Insurance paid UCSF $16,000 after discount.
So I’d say the hospitals definitely are a part of the problem.
You can imagine what he did with a fund raising letter he got from UCSF asking for a donation so they could continue to help the community…
Even the private clinic is making bank like there’s no tomorrow.
Their standard lower back MRI was $400.
Price competition can be fierce in MRIs since the startup costs aren’t high and you can pull patients from everywhere.
There you go. The insurance company is actually incentivized to not negotiate a lower price.
What if they refuse a ludicrous price? Their customers will complain -- what, what? go without MRIs?
Worse -- the insurance company gets to keep 20% of the costs as profit. For a $16,000 bill, that's $3,200. For a $3,000 bill, that's just $600.
So why, again, would they fight for a lower bill? No reason. Competition from other companies? Unfortunately, they're all playing the same game, and lower premiums are simply not happening.
The insurer did negotiate the price down - from $20,000, so a 20% discount.
But yes, UCSF just leverages their name and the desire for insurers to have them in network. Their attitude is basically “no, I won’t go lower, and you’ll pay anyways”.
No, insurance companies don’t keep 20% as profit. They can keep 20% in reserve, the rest has to be paid out as benefits that calendar year. United Healthcare’s profit margin is like 2-4%.
And of course they fight to lower their insurance premiums, that’s how they attract new customers.
I've just got to point out that they're adding back 20% -- to keep in "reserve," as you say. So what's the advantage of insurance? The "premiums" force the scam pricing on everyone! (And not just the direct victims of this type of fraud.)
1) Insurance companies don’t pay sticker prices. They pay negotiated rates. At the same time, hospitals have to pick up a lot of ER costs that are never covered. They might be making money but reasonable amounts at best (also that’s probably not true either considering how many hospitals are shutting down in the US).
2) The negotiated rates insurance companies pay are still very high. They are probably making a good profit, but their margin is still probably a fraction of the margin of many other industries, and it’s not like they have no competition, so they do have market pressure to reduce prices.
3) Doctors pay a ton in education and liability insurance and delayed earnings due to the extensive education required. They can spend over a decade, and be into their 40s before their net worth turns positive.
So where is all the money going is an excellent question. No one is benefitting from this current system.
1 obvious destination for the money is the education system in the US. Higher Ed in the US is an increasingly growing money pit. Tuitions are exploding. Loans are exploding (and educational loans are unique in the US in that they cannot be canceled in a bankruptcy). Administrative salaries are blowing up. Ever fancier buildings are being built. Yet money for teachers, researchers and remasters/phds is plummeting. It’s a complete scam with the entire system paying ever more money to build fancy buildings, the vast majority of the cost of which is captured by corrupt contractors with connections to university presidents, etc.
Then you have the pharma industry, which unlike any other civilized society, needs to advertise to consumers in the US. This means they have pressure to constantly grow their sales and once popular enough they have parents, and once generic, brand value, to force hospitals and patients to buy overpriced drugs.
But the US can’t outlaw pharma ads like nearly every other civilized country has, because that will then destroy your Media and Tech industries, and where ads, and therefore pharma ads, make up a massive source of income.
And I’m sure the same dynamic probably applies to medical tech as we’ll.
So in honesty, the money is likely going to the places that are showing that they are receiving money. Not in the healthcare system, but rather to tech, media, and construction and real estate.
Meanwhile, in developing countries, it's not that hard to find a decently qualified doctor running his own small clinic with couple of nurses in a busy street. And to the next level, there is always a small 20-bed hospital around with 3-4 doctors and a bunch of nurses. And options keeps increasing in size and cost from small to the big hospitals like you typically see in the US. Almost 95% of primary healthcare are met by these small-mid level operations and people go to the big hospitals only for complicated surgeries and intensive care.
In this example of just 6 stitches, it probably would have been administered by a nurse in a 20-bed hospital for fraction of the cost of a big hospital.
It’s the same in Germany, so I’m not sure that actually is what makes things different.
the US is not a poor country, it is an astonishingly rich country whose elites want poor (and working-class more generally) people insecure so as to maximize the degree to which they can be exploited via economic coercion.
