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Comment by nradov | Hacker News Reader

Simply replacing private payers with a single payer system ("Medicare for all" or whatever) wouldn't do much to cut US healthcare spending. Payer profit margins are relatively low and in total only constitute a small fraction of total healthcare spending. Any real savings would have to come from severe price controls on providers, drugs, and medical devices. Plus some forms of rationing. I'm not necessarily opposed to that, but it would be difficult to build a political consensus for it.

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Half of our excess spending is just administrative costs dealing with insurance...

Administrative expenses on the payer side are 7.5% of total US healthcare spending. Even under a single payer system, that number would decrease only slightly.

https://www.healthsystemtracker.org/chart-collection/u-s-spe...

Bullshit single payer would vastly decrease that number. Only having one payor who has from your perspective fixed rates is going to vastly simplify that process compared to the cluster of today.

Health insurance profit would also disappear as much would their administration costs.

You would still need to determine price structures and deal with fraud but you wouldn't need to network anymore.

False.

Look up the McKinsey study. The biggest driver is that Americans get way more healthcare.

Summing up that topic that way is disingenuous at best.

The rate of self selection of healthcare is not that different in the US. While our old are more likely to seek care our young are way way less likely to.

A ton of that is unnecessary work to avoid getting sued, unnecessary work because of how our billing works (who would have thought that billing based on services rendered would result in escalating costs?), not to mention the complexity of the system helps make finding fraud more difficult.

I would love to debate the conclusions with the McKinsey team. I think their analysis was highly flawed. Do Americans consume more healthcare? Yes. Is that the primary reason for our escalating cost share? No. Market concentration at multiple layers (Payer, Provider, Tech/Data layers, etc.) is a huge issue in U.S. healthcare. In most markets we basically have 1-3 companies that have market control of the providers and inpatient facilities, and 1-2 companies that have majority market share on the carrier side. Add in the mess that is distribution (broker-controlled, and concentrated as a well), and you have a witches' brew of mis-aligned incentives, excessive costs, inefficient bureaucracies, and plain-old anti trust behaviors.

You would debate them? Did you even bother to read the paper? It's easily googlable.

> Payer profit margins are relatively low and in total only constitute a small fraction of total healthcare spending.

What? The government was forced to make insurers cap their profits at 20%.

Except now that means if they want to make more money, they just raise premiums and negotiated provider payments. Even easier when you're as vertically integrated as UHC.

You appear to have confused payer profit margins with the 80 – 85% minimum medical loss ratio imposed by the Affordable Care Act (Obamacare). Medical insurance is a low margin business and industry profits have never been anywhere near 20%.

https://www.cms.gov/marketplace/private-health-insurance/med...

For the past quarter, the UnitedHealthcare business unit of UnitedHealth Group had a profit margin of 6.6%.

https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/dat...

The business is still highly competitive, and payers have limited ability to raise premiums due to push back from employers.

You're confusing the insurance industry with the health industry. When you have the same companies owning hospital chains and insurance, they can easily pretend to be a low profit industry.

The industry as a whole is insanely profitable. Revenue is $1.4 trillion. It posts profits of around $650bn. Which means on average it extracts around $2000 of profit from every single person in the US, with an average individual healthcare spend of more than $4000.

The profit is in the ballpark of the entire US defence budget, at around $750bn.

Healthcare is a huge boat anchor drag on the entire economy.

>The industry as a whole is insanely profitable. Revenue is $1.4 trillion. It posts profits of around $650bn. Which means on average it extracts around $2000 of profit from every single person in the US, with an average individual healthcare spend of more than $4000.

Source for these numbers? 0.65 billion in profits on 1.4 billion in revenue is an insane margin

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