% of the single payer health system. The republican's move to eliminate obamacare is very short sighted but they are doing it for obvious other reasons. It's very expensive to the american people because afterall the private entities have done the math and know the costs. It's expensive.

If your endgoal is single-payer healthcare in the USA. Step 1 is getting Americans healthy again and I think we have hit a roadblock.

edit/ welp stepped in it. Highly downvoted. sorry everyone, guess not allowed to discuss this one.

bit of a catch 22, USians are unhealthy in part because adequate healthcare is out of reach because of its cost

No, Americans are unhealthy because the vast majority of them eat like crap, are lazy, and are fat as hell as a consequence. That's not a healthcare issue.

If more of our doctors cared about people more than money, and kept nutritionists on staff, it might make a dent in things. So I find that it is a healthcare issue. Here, on HN, and in the industries that many of us work in, we have a lot of knowledge and understanding about our own bodies and the care of them. But a large portion of the populace lack that! For some people, nutritional advice would fall on deaf ears, but there are some people as well who, if told by a true expert, "Here is a diet plan. If you follow it closely you won't be so out of breath when you go upstairs. Your ankles and knees won't hurt constantly. You'll be able to keep up with your grandkids better. You'll live longer (on average!)."

If told they would actually do it, and improvements would be made.

That might be one (fairly expensive) strategy to address it. But the rest of the world doesn’t avoid the US problem because they’re all seeing nutritionists all the time.

Much of the world is better educated in general. Much of the other ones don't have the problem/luxury of too much to eat.

I won't argue that the US is at the top but there are many other developed countries following behind. I think education is definitely a part of it.

Something started in the 70s and I’ve never seen a good explanation of what it was. But you can see in the stats that obesity hit an inflection point in the mid-1970s, started going up and has never looked back. Now we’re at 80% overweight and 40% obese and still rising.

Pinning it on willpower or individual choices seems way off base. Something system-wide happened here and it’s crazy that we don’t know what it is.

In the middle ages, only royalty and elites were fat because they were the only ones who had access to the abundance of food that made it possible. It was seen as a good thing to be fat. Hell, in today's society the "Health At Any Size" movement portrays morbid obesity as no big deal at best, and a good thing at worst.

> But you can see in the stats that obesity hit an inflection point in the mid-1970s

This is about where mass production of hyper-processed foods hit critical mass of cheapness and availability.

Americans have easier and cheaper access to nearly infinite amounts of food that middle age kings could only dream of.

My bet is that a significant chunk of this is the push of populations out of cities and into car-focused suburbs. Matches up quite well timeline wise as second-order effect of the post-war suburban boom.

Comments like yours are just not helpful or productive. There are definitely lazy people all over the world but I think what you said is more of a symptom than a cause. When entire communities are generationally stuck in a trap of eating highly processed foods for how easy/cheap they are it can be difficult to escape. But of course it's a lot easier to go the uneducated simpleton route and just say they are lazy.

If you're 300+ lbs, you are lazy, period. Sugar coating it isn't doing anyone any favours.

I am sorry for you.

A staggering amount of money thats spent in the healthcare industry is directly due to Americans unhealthy lifestyles, primarily obesity and its secondary symptoms.

  >  It's very expensive to the american people

doesnt a single payer system also presume single-buyer/negotiator for prescription drugs which would lead to vastly cheaper costs all around?

We already spend over $3.8 trillion per year on healthcare in the US… using a single-payer system would probably not be more expensive than that

A large portion of those millions of jobs are not contributing to human progress. We don't flip the switch overnight, but in my opinion, a sane government should have announced decades ago,

"Hey, we're going to do away with this private health insurance business in 10 years (or whatever!). We are accepting applications to help us with the new plan, and otherwise, you should begin thinking about what you will do after we complete this transition. Here are some resources that we are providing to help you figure that out."

As for unhealthy Americans I don't have much of a solution to offer. Sugar Tax? Maybe. I don't know what else. Just don't be idiots, people! Take care of your bodies! Get off your asses and do something! It's frustrating, because I don't feel like I'm really part of the problem.

I also don't really think that Americans being unhealthy should prevent us from moving on. There is nothing hidden about the blight of Private Health Insurance. It's governed by greed, and it's obvious. It's already socialized, because some 10-20% of my paycheck goes to health insurance for my family, and I almost never use it at all! Meanwhile, my oldest child has a chronic condition and is almost 100% covered by a State funded health insurance program (and I'm very thankful for that)! We're part of the way there already! The system is broken, and I find there are few topics on HN that I have a stronger opinion about.

> The reason the USA can't fathom going to single-payer system is because Americans are so unhealthy.

> If your endgoal is single-payer healthcare in the USA. Step 1 is getting Americans healthy again and I think we have hit a roadblock.

American's are unhealthy, yes, but the real problem with healthcare in the US is the cost of healthcare, first and foremost [1].

Single payer could at least negotiate prices down, but does not go far in enough IMO. I am pretty much a hardcore free market fundamentalist, but healthcare should have no space for profit motive.

Obamacare was, for a lack of a better word, a joke. More or less, it was (publicly and privately) funded expansion of the current system. Case in point, in order to subsidize the higher healthcare cost for older Americans, Obamacare (stupidly) forced healthcare on younger people via the individual mandate, effectively shifting the premium costs to younger people in order to pay the healthcare costs of older, less healthy people. There were other dumb problems, too. Yes, it did save lives in the short term but did fuck-all for fixing the system - the main problem being (again) costs.

[1] https://www.washingtonpost.com/opinions/fareed-zakaria-curbi...

US pays more for healthcare than any other developed nation and gets the worst service. This is just a bunch of talking points I see repeated a lot. With single payer we can actually save money as a nation.

> It would mean millions of jobs lost, what are those people going to go do?

This is legitimately one of the biggest issues with single payer, and absolutely worth talking about. Our grossly inefficient system has created many layers of administrative bureaucracy that would have to be shed and that's not going to be an easy problem to solve.

> Defund the craziest, largest military in the world and you wouldn't pay for 10% of the single payer health system.

The CBO scored 5 different variants of a single payer system and found that 4 of them would reduce overall healthcare expenditures[0], so even if taxes were increased to pay for single payer, those increases would theoretically be less than the current amount we spend on healthcare because of the lower administrative overhead. Lots of policy people have done research on this, it's simply not true that a single payer system is just out of the realm of possibility.

> If your endgoal is single-payer healthcare in the USA. Step 1 is getting Americans healthy again and I think we have hit a roadblock.

I fail to see the correlation here, Americans don't want single payer because there are powerful political voices that frankly tell some serious fibs about it (see your own comment above about the viability of single-payer). The food supply is a serious issue as well, but this is like arguing that everyone in the US just needs to start making six figures and that's how we'll end poverty. That's just not reality.

0: https://www.healthaffairs.org/do/10.1377/hblog20210210.19024...

"edit/ welp stepped in it. Highly downvoted. sorry everyone, guess not allowed to discuss this one."

You are downvoted not because it's not allowed to discuss this but because it doesn't make sense. You can't explain the regular overcharging of hospitals with an unhealthy population. Neither can you explain why an MRI costs ten times as much as in other countries.

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