Instead of any kind of dramatic increase in patient results, this system instead protected truly terrible doctors like the murderer Dr. Christopher Duntsch.
The human mind loves clear enemies but Hanlon’s Razor almost always applies. Almost no one ever actually has malicious intent, but our brain evolved to watch for enemies and loves seeing patterns where they aren’t.
Sorry if some of us, in our biased minds, suspect that some of that money is spent in cigars and expensive suits.
(1) - https://data.worldbank.org/indicator/SH.XPD.CHEX.PC.CD?most_...
So what you're saying is there is an horrendous creeping bueaucracy cost here.
Funny, because that's exactly what free market proponents argue is the cause of inefficiency in publicly managed healthcare systems, and the reason to move towards models based on the US system.
Someone is lying.
It’s you, to yourself. What we have is not by any stretch of the imagination a free market solution. It’s insane amounts of paper pushers created by the government. The whole insurance system we have is an impractical mess designed to fail. The free market would never have designed something so customer unfriendly, people would have gone elsewhere had competing solutions been allowed to exist. In a free market, you are free to go somewhere else.
Our health system is designed by the government, by way of outlawing everything else. If you want to talk free market, in the early 1900s it was common for large companies to keep a doctor on staff and offer their services to employees. That was essentially outlawed.
The rise of cash only flat rate doctors in current years is the closest thing we have to free market, and they’re great. Prices posted up front. No back and forth with insurance companies.
I'd be interested in how the free market develops that solution. At the very least, regulation would be involved. And we all know how adept the free market is at getting around regulation.
Anyway. I'm off to go lie to myself some more. Cheers.
> The whole insurance system we have is an impractical mess designed to fail.
You shifted the boogeyman from corporate suits to politicians in the space of a few comments. If nobody has malicious intent then nothing was "designed to fail". It just doesn't work as expected or wanted by anyone involved.
But wait, the financing in the U.S. is quite predatory, so a lot of people pay nothing, and a few people are stuck with outrageous bills. It's like the infamous SF General Hospital that offered loads of free care to the poor and to immigrants and then refused to take any insurance so that normal people were regularly driven to bankruptcy if the ambulence took them there. The U.S. healthcare is one in which a half a million is spent on emergency care for an indigent person and 10 middle class families lose their life savings of 50K treating snakebites and broken arms.
Once you wrap your head around this, you'll understand we have a very similar problem in higher education, and for very similar reasons.
All I know is simpler systems around the world exist and work such that those 10 middle class families would never get stiffed like that, whilst also looking after the needy.
I can't fathom it.
Agreed. But that's the way it is, and it's important to understand why it's this way.
When Europe and Australia adopted national healthcare systems, the industry was ~3-5% of GDP. So at that point it wasn't politically strong enough to resist either nationalization or strict controls.
Then healthcare mushroomed in size, being ~10% of GDP in Europe and 20% of GDP in the U.S.
So now, when you try to do the politics that the europeans did, it doesn't work. The industry is too powerful. Merely blaming the US for not doing what Europe did misses this essential point.
There are millions of nurses, lab techs, administrators, and doctors, and they have money and they vote. So the left keeps looking for some villain -- greedy insurance executives, Wall Street, Evil Billionaires, etc. And basically refuses to understand that these are not the ones standing in the way of reform. It's the 13% of our labor force that earns 20% of national income, and these are not the same easy targets that the left can attack, because they are a large portion of the US middle class, and are core Democratic constituencies.
That's why healthcare reform in the U.S. always focuses on having the government pay some of the costs charged to consumers rather then reducing the costs of providing healthcare. E.g. more subsidies for this bloated industry, which only results in costs rising even more, and then calls for even more subsidies when people can't afford to pay the costs. When what we should do is fire 50% of the staff and cut the pay of those that remain by another 50%. That's the only way to get affordable healthcare.
And you have a similar problem with higher ed.
