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Comment by bko | Hacker News Reader

If you think health insurance is expensive now, wait until it's free!

In all seriousness, if a private business with all the incentive in the world can't figure out how to lower healthcare costs, I don't see how punting to the government would somehow be better.

Everyone that proposes a single payer can't explain who makes less money. Will we save money by the doctors getting paid less? The drug companies? Where do these savings come from?

Even if you're able to do everything the health insurance company does and capture 100% of their margin with equal efficiency, you'll capture a profit margin of around 2-6%.

The only argument I hear is "other countries do it", which is just unpersuasive. It's not a serious argument. Propose something better

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Single payer is cheaper. The US spends more per capita than any other developed nation and is not even capable of providing health care to all of its citizens.

Move to single payer, kill the medical insurance industry, and save these costs:

The health insurance industry employs approximately 605,000-912,000 people directly. The top 10 companies generate over $1.5 trillion in combined revenue annually. Conservative estimates suggest these companies spend $45-90 billion annually on employee salaries.

> The US spends more per capita than any other developed nation and is not even capable of providing health care to all of its citizens.

US has medicare and medicaid. It actually spends more than most other countries. I guess they need to spend more to save money?

Again throwing around stats about health insurance industry is not an argument. That money gets spent on something unless you think there is some grand cabal of health insurance companies to do make-work and hire people and set money on fire for no reason. Why doesn't some greedy capitalist start a health insurance company, set slightly less money on fire and provide great healthcare?

https://www.visualcapitalist.com/u-s-spends-public-money-hea...

Yes, exactly. We spend more far more and get less because we do not have a single payer system like the rest of the world. We are lining the pockets of healthcare execs and unnecessarily employing hundreds of thousands of people at insurance companies and private companies to manage employee benefits.

How does removing competition and choice reduce costs?

What do you think is so unique about the US that it is incapable of having similar pricing and quality of care compared to the rest of the developed world?

Because of how risk pooling works.

The reason you have health insurance, and you don't just pay for healthcare, is because pooling together a lot of people and paying for all of them is cheaper than paying for each individually.

You've probably noticed that, the bigger the company, the better the health insurance plans. Why is that? Their risk pool is bigger.

Follow the logic. What's the biggest risk pool you can use? The entire US population. What would then provide the lowest per-capita cost? Spreading the cost across the entire US population. It's economies of scale.

Bonus: we can also eliminate much of the administrative aspect of healthcare because we are no longer coordinating thousands of separate insurance entities. You mentioned make-work - yes, we have that. Why does a hospital need 500 billing specialists? You tell me.

"The US spends more in public spending on healthcare than other countries" isn't some great gotcha, it's proof that healthcare access in the US is vastly more expensive than in those companies.

Some great quotes from your own link about US healthcare:

> The underlying challenges in fixing U.S. healthcare may be multi-faceted and complex, but the overall diagnosis is clear: costs are out of control.

> In other words, costs seem to be out of whack across the board in the United States, regardless of whether it is private or public care being discussed.

> Spending keeps rising, but the effect of that spending seems to have decreasing marginal returns on life expectancy – a metric that is an important indicator for the overall effectiveness of any health system.

> It’s clear that Americans aren’t getting bang for their buck when it comes to medical treatment – so how is it to be fixed?

Your own link comprehensively and thoroughly disputes your original assertion:

> If you think health insurance is expensive now, wait until it's free!

> The only argument I hear is "other countries do it", which is just unpersuasive. It's not a serious argument. Propose something better

Given that all those countries pay less for the healthcare they provide AND have better morbidity and life expectancy outcomes, I dunno, that sounds "better" to me, but apparently you have a different definition?

> if a private business with all the incentive in the world can't figure out how to lower healthcare costs

What if their incentives aren't to lower cost? Insurance companies make more when the obfusicate pricing and payout less. That's the opposite of incentive, it's a way to cover up your profits.

> Everyone that proposes a single payer can't explain who makes less money.

If you think the healthcare industry is just doctor-insurance-you, then you're nuts. Look up pharmacy benefit managers. They're basically third parties that are in place to jack up prices.

> Even if you're able to do everything the health insurance company does and capture 100% of their margin with equal efficiency, you'll capture a profit margin of around 2-6%.

