The American Healthcare Conundrum | Hacker News Reader

The American Healthcare Conundrum

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The problems are so vast it is difficult to even describe to outsiders. For example, if I purchase a particular medication at a local pharmacy, it costs $25. However, my insurer mandates that I purchase it via their Pharmacy Benefit Managers (PBM) Optum, which charges $125. Easy enough right, you price shop? Well then it doesnt count towards your deductible. The whole thing is an elaborate trap to not pay.

Sometimes it is easier to just pay cash without insurance altogether. You need the medication today and dont have two weeks to fight it out with letters and forms, then it definitely doesnt count towards your deductible (and also, what is the purpose of the pharmacy coverage insurance?)

Prescriptions are a total racket. A good portion of actual medication literally costs a few dollars at most. Then there’s layer upon layer of bloat and bureaucracy that add no value but drive the cost up 10x or more. It’s totally bonkers.

When these Rx cards and Marc Cuban CostPlus drugs came out where you just pay cash and a fraction of the price I thought there must be some catch or scam here. But turns out no, they’re just cutting out all the middleware bloat and selling you the meds at a defensible markup plus their logistics costs. Love what these guys are doing.

The fact that something like that even exists highlights how corrupt and broken the health insurance companies have become. It’s their job to get better prices at scale and yet somehow they manage to sell at prices far worse that Joe Blogs off the street can get with cash.

In many ways the quality of care in the US is far better than what folks get elsewhere, which in part is probably why there isn’t a total patient rebellion, but the US’s challenges are all rooted in massive administrative overhead. If we got rid of that and had a lean system where healthcare providers can do their job without interference there would be plenty of money to go around for amazing care at lower cost.

> In many ways the quality of care in the US is far better than what folks get elsewhere, which in part is probably why there isn’t a total patient rebellion

How sure of this are we really? Other countries mostly have problems with emergency departments being full, but that's less because those emergency departments are worse and more because in the US people aren't going, they just stay home and hope they don't die.

I guess that's because many/most countries don't have the concept of a private emergency department.

It doesn't really matter how much money you have if you have a broken leg as you'll be queuing up with everyone else for the triage and initial treatment.

I have amazing private healthcare coverage in the UK through my employer. I've had certain treatments done in under a week where the NHS waiting lists for the same procedure are measured in years.

But if I have a serious acute illness, or break a bone, my private healthcare can't help other than give me a telephone appointment with a doctor within 10 minutes at which point they'll say "What are you doing calling us? Go to the emergency department now!"

After the initial triage/treatment/stabilisation there may be a different pathway for people with private healthcare, but the doors of the emergency department are the first port of call for pretty much everyone who is in dire need.

(I'm sure for people who are seriously rich there are private arrangements, most people with serious money have doctors/dentists/etc on retainer, but these are the 0.001%)

Australia reporting in.

We have private emergency rooms. We call them urgent care and you can go and see a qualified physician with allied health services (radiology, pathology). If they can fix you up they will. If not you get transferred via ambulance to the nearest public hospital and triaged as required.

I took my kid to one last weekend as they had been diagnosed by our family Dr as having pneumonia. The emergency physician ordered chest x-ray and full suite of pathology and we had results in less time than we would have waited in the public hospital waiting room. Yes we paid.

Does it make sense to get an x-ray for that? I’m sympathetic to the desire, but isn’t the end result for pneumonia always antibiotics anyway?

If it's not pneumonia, antibiotics might not help.

Also Australia reporting in.

I've unfortunately had a number of emergency visits over the past few years. I'm a bit torn on the public vs private situation. For certain classes of issue (e.g., broken bones) my friends who work in hospitals have repeatedly said they'd go public purely because the volume of patients those surgeons have to treat daily means the teams in the public systems are typically incredibly experienced. And yet, I smashed my hand to pieces mountain biking on a holiday weekend and when I arrived at the ER the place was absolutely rammed and it was going to be a many hours wait to even get triaged. We got straight back in the car and drive to the private ER 5 minutes down the road and were seen immediately.

In the moment I was incredibly appreciative of that option. It does make me feel uncomfortable that it was only an option because I could afford to pay to jump the queue though.

As a person who has lived in Spain, UK, and now California, I can attest to one thing: the quality of care in California (I can't speak for the whole country) is vastly superior to what I received in both Spain and UK.

Sate-sponsored universal healthcare is amazing, I love the concept, but it also means that they have to run it like a very stingy HMO. They have a rulebook and they go by it, if your case is even the slightest out of their parameters, tough luck. And don't you dare ask for a second opinion, you'll get the doctor that has been assigned to you and accept whatever they tell you. I could bore you with countless stories of doctors who have used tricks not to provide service and make it look like it was the patient's fault.

The problem with private healthcare is that profits corrupts it. The problem with public healthcare is that politics corrupts it. There is no good solution.

I think this is mostly a problem with state funded healthcare budgets being cut (relative to population demographics) in these countries. If the UK or Spain spent anywhere even close to what the US spends on healthcare (per capita), I have no doubt that it's healthcare provision would be just as good. In the UK, healthcare provision was notably dramatically better 20-30 years ago under the same system (except for less private finance).

I don't think so. With state funded healthcare you get rigid rulebooks and policies. In the capitalist-ish US model, if you are a successful advocate then you can get better than average care because there's enough flexibility in the system (in many cases, physicians can individually decide to over-extend for one patient if they choose to) to allow for this. Having a private payer market absolutely helps here.

Having care depend on "being a successful advocate" does not sound like a good thing to me! Albeit it's probably impossible to avoid entirely. We want good care for everyone.

I'm mostly familiar with the UK system, but medical professionals make pretty much all the decisions here, with a large degree of discretion according to their professional judgement (and they never have to adjust or delay their care based on whether you can pay). Except for some particularly expensive treatments (think CAR-T for cancer) which are not available at all in the state funded system. But you can still pay for those privately if you want to.

> Having care depend on "being a successful advocate" does not sound like a good thing to me!

It's not. You have to become a horrible demanding person to get a decent level of care instead of things being nice.

The data supports this. The AMA's 2024 Prior Authorization survey found 93% of physicians report PA requirements delay medically necessary care. Twenty-nine percent reported a PA delay causing a serious adverse event for a patient. Seven percent reported PA contributed to a patient death.

The requirement that patients fight for care isn't just a frustration. It's a documented cost driver: Health Affairs (2025) puts the total system-wide cost of prior authorization at $93.3B/year, including $35.8B borne directly by patients navigating the process. The persistence required to appeal a denial is unevenly distributed across income, education, and time availability. That is a structural equity problem as well as a cost problem. Issue #5 of this series covers the full mechanism.

> With state funded healthcare you get rigid rulebooks and policies.

We could just not do that. If you change the flow of control certain problems solve themselves. Think about a landscape where government funding multiplies the patient dollar, for example.

The problem is that it always happens. There's no such thing as comparable funding.

I'm sure there is a lot of nuance but long term healthcare outcomes are generally lower in the US compared to other countries. https://www.healthsystemtracker.org/chart-collection/quality...

I think this difference mostly disappears if you group Americans by wealth. So wealthy Americans have similar life expectancies to those in other countries. It's really the poor that are most affected by our dystopian healthcare system, which is probably a big part of why it never gets fixed.

Hvae you considered that America is a much larger and much more diverse country that these other countries and and it is very different social norms? Obesity is a major problem in America and it is not the fault of the doctors. I wonder if this has anything to do with it?

Obesity is a problem in lots of countries.

The obesity adjustment is worth quantifying. US adult obesity: 42% (CDC). UK: 28%, Australia: 31%, Germany: 22%. Those gaps are real, but they don't explain a 2.5x per-capita spending differential. The Commonwealth Fund's 2021 analysis controlled for age, income, and chronic condition burden; the US still spent roughly $5,000 more per capita than the next-highest spender (Switzerland).

Obesity also matters less than assumed in hospital pricing: a hip replacement costs $29,000 commercially in the US regardless of patient BMI, vs. $15,000 in Germany and $9,000 in Spain (iFHP 2024). The cost structure is in the pricing system. Johns Hopkins researchers estimated eliminating US obesity would reduce healthcare spending by about 12%, real but not 2.5x. Repo with methodology: https://github.com/rexrodeo/american-healthcare-conundrum

Personal anecdote... My uncle is an auto mechanic in Scotland (Scottish NHS) and my brother-in-law is an auto mechanic in WV, USA.

Both have similar health care outcomes - they have ready access to quality care, specialists, etc. ER/A&E is available. The biggest difference is the perceived cost and stress incurred by that cost. My uncle doesn't give much thought to health care - he can work, retire, whatever and be assured a reasonable level of care. My BIL will work to 65 or beyond, fighting red-tape the entire time, then retire and still have to deal with supplemental programs.

Looking at another uncle, who was a small business owner in Scotland vs my father (also small business owner), it's similar to above, just with more money at stake. Uncle also purchased additional insurance on top of NHS for faster access to selective care, still cost less than insurance in the US, even after accounting for tax differences.

American's kid themselves when they say the Western Europe has higher taxes. Once you account for medical care, college funding, and other similar things, it's pretty close.

So we do better at actually delivering care, they do better at getting it delivered to everyone.

The RAND Round 5.1 study (2023) puts US commercial insurer payments at 254% of Medicare rates for identical procedures. That's the mechanism behind the international gaps — it's not complexity or quality, it's that commercial insurers negotiate against chargemaster list prices rather than against cost. The HCRIS cost-to-charge analysis (3,193 hospitals, FY2023) puts median markup at 2.6x actual costs.

Yet, living in Germany, the problems I hear about our healthcare system from friends or in the media are an absolute far cry from the insanity that I hear about the US system. Maybe some of it is sensationalism, but I very much doubt that would account for the whole story.

What's usually missing from anecdotes is class cohorts - so, US working class with Medicaid or a crappy marketplace plan vs working professional with an amazing plan vs retiree with Medicare vs...

Nothing's perfect, but the plan differences seem stark. For example, my wife had a crappy marketplace plan and I had a plan through my employer. For her, an MRI was denied, denied, then finally approved with many calls. For me, it was approved immediately. For her, pre-auth to a specialist was denied until her doctor went and tried a different referral strategy. For me...well, I haven't been denied yet. It goes on - same city, same hospital, some of the same referrals, etc.

I've come to think the price discrimination really does mean we have class-based care which seems to allow for the sensationalism. Combine a dire scenario with a working or indigent class American, and they don't have to exaggerate much at all.

Having lived in both Germany and the US, my experience with the German system is that there are a lot more, smaller hospitals and private practices, the care is good, and all I ever paid for out of pocket was prescription medications. I didn't have to wait long for an MRI (two weeks) versus months in the US. I had a number of things that would have been hundreds or thousands of dollars in the US that I never paid a penny for in Germany. I'll also say that hospitals are absolutely crazy about sending bill collectors after you. I had a handful of small charges--like $10 or $20 things--that I hadn't realized were even there and two months later they freaking inundated me with bill collector notices.

It does make a big difference exactly where you are in the US, however. Some places have a glut of healthcare providers and other places don't.

> I didn't have to wait long for an MRI (two weeks) versus months in the US.

Where in the US did you have to wait months? There seems to be an MRI/imaging location in every other shopping center in the US right now. I've never had a problem getting a same day MRI when needed. Perhaps you were waiting for the 'free' one your insurance would accept?

Why wouldn't you wait for one your insurance would approve? You're probably paying them thousands every month.

Pittsburgh / UPMC.

Now try to schedule a colonoscopy. It'll probably take two or three months.

There are other public healthcare models besides Beveridge though. Some countries do the payment & financing via gov, but the actual service is a mix of public/private. Not a perfect solution, but in my opinion better than what we have now. Maybe more achievable than Beveridge too.

Norway funds health care through taxation, seems to work pretty well here. But we don't have PFI, instead there are fully private healthcare companies that act as suppliers of services such as MRI, CAT scans, etc. So if your GP orders an X-ray or MRI you will most likely get it done by a private company rather than the local hospital. The patient doesn't really see any difference most of the cost is borne by the state, the patient pays a small egenandel (like copay in the US, excess in UK insurance terms) wherever it is done.

I'm not sure how the other Nordic countries do it but I think it's probably similar.

"And don't you dare ask for a second opinion, you'll get the doctor that has been assigned to you and accept whatever they tell you."

This happened to us with private healthcare. There is basically one specialty group for the procedure my family member needed so any 2nd opinion request just got routed back to the same doctor, "Oh, your Dr X's patient". Also, we could barely afford the procedure so we missed out on some follow up testing that would have verified things worked properly and basically got blacklisted from that practice so hopefully it's resolved...

You can also get private medical insurance in the UK. The cost is usually much lower than the US and quality is decent. NHS acts as an anchor keeping down premiums.

Personal experience with specific interventions reflects something real: US cancer survival rates, cardiac procedure outcomes, and access to cutting-edge treatments are genuinely strong for people with good coverage. That's not disputed.

The cost-outcome tradeoff shows up at the population level. US life expectancy: 77.5 years. Spain: 83.6. UK: 81.6. Infant mortality: US 5.4 per 1,000 vs. Spain 3.4, UK 3.7 (OECD 2023). The US spends $14,570 per capita. Spain spends $3,300, UK $4,100. If the premium were buying 10 extra years of life expectancy and half the infant mortality, it might be worth the argument. The data shows the opposite at population scale.

The newsletter's framing isn't that US clinical quality is poor. It's that the US is paying $3T more per year than Japan (same life expectancy, lowest infant mortality in OECD) for aggregate outcomes that are worse.

The cost and life expectancy differences are indisputable, but the rationale may need more nuanced: that's not necessarily a problem with the healthcare industry, but with lifestyles, safety regulations, food standards, and a long et cetera of reasons. For instance Spanish people, on average, have more balanced diets and are more active than American people. They also lead much less stressful lives. That's a big factor.

There are people who have lived in multiple countries, and speaking with them the only place that seems to be comparable (until you factor in private healthcare of course) is Switzerland.

Simple test: The reports saying the UHC systems are better always are using statistical games. If they were really better why would they put their thumb on the scale?

Things like making 20% of the score "fairness"--as in UHC. And hiding the fact that most of the life expectancy difference is infant mortality and most of the difference in infant mortality is a reporting issue: infant mortality + stillbirth produces a far flatter plot. Thus much of the difference is whether it's considered to have died before birth or after birth.

There are certainly locations in the US where the standard of patient care -- ignoring cost -- is world-class.

And there are certainly locatioms in the US where the standard of patient care is nowhere close to that, and would be easily beaten at any major hospital in any other first-class economy.

Patient outcomes should provide reasonably hard data for comparisons. Life expectancy at least is not vastly better in the US, how about other metrics?

See https://pharmacy.osu.edu/news/prescription-discount-cards-wh...

Thanks for sharing the OSU piece, good read. A few things it surfaces that complicate the "discount cards help patients" narrative: discount card companies still contract with PBMs to set pricing, they don't bypass them entirely. The savings often come out of the pharmacy's margin rather than the PBM's: the article shows a pharmacy receiving $5 on a drug it acquired for $15, with the PBM still collecting a transaction fee either way. GoodRx was also fined by the FTC for selling patient health data to advertisers without authorization, so there's a second extraction happening on the data side.