> US health insurers report billions in first quarter as small providers face stress
> UnitedHealth Group, reported $4.9bn in profits in the first quarter of 2021 while CVS Health reported $2.2bn
- https://www.theguardian.com/business/2021/may/08/us-health-i...
> Major U.S. Health Insurers Report Big Profits, Benefiting From the Pandemic
- https://www.nytimes.com/2020/08/05/health/covid-insurance-pr...
> The health insurance industry continued its tremendous growth trend as it experienced a significant increase in net earnings to $31 billion and an increase in the profit margin to 3.8% in 2020 compared to net earnings of $22 billion and a profit margin of 3% in 2019.
- https://content.naic.org/sites/default/files/inline-files/20...
That said, I don't think this excludes the possibility that the insurance companies and the hospitals are also not telling the full truth.
America somehow spends far more than any other country on healthcare and yet patients still have some of the highest out of pocket costs even when they have expensive private insurance schemes, something is clearly broken to anyone looking and it's not the homeless causing it.
As for why the US spends more than any other country: it's due to an overabundance of caution among the comfortably insured. It's much easier to get a variety of expensive (and often unnecessary) tests and scans (such as MRI scans) in the US. In countries with universal health care these tests and scans are restricted only to those with demonstrable need and they may be subject to long waiting lists.
Countries with universal healthcare also tend to have private health companies which can provide tests and scans at a higher speed, either on an insured or a pay-as-you use basis, typically at much lower costs than the US. Yet there doesn't seem to be the same "overabundance of caution" elsewhere. To the extent that precautionary procedures are responsible for high US spend, I don't think that can be decoupled from a system designed to ensure that primary healthcare providers are sales outlets for those procedures.
If it's an HMO, often it's just free entirely. PPO plans tend to have a small fee -- it's never been enough that I've given it a second thought -- and have wide coverage with few limits.
I mean, it's clear that it's not sustainable to have a healthcare system in which stitches cost this much. Things are not made any better or less outrageous if these costs are transferred to someone else or if they are paid out of pocket.
But if you look at healthcare spending as a % of GDP: the US has the largest public healthcare system in the world, and it has a private healthcare system that invests very heavily in people's health (I think people get confused about this because US life expectancy isn't much higher but that is largely a function of things like obesity that, ultimately, aren't solvable without people eating less...the US does very well with quality of life and difficult to treat stuff like cancer, I am in the UK and a lot of cancers are treated properly, there is just no money to do so).
So, imo, the US is more expensive than similar systems like Germany. But incomes in the US are much higher, people are willing to spend more (particularly on quality of life stuff like joint replacements), and a lot of the additional cost is not in treatment but admin. Maybe moving to a public insurance system would help but look at France: public healthcare system, and doesn't spend that much less than the US (and in the US, public healthcare prices are cheaper than private but private does subsidise the public...and the gap isn't huge)...doctors don't work for free, medicine isn't free, nurses aren't free, you just pay the same but in taxes (btw, I think a public healthcare system would reduce costs by removing admin...would they like it when they couldn't get a knee replacement? No. Would they like it when a parent got cancer or their kid has a rare type of epilepsy and they can't get medicine? No...there are trade-offs, fully public healthcare systems generally do not perform as well as mixed systems like Germany or Netherlands...making insurers non-profit might be a good first step).
Your reply is well-stated. There isn't one single 'bad guy' in the US system; it's more a function of a bunch of little factors that nobody wants to change: the US has the best, highly trained doctors (expensive), best equipment/hospitals (expensive), subsidizes much of the drug development for the rest of the world (for better or worse), and a weird public/private system where the private insurers make up for lower payments from public insurance like Medicaid/Medicare.
In talking with a number of physicians, my biggest concern is that they're starting to feel like most of the 'reforms' and changes the US is making are impacting them the most. None of my physician friends recommend their children go into the profession, and many are leaving poorly-run hospital systems to focus on boutique, private practice (catering to the rich.) We have a huge healthcare provider shortage coming, and I'm terrified the system is straining hard as I get older and will need to start relying on it.
https://www.ncsl.org/research/health/health-insurance-premiu...
