Health Insurance is a Racket. What value do these companies add, really?

Imagine what would happen if you forced healthcare providers to offer flat pricing? Meaning the "cash price" is always THE price, and either insurance companies pay that cash price or you pay it with literal cash. No biased pricing.

Suddenly in-network/out-of-network cannot exist, insurance companies and cash-paying patients are on the same side; both fighting overcharging TOGETHER. You've massively reduced admin overheads and made the market more efficient.

If we want to continue this "for profit" model we have today, we could make two changes, and it would hugely reform the market. Make it almost competitive and healthy.

1) Ban healthcare discounts across the board. Everyone pays a sane cash price. Meaning no more fake price + fake "discount" games. No more $100 bandaids with 90% discount.

2) Ban employer provided healthcare. Instead, increase the HSA cap, have employers pay pre-tax into that, and then consumers get to pick their insurance from the market. Therefore, they can "punish" insurance companies for misbehavior since they're now the actual customer (rather than their employer).

You've now created actual price competition for healthcare services and actual competition for insurance. That is how this is MEANT to work, but currently doesn't because you cannot pick either your healthcare providers OR insurance options, someone else is doing that for you.

You are not hiring insurance companies to do the second part but they do it any way in order to increase their profits. They should be removed from this role via legislation.

The first part is necessary, because hospitals and drug companies would charge even more if nobody tried to control the prices. But the consumer is the best person to keep prices in check. It is challenging because consumers of the knowledge asymmetry. Regardless, the consumer needs to feel the cost.

One employer I know of has an excellent solution to the problem: Make employees pay 100% of their medical bills up to an out-of-pocket maximum, such as $6000. That's a large amount, but the employer then contributes a large amount to your Health Savings Account (HSA), such as $4000. This amount is for you to keep regardless of whether you have any medical bills or not. (This money can be used for medical expenses only, but can be used any time, including after retirement). So the maximum you will spend out of pocket per year is $2000. How does this encourage the consumer to scrutinize and control medical expenditure? Because the first $6000 of medical spending in a year is "your money". This is money you'd be able to keep in your HSA if you didn't have any medical expenses. This gives the consumer a strong incentive to reduce costs, question charges, avoid unnecessary services, and so on. When physicians and hospitals know that patients are scrutinizing care plans it will force a cultural change. That cultural change will subsume older practices.

A personal example. My dad was visiting from abroad and was diagnosed with pulmonary edema from the long flight. I had purchased health insurance. This was not a pre-existing condition. So he got treated and my expectation is that insurance should pay.

Instead, UHC basically keeps asking the hospital for “documents/records”, the hospital doesn’t respond and then the hospital just charges me.

Now my dad isn’t coming back. So I’m basically going to tell everyone coming to me to fuck off and tell them the person doesn’t live here anymore. But the fact of the matter is, insurance was purchased, it was denied for who knows what reason.

It's also a great example of why GDP is an imperfect measure of economic output.

The _THEORY_ of why these companies need to exist is to to more efficiently allocate limited available care to a pool of patients. However in practice they do this so inefficiently (by design), that any money paid to the employees of insurance companies would be better spent on educating additional doctors.

Yes --- just like Bernie Madoff had a "public relations" problem.

His problem was keeping his profit making scheme hidden from the public.

Consider this argument: "I think taxes should be 10% higher, therefore, the taxpayer subsidizes 10% of all your purchases".

It is structurally identical to "Employer healthcare comes out of untaxed income, therefore, the taxpayer subsidizes your healthcare to the amount of tax which would counterfactually get collected".

Or this one:

"State sales tax is not paid on food, therefore, the taxpayer subsidizes your groceries to the amount of sales tax which is not collected".

This behavior greatly detracts from an otherwise fairly thoughtful point. I don't understand why people think it's ok to conduct themselves this way, Krugman definitely knows what he's doing here.

Confusing things is the ACA is cheap for people who get subsidies (if you're near poverty) but for those us self employed or make medium income, our payments to health insurance companies are $1500 or more per month. For what? We get denials at our most vulnerable moments.

Abolish insurance. Let us buy into medicare or make M4A like most other countries have. Insurance is a old sick system that way outlived it's grifting life.

> The answer is that this call was and remains politically unrealistic.

The USA is so ff-ed for normal people and it will get so much worse. Not for the HN temporary embarrassed millionaire crowd here of course.

Meanwhile George Carlin said it best:

> it’s called the American Dream because you have to be asleep to believe it.

That being said, the only stable function of current Western governments are the graft networks. Everything else either runs by itself or doesn't run at all. They can only function as people expect government to function during emergencies, and that's largely because they can hand out contracts quickly with little review, and possibly use them as pretenses to put long planned projects into action. The countries that have had fully functioning state health care have been spending the 21st century trying their best to dismantle them and sell them off.

That being said, Krugman is another on the list of recently unemployed extreme partisan shills frantically trying to rebrand now that the corporate world sees the Democrats as a sinking ship. He was originally an amazing, careful economist, but happily prostitutes his achievements for praise and cash.

> So you could make the case that at this point private health insurance is, in large part, a parasitical racket. At which point at least some readers will ask me why I didn’t back Bernie Sanders in his call for single-payer, Medicare for all.

> The answer is that this call was and remains politically unrealistic.

It was politically unrealistic because Democrats campaigned day and night against it, suddenly becoming tax hawks and pretending that they didn't understand how much premiums were, because they were paid to, and Krugman lined up at the trough. Single-payer had far more than supermajority support from the Democratic base, and had achieved majority support from Republicans during the Obama administration, with bipartisan public disgust at Obamacare (other than the Medicaid expansion, which had nothing to do with the Heritage through Romney plan, but was used to confuse the public.)

He trots out the industry line:

> The more important problem is that most Americans with employer-sponsored health insurance are happy with their coverage

But ignores the direct questions about single payer that were asked, poll after poll. He's a dog, and stating the obvious. The reason 90% of the public landed between shrugging and cheering when a law-abiding, successful businessman with a wife and children was gunned down in public in cold blood is not because people are satisfied with their healthcare.

If the US spent the same % of GDP on healthcare as any other country, it would have been in surpluses for decades.