The deeper point the card market reveals: a profitable arbitrage layer can consistently undercut the insurer's "negotiated" rate, which tells you the negotiated rate isn't really a discount. Generic apixaban costs £1.16 per 30-day supply in the UK. Medicare's gross cost for Eliquis (same molecule) is $862.

> It’s their job to get better prices at scale and yet somehow they manage to sell at prices far worse

Maybe on paper, in reality their job is to return as much profit as possible to shareholders. Convoluted bureaucracy, complicated regulations, layers of useless middlemen… they all help to reduce competition and increase profits. There are industries where the “free” market doesn’t work, partly because “human well-being” is a non-goal for any health insurance company. The entire point of the insurance business model is to avoid paying for it as much as possible

> The entire point of the insurance business model is to avoid paying for [human well-being] as much as possible

For-profit health insurance. Which imho should be illegal.

A lot of the US' quasi free-market, in-name-only health insurance problems would be solved by:

1. Requiring all insurers to be not-for-profit (critically: also including all corporate owners of insurers too)

2. Tying financial incentives and disincentives to outcome-based KPIs

Does "not for profit" actually solve anything? Aren't most private universities also not-for-profit, while also being major real estate owners, developers, managing massive investment portfolios, etc?

In my experience Kaiser / the Blues have their issues (mostly inefficiency), but not nearly as many directly anti-patient incentives as United Healthcare et al.

Generally speaking, you get decent outcomes with {not for profit} + {efficiency/outcome based KPI}, because the primary thing you're fighting is apathy (not for profit) instead of malicious profiteering (for profit).

And capitalism doesn't particular lend itself to running an insurance company. Fundamentally, there's not that much that should change year-to-year at insurers than {actuaries / pricing}.

Have pharmacy benefits or all the other kooky for-profit inventions really improved patient experience and outcomes?

> Does "not for profit" actually solve anything?

Ask the Swiss and/or Germans? AIUI there are (aspects of) their health insurance that are mandated to be non-profit.

Perhaps someone from one of those countries can give more details.

(IIRC, the Swiss only 'recently' moved to universal coverage: in the 1990s?)

It doesn't.

The Netherlands has a system with both not-for-profit and for-profit insurers, that works reasonably well.

- Transparent, identical rules for minimum coverage and strict rules on minimum and maximum deductible for all insurers and insurees. - Mandatory coverage for everyone (just like liability insurance is mandatory for cars in the US) - Insurers do not have the right to refuse any applicants based on pre-existing conditions - Insurers directly negotiate with hospitals on rates. Emergency care has to be covered regardless of whether hospitals are in network or not.

The Dutch model is a useful counterexample to the argument that you need a single-payer structure to contain costs. Netherlands uses regulated private insurers with community rating and risk equalization, yet achieves per-capita spending well below the US (roughly $7,200 vs. $14,570 in 2023 OECD data). The direct insurer-hospital negotiation you describe is also how Germany's sickness funds operate.

The US equivalent would be all-payer rate setting. Maryland has run a statewide all-payer hospital rate system since 1977 with documented cost containment. Issue #3 of this series focuses on a lighter-weight near-term version: capping commercial hospital payments at 200% of Medicare (already used by Montana Medicaid and thousands of self-insured employers). The Dutch model shows a stronger structural fix is feasible. The question is political path, not technical feasibility.

Big problem here: You get more KPI, not better outcomes. Things like no doctor being willing to risk working a high risk patient.

We have already seen it with things like Medicare Advantage plans doing sign-up meetings on the second floor of buildings without elevators etc.

Medicare Advantage is a clusterfuck from start to finish (denying more claims than Medicare while also costing taxpayers more), precisely because it tries to micro-manage KPIs.

If you want to look at them done correctly, look at the FEP program. High-level KPIs that are difficult to game (without actually improving service & outcomes) tied to financial incentivizes.

Fair point about KPI gaming, and it's a real problem in value-based care. But the fix in Issue #3 (commercial reference pricing at 200% of Medicare) is a price cap, not a quality incentive structure, so it doesn't directly create the risk-avoidance problem you're describing.

Montana Medicaid has used 200% Medicare reference pricing since 2015. Published evaluations haven't shown measurable quality deterioration or patient-selection effects in that program. The RAND Round 5.1 study underlying the savings estimate controlled for case mix, so it's comparing equivalent procedures at equivalent acuity. Risk adjustment is still genuinely hard at the individual level, and the concern is well-founded for P4P schemes. It's a separate question from whether commercial payers should pay 254% of Medicare rates for the same surgery at the same hospital.

In no way shape or form is the medical industry in the US a free market, it's one of the most heavily regulated sectors in the economy. Remember when the government wanted to make purchasing health insurance mandatory? Forcing employers to pay for their employees health insurance greatly distorts the market. And many other things...

By the way, as much as people complain about the profit seeking motives of insurers, many of them have been performing abmysally in the last six months. As it turns out, our current system is bad for just about everyone.

Just to tack on, dentistry is an example of a somewhat freer market than 'healthcare', and veterinary care is an example of an even freer (though somewhat different) medical service.

In Romania the employer takes a cut from the employee's salary and gives it to a government agency for the health insurance (some thing with income tax, social security (pension), etc). I think this is happening in other European countries as well.

Some employers also offer as a bonus a sort of subscription at a private clinic, so you can see a private doctor or have an operation for a lower price or even for free.

Same in the UK.

In the USA the government health programs for people in low incomes, children and pensioners cost about as much as a typical European single payer health system. Then tax payers get to pay to be gouged by health insurance companies to get any cover for themselves.

> In no way shape or form is the medical industry in the US a free market, it's one of the most heavily regulated sectors in the economy.

If any regulation at all makes a market not "free", then there are no free markets as soon as we have any laws.

Like all free markets, this one is regulated. There are degrees of freedom.

In this market, neither the producer nor the consumer are responding to price signals and often neither knows what anything costs. The Payer (literal healthcare industry terminology) does but isn't producing nor consuming the service.

This is why this isn't a free market. It's not about regulation, it's about the system being divorced from responding to market dynamics.

There are degrees of freedom, but within the American framework, medical care is on the less-free end of the spectrum.

Aside all the insurance stuff, you cannot open an MRI imaging lab or similar without a letter of need from the local government. The supply side is quite literally gated by existing players in the market (via campaign bribes and similar).

And pharmacy vertical integration is an easy way for them to get around regulated profit margins. While if your profits are capped at 15%, the only way to increase them is to increase premiums as a result of increasing providers costs (which the insurers can and absolutely are doing, of course), if you own the pharmacy supply chain, you have freer reign to increase those prices.

Healthcare is one where vertical integration can be really profitable, even at the smaller scale. I used to work as a paramedic, both local agencies and private. The private ambulance company I worked for started when a man who owned a nursing home realized how much money the facility was paying for ambulance transports, so he started an ambulance company. He realized how much his ambulance company was paying to industrial/medical gas companies for oxygen, so he started a medical gas company. And so on. And went from his one small nursing home to his daughter having a $100M empire by the time he died 30 years later.

Human well-being should reduce medical expenses, so at least in theory it should be a goal of insurance companies.

People are waking up and a lot is happening to counteract some of this.

In the FY26 omnibus bill passed by Congress and signed last month by Trump is the most aggressive federal crackdown on PBMs in history. Starting in 2028 it bans PBMs from taking a percentage cut, which is exactly what incentivized them to drive up the sticker price of your meds. It forces PBMs to pass 100% of the rebates and discounts they negotiate directly to employer health plans, stopping them from pocketing the savings. And PBMs are now mandated to provide detailed semiannual reports exposing their "spread pricing" (charging the plan more than they pay the pharmacy) and their shady practices of steering patients only to pharmacies they own

Also to do what Mark Cuban did but on a national scale, the federal govt launched TrumpRx.gov, a direct-to-consumer federal platform that completely cuts out the PBMs and insurance deductibles you're talking about , allowing people to buy dozens of the most popular meds for an average of 50% off.

Finally one benefit from the threats of tariffs has been that companies like Pfizer caved and signed landmark deals with the US to offer their drugs at “most favored nation” prices to Medicaid and directly to consumers

The rebate pass-through rule (effective 2028) is a real step, and worth tracking. But rebate retention is one of six extraction mechanisms the Big 3 PBMs use. The FTC's Interim Reports I and II (2024-2025) documented $7.3B in specialty drug markups alone, separate from rebate games. The Ohio Auditor found PBM spread pricing extracted $224.8M from a single state's $2.5B Medicaid drug budget in one year.

The rebate rule doesn't touch spread pricing, formulary manipulation, or self-preferencing to vertically integrated pharmacies. Issue #4 (scheduled for releases 3/22) of this series covers the full mechanism stack and what each proposed reform actually targets. Repo: https://github.com/rexrodeo/american-healthcare-conundrum

TrumpRx is mostly hot air. https://democrats-energycommerce.house.gov/sites/evo-subsite...

"In many ways the quality of care in the US is far better than what folks get elsewhere"

This comment has very strong survival ship bias though because you're only looking and ranking the treatments that did happen. How about the cases when the person was denied treatment based coverage or whatever reason. These cases should rank too.

> In many ways the quality of care in the US is far better than what folks get elsewhere

Or so people keep telling themselves to not feel completely fucked?

The catch is that Mark Cuban is now the one capturing the rewards instead of the now-unknown-to-me-in-the-wake-of -Luigi-Mangione healthcare tech company CEO

https://en.wikipedia.org/wiki/Stephen_J._Hemsley

You're welcome.

"... quality of care in the US is far better ..."

Care starts when you need it, at the ambulance level.

Recently we saw that people who dial 911 in the US can actually die because the ambulance arrives hours (!!!) later.

So no. Quuality of care in the US is not that good.

This always baffles me.

There’s so much rampant profiteering in the US healthcare system it’s unbelievable. Other countries look at it from afar in utter disbelief. I’m glad I had no serious health problems when I lived there 25 years ago (and I had health insurance via my employer).

In the UK prescriptions are effectively capped at about USD125 per year:

https://www.nhsbsa.nhs.uk/help-nhs-prescription-costs/nhs-pr...

I recently collected 4 prescriptions from my local pharmacy (3 for temporary conditions, the other one was ADHD meds which I’ll be on for the foreseeable future) and the pharmacy didn’t even want to see proof of my prepayment certificate, I just said I had one and they ticked the relevant box and handed me the prescriptions.

(The implication is that the NHS will check this and come after me if I was lying.)

Don’t get me wrong, there’s lots wrong with the UK healthcare system but the access to regular medication has very few barriers.

In Scotland and, I think, Wales there are no subscription charges at all.

Ah yes, forgot about that.

The regional differences are quite odd.

I got my ADHD diagnosis via Right-To-Choose, so it is considered an NHS diagnosis and I get my medication via the NHS (and therefore cheap). But the RTC pathway isn't available in Wales/Scotland/NI. I'd either have to wait years for an NHS diagnosis or go private and then have to pay £££ for my prescriptions privately.

The UK system has many problems but at least the general population are shielded from the exorbitant individual costs. We pay for it through general taxation but that, at least, spreads the load a bit.

I got my ADHD diagnosis privately (mostly because of the length of the NHS waiting lists, and I'm currently waiting on a NHS RTC provider to transfer my care there) and I pay the trade price plus pharmacy markup (so ~£40/mo) for my medication, for whatever it's worth as comparison.

Definitely not cheap (I would prefer the £9.90 NHS prescription fee) but I get the feeling that it's cheaper than I would pay elsewhere in the world anyway.

Yeah, mine would have been £50/mo if I’d been private according to the receipts I never had to pay on RTC. Luckily I only had to wait about 9 months from referral to RTC to diagnosis and starting titration. I know some people who have only had to wait a couple of weeks, it’s another lottery based on the individual providers and the phase of the moon.

Meanwhile we’ve spent close to £7k on my kids ADHD/ASD diagnoses privately as it was a 4 year waiting list for a NHS CAHMS referral. Luckily the GP has agreed to take on the private diagnosis and prescribe the meds under a shared care agreement.

I’ve no idea what happens in a few years when my kid hits 18. I’m hoping they don’t have to back out of the SCA leaving them without access to meds. It’s something I need to research although the fallback is paying privately I guess.

What an amazing system! Poof! just like magic you can pretend that sophisticated medicines, that are years in development, should cost nothing just because! And then you can act all smug about it!

Cost nothing to the user, yes. You can then have the state, a sophisticated purchaser, decide what it's willing to pay.

Sure, sure, “sophisticated”

Not at all. The majority of the cost is subsidised by the Government who acts as a central purchaser to minimise profiteering and keep prices down.

Everyone pays a little bit towards it all via general taxation but if you prefer a system where individuals have to front the vast majority of their own costs, much of which is just being extracted as profit, then you are welcome to that. I prefer the option that leans a lot more towards socialism than rapacious capitalism.

Ok, but that wasn’t part of the discussion was it? Just “lol drugs only cost a nickel here, silly USA” seems disingenuous

The NHS prices in the Issue #2 analysis are not subsidies. They are the generic reimbursement rates from the UK Drug Tariff after patent expiry on each molecule. Apixaban (Eliquis) costs £1.16 per 30-day supply on the Drug Tariff. That is what the open market charges for the active compound once patent protection expires. The NHS does not manufacture it or subsidize the price: that is the market rate for the molecule itself.

The $862 Medicare gross cost for the same molecule is not explained by active R&D recovery, either. The IRA's first ten negotiated prices (effective January 2026) cut Medicare gross costs 40-70% per drug, which does not happen if those gross costs were development-cost-justified.

Health care is so broken that I think it will unbreak itself.

You can eliminate most of the problem by mandating true cost billing by hospitals (get rid of their insurance mandated 500%+ markups to make it look like your insurance does anything at all besides make your care as costly as possible).

As you said, it's oftentimes cheaper to buy drugs without insurance.

The average person would quickly find out that insurance doesn't pay for anything at the hospital (most of the time).

~80% of healthcare spending is already at the tail end, and the state already covers most of that through Medicare and Medicaid.

The bottom ~50% of spenders (healthy people) only spend ~3% in total of healthcare (~$900 per year per person, about 1 month's PREMIUM).

Health insurance is a MASSIVE tax on the bottom ~3% of spenders (~50% of the population), when the state ALREADY covers the vast majority of people that need covered for tail end expenses.

Think about this: the MEDIAN adult in the US pays <$1k in personal income tax! Yearly health care premiums (that do nothing) are 3x that! 75%+ of the median person's true tax is going to health insurance that does NOTHING for them.

We already have the European model. Health insurance as it is is a tax. It just could not be designed to function more poorly than it does for the average healthy worker.

It benefits literally no one besides the health insurance industry which does not employ that many people, and is not strategically important for national security.

If the state completely covered the tail, and we had true billing at hospitals, almost no one would need or want insurance besides people that already have it through Medicare and Medicaid.