Insurance companies have had their profits capped via the ACA for more than a decade now. Where they're making their money is by using more third parties in the middle to jack up pricing and increase costs so that A) their 2-6% is bigger, and B) their "investments" in the third parties are not regulated by the ACA so they can get their massive profits their.

> The only argument I hear is "other countries do it", which is just unpersuasive. It's not a serious argument. Propose something better

Its a very serious argument, you're just happy to dismiss it for some reason. If the entire developed world uses a different system than us, gets better results and for less money, then you'd have to be insane to insist that mimic those systems is not a serious alternative.

What you have is a really simplistic model of how private enterprise actually works. And what you need to understand is that economics is primarily driven by incentives, both for the individual and for the company. The only way to get different behavior out of actors in the economy is to offer different incentives, either naturally or by government fiat. Let me give you an example.

The health insurance company's bottom line profits are determined entirely by the volume of cash that they funnel to healthcare. Their profit margins are capped by law to X% of this volume. So the only way they grow year over year is to increase the amount of cash they hoover up and direct to healthcare providers. Because the stock market demands year over year growth, they are incentivized naturally and by fiat to increase the volume of cash that flows through their network. This volume of cash is directly spent on healthcare. So you can see pretty easily that the incentive structures in our society are geared toward raising costs steadily.

If you couple that with private equity buying up healthcare providers and globbing them together, then you can see that there's a whole market system being built to make healthcare more expensive so that health insurance providers can absorb more costs and therefore increase their year over year profits. PE companies increase the negotiating power with insurance companies, and costs increase. And when costs increase, the insurance company's profit increases proportionally year over year.

So what you're saying about private companies doesn't make any sense. There doesn't even have to be collusion, although United Healthcare, an insurance provider, owns Optum, a healthcare provider, and I suspect there is a lot of collusion in relationships like that. The incentives are perfectly aligned to create this situation.

That's not quite how the actual incentives work. Most commercial insurers (both for-profit and non-profit) are increasingly adopting the "payvider" business model pioneered by Kaiser Permanente. As health plans pressured network providers to cut rates, the providers responded with M&A activity (some financed by PE) to gain more negotiating power. In some regions there are only a couple large health systems left that dominate the local market. Like in the SF Bay Area, health plans are pretty much forced to have Sutter Health in their networks in order to maintain adequate coverage. So now the only lever that health plans have left to control costs for their customers (i.e. large employers) is to hire clinicians directly as employees and cut out the middleman. UnitedHealth Group has been particularly aggressive about this strategy but all of their major competitors are taking similar approaches.

"The only argument I hear is "other countries do it", which is just unpersuasive. It's not a serious argument. Propose something better"

What's unserious about this?

> if a private business with all the incentive in the world can't figure out how to lower healthcare costs

Of course they can. But why on earth would they? Health insurers are mandated by law to not exceed certain profit margins, so the only/best way to make more money is not by increasing volume and lowering margin, it's by increasing costs for your target captive market. That flows down the chain, you increase the allowed costs, so providers increase to meet that (why wouldn't they?) and the only person left hurting is the policy holder (and their employer, paying some portion of it).

> unpersuasive. It's not a serious argument

Your argument amounts to "this doesn't make sense, why wouldn't companies look to lower costs" when lowering costs in the health insurance mathematically equals lowering your profits.

What's not a serious argument is this constant belief that America is unique. "We're bigger than other countries", "our population density is different", all these things.

But you're going to need to do better than a pithy "it's not a serious argument" with no substance behind it when acknowledging that the entirety of the developed world hasn't "solved" healthcare but does a better job at making it equitable and accesible to more, at a lower cost, with oftentimes better outcomes (looked at our mortality rates around childbirth, lately?). It's not about the quality of care, it's about a system that revolves around making more money, not patient care. Another simple example, my insurer, Aetna, simply refuses to authorize 90-day (or rather, anything beyond 30-day) prescriptions from any pharmacy except the pharmacy they wholly own. Why? That doesn't provide patient benefit. There's no discount - the charged amount for the 90-day script is 3x the cost of the 30-day. It provides a worse experience for the patient, removing flexibility for them. It doesn't change their pharmacy network - they're still serving pharmacies all over, just for a subset of patient needs.

No, it's just about money. Again, there's near no incentive in the current US healthcare market to compete on price. And that's why US healthcare is ~20% of GDP, double, if not triple the cost of other developed nations.

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