We are already in the midst of a provider shortage.
https://www.aha.org/fact-sheets/2020-01-06-fact-sheet-uncomp...
Except if the US is literally falling apart and had ab endless amount of non paying people?
And you can't shop around for cheaper treatment. Partly because you are not in position to do so and partly because no one will tell you full price in advance.
I'm willing to believe addicted's[0] rationale, but maybe most people are getting paid poorly, there's just more of them in the system?
Insurance companies are definitely lying (their execs are paid tens of millions) though it should be noted that the US system greatly limits the ability to spread insurance payments on health populations, so it makes sense that the population using medical services is a larger share of the insured population, and thus has to pay more.
Anyway more generally the administrative overhead of US healthcare is absolutely enormous e.g. as of 2017[0] it was almost 35% of medical expenses, versus 17% in Canada (up from respectively 31 and 16.7 in 2003).
> [Administrative costs per capita in the US versus Canada are] $844 versus $146 on insurers' overhead; $933 versus $196 for hospital administration; $255 versus $123 for nursing home, home care, and hospice administration; and $465 versus $87 for physicians' insurance-related costs.
So the admin overhead in the US (v Canada) is:
- 5.78x on insurance
- 4.76x on hospitals
- 2.07x on nursing homes, home care, and hospices
- 5.34x on physicians
Importantly though you did not list drug companies in there.
Drug costs are completely out of control in the US (some generic and out of patent drugs have seen price increases of 80x in a decade), and AFAIK modern treatment regimens tend to include a lot more different drugs.
At the hospital level, aside from the administrative overhead above, as an other commenter notes there is also the issue that because it's not a single-payer public health system hospitals have to compensate for indigent ER clients by billing more to, well, people who can pay.
Then of course there's the issue that because all the incentives are fucked under the US system it's being used the least efficient way possible e.g. medical costs are sky-high, so people can't have a GP, so they can't take care of their conditions until those go south, at which point they go to the ER which is the most expensive and least efficient medical service center.
And then the ER's job is to stabilise them, but they still don't have any more money to pay for long-term treatment than they did before having to go to the ER (less, really), so they can't follow through, so they degrade again, and back to the ER.
In private practice outside a hospital, they perhaps have more guilt here, but in an ER? They set the prices about as much as the janitors do.
Most medical practices employee (or outsource) medical "coders" whose job it is to take the notes written by the doctor and determine which procedure codes should be applied (which then determine what gets billed for)
The law here has changed since then to prohibit this kind of thing, though.
The doctors likely have very little say in the pricing.
Which hey, I'm glad they are there, but it also isn't "nothing to do with" it.
Hospitals are for profit corporations. Doctors are reviewed on how much revenue they generate per patient - usually by asking for more diagnosis and treatments - which is what patients want too.
Too much admin, too little doctors. Someone should get the admin to doctor ratios at hospitals, it is nuts. A lot of admin is there to handle the insane documentation requirements, software, machinery and dealing with insurance providers.
Insurance providers have their own army of admins, talking everyday to hospital admins.
On top of this, supplies providers know that insurance is going to foot any bill. So they charge more. Insurance tries to negotiate it down but there's only so much they can do - unless they buy stuff directly from China or somewhere else.
To add, each of these institutions has their own management ladder with fatter paychecks than the doctors themselves. These folks are nothing but leeches who just need the corporate ladder to exist.
Unfortunately, the only capitalist solution out of this is to allow massive production of doctors (blocked by AMA), allow doctors to unite and form their own hospitals willy nilly (harder than you think because legal requirements are burdensome) and for insurance providers to compete in open market - as they do for cars. No more open enrollment.
FWIW lots of hospitals are non-profit (though I expect that changes are investors are moving more and more into the space).
That doesn't mean they don't focus on doctor's revenue, it only means there are no owners skimming off the top, but there are still execs being paid (a lot), as well as suppliers, etc... I'm not saying NFP hostpitals are worse (or even as bad as) FP, but they're hardly good.