You are extremely close to arriving at the solution, which is medicare for all. Cover everyone, then almost noone uses the insurance except when they need it, which is when they get old.

If the US had the equivalence of Canadian health insurance, the spending reduction would be so big, that as a working person, your health insurance bill would go to zero, out of pocket costs to zero, and everyone would have health insurance.

Medicare's admin cost is around 5%, private insurance is around 33% of claim dollars. There are around 27-28% uninsured. The money is already there who pays needs to be moved to the Billionaire and Multimillionaire class to reduce the annual costs for those who work for a living.

> private insurance is around 33% of claim dollars.

The Medical Loss Ratio (MLR) requirement established by the Affordable Care Act (ACA) is 20%.

Typically it's closer to 15%.

As these are private companies, some percentage of that is obviously profit.

It doesn't cost that much more to run private insurance than Medicare.

The problem is the incentive of insurance to drive up cost to get a larger fixed cut, and the lack of a public option (which would require private insurance to actually be worth it).

Those figures are in the right range, and the full picture is larger. The CMS NHE 2023 data puts total US healthcare administration at roughly $1.1-1.7T annually (depending on methodology), building on Woolhandler and Himmelstein's 2020 Annals paper ($812B in 2017 dollars). The per-capita comparison against 10 OECD peers: US $4,983 vs. a peer average of $884. That 5.6x gap is the number Issue #5 of this series will examine in detail, covering three separate computation methodologies and why the estimates range so widely. All source code will be in the repo: https://github.com/rexrodeo/american-healthcare-conundrum

The policy lever that addresses this is billing standardization, not just insurer reform. Countries like Germany and Switzerland run much lower admin under private insurance through standardized claims formats and all-payer rate setting.

The United States will never have universal healthcare because a subset of the population would rather pay more for worse health outcomes than participate in a system the provides abortions, HRT, or PreP, or any healthcare at all to Black people.

See, for example, “Dying of Whiteness: How the Politics of Racial Resentment Is Killing America’s Heartland” by Jonathan Metzl

But they’re a subset. It can happen.

The more critical, and yet smaller, subset is the people making bank from the current system. Get their money out of politics and watch resistance crumble.

Yes, precisely. The smaller subset that make bank from the current system directly benefit from us poors (aka non-billionaires) from blaming the person lower on the ladder.

> The United States will never have universal healthcare because a subset of the population would rather pay more for worse health outcomes than participate in a system the provides abortions, HRT, or PreP, or any healthcare at all to Black people.

This subset does exist, but is smaller than the percentage of people who think the system is broken - and the solution is not to just open up the floodgates and make it even more broken and even more expensive.

You FIRST have to fix the system before you open up the floodgates.

I am on your side that I think it would actually cost LESS to move all high-cost patients off of the ER and onto Medicaid.

But that's not a big enough problem to actually move the needle. In the rosiest scenario, you might save 2% per year. That's still like $20-40B, so nothing to scoff at - but in realistic scenarios, I'm doubtful it would save >$10B.

Even if they had Medicaid, they're so conditioned on going to the ER for everything, a lot of them might still go there instead of somewhere cheaper. For one, they might be convinced they get better care there (and maybe they would).

There's way bigger fish to fry.

>You FIRST have to fix the system before you open up the floodgates.

I don't see any reason to fix the system on a nationwide level. Let the individual states figure it out. There's things that the top 5 US states for healthcare have in common, and there's things that the bottom 5 US states have in common [0]. They know how to talk to each other if they want to know more.

[0]https://www.commonwealthfund.org/publications/scorecard/2025...

> I don't see any reason to fix the system on a nationwide level. Let the individual states figure it out.

It's a problem because the nation already ineffectively covers the tail.

The state shall not fix what is not a problem for the state.

> You are extremely close to arriving at the solution, which is medicare for all. Cover everyone, then almost noone uses the insurance except when they need it, which is when they get old.

I strongly think that covering everyone in the existing system is not the best way to go.

The existing system is designed to cost as much as possible, and we have way too much demand for treatment (as is) and not enough supply. ER wait-times aren't 2-4 hours just because.

First, that needs to break.

Then, you can cover everyone.

We simply do not have enough doctors for how many old and unhealthy people we have. We should be thinking about how to keep people from going to the hospital that don't really need to be there. Do you really need to go to the ER because you stubbed your toe? If you didn't have insurance, you'd go to a low-cost clinic and get the same treatment for 1/10th the price.

We are slowly getting there already. Low cost clinics weren't widely available, but they are becoming more and more available as the cost of health care even WITH insurance is too high for most people.

The infrastructure for the bottom ~50% of people needs to exist to break free from a system that is not designed for them BEFORE they can move off it.

It's almost there.

Since One Medical became widely available, I basically have not gone to the hospital in 5+ years. Before, you kind of needed to go even for routine things (or at least I didn't know of a viable alternative). More and more places like this are springing up all over the US.

Who would you choose not to cover? The sick?

I hate to break it to you but insurance is meant to be a tax on the entire risk pool. What changed after the ACA is we couldn’t kick anyone out of the risk pool for getting sick.

> Who would you choose not to cover? The sick?

You didn't read the post.

The sick are mostly the old (if you're looking at total spending), and they are already covered by Medicare.

The sick young are a minority, and are often times covered by Medicaid.

If the state covers the tail end and assuming they aren't covered already by Medicaid, there just isn't that much spending remaining.

They can get private insurance to cover the under $10k per year - but there's not really a product that covers that effectively - so unless a new insurance evolves, it still wouldn't make much sense.

The sick, young, non-medicaid tail is VERY small compared to the rest of the tail the state already covers. Just add it in. A 1% global tariff could easily cover it. You've still got 9-14% left to spend on more bombs, tax breaks for the rich, paying people to get underwater basket weaving degrees, whatever.

The premium charged for the sick, young is high enough that your math doesn't make sense. ACA plans have to pay out 80%. Since I'm paying $11k/yr for my ACA plan they are clearly paying out at least an average of $9k in claims for the average member of my cohort. (And the reality is worse as they are limited in the ratio between young and not so young, this effectively makes the young subsidize us not so young.)

I’m not understanding how this is better than just putting everyone in one risk pool and having the young and healthy subsidize the old and sick? You’re basically saying if you’re healthy don’t carry any insurance and just rely on the government and taxes for catastrophic coverage. And then as soon as you get sick you’re supposed to apply for this coverage that only applies when you’re sick? The biggest problem with Medicaid is that you have to prove you can’t get the means to pay for healthcare which is essentially impossible without paying for healthcare.

So now you have this huge apparatus for intake and for rejecting people who are not sick enough or old enough but who can’t conventionally afford care. And you have to pay for that apparatus. Why would that be any better for the young people, other than seemingly using their taxes to make cruel decisions about a portion of the old and sick instead of simply providing care?

And what’s worse is a lot of those sick people wouldn’t have gotten that sick if they could pay for preventative care. So now in your system you have this huge group of people who have through lack of means let their illnesses and maladies get so severe that they can’t afford to treat. The whole point of preventative care is to keep people healthy so they don’t become a cost burden to the insurer. That’s why we pay more relative to what it costs. And it’s a hedge for us. We might find ourselves among the desperate ill some day without the means to pay for treatment.

Breaking the existing system will be extremely difficult. I have decade-long relationships with all of my doctors. The thought of a health plan that forces me to change all my doctor relationships is anger-provoking and exhausting. New doctors don't know me, they don't know my history, and haven't seen the medical shit show you've been through and why your treatment is the way it is. Then they think they can change your treatment to something that has already failed because "I didn't give it a long enough trial" or "That's a rare side effect," it won't happen to you.

I highly recommend you read the book "We've Got You Covered." It's an economist's view of health systems and how we can rearrange government spending to provide coverage for everybody and prevent medical bankruptcies.

One Medical looks interesting, but I wonder how they keep the price that low. Is it subsidized? Are they putting constraints on physicians and what they can do in the same way BetterHelp messes with the therapists? Are they servicing only the young and healthy?

Their senior care plans tell an interesting story. They only work with Medicare Advantage plans, specifically those known for up-coding, excessive pre-authorization requirements, and high rates of care denials. Medicare Advantage is an interesting failure in the marketplace in that it costs the government significantly more than classic Medicare and provides worse-quality care.

For the rest of us, we can skip the ER by going to an urgent care. But around here, urgent care offices are owned by private equity, have deceptive billing and are part of the reason why medical care costs so much.

> I have decade-long relationships with all of my doctors. The thought of a health plan that forces me to change all my doctor relationships is anger-provoking and exhausting.

You are clearly not in the bottom 50% of health care spenders. You would be in the group that would keep private insurance and be happy.

> One Medical looks interesting, but I wonder how they keep the price that low. Is it subsidized?

No.

> Are they putting constraints on physicians and what they can do in the same way BetterHelp messes with the therapists?

The vast majority of their "doctors" are Physician's Assistants. You can see whoever you want for whatever you want (that they provide).

> Are they servicing only the young and healthy?

Mainly. It's a clinic. You can't go there for Open Heart Surgery and cancer treatments. They'll just (cheaply) refer you to a specialist (who will be expensive and require insurance).

What you can do is avoid huge wait times and get good enough treatment for ~90% of what the mostly healthy group of ~50% of the population needs for fair up-front prices - which previously did not exist.

That's a mighty big assumption you're making. I've had private insurance for years, and I've always been unhappy with it because of treatment delays, Treatment denials, pre-approvals, and unrealistic copay limitations.

Many of my health needs are not expensive, but my body's reaction to treatments is. Frequently, cheap drugs are all side effects and no benefit. Also, private insurance has bizarre coverage gaps. For example, ambulance costs. When I had a heart attack, I drove myself for 45 minutes to the nearest hospital with a cath lab rather than take an ambulance and end up with God knows how many thousands of dollars in uncovered ambulance fees. Then there are things like cardiac rehab, which go a long way toward restoring cardiac health. 12 weeks, three times a week at $50 copays, was an expense I wasn't counting on. When I qualified for Medicare, the quality of care improved significantly. Usually, wait times for service are much lower than with private insurance.

I also resent private insurance because my premium dollars go toward enriching stockholders rather than providing care for all policyholders.

Okay - so you could keep your private insurance and not be happy, or move to Medicare and also not be happy.

I think you want a third solution - but that seems highly unlikely to be available in the mid term - and it doesn't look like anything is changing in the short term.

Who knows, my crystal ball doesn't work any better than anyone else's.

> We simply do not have enough doctors

We're going to need to make more doctors. To do that we'll need to identify kids in high school that would be good candidates and offer full-ride scholarships where needed. And we need to improve science education at the high school level to help with all of this.

> To do that we'll need to identify kids in high school that would be good candidates and offer full-ride scholarships where needed. And we need to improve science education at the high school level to help with all of this.

We could import them.

We have tons of options. But the medical industry likes a shortage, because they like high wages, so I won't hold my breath.

They pick the rules. The rules favor them.

That's going to remain true for the foreseeable future, and on the list of problems, that's at the absolute bottom of things to fix that would actually move the needle.

The cost you spend on DIRECT HEALTHCARE is only ~20-30% of all spending. The rest is administration, drugs, insurance overhead, profits, ACTUAL insurance costs, cost overruns due to insurance making everything as expensive as possible to scrape 15% off the top, fraud, legal fees, etc.

The biggest benefit to moving to a centralized insurer is that fraud is centralized.

If you're a Republican and skeptical of government, you might assume the government will let massive fraud slip through to insiders, and you don't like that.

If you're a Democrat, and think the government can generally be good, you think the government can catch a lot of the fraud and cut total costs by 10% to get to fraud levels that are similar to other advanced countries (with similar systems).

Or, like, not haze kids in their 20s for residency and make them take hundreds of thousands of dollars in debt. Whereas in Europe and other countries, residents work something like 50 hours per week and graduate with zero debt.

I've watched friends go through it here in the US and I have zero interest in working 24 hour shifts and sleeping in break rooms, working 80+ hour weeks for years. There just is no need other than hazing and keeping artificial scarcity of doctors for inflated wages. There are plenty of brilliant, scientifically minded, hard working people that care about others that probably could be great doctors, but the US training system is just hostile towards most people.

>ER wait-times aren't 2-4 hours just because.

ER wait times are long because ERs are the only place in the country where we effectively have medicare for all, albeit in a particularly perverse and dysfunctional form. Everyone gets treated at the ER even if they're broke & uninsured as long as they're willing to wait long enough. Now imagine if those folks could go to any primary care doc or even use One Medical, CVS walk-in clinic etc. That would go a long way toward fixing our overloaded ERs. We've legislated quazi-medicare for all but only in the most inappropriate part of the system.

Agreed. We all collectively understand that we can't allow people to die in the streets because of their lack of health insurance. We already have universal healthcare, we just have the worlds dumbest way to pay for it.

> Do you really need to go to the ER because you stubbed your toe?

Where else are some people supposed to go? Maybe that toe is starting to change colors… is it broken? Do I need to have it set? Is that possible for toes?

People have valid medical questions and don’t want to wait weeks to see their primary care. They might not live near an urgent care. The urgent care may have terrible hours, or they made the mistake of mentioning chest pain for their heartburn incident and now they are forced to the ER.

It’s a chicken and egg problem. Faster medical answers will lead to reduced ER wait times. Reducing ER wait times lead to faster medical answers.

> You are extremely close to arriving at the solution, which is medicare for all. Cover everyone, then almost noone uses the insurance except when they need it

Most Medicare recipients do get supplementary private insurance though? It's called "Medigap."

Medicare pays for 80% of patients' costs, but even the remaining 20% is a lot. (You get a $100,000 procedure -- you're on the hook for $20,000.) That's why people get Medigap coverage.

By "the insurance" I was referring to Medicare. I'm a working, healthy person and rarely use healthcare outside of preventative care. You could raise my Medicare taxes by hundreds monthly and still be less than what I pay for private insurance.

In a Medicare-for-all scenario, the individual price of a given procedure doesn't need to be so high, because the reimbursement is guaranteed. Right now, the "list" price of the procedure has to be high to subsidize the uninsured and Medicaid who lose money.

I'm sure there are single payer health insurance countries in which people still purchase insurance, which should inspire debate about the universal insurance cost-sharing.

Regardless, the only viable solution in the US is a single payer insurance model.

Your private insurance isn't there (ideally) to pay for your preventative care, which you can easily pay for out of pocket. It's there to pay for the low-probability but very expensive scenarios, such as cancer, major accident/injury, etc. that would otherwise bankrupt you.

I understand how insurance is supposed to work. The problem is that private insurance captures all of the value I pay in during my working life, and doesn't have to pick up the tab when I inevitably get old and sick.

To use car insurance as an example, it would be like if we had a government program for cars over 150k miles. You have to pay for both private and government insurance. The private company collects more money than the government, but the government pays for all the expensive stuff because that's when cars break down. It's completely pointless.

If you want a medicare-for-all scheme where working people have a higher cost-share than children/retirees, fine, that's reasonable. Having private companies rake in profits from a system that has no business being a profit enterprise is insane.

The value is that it is there. Most insurance isn't used, or ever pays back what you paid into it. That's the point; that's how it's a viable product. There's no way to insure old, sick people, that's why the government does it. It would be like selling automobile insurance only to drunk drivers, or selling homeowners insurance to people whose houses are already on fire.

There's a way to insure old, sick people (who were once young and healthy) and it's how every other developed nation does so at lower cost. How is it lower cost? the profits from the young and sick don't get shoveled to private corporations for performing the exact same function at higher cost.

Paying for the preventative is because it's been demonstrated that doing so reduces costs overall. The amount involved isn't all that much, it's not the driver of the costs.

The actual true problem is that there is a mismatch between the value the average person generates in their life, and the value of them staying alive. A handful of SOTA treatments can easily blast through a year of someone's total earnings. And this isn't even some kind of gouging or scam, anything SOTA tends to be the most expensive.

Insurance is the natural solution to this, but to be effective it requires most people to not need it while still paying into it. This is what Obamacare tried to fix by mandating insurance, but healthy/young people got sticker shock and bailed.

> Insurance is the natural solution to this, but to be effective it requires most people to not need it while still paying into it.

Yes, and you can fix it by the state covering ONLY tails - which it ALREADY essentially does, just as expensively as humanly possible.

Democrats and Republicans spend all their time arguing about whether to have sweeping changes that won't drive down costs or do nothing (which obviously won't bring down costs).

You could spend less money and get better outcomes by officially covering the tails instead of un-officially.

Instead of ~50% of young, healthy people paying a MASSIVE tax for "insurance for all" which doesn't really do what it says - you could just officially cover the tails, use the existing tax dollars, and accept that instead of ~30% of people "not having coverage" everyone would have tail coverage and ~50% of people wouldn't have "coverage".

You get a better, fairer system - that costs less overall, and that I think the American people could actually vote for.

Republicans would like it because it costs less and doesn't cover abortions or whatever they bitch about.

Democrats would like it because it officially covers everyone and prevents medically bankruptcies, and it doesn't FORCE anyone off insurance, and it would bring down private insurance costs significantly. They'd bitch that we should just do Universal Healthcare instead, but it's hard to argue it's a step in the wrong direction.

Pipe dreams don't pass. Reality does. You're never getting anything passed that massively fucks over a huge relatively popular special interest (like doctors).

You might be able to pass things that piss off unpopular powerful special interest like Health Insurance (or, previously, Fossil Fuel companies).

And this is supposed to be an answer?

1) In many cases you are paying that high "markup" for the handling rather than the product.

2) Hospitals are typically not making much money. Available 24/365 costs. Deadbeats cost.

3) Yes, most people don't pay much healthcare in any given year. But you don't know what year they are going to.

4) I like the idea of it as a tax--but in the real world this always ends up with the fox guarding the henhouse. Because most people don't need much care in a given year it's easy to satisfy the majority of the population with poor quality care. The ones that see the failure aren't enough to change the outcome of the ballot box.

Oh you must have United Healthcare. Yeah they do this with IVF drugs too, and I’m sure with chemotherapy drugs. Plus it all has to be shipped so if you’re mid-cycle and the doctor orders a different medication you either waste the benefits or pay out of pocket. And they structure all their pricing so the fertility benefit covers a cycle but the medications aren’t fully covered so you pay out of pocket in medication that’s 3-4x as expensive as the cash price would be at a pharmacy like Alto.

If you are on UnitedHealth and reading this, switch to Kaiser HMO next open enrollment, you will not regret it. It’s worth far more than the UnitedHealth PPO, they have plenty of availability for appointments and lots of remote options. They don’t skimp on screenings and radiology, their pharmacy is fairly priced. You can go in for a single appointment and get 4 things accomplished (physical checkup, blood draw, prescription transfer, physical therapy sign up and more) in 45 minutes. The people are nice and you have tons of locations nearby.

I pay cash for a medication because the insurance won't pay for the 90 day supply and it's a hassle to deal with it every month. It's $70 for me to pay for 90 days out of pocket versus paying a $20 deductible each month. I'm only paying $10 extra to avoid the hassle. Worth it.

My new job has some kind of insurance add-on which is an entire company of people with the express purpose of negotiating with your primary insurance to get specialty medication paid for.

Sticker price on my partner's medication is $10k/mo. Insurance alone refused to pay anything. This third party negotiator managed to get insurance to pay some, the manufacturer to discount it, and a "copay card" with several thousand dollars preloaded appeared to pay the rest.

We ended up paying zero out of pocket for the medication but it took two weeks of thrice-daily phone calls with various entities.

The very notion that an entire company can exist and sustain itself solely on negotiating with your insurance provider on your behalf is utter insanity. I've heard horror stories about communist bureaucracy from Soviet-occupied European countries, but I don't think even the USSR can compete with the modern American healthcare bureaucracy. It's outrageous and unconscionable.

Free idea: AI-powered "agent" that fights health insurance and medical bills for you.

The people writing the AI agents are being paid by the insurance companies.

Another example, I needed to rent some medical equipment which was pretty inexpensive. But for some unfathomable reason the insurance required that if that was rented, I also had to rent some other equipment that was like 20x as expensive that I didn't need at all. As well as purchase some disposable stuff, that I would not use, and could not be returned or used by someone else. And paying for just the things I actually needed myself without insurance wasn't an option.

try being diabetic ugh. I am constantly grinding against made up barriers. 150$ in strips and about 500-700$ for insulin. Meanwhile I meet a friend and he's just buying the base insulin from walmart for about 50$ a vial.

It is insane to me how much diabetic test strips cost in the United States. They are a cheap mass manufactured product that cost almost nothing everywhere else in the world

If you can pay cash without insurance, then you don't need the insurance.

Insurance is (should be) addressing the risk of unexpected expenses that you cannot afford. Not predictable, small expenses that everyone has.

This ignores catastrophic scenarios.

That is included in "unexpected expenses that you cannot afford"

???

This explicitly addresses catastrophic scenarios.

My Boomer mother has a mild case of shingles. Her health insurance will only pay for an expensive monthly injection. She tried it, but doesn't want it, as she says the side-effects are worse than the shingles. She prefers to apply a cream when she experiences a flare up - maybe, twice per year. Well, her insurance won't pay for the prescription cream; they keep insisting on the monthly injection. She was told if she insists on the cream, she needs to buy it on her own - cost, around $150. Thankfully, we live not far from Mexico, where I can purchase the exact same cream for around $7.

So, it seems the solution to the high cost of prescription drugs in the US is to live near a border. LOL

I have never heard of shingles as a chronic condition. Will the vaccine not work?

This kind of bureaucracy sounds like the stuff my teachers criticised communism and socialism for in school. Isn't our 'capitalist' system supposed to thwart this?

Your example captures two distinct extraction mechanisms in one transaction. The $25 to $125 gap is spread pricing: the PBM pockets the difference between what they pay the pharmacy and what they bill the plan. The deductible non-application is a separate mechanism: by routing through their own mail-order or in-network channel, the PBM ensures that cost doesn't reduce your out-of-pocket maximum, extending your exposure for the year.

The FTC's 2024 Interim Report documented $7.3B in specialty drug markups from the Big 3 PBMs (CVS Caremark, Express Scripts, OptumRx) in a single year. The Ohio Auditor found PBM spread pricing extracted $224.8M from one state's $2.5B Medicaid drug budget annually. This is the subject of the next issue being released this Sunday.

Your example captures two distinct extraction mechanisms in one transaction. The $25 to $125 gap is spread pricing: the PBM pockets the difference between what they pay the pharmacy and what they bill the plan. The deductible non-application is a separate mechanism: by routing through their own channel, the PBM ensures that cost doesn't reduce your out-of-pocket maximum, extending your exposure for the year.

The FTC's 2024 Interim Report documented $7.3B in specialty drug markups from the Big 3 PBMs in a single year. The Ohio Auditor found PBM spread pricing extracted $224.8M from one state's $2.5B Medicaid drug budget annually.

Healthcare administrative overhead in the US is pretty huge and has been for a long time. Back in the early 90s I worked on claim processing software and I recall it being discussed as being around a third of healthcare costs.

Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

In 2021, the U.S. spent $1,055 per capita on healthcare administration, while the second-highest country — Germany — spent just $306 per capita, Japan is $82. https://www.pgpf.org/article/almost-25-percent-of-healthcare...

Administrative spending accounts for between 15% and 30% of total medical spending, with lower estimates covering only billing- and insurance-related expenses, and higher ones including general business overhead such as quality assurance, credentialing, and profits. https://www.healthaffairs.org/do/10.1377/hpb20220909.830296/

The Center for American Progress estimates that health care payers and providers in the United States spend about $496 billion annually on billing and insurance-related (BIR) costs alone. https://www.americanprogress.org/article/excess-administrati...

The time burden on physicians is staggering — estimated at $68,000 per physician per year spent dealing with billing-related administrative matters. https://www.pgpf.org/article/almost-25-percent-of-healthcare...

I witnessed this devolution with my GF. She's a medical provider in CA that, since the mid-90's, got her funding from a state agency. She met with the agency once per quarter, reviewed her funding claims, worked out any discrepancies one-on-one, in-person with her representative. Worked great. Then private insurance muscled their way in. It's been a bureaucratic nightmare ever since. She had to hire a full-time staffer just to handle all the insurance BS. She never needed that before private insurance.

The nightmare isn't just for her; it's also for her patients. She now spends almost as much time walking her patients through the insurance bureaucracy than she spends on actual treatment. And it's so sad because her patients are so desperate (parents of extremely sick children), but often get nothing but bureaucratic run-around from their private insurers.

So yeah, it's been a lose-lose situation since private insurance took over.

At least those parents have the freedom to choose which animated 3d mascot is on their insurance paperwork.

>Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs.

That's the reason why a lot of inefficiencies are kept in countries around the world: it keeps people employed and moves money through the economy. If broken things were suddenly to be made efficient overnight, the government wouldn't be able deal with masses of angry people/voters suddenly out of a job.

And they say there's no socialism in the US

The sentiment reminds me of the people who believe that having so much prosperity that people feel comfortable not working all year around... represents some terrible threat that must be vigorously resisted for the greater good! Think of what it would do to the poor metrics.

Literal overnight change might be too radical (although, frankly, I'd want to see some academic work on the matter because it sounds like it might work - typically the problem seems to be that the body politic tries every alternative but good policy first then blames the mess on freedom) but people who are scared of rapid improvement because they don't like change are a massive threat to human prosperity and really shouldn't be left in charge of anything important.

Delaying the industrial revolution was never a good choice at any point in human history. The potential gains from efficiency are unbelievably large.

>not working all year around

Keeping people employed through inefficient bullshit jobs is better for the government than paying them to sit at home, since this way you have control over their livelihoods and their votes.

In civilised places, the government is the people. And civilised people know they are the government.

Like which places are those?

This is some idealist fairytale view that people like to believe in but doesn't actually exist.

This is unnecessarily confrontational. The real point here is that there better functioning democracies than the US. They have faults, but Scandinavia and much of northern Europe (partially excluding the UK) much better approximates what you call a fairytale than a US perspective might allow you to believe. Trust in and satisfaction with government institutions in Scandinavia and Finland are much, much higher than in the US, and it's largely justified by their competence and delivery of public goods.

>This is unnecessarily confrontational.

Why?

>but Scandinavia and much of northern Europe

That's like 3-5 out of 195 countries and only 0,3%-0,5% of the world's population. Being born there is like winning the lottery so maybe take that into consideration when arguing with such examples since that's not the norm. Like what are the odds that people you talk to online are part of that 0,5%? So who's the one being needlessly confrontational?

>Trust in and satisfaction with government institutions in Scandinavia and Finland are much, much higher than in the US

I don't care about the situation in the US since I don't live there. I'm talking from the perspective in Europe(not Scandinavia) where I can't say the democracy is representing or serving me. No law maker asked about the major decisions the EU made.

> I'm talking from the perspective in Europe > > No law maker asked about the major decisions the EU made.

Idiot brexiteer talk...

Did your mom teach you to talk like that?

She taught me to only speak the truth.

This reminds of a debate in the German parliament 30 years back or so, about the cost for the Eurofighter project (IIRC). Essentially one speaker had argued against the staggering cost, and a second speaker from the government defended the project by saying how many jobs it created. Someone shouted that building a pyramid in honor of Helmut Kohl and it would create a lot of jobs as well, that didn't mean it's a good idea.

The Kohl pyramid vs Eurofighter is a funny but very poor example that isn't remotely comparable. Useless defence projects have the advantage that it keeps institutional know-how from being lost and ready for the time when war actually comes for you. That's why Europe has been left unprepared by the war in Ukraine and why the US is the defense powerhouse.

Yup. It's one of those industries where an important part of the mission is reasonably level spending over extended periods. Much of the real cost is the cost of being able to produce it, this can end up being more than the actual cost to produce one item.

(Even more extreme: drug pricing. It can take a billion dollars to bring a drug to market, something has to pay for that. Unfortunately, the reality is that it's basically the US market that covers the world's drug R&D.)

This is a sign of a broken system. It's the old joke about paying someone to smash windows and someone to repair them, how that's great for The GDP.

I would assume reducing healthcare costs would make absolute majority of voters happy.

> The time burden on physicians is staggering — estimated at $68,000 per physician per year spent dealing with billing-related administrative matters

Having had my share in the administrative part of the medical field, that figure is most probably somewhat misleading. Every time you deal with billing you are bound to deal with granularity. On one extreme you could bill per case, on the other extreme you can count the paperclips used. It could seem at the first glance that the more you move towards the latter, the more time has to be spent by someone to somehow eventually form the invoice.

However, this surface-level conclusion misses the fact that patient care does not start and stop at the the operating room door. Some processes mandate transparency/traceability and thus documenting what's being done and used is part of the process anyway. [edit: the final deliverables are not a treated patient, but rather a treated patient and documentation complete with medicine authorizations / prescriptions (including for drugs used internally), sick-leave certificates, etc.]. That data is then effectively reused for billing, with minimal overhead hopefully. Yes, there's a lot of room for improvement and automatization, but activities not directly related to active care make up a sizable portion of the time.

Isn't this true across other sectors as well? NYC DOE spends $42,000 per child on education ~half of that is administration costs.

https://apps.schools.nyc/dsbpo/sbag/default.aspx?DDBSSS_INPU...

Where are you getting that from the link that you shared (which is one specific school)? The link you shared shows a figure of $34k and doesn't show a clear breakdown of administrative vs non-administrative costs. The closest I can see in that link is that $13k/$34k is allocated to central services, but most of that cost goes to things like the school buses and the cafeteria and the security guards, which are direct services to students, not administrative overhead. They just are run at the system level, not the individual school level.

I didn't see those figures in your link. It looks like $34,000 is the per capita funding of that school, and it wasn't really broken down into administrative or not.

Huge data problem here. How much of it is special education? There's a huge division here, the per-capita spending is not remotely what is spent on the average student in the classroom.

> Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

Yet we're ok with spending trillions on AI to eliminate jobs everywhere, including healthcare.

I don't think that's the reason.

Personally I'm of the opinion the reason it isn't being solved, is because the people whose job it would be to solve it get to keep their jobs due to donations from pharma and insurance companies.

Well right, people lobby not to change anything because they have giant companies that make them money. They need all those people in jobs to help them deny claims, identify fraud, waste, etc.

If Intuit and other tax preparers can protect their tax preparation rents at the expense of all income earners, then it is not difficult to believe that the medical industry is also able to protect its own rents.

Middle men in processes add overhead, but on various analyses I've seen.. zeroing all middleman (insurance, PBM, etc) out still leaves us as far more expensive than the rest of the rich world.

One thing which is not terribly popular to point out is that at least on procedure pricing - wages are way way higher here. Some of that is that education is far more expensive so then we need to pay very well to pay that down. Also we have a cartel that limits the number of medical graduates.

NYC have been striking and to quote the union-friendly NYT "The three hospital systems affected by the strike said their nurses on average make about $160,000 a year and are seeking raises that could propel nurses’ salaries on average past $200,000, according to the hospitals."

By comparison UK pays nurses like US blue state fast food workers. Per google - "Average nurse salaries in London are the highest in the UK, generally ranging from £37,000 to £55,000 per year." Note NYC minimum wage is at $17/hr though many hospitality workers in the $20s, with a renewed Mamdani push to $30/hr minimum.

And US tax rates at these 3-4x higher compensation levels are same/lower than the UK..

Then add Americans having generally unhealthier lifestyles, being more litigious requiring higher malpractice insurance, etc..

Malpractice insurance is a big part of the higher salaries.

Care to provide reference for your claim? AFAIK malpractice insurance for nurses is quite cheap.

Why are we attacking literal healers that want to be compensated fairly and have better standards for their patients?

The US is being pilfered by like less than 10,000 people so the federal government can give them corporate welfare worth $50 trillion over the decades [1] at the expense of workers.

But yeah... it's those damned nurses wanting to have fair wages and working hours that are the true enemy not the ghouls in SV that profit off of human misery... it's the nurses...

The idea that healthcare needs to be profit driven should be an idea excised from our collective intelligence.

[1] https://time.com/5888024/50-trillion-income-inequality-ameri...

> Administrative spending accounts for between 15% and 30% of total medical spending

Healthcare is nearly 20% of GDP (and growing), so administration is 3%-6% of the US economy!

> Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

Why not simply hire them to do something that isn't pointless - like dig ditches or clean garbage

You could say the same to tech workers after AI.

So what?

Are you arguing that since we think we're all special that we should be accepting that other people think they're special?

Meanwhile, people getting laid off (just so the jobs could be exported to countries with more poverty and lower pollution, worker's rights, and standards for working conditions) were getting berated that they should "learn to code" for decades, while we laughed and discussed our stock options.

> while we laughed and discussed our stock options.

We? Sorry, I'm one of the "newer" engineers that joined the industry right before the AI bubble.

I didn't laugh or discuss my stock options. I accepted what jobs were available post-COVID crash.

And you'd be right. Forbidding efficiency improvements in order to preserve jobs is the correct solution approximately never.

Do you expect US government to create a huge regulated industry similar to health insurance to keep tech workers employed?

Those figures are consistent with what Issue #5 (still a couple weeks out) of this series computes from CMS NHE 2023 data and OECD health statistics. The 10-peer OECD average lands at $884 per capita, putting the US at 5.6x. Scaled to 335M people, that's $1.37T in excess admin annually.

The Woolhandler/Himmelstein 2020 figure ($812B) updates to $1.13-1.66T in 2023 dollars when adjusted for healthcare inflation. The CMS narrow admin estimate ($410B) plus CAP's billing complexity analysis ($496B) gives a $906B floor. Those three methodologies agree on the floor, disagree on the ceiling. Issue #5 covers all three and explains why the range is so wide. Coming soon.

> Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

This is legitimately mentioned in the industry.

Imagine the "you need developers!" crowd on HN, but 5x stronger.

I see a lot of the comments operating from an empirical framing. This is valid analysis and is good; we should want to understand the waste in the system as it stands.

However, that isn't enough. US healthcare is wildly inefficient because the paying customer is different than the serves customer. This has been known for sixty years, since Arrow published his paper (he identified four reasons, three of which are not exclusive to healthcare and seem to be mitigated well in other industries). I'm surprised people posting can't quite see this: when you go to the doctor, would you call the experience efficient? You check in, then wait, then are called back, tell the nurse or PA why you're there, wait, see the provider who asks you again why you're there, has a short exam, wait, finally get all the paperwork and sign out.

If you have labs or tests, you then wait again. And of course if you need a specialist, you wait again, sometimes for months. If you need any sort of "specialty" medication or equipment, then you REALLY wait, as specialty pharmacies, DMEs and the like jump in.

The whole system is woefully inefficient, and overhead is only a part of the explanation. No one knows what anything costs, and the people who pay (insurance providers, the largest of which is the US Government) want to believe they're not getting scammed - they still are, but at an acceptable level.

The question we ought to ask is how we can buy better health outcomes for people. And I think part of the answer is that in most cases, individuals and families themselves must allocate resources they control to make this happen.

And yet it is still vastly more inaccessible and inefficient than other countries where the same holds. There is a lot that could be learned from other countries. So it's good to see that this repo does so.

I notice the repo has no data on supply of doctors per person in different countries. It's well known that the US residency system with its limited slots constrains the supply of doctors who can practice in the US.

There exist similar systems in pretty much any other western nation. The problem is that teaching doctors is expensive and isn't something you can ramp up quickly because you need other doctors to teach the new doctors. The supply of doctors is a problem that is universal to essentially all western nations especially if you move away from metropolitan areas. It's largely due to aging populations and failure to increase spending on medical education over decades. I think the US is actually better off than many other countries, because they pay disproportionately high salaries so get more immigrants.

That said I don't think there's evidence that lack of doctors is what is driving up cost in the US. Just an example, growth in hospital administrators has significantly outpaced medical staff over the last decades, which will directly increase cost.

Clarification because people get this wrong a lot:

There is no imposed limit on the number of residency slots.

There is a limit to the amount of money the US government is willing to spend on slots.

Why does the government need to spend money on slots at all? Do other countries do it like that?

Because it makes pretty much no economic sense for anyone else to do it

One of many failure modes of the glorious and totally perfect Free Market

Yes most other countries use public money to educate their doctors

> Because it makes pretty much no economic sense for anyone else to do it

I think other funding models simply haven't been explored. I'll pull one out of my ass. The hospital does it themselves. In exchange the doctor works at the hospital for the next N years, or pays a contract break penalty. The hospital can pay the doctor somewhat less than market rate and doesn't have to deal with staff turnover.

It should be obvious that other funding models will be invented if government funding goes away. Because the alternative is no new doctors and people start dying without treatment.

Residency training costs like $750,000 to $1.5MM per physician

Primary care doctors would have to work 12-15 years while giving up 25% of their gross salary just to pay for the residency program. They'd also have to pay x% of their salary to pay for their debt from med school training before the residency.

People just wouldn't go into the field, which is already happening even in a world where the residency is funded. The economics of being a doctor are simply not that great anymore, especially relative to other things you could do.

> It should be obvious that other funding models will be invented if government funding goes away. Because the alternative is no new doctors and people start dying without treatment.

There is an infinite number of jobs that would be great to have but we can't reasonably fund and so don't exist.

We currently live in a timeline where there are no new personal one-to-one tutors for middle schoolers and therefore every single middle schooler in the country receives subpar education, causing vast amounts of economics losses as compared to if they could be trained more thoroughly.

But that's just the way it is!

> Residency training costs like $750,000 to $1.5MM per physician

And how much do residents generate in billings?

Your numbers may also be off by a lot. It'd be great to see some sources. https://news.ycombinator.com/item?id=45507076

I find it completely unbelievable that residencies are not a profit center for most teaching hospitals. The residents do almost all the day to day work with a half dozen of them reporting to a single attending physician.

It’s not like you get a discount if you’re seen by a resident vs attending either. Sure the first year or maybe two a resident needs a lot of close supervision, but not nearly as much as people think happens.

I would bet dollars to donuts that the vast majority of patients seen by a resident have no clue. They simply call them doctor.

My bet is it’s all accounting tricks. You’d be utterly incompetent not to somehow make a profit on 60-80hrs/week of basically free doctor labor even if those are junior doctors. They generate massive amounts of billable services. Plus they are basically guaranteed to work for you for 4+ years, aside from the few that wash out.

The reason you tell several different people why you are there is because that is important. if a system doesn't they need to start!

people often remember things when asked latter. this gives more opportunity to ask about everything you care about even if you forget the first time.

people sonetimes grab the wrong chart. This helps ensure that they check for things that matter to you and not someone else - your history is on the chart if they are watching you for something weird in you history this is important.

Or the patient makes the mistake. I've seen it happen:

My wife has a foreign name--an English speaker coming at it cold is going to butcher it. Someone gets it right--either they've been told or they speak some Chinese. (It's not hard to say, but you have to know the Chinese Pinyin rules to get it right.) Over the decades we have grown used to responding to anything in the ballpark and then sitting back down if someone else responds. Oops--L shaped waiting room, we didn't see the somebody else. She ended up in back, the check caught it there.

Or look at my own name. That's the male spelling--but most people don't realize there is a male spelling. It's caused confusion over the years.

I mean isn't that why they ask for name and DoB each time? I get that they want to ensure they're working with the correct patient. I just don't love trying to recall on command the litany of symptoms I've experienced and remedies I've tried before seeing a physician.

> The question we ought to ask is how we can buy better health outcomes for people

spend more money. you DO live in the greatest country on the planet, surely if an american citizen cannot raise the funds for healthcare, in what country can you expect to?

We spend a ton of money per capita and get bad outcomes.

I worked in healthcare start-ups for many years and the main problem is mis-aligned incentives.

The #1 thing we need to do is make it illegal for your healthcare to be tied to your employment. We can still have your employer provide a X% or $Y to an HSA account that the employee can buy health coverage wherever they like. (I'm not optimistic that this will ever happen politically)

The issue today is that NOT healing you makes everyone more money, like a LOT more. There is no incentive for anyone to help people get healthy just to have a different insurance company benefit from the decreased claims.

This is also the only way forward to value based care (for primary) where doctors (providers et al) can take on the risk/reward. They get some amount (say $1K ??) per year and they keep it and submit no claims. However, if there costs go above, they eat it loss. Now the doctor and the insurance company (payer) are all incentivized to get and keep people healthy.

> I worked in healthcare start-ups for many years

I learned a while back that there are two industries you should never ever touch as a startup:

- Healthcare

- Education

Both systems are so broken (for different reasons) that it's a fool's errand.

> We can still have your employer provide a X% or $Y to an HSA account that the employee can buy health coverage wherever they like. (I'm not optimistic that this will ever happen politically)

Doesn't this already partly exist? My (US) employer offers an HDHP (high-deductible health plan) that comes with an HSA.

(It's not quite what you described, because you have to use the insurer that the company picked. I think you're describing something more like the Singaporean system with Medisave.)

I think the mechanic they're trying to speak to is that due to insurance being tied to employer, no insurance plan (besides Medicare/Medicaid) is truly motivated to ensure good health outcomes beyond a ~4 year horizon. You'll switch jobs and get a different plan.

FEHB plans would also have this incentive. I think at least historically Federal employees didn't switch employers as much (though job-hopping between agencies happens), but more importantly if you retire from the Federal government you keep your health insurance.

Yeah, what I'm suggesting is that your premiums are funded through your HSA, not just your deductible and medicines. Obviously, the max HSA funding amounts would have to change.

The main difference there is that with an HDHP your employer is still the one choosing the insurance provider, and the insurance provider views your employer as the customer. There's no risk that you as an individual will switch to another provider as long as the employer remains with this one.

Removing that layer of indirection would make it your own choice to pick a provider, and the provider is then incentivized, at least a little bit, to provide you with a good outcome or else you may freely switch to another provider.

There's also the component that, right now, you lose the discounted group rate insurance premium as soon as you lose or leave a particular job. Putting the purchasing power with the end consumer means that you can keep your provider at the same premiums even if you switch jobs. All that might change is your employer contribution.

The #1 thing we need to do is make it illegal for your healthcare to be tied to your employment

Yes. Or at the very least, stop making it mandatory. Health insurance should work like literally everything else: your employer pays you money, and you use that money to buy it.

> Health insurance should work like literally everything else

Eh, everything else varies significantly by company. Tradesmen have to buy their own tools. FANG provides free lunches.

I've yet to see an argument for why a singular person is going to be able to do a better job making healthcare more efficient than a company that shells out millions of dollars for that line item. Like why doesn't HR drop the health insurer that just keeps lock-step increasing prices? And why doesn't that reason apply to an individual?

Lots of people without a lot of assets would gamble.

The current system exists because yours is even worse.

Why make this so complicated when we can just have medicare for all? You're right that healthcare shouldn't be tied to your employment, but what you're proposing is something that only the rich + affluent can achieve independently.

All you're doing is playing musical chairs with different capitalists, just stop playing the game. A large part of the electorate wants to stop playing the game.

I think politically it is an easier sell than medicare for all or government only healthcare.

You need to do some actual canvassing and get out of your SV bubble, M4A polls at a consistent 60% support where both independents and democrats are at nearly 80% support.

What you're advocating is more corporate welfare that I don't see happening but it's the only playbook those with money seem to advocate for.

Weird.

No offense, but that is meaningless.

60% support abortion but he we are with no Roe. 70% support gay marriage but the small percentage in charge want to outlaw it.

It takes more than polling to become legislation. Weird indeed.

I am less interested in the quantitative analysis, but the qualitative analysis. Why, culturally, has the US shot itself in the foot in this way?

> And I think part of the answer is that in most cases, individuals and families themselves must allocate resources they control to make this happen.

Assuming uniquely American selfishness got us in this mess, I don't buy that rugged individualism is the route out. You'll just get that classic pattern of those with enough resources to manage criticizing the resource management of those with too few resources to learn to manage. That just further corrodes solidarity.

The unfortunate answer is that the US seems to be very bad at fighting regulatory corruption which allows small parts of the market to buy laws which give them a moat. Rinse and repeat over the last half century and you get to the situation we're in.

But that's not rugged individualism. It's just letting the market actually do its job, and let consumers and producers actually communicate a price

> Assuming uniquely American selfishness got us in this mess, I don't buy that rugged individualism is the route out. You'll just get that classic pattern of those with enough resources to manage criticizing the resource management of those with too few resources to learn to manage. That just further corrodes solidarity.

I chose my words carefully so as not to imply "rugged individualism" was the solution. I mean I even explicitly invoked "families" as an institution greater than the individual. And I used the word "control" rather than "earned" or something.

Weirdly, "rugged individualism" is kind of why American healthcare is so bad: we tie it to employment for those under age 65. Before the ACA, this was simply because healthcare is exempt from income tax; with the ACA, it's literally mandated. In order to get health insurance, you need to pull yourself up by the bootstraps and get a job OR pull yourself up by the bootstraps and pay extremely high premiums.

Disentangling healthcare from employment and allowing for other institutions like churches or schools to play a part in helping fund it would do a lot. And for the truly catastrophic conditions like cancer, we should just have a universal policy that kicks in.

One key problem appears as misaligned ("perverse") incentives. But it has to be that because its essentially impossible for an average person to purchase health care in the moderately informed and choice-filled fashion that I can purchase a vacuum cleaner.

Of course, another key problem is trying to divide distinct parts of health care into distinct costs. Everyone benefits from having a good quality hospital in their area and so assigning a health care provider's cost to just a given patient and then trying to reduce the patient's cost is quite irrational.

Essentially, you have a public good that the state and private interests are trying to make into a public good. A lot of profit comes from this but little good for the patients.

Why do you think we can??

We already have mandated covering the things where spending now saves more down the road. And the medical community has standards of proper care. If there was a way to reduce costs by improving patient health it would already have been done!

Think we haven't learned a fair bit about our own health issues? If there was some magic answer a lot of people would have found it.

> The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD. That gap is roughly $3 trillion per year.

The difference in life expectancy will be influenced by multiple factors and may have more to do with diet and lifestyle than with healthcare.

Japan also spends less per capita than the UK, France or Germany. The US spends a lot more than any of those so the US system is bad value for money.

We in Germany copied a lot of the stupid stuff from America (including the stupid billing system for inpatient stays), so it's not that surprising that our system is also bad value for money.

PS: Outcomes here are not worse than those of rich people in the US, because I know some idiots will claim this to cope

https://jamanetwork.com/journals/jamainternalmedicine/fullar...

Germany didn't copy the US - they just happen to share similar roots.

Both historically had private hospital systems, and just so happen to implement pension/employer-based insurance programs very early on. German's just evolved in one direction and the US evolved in the other.

We copied the DRG reimbursement System from the US.

And no, we didn't had a historically significant share of private hospital systems, those came with the introduction of the DRG System, which forced many city/church owned hospitals into privatisation.

Before that, they had a "Fixed Price per Night" System, which also was a bit stupid, before that they got reimbursed their cost.

Actually Germany is a lot better value for money than the US. The cost (either absolute or as a percentage of GDP) is similar to the UK or France, and from what I have been told by people who have lived in both countries, the German system is better than the British.

The US also has GDP per capita of $90k and Japan has a GDP per capita of ~ $35k.

Put another way, in both countries a hip replacement surgery is almost exactly 1/8 of someone's per capita GDP.

Too bad Walmart greeter isn't making "per capita GDP".

Some quick googling suggested cashiers at Seiyu in Japan earn $7-9/hour USD while Walmart is about double that.

If the Japanese cashier makes half the amount, but spends only 1/3 on healthcare that still seems to favor Japan

Well sure, then you're kinda cherry picking data that could easily be considered within a margin of error to make a rather unconvincing point

Whats your point, US healthcare is ridiculously expensive to detriment of all US citizens sans those working for health insurance conglomerates. Any objective data you pick will show this, no need for strawmen.

It’s really good for clinicians and their paychecks, too.

It is not cherry picking to respond to presented data

It's cherry picking to describe the typical worker experience? You do realize that vast majority of Americans don't make more than $100k right?

They make more than they would in Japan. But people can make $0 in any country. Regardless, part-time Walmart greeters are fortunately not paying full price for health insurance in the US.

put another way, they're so poor that the US gov has to subsidize their healthcare since they couldn't get insurance or care otherwise.

I'm curious what you're implying. Is there a country where the poorest person is so rich they can get all the insurance and care they require without government subsidy?

The Walmart greeter also isn't paying for the bulk of their healthcare expenses because Walmart provides subsidized health insurance to all employees who work at least 30 hours per week. All US employers with at least 50 employees are required to do so under the ACA. If the greeter worked fewer than 30 hr/wk, they wouldn't get insurance through Walmart, but they would likely qualify for an ACA subsidy that covered close to the entire cost of a health insurance plan on the marketplace.

The statement, "The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790" is about the average amount that the country as a whole is spending per person on healthcare, not what any given individual is paying. Per-capita GDP (i.e. the average economic output per person) is the most relevant comparison.

This feels like a misleading ratio, it's just saying the cost is the same in per capita terms but says nothing about the absolute cost or more importantly cost as a percentage of income, which matters for the majority of people in the denominator of the GDP per capita calculation.

“someone” in this case is in the 73rd percentile in the USA and ~40th in JP.

So the USA is still significantly more expensive as a portion of actual income. “GDP per capita” is a relatively useless figure

The difference that using percentage of GDP instead that Japan moves close to the European countries. The US remains a very expensive outlier.

https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS?locat...

The median salary in the US is around $61k a year and in Japan is around $42k a year. Salary-wise the difference is not as big as GDP per capita

This is called "purchasing power parity". There's an official index for it, as well as ad hoc measures like the Economist Big Mac Index.

To some extent it's circular: the US has a higher number of GDP because it spends more on healthcare. The broken leg version of the broken window fallacy.

This is an excellent point. Another comment pointed out that the gap in median salary is not as great as the gap in per capita GDP. Depending on the causes this and lower prices may mean Japanese are better off then Americans - e.g. if there is greater self-supply within households that would not be captured by GDP.

The important question is: which fraction of people can afford it in either country?

I suspect you would see the exact same trend comparing Japan and the U.S. in transit, education, and many other services. The U.S. spends more per capita to get less.

The US is a wealthier country and wages are higher here than Japan.

The median equivalised household disposable income of a US household is over twice that of a household in Japan.

This is one of many reasons why it’s so misleading to compare prices across countries in a vacuum. All of the people doing the work for those education, transportation, and other services and all of their inputs aren’t going to work for Japan-equivalent pay when they’re living in the United States.

The wage adjustment is worth testing with data. Japan's GDP per capita on a PPP basis is roughly $47,000 versus the US at $80,000, a 1.7x income gap. The per-capita healthcare spending gap is $14,570 vs $5,790, a 2.5x ratio. Healthcare costs outpace the income gap by a meaningful margin even on PPP terms.

The outcome data is what makes the adjustment argument hard to sustain. Japan has the highest life expectancy in the OECD (84 years) and the lowest infant mortality (1.7 per 1,000). If higher spending were buying proportionally better outcomes, the wage argument would carry more weight. The US spends 2.5x more and gets worse population health statistics. PPP narrows the gap, it doesn't close it.

Median salary in the US is barely $45k a year:

https://www.ssa.gov/oact/cola/central.html

So what you're describing is even worse.

The above was comparing the average in Japan to the average in the US. If you want to compare medians, it’s about $43,000 in the U.S. (2023) versus 3.96 million Yen (2025). See: https://e-housing.jp/post/average-salary-in-japan-2024-insig.... At current exchange rates that’s about $25,000. So that’s the exact same 1.7x ratio as for the averages.

Not in iPhones!

In domains like healthcare, education and transportation, the cost is primarily labour. A wealthier country pays its workers more, which gets passed down in higher prices to its consumers. And, while healthcare and education do not benefit from economies of scale, transportation does, so the denser population gets cheaper transportation per capita.

Japan also has the "Metabo Law" (aka fat tax). Do you think Americans would go for that?

"Obesity costs the US healthcare system almost $173 billion a year."

So that's about 6% of the difference? I'm not immediately saying no, but it sounds like that's not the real problem.

That 6% number isn't even close to accurate. There are many other very expensive chronic conditions that are downstream of obesity including type-2 diabetes, heart failure, hypertension, MSK injuries, etc. We are digging our graves with our teeth.

Although I tend to think we overwork the working class such that they have no energy to keep up their health, so this would basically be taxing them because they're poor in many cases.

Except all those things reduce peoples lifespan, and age-related care is by far the most expensive medical care.

Social reasons it would never work. I hate to mention anything race related online but simple truth is America has complicated history and African Americans are 30% more likely to be obese than White Americans and also earn approximately 60% of income that whites earn. A fat tax, especially one that properly allocated the cost burden to the individual, would erode race relations.

fwiw the “tax” in Japan is not paid by the individual, and generally taxing the behavior via e.g sugar taxes rather than the outcome has worked better without much public outcry after the fact

Not sure that would play the same in US though.

Black population in the US is still concentrated in neighborhoods formed by overt racism and segregation and same neighborhoods tend to be food desert where no healthy or even fresh options exists. Even if we taxed just the bad food, the lack of options and mobility that higher income might provide, basically means it’s something that would be seen as targeted. Not to mention, people will draw the most racist perception no matter how carefully you crafted the tax because race relations are always unfortunately weak and these correlations are being forced/drawn.

Is that controlled for income / poverty levels?

It doesn't matter as the cited numbers will be cherry picked.

Fat shaming! ... It makes me sad whenever I hear that response to any mention of the health problems associated to obesity.

It’s what all of Asia does and it’s very effective. Make people’s weight their primary problem until they resolve it. It’s not like it is some unchangeable attribute that can’t be fixed through self control and discipline. The shaming is just unsolicited motivation that works. I feel sad if people are made fun of for attributes they can’t change.

If everyone could control their weight via simply willing themselves to have more self-control, then nobody would be fat.

Self-control is, ironically, not usually within one’s self control.

Most people don’t contemplate very deeply about the gap between their will and their behavior. I’m extremely focused on self-determination and it’s absolutely astounding (and irritating) to me how little control I have over my actions relative to the control that circumstances have over me.

Your attitude about the matter is common, and seems like plain old common sense. It’s also dead wrong.

> Self-control is, ironically, not usually within one’s self control.

Problem solved. Next!

Companies make a fortune from creating that lack of “self control”

No, they didn’t create it. They created the circumstances where it causes certain types of purchasing and consumption behaviors. The lack of self control was always there, just waiting for those circumstances to bring out the effects of the lack of self control.

Most people vastly overestimate how much they are actually in charge of their life.

That’s exactly what I’m referring to. You’re made to feel so bad that it’s no longer a matter of “self-control” but social acceptance. People will do a lot to fit in.

Metabo is a saw producer, so cut fat in half should be their motto. /JK

> Japan also spends less per capita than the UK, France or Germany

These have to be purchasing power adjusted.

The Japanese system is amazing. Cheap drugs, cheap dentistry, no wait times and reimbursements for all kinds of things (government covered more than 100% of childbirth cost - yes we got more back than we paid). But the best part IMO is the emphasis on preventative medicine. My wife and I get annual checkups which cover a whole range of things including screening for various kinds of cancer.

Try seeing a doctor in Japan as a foreigner. Just a simple consult costs $300 USD or so, and it goes up from there. It's actually a rather expensive system.

That doesn't seem more expensive to what I generally pay in the US.

Exactly, it's roughly on par. The OP was claiming it was significantly cheaper.

This is absolutely not true. I pay the equivalent of about $40 for X-rays and blood tests. A simple consultation is about $15, if that. I recently got diagnosed with asthma, and the whole set of tests plus a month of medicine came out to about 6000 yen, which I suppose is $40.

The only reason you would pay that much is if you're visiting a private no-insurance clinic and not using insurance. And private clinics pretty much only exist to prey on people who identify as expats and make zero attempt at learning non-English languages, aside from a few exceptions (certain speciality dentists, plastic surgery, anonymous STD treatment, some cancers).

The whole debate is about what insurance companies are paying for those services, right? It's when one walks in without insurance that you see the true cost of the service.

> The only reason you would pay that much is if you're visiting a private no-insurance clinic and not using insurance

What alternatives does a tourist have? If Japan truly had cheaper procedures, it would see a huge uptick in medical tourism. There's no doubt that Japan has state-of-the-art facilities and treatment options, comparable to the US. It's no surprise that costs are comparable too.

A country has no obligation to make its medical system cheap and affordable for tourists. Your mention of "foreigner" was wrong because foreigners have access to all the same health care as a local.

No matter what country on earth you go to, a tourist will pay more than a resident for doctor's visit. That's why travel insurance exists. And health tourism is a disaster for any country since it results in high paying foreigners lining up for treatment and locals being neglected. There's a reason primarily poor and corrupt countries offer it for regular treatments, putting aside vanity treatments (balding, rhinoplasty, etc)

I think the salient point is that in all jurisdictions, there are subsidies for locals, either through government or private industry, to make health care affordable. That those subsidies create perverse incentives is unsurprising. Since perverse incentives distort the market, they are not useful. Hence we cannot measure the true cost of health care by looking at what locals pay, because there isn't one single rate for a local (this includes free/fully subsidized). The true cost of the service is most clearly evident to those who do not qualify for any subsidies, it makes the most sense to measure that.

I mention medical tourism because it's a real thing. People do shop around globally to take advantage of medical systems where the cost-to-service ratio is beneficial to them, and in many cases, not all but many, those people are paying the true cost of delivering that service (this includes the flight cost).

  > Try seeing a doctor in Japan as a foreigner.

you mean as a foreigner without insurance no?

But also age-related care is by far the largest share of medical care costs, and Japan has no lack of very old people. Being unhealthy also often reduces the amount of procedures someone is eligible to receive. Despite the blame people throw on unhealthy people for medical costs, they ironically often cost less because of the reduced care and lower lifespan which cuts out a significant amount of age-related healthcare costs. One could argue dieing at 60 instead of 90 is a big loss socially and personally, but overall financially it is a benefit.

It "may be other than health care" but most (all?) other modern nations on multiple continents in multiple cultures spend less percent GDP on healthcare with longer life expectancy than the US

Japanese Americans have a slightly higher life expectancy in the US (87 years) vs Japanese living in Japan (85 years).

Japan has an age fraud problem which inflates its life expectancy: https://en.wikipedia.org/wiki/Sogen_Kato

"The discovery of Kato's remains sparked a search for other missing centenarians lost due to poor recordkeeping by officials. A study following the discovery of Kato's remains found that police did not know if 234,354 people over the age of 100 were still alive".

The US has a high variance population. Aggregating the US into a single mean or median for that matter is a fool's errand.

> The difference in life expectancy will be influenced by multiple factors and may have more to do with diet and lifestyle than with healthcare

Less than 5% of Japanese are obese (BMI >30) compared with 36% of Americans, additionally 1 in 10 Americans are severely obese (BMI>35) whereas the number in Japan is negligible.

https://theworlddata.com/us-obesity-rate-compared-to-other-c...

I buy that the locus of American overspending is in fees charged by providers (my understanding is that a further principle component of that spending is in end-of-life care).

The problem, though, with going after pharma costs, and pharma benefit managers is that pharma is a relatively small component of overall spending; it's less than 10%. That is to say, you could make all pharmaceuticals entirely free, and we'd get at best a 10% discount on what we pay. I don't think any of us would be satisfied with that!

This is data from the most recent (as of last year) CMS NHE:

https://nationalhealthspending.org/

The 9.2% figure is pharma's direct share of NHE, but drugs are a net-positive externality. Cheap statins can stave off cardiac surgeries, GLP-1 can stave off bariatric surgeries, etc. It's ridiculous to conclude we would only save 9.2% on costs--this is not zero-sum.

No comment on drug pricing and its incentives, the existence of America's prescription drug markets drives the new innovative drugs that the rest of the world picks up for cheap.

That's an interesting argument --- that massively increased access to pharmaceuticals would have knock-on impacts on other cost areas in the NHE.

I think if we dig into the numbers we're likely to find those effects, even if we maximize them, are marginal, unless we do other structural things to untangle the provider pricing system and do price transparency. Like: you could posit a material impact on CVD costs by making statins more widespread, and that should make a dent somewhere, but I don't know that CVD costs in non-Medicare-insured patients are really that big a line item, and non-Medicare is important here because people already Medicare-qualified generally have all the statins they want already. Meanwhile, providers are still ripping patients (and insurers) faces off for shoulder impingements, stents, and spinal fusions.

It's a super interesting comment. Thanks!

> the existence of America's prescription drug markets drives the new innovative drugs that the rest of the world picks up for cheap.

That's the ludicrous propaganda that you've been fed but you really should be intelligent enough to dismiss it.

The world would get along just fine without you overpaying for your drugs. You pay for marketing costs.

Mostly not marketing (still large), but the R&D costs and clinical trial costs. The latter are in hundreds of millions to billions range for the entire journey from a promising discovery to an FDA-approved medicine.

Right, but the idea that Americans specifically should pay higher prices is beyond propaganda. It's Stockholm Syndrome-level delusion. Big Pharm has thrived for generations on our research universities (for the time being anyway) and had a front row seat to expanding foreign markets under US-led globalization. In return, we get the world's most expensive healthcare system and the privilege of paying too much for meds because our leaders won't cut a deal. All they have to lose is the "hundreds of millions to billions range" in annual lobbying expenditures by Big Pharma.

In a sane world - or literally any other country - that $300-$500 million in annual lobbying would be the literal difference that makes medicine accessible for those who need it. Instead, it goes to expensive lunches.

Why not just research it outside of the US if the problem is the FDA cost

You still need the same FDA approval and process to sell it in the US

Cost cut them. You think the administration won't take a bribe at that point?

Because the problem isn't the FDA cost

The problem is proving your drugs work

It's very hard and expensive to do

Every time Ive looked into it marketing is more than half of the costs of US pharma companies - and I would suspect even more as don't know if there has much work to unmask even more of that spending via channels that can occur in ways not obviously marked as marketing or at least are really not core to research and manufacturing.

e.g. is all the "discount coupon" pharmacy rigamarole considered marketing or administration.

This is not correct. Here's Pfizer's 2025 annual report [1]. Total expenses for the year were $55.1 billion. Advertising expenses were $2.7 billion of that, or just under 5%. R&D expenses were $12.1 billion, or just under 22%. They do have a lot of SG&A, but the large majority of that is not going to marketing.

[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0000078003/908eb6a...

Advertising is only a subset of marketing. From that doc, look at operating costs: SGA was ~$11B and R&D ~$12B - basically 50/50. Pfizer is very international, so is pretty difficult to break out US operating costs and what marketing vs R&D is for just the US. But one can also assume US marketing is higher than any other nation as direct-to-consumer advertising is primarily only allowed in the US.

No. Marketing is an issue but it's not the main driver.

Everybody else uses price controls to keep prices "reasonable"--the drug companies tolerate this so long as selling to the country exceeds their marginal cost of production. They count on the US market to recoup the $1B R&D costs.

Simply mandate that a drug company can't charge more in the US than they do in any other first world country. Major earthquake in drug costs.

The "discount card" bit is basically a reduction in revenue, it's neither marketing nor administration.

Agreed. I mean, where did the COVID mRNA vaccine come from? Which company makes the GLP-1 inhibitors like Ozempic and Mounjaro? Are these American companies?

Mounjaro and the next generation of soon-to-be best in class GLP-1 (Retatrutide) are Ely Lilly based out of the US.

Novo makes Ozempic, and is out of Denmark.

The mRNA stuff is a bit more murky, depends on how you squint. Best assignment there would be a split between the US and Germany I suppose?

Even if it's 10% in aggregate it could be much higher for individuals and families that are screwed over by drug pricing.

But anyway we really do need to go after providers and end the racket that is employer provided health insurance.

Wait, I hate employer-provided health insurance and think it's a terrible policy but what does that have to do with providers charging everyone --- including Medicare! --- way too much for services?

The health insurance industry drives highly increased administrative costs - costs which the insurance companies are happy to foist off onto non insurance channels?

It’s a round about recognition of the agency problem in the medical industry.

If people chose and directly paid for there own medical bills and insurance then extra fees and extra diagnostics would be born directly by the person paying for it, who would have the freedom to make other choices, like picking insurance providers who were better at preventing it.

At least that’s an argument you can reasonably make. I’m not sure it would hold up in practice given how different medicine is from other markets.

This project reminds me of a book I highly recommend called An American Sickness. It sheds a lot of light on the same sorts of issues.

One underlying, perverse incentive behind many of the problems is that insurers are regulated based on percentages of spending rather than total costs.

The US passed laws meant to limit marketing and overhead that tied insurers economics to the size of the overall medical bill... which means as healthcare spending rises, the dollars they’re allowed to retain can rise too, which basically means they're incentivized to drive costs up rather than down.

Here's a link to the book: https://www.helmpublishing.com/products/an-american-sickness...

It's almost as if the insurance companies wrote those regulations. The same ones that required everyone to purchase their product and implemented government subsidies to pay them. Legitimately no way anything other than price increases and insurance profits could happen.

> The US passed laws meant to limit marketing and overhead that tied insurers economics to the size of the overall medical bill... which means as healthcare spending rises, the dollars they’re allowed to retain can rise too, which basically means they're incentivized to drive costs up rather than down.

Yes, this is an important piece of the puzzle. The "medical loss ratio" for large insurers (the kind we all know and love) is set to 85%. So they can keep up to 15% of their revenue as profit.

As you said, if total spending goes up, they get 15% of a larger number.

So same as realtors and most other brokers.

Challenge is the whole system is just a mess. Medicare probably lays too little. Commercial insurers have formed a mountain of red tape and bureaucracy and arguably pay too much, although individual bills (EOBs) are rarely logically defensible against any scrutiny.

Healthcare providers try and combat all this by literally just making up pricing and trying to negotiate something while also having bloated administrative structures that raise costs for all.

Nothing about the current state of the healthcare system makes much sense to anyone that tries to peel back the onion.

>Nothing about the current state of the healthcare system makes much sense to anyone that tries to peel back the onion.

I'd offer a slight tweak. None makes sense in a vacuum or solely considering efficiency. It all makes sense seeing the evolution over time and the misaligned incentives.

> Medicare probably lays too little.

What's wild, is that at least in the slice of healthcare I'm in, Medicare is one of our best most reliable payors. In fact, in some cases, our contracts with private insurers have them promise to pay at least 80-85% of what Medicare would reimburse us.

The other benefit with Medicare is that they just give us a lump sum of money and let us do what we want with it as long as we get good outcomes. Which means we don't have to fight for every visit we make to the patient. And they base it off of a public formula that we have access to (unlike with the private insurers).

Medicare prices are too low to operate on. They generally factor in the bare minimum or slightly less for the variable costs of a procedure but severely under value the fixed costs of providing the same procedure. So those costs largely get pushed to commercial payors as those are the only ones who can shoulder it.

There’s plenty of arguements about waste and executive compensation but when I was a healthcare CFO we had our financials separated where I could see individual hospital performance and all the executive/corporate stuff was separate and it still was an issue as basic capex was hard to keep up with in a hospital that had a low % of commercial patients.

Sure you’re not thinking of Medicaid? Medicare was generally pretty good for reimbursement. When my wife treated Medicaid patients, she often lost money on the cost of the supplies used to treat them, let alone rent and paying the staff etc etc. Most doctors who see Medicaid patients do it as basically pro bono. Some figured out how to game the system with economies of scale but it’s nearly impossible do do and maintain a decent standard of care.

But Medi care was right with the commercial insurers on reimbursement.

Medicaid is usually a big loss for hospitals. It’s just a cost of doing business and another reason why someone else has to pay more. It’s completely a subsidy essentially. This is why certain areas only have a county hospital, it’s likely the same area that is a food desert and has no retail banks, the simple truth is too high of a Medicaid mix will quickly sink a for profit hospital.

Medicare is as I described. Every specialty and procedure has its quirks though, some even make a killing on Medicare and not commercial but the hospital kind of represents a portfolio and the overarching economics in aggregate favor the commercial insurance. I’m guessing your wife’s specialty had decent Medicare rates but it’s not always true.

There’s even some private insurance which is effectively Medicare that has different reimburse ranges (Medicare advantage plans).

Executives like to lament the lose money on Medicare but I never really saw it that way. If you look at it isolated, sure it’s true. But if you look at it as a portfolio where your fixed costs are covered by another cohort, then it’s a huge volume to add and make money at the contribution profit line. You just have to be careful not to run fixed costs as a percentage of total revenues or something like that. The extra volume Medicare brings to a hospital or network of hospitals also has tremendous negotiating power for pharma, medical supplies and devices, etc.

> Executives like to lament the lose money on Medicare but I never really saw it that way.

We're in the totally opposite boat. We actually prefer Medicare patients vs private insurance not only because of the reimbursement, but the way in which they reimburse us (one lump sum vs visit-by-visit auth that requires manpower to manage).

Some of the requirements can be onerous, but on the whole, they're easier to plan for than the private stuff.

You’re not a hospital then. I see this with some specialties or types of providers. I’ve also seen it do complete 180. As in, Medicare is high reimbursement for a decade or two allowing a specialty to proliferate, then one day they rug pull the rates and the specialty is scrambling because they’ve not been running managed care part of their practice (the part that negotiates with commercial plans). It’s a huge headache all around and I do agree Medicare is easy once established.

Those are fair points. From our specialty clinic's POV, Medicare has been great as far insurers go[0]. I've not had to deal with them at a hospital's scale.

[0]File under "damning with faint praise".

Generally speaking Medicaid is worse than Medicare for provider reimbursement rates. In some states, Medicaid plan members are effectively uninsured because they can't find a provider within reasonable distance who will take new patients.

> But Medi care was right with the commercial insurers on reimbursement.

As I said in another comment, I'm with a provider and Medicare is easily one of our best payors. We actually have contracts with private insurers that say they have to reimburse us at least 80-85% of what Medicare would. They also give us the money up front, with a public formula that we can count on vs. a hidden formula that requires us to go back for more auth (and thus needs more people to manage).

Contracts are negotiations

Yes, that's what a contract is. I don't remember asking for a definition.

But you blame the contract as to why commercial pays less, when it’s because that’s what someone accepted. They’re obviously going for a low number and it’s your sides job to negotiate for yourself. I just made another comment about lazy managed care, then you prove my point here.

While you didn’t ask for a definition, you should try and connect the dots.

The contract pegs reimbursement to Medicare rates. That's not laziness that's literally how most commercial payer contracts work. "You should have negotiated harder" isn't the own you think it is when the outcome of good negotiation is still a Medicare-indexed rate.

Pegging it to a Medicare rate isn't the lazy part. Allowing that rate to be less than Medicare is the lazy part. I really feel like you're not understanding how this works like you think you do. It is certainly a common way to write the contract, and the negotiation needed to agree on what amount to settle on is and can be a significant effort and can be heavily contested/negotiated. So it's not the contract design that's lazy. Accepting a rate below Medicare because you make enough on Medicare is lazy and puts business at risk if Medicare rates were to shift downward.

I'd not let my Managed Care team get away with that negotiation. If the other side wants to use Medicare as a baseline, then fine, reimburse at Medicare rates is the absolute lowest I'd ever go (Medicare +0%). Much more commonly, if we're using Medicare as a baseline it's going to be Medicare +20-50% or more above. Depends on the exact service and economics involved, very case by case. Going below 0% is a no-go for me and I can't think of a time I ever would have accepted it, so if you're job is to negotiate, then this is lazy. See what I mean by "lazy"?

That back and forth is a huge time suck. Knowing that Medicare will reliably pay $X for code Y makes life vastly easier. Contrast with, say, UHC: “preapproval? That mean we agree to pay $Z, but only if we want to!”

Absolutely. It's not as black and white as people make it out to be.

Author here. The 254% figure comes from RAND Round 5.1. I built a Python pipeline on CMS HCRIS cost reports (FY2023, 3,193 hospitals) to compute cost-to-charge ratios by ownership type. The surprising finding: nonprofit hospitals have a median markup of 3.96x actual costs. All scripts are in the repo. Happy to discuss methodology.

Thank you for doing this analysis! I'd suggest adding some charts to better represent some of the issues you've found!

Thank you for the feedback and support! I've added some charts to the repo and have charts in the substack.

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits.

Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money.

Several doctor friends have told me this as well.

I was under the impression that some companies that provide insurance also provide healthcare?

This. It's hard to believe that the Obama team could have been this financially incompetent.

It's easy with hindsight to believe you could have capped expense at 200% medicare but getting what we got passed was nearly impossible at the time. Before Affordable Care Act, insurers had every tool available to deny care, maximize profits, and skim more than 20% off the top. It's great we're getting closer to the point that it feels to you like incompetence that these things aren't fixed today but your anger with the medical lobby is clearly misplaced here.

Every major piece of legislation needs revisions to chase circumvention and we're well past due on updates but no legitimate bills have been presented that cover these topics and that's not a one-party issue.

Yup, pre-existing conditions, in particular, was a beast. The patient protection portion of the ACA is one of the better parts of the whole bill.

Private insurance companies still do not cover pre-existing conditions. How? By not writing insurance to individuals except during ACA open enrollment. I know this because I tried to get private insurance before going to Mayo Clinic, because my ACA insurance with Ambetter was out of network. When I got through to an insurance company sales person for individual coverage, they told me they don't cover pre-existing conditions for 6 months. When I challenged them and said that's illegal, they hung up on me. Most companies I called had a phone menu that, when I pushed the buttons for individual coverage, would lead me into a loop, hang up on me, put me on hold forever, etc. They simply won't write individual coverage outside a couple of months at the end of the year. This effectively allows them to not cover pre-existing conditions, at least for individuals. For company employees, yes, the coverage of pre-existing conditions is a win.

I ended up paying $12K to Mayo for a week of appointments. Private insurance, if I could have gotten it, would have been at least $1000/mo for premiums (in 2020) plus $10K deductible, so I actually saved money just paying Mayo instead of getting private insurance.

IMO the only reason insurance companies allowed the ACA to pass was the stipulation that everyone in the US was required to get insurance coverage or face a penalty. When the Supreme Court ruled that provision illegal, I'm sure the insurance companies were furious that they were duped.

Your story is missing some pieces. Why didn't you sign up during ACA open enrollment? Those policies absolutely do cover pre-existing conditions. But not every provider organization will be in network for every health plan.

>Private insurance companies still do not cover pre-existing conditions. How? By not writing insurance to individuals except during ACA open enrollment.

Sorry I'm struggling to follow here. You think the open enrollment period effectively means that there's no prohibition on pre-existing conditions? Think you're kind of bending words outside of their normal usage because quite literally pre-existing condition policies are banned. The compensating counterbalance is a neutral open enrollment period so people don't just jump when they learn they have a health problem, it's a compromise to ensure financial sustainability.

You do understand that before this, it was worse right? One comment after another here is comparing the ACA to a magical fantasy, rather than the status quo that it improved upon.

That's how it was supposed to work though? There's an open enrollment period where anyone can sign up, pre-existing conditions or not. To prevent the adverse selection problem, which is where you don't sign up for insurance until you have a condition and then cost the insurance company a lot of money, you can only sign up at that time.

The thing you're trying to do - sign up for insurance to cover a specific procedure - is quite literally what the system is designed to prevent. You're supposed to have insurance all the time or none of the time. Did you try asking the clinic how much it would cost if you are uninsured and paid cash?

It’s probably the single worst decision of the entire bill and one of the largest wealth transfers in history.

If you tell me you’re going to light your house on fire and then ask me for fire insurance, I should be able to say no.

Instead what we have is not insurance, but the world’s worst socialized health plan. Insurance is for managing tail risk, not for distributing the cost of healthcare. If we’re willing to pay a tax to subsidize the elderly, we should cut out the middleman and let the government fill that function.

Obamacare was totally subverted by the medical lobby during its creation. They had a lot of great ideas but there were way too many politicians in Congress who had sold out to the lobby (Lieberman, Baucus on the democrat side) and would block anything that would reduce cost.

And since then it has been a fight for survival without much chance for improvement. The republican refuse anything that could improve it but want to “repeal and replace” but are struggling a little with the “replace” part. And the democrats are too timid to make another push.

So we end up with the worst of all worlds. Super expensive, overall results not very good and super complex.

It was the best they could do to get 60 votes because universal health care was too radical even though every industrialized country in the world does it.

It's almost as if no healthcare legislation gets passed before private insurers have figured out how to extract shareholder value.

(Which makes the system worse. The fiction of a fiduciary responsibility to extract top dollar from a business regardless of consequences is the opposite of "capitalism". Which derives its name from the practice of sound investment to build something of lasting value.

To say nothing of the social deviance of for-profit healthcare.)

Obama had nothing to do with what's in the ACA. It was ideas from moderate Republicans (previously prototyped in Massachusetts under governor Mitt Romney), advanced on the basis that it would receive bipartisan support as a result. But it didn't, so it was heavily amended until John McCain provided the last vote to get it through.

These limits don’t apply to self-funded programs that are administered by big insurance companies (most large employers’ plans, then) or plans less than two years old (whether there are measures in place to prevent simply rotating plans often to exploit this, I do not know)

This seems like we need similar price caps for healthcare providers, medical equipment providers, pharmaceuticals, etc. Done just in isolation for 1 part of the healthcare industry results in this obvious bad effect.

Removing the rule wouldn't help things.

Price caps always and everywhere cause shortages, including long queues for certain types of care. This may be acceptable but we need to understand the trade-offs when making any changes.

Price caps create shortages when they are the rate limiting factor, which is always the case when imposed on a free market whenever the cap is below the market price, so this is an extremely accurate statement when dealing with things like lightly regulated commodities.

Whether they would be the rate limiting factor in health care remain to be seen, since health care is highly regulated with regulatory capture, licensing, and violence enforced market manipulations. As a thought experiment, in the extreme that health care were a pure monopoly, then I could envision some price caps somewhere between cost and price where the supply curve is relatively flat on either side thus creating minimal effects to supply.

You don't need to waste time with though experiments, you can just look around at various national healthcare systems. Wherever there are price caps, certain treatments have long queues or are simply not available at all. That's why affluent Canadians often come to the USA as medical tourists and pay cash for MRI scans or joint replacement surgery. Every system rations care somehow and price caps aren't necessarily the worst way to do it so let's just be real about the consequences.

Are those market price caps, or are those caps on what the 'single payer' in a 'national healthcare system[s]' is willing to pay? I was under the impression that in these systems, the 'shortage' was created by the fact the single payer was not willing to pay the free market rate that would clear for these services, therefore there is an undersupply of services provided to the 'single payer', not that there was usually an actual market cap.

Typically in these countries you actually can get health care as long as you pay privately yourself and don't go through the 'single payer.' A price cap would mean that no matter how much you're willing to pay, you can't pay over the cap, which is much rarer than the presence of 'national healthcare systems' that merely won't pay over the supposed soft 'cap'.

Indeed. The US has something around 4X the number of MRI scanners per capita compared to Canada. That’s an insane figure for what has become a baseline diagnostic tool.

Electric utilities face price caps and there are not electricity shortages.

It depends on the level of market failure, but there are not a ton of hospitals to choose from regardless.

There are electricity shortages.

https://fortune.com/2025/11/10/nvidia-hometown-santa-clara-c...

Electricity price regulation, at least for transmission, has been a thing for states for 100+ years and federally since the 1930s. Pipelines and railroads also have price regulation of some sort.

Monopolies, in these cases natural monopolies, can in fact exist. Look at the Micro supply and demand curves. As a general rule over those 100 years, there has not been rationing of electricity. There are natural blackouts and today an unplanned surge in demand (as happens in every industry such as chips after Covid), but generally the price regulation did not cause some kind of gas lines.

That would break the system completely. The only reason any of this holds together at all is medical providers shift costs from one patient to another. Medicare doesn't pay enough for the care patients are provided, so hospitals charge private patients extra. If you introduced price caps either hospitals would start to go out of business or they'd stop accepting Medicare entirely.

So I happen to be in Costa Rica for the month. Just like every other 1st world country, it has managed to have universal health care that is better and cheaper without private insurance.

Even if you do get private insurance for quicker access, it’s still much cheaper than the US.

I just spoke to someone who flew down here to save $30K on dental work.

The problem isn’t the ACA, it’s the ass backwards American health care system. I was at a meetup of American ex-pats here and half of them said they established residency here to join CAJA - the health care system

ACA enshrined the worst parts of the American healthcare system for years to come. It is a politicized victory that is the best solution for no American citizens. Places I’ve been with fully privatized healthcare or single payer are both significantly better for consumers.

Insurance companies have raised prices to restore profit, were briefly a mandatory expense, and will exist for years to come.

> Insurance companies have raised prices to restore profit, were briefly a mandatory expense, and will exist for years to come.

Why do their stocks underperform so badly?

https://imgur.com/S8bNSM2

Why would a 3-year stock chart be indicative of underperformance?

It is a 5 year chart, and the 10 year is not free on that website.

You can find out similar results for longer periods here:

https://dqydj.com/stock-return-calculator/

https://dqydj.com/sp-500-return-calculator/

> ACA enshrined the worst parts of the American healthcare system for years to come

before the ACA, insurers could deny coverage for pre-existing conditions

people have forgotten how bad things used to be

We traded the cruelty of Exclusion for the cruelty of Extraction.

What does that mean?

Before ACA, insurance had a more traditional "insurancey" role by excluding pre-existing conditions (aka managing moral hazard) in order to make money via premiums. In the "guaranteed issue" world post-ACA, insurance companies have pivoted instead to extracting as much money as they can from an increasingly vertically integrated ecosystem (PBMs etc)

You have the two mixed up. Insurance companies - even for group insurance like through your company where they always had to accept everyone - required you to have “continuing coverage” and not have gaps or you had waiting periods.

The ACA also was written to enforce that through mandates and subsidies - a carrot and stick approach. The moral hazard was caused once there weren’t any mandates because of lawsuits by Republicans and the insurance companies still had to accept everyone.

We are talking past each other. When I said moral hazard I'm talking about adverse selection(1), my bad if that was unclear. And I was responding to some comments about denial for pre-existing conditions, which as you point out is irrelevant for continuous coverage group policies. Removing the mandate penalty without also adjusting the pre-existing condition protections did introduce adverse selection in the current regime. None of that disqualifies my argument about the current state of affairs though re the business model of modern insurance companies

If you were just looking to shout "dems good GOP bad" and find others who agree with you, that's cool too.

(1)https://en.wikipedia.org/wiki/Adverse_selection

The problem here is that pre-ACA you didn't have insurance, either.

Yes, they would (maybe--some plans saw huge sticker shock because the original didn't actually pay much of anything) sell you "insurance". They would offer a plan for a few years, then close it, offer something new. The old plan would see patients getting sick, costs would rise. Premiums were based on costs *for that plan*. Soon the healthy jump ship for something else, now the old plan is only the sick and the premiums go into a death spiral.

Thus the reality was that any ongoing problem soon you were uninsured.

Before ACA, insurance had a more traditional "dump you when you were in need" role that leveraged pre-existing conditions rules by, if you fell ill in a way which was likely to be sufficiently expensive to make this profitable, looking for any minimally tenable evidence of an undisclosed pre-existing condition (just to have something to cite as a pretext, it didn't need to be convincing), using it to justify cancelling your insurance, and avoiding any legal remedy by refunding your entire lifetime of premium payments.

Of course, whether or not you actually had a pre-existing condition when you had signed up for the original insurance, you now have one that prevents you from getting new insurance,

Why is that inherently bad? Should I be able to buy fire insurance on pre-existing embers?

It interacts badly with insurance being offered as workplace benefit. If you quit or lose your job, you'd lose your health insurance. And any plan you signed up for after that would then treat you as "pre-existing embers" and expect you to pay accordingly. The bundling of health insurance with workplace seems like the healthcare original sin to me.

Obama couldn't change that, so the ACA redesigned the system to work with it. Despite being called insurance, health insurance is no longer really viewed or designed to be any kind of insurance. Instead, it's supposed to be Netflix for healthcare. You pay a flat rate, and then get unlimited healthcare. Obviously, the issue with this is that if you don't need healthcare you can just not sign up for the subscription. So the ACA tried to solve this by requiring everyone to sign up. Once everyone is required to sign up, it's not right to discriminate against preexisting conditions. It may not be an especially good system, but it is coherent.

The US is allergic to taxes. Maybe it's a marketing thing. Benefits paid for by society.

Maybe a department of Return on Investment. See what those taxes pay for. Contrast to buying private versions of the services at the same SLA or better.

It’s more that the US is more like a collection of 50 little countries, and it’s supposed to be hard to accomplish much at a federal level. That separation has eroded a bit in the last 50 years but it’s still very much a part of our political ideology.

If you live long enough, you will have a pre existing condition.

The way it was suppose to work with the original mandate is that everyone had to be insured either through their employee or the exchange. So you couldn’t just buy insurance when you were sick. The Supreme Court struck that down.

If you lost your job, before the ACA, you could not get health insurance outside of working for someone and having group insurance at any cost.

But you do realize that the entire idea of not being able to get insurance because of pre-existing conditions is completely unique to the US?

Costa Rica for instance (where I am right now for a month and half) allows anyone to become a resident as long as you have guaranteed income of around $2000 a month or you deposit $60K into a local bank account and they arrange monthly disbursements and you pay 15% of your stated income to CAJA. Healthcare is both better and more affordable here.

The same is true for Panama. Why can’t the US figure this out?

>If you lost your job, before the ACA, you could not get health insurance outside of working for someone and having group insurance at any cost.

This is a flat out lie. You absolutely could buy health insurance without being at a company.

Not if you had a pre-existing condition - the entire point of this thread.

And if you had an expensive dependent better work for a big company. Saw it happen--wife lost her coverage through work because they had an employee with an expensive kid. Next year insurance wasn't offered.

> Why is that inherently bad? Should I be able to buy fire insurance on pre-existing embers?

What if someone gets Type 1 diabetes as a child so they can no longer get insurance because of that "pre-existing" condition: if they get cancer for unrelated reasons they should just be saddled with medical debt? Or because of your Type 1 you can't get coverage, and you get t-boned in your car by a drunk driver.

Certainly it sounds 'unfair' that someone who smokes (a personal choice) gets similar cancer coverage for someone who does not smoke. But it also means that if your ((great-)grand-)mother had cancer, and you get it through no fault/choice of your own (i.e. genetics), you can also get coverage. (This latter effects a cousin of mine: her aunt (mom's sister) died of cancer at 37, her mom at 63; so now she's wonder when here number will come up. We're in Canada, so have universal care, but it's still something in her DNA.)

There are many circumstances in which you suffer through no fault of your own, and universal health coverage is present in many societies because it was decided to protect those people—even if it allows some 'free-riding' by others making poor choices.

People make all sorts of crazy decisions to prevent the "wrong" people from getting what they "don't deserve":

* https://en.wikipedia.org/wiki/Dying_of_Whiteness

Pre-existing conditions also continue to frame healthcare as 'insurance' against a bad thing happening to you, when it should just be a regular service like any other.

You don't need 'insurance' in order to get your vehicle serviced, but that is what the US does with healthcare.

The most it will ever cost me to go from “not having a working car” to “having a working car” is the cost of used car that will reliably get me from point A to point B.

I can’t say the same about health care

it's bad for the person, obviously. The point of society-wide policies is not to maximize economic efficiency; they're supposed to making society a good place to live. Of course if you only look at them under an economic lens they're going to seem bad. Economically the best policy would be to kill all the sick people.

When one of my kids was 4, they had an unexplained seizure. Hospital workup, whole nine yards, never recurred; it was probably a medication reaction. Years later we were denied coverage from all the private insurers over it (more accurately: we were denied any coverage for that child).

Similarly, insurers would as a matter of course exclude from coverage any woman with one of several extremely common conditions, including endometriosis, PCOS, fibroids, and adenomyosis.

Prior to Obamacare, insurers were free to deny coverage wholesale for these conditions. It would have been fucked up to extend coverage but exclude any neurological conditions from my kid, but the actual outcome was worse: they were under the law entitled to withhold any coverage.

Because people aren’t objects.

We as a society accept the insurance system as an implementation of "funding healthcare" because market capitalism is supposed to lead to lower prices, fair allocation of scarce resources, and innovation, among other things. That is, the insurance industry is a market solution to a moral problem.

If insurance companies then can wiggle out of covering pre-existing conditions, they're no longer solving the moral problem they were brought into the world to solve, and now we need some other solution to solve the rest of it. Then, whatever that other solution is, it's solving the hard part, so why not extend it to solve the whole thing and cut the insurance middlemen out of the economy entirely? What are they even doing at that point besides extracting a rent?

(This is one answer among many good ones to what is really a bad-faith question—health-insurance is not a lot like fire-insurance at all)

Because my pre-existing condition happened either at conception or sometime before adulthood. I wasn't in a position to buy insurance before then.

> people have forgotten how bad things used to be

Not really, because whereas before things were bad for people with pre-existing conditions, now they are really bad for everyone.

People are paying exorbitant prices either for insurance, for routine health care stuff, or for both.

There was no free lunch, so we traded some health care for the chronically ill, for slightly less healthcare for everyone else. The insurance companies make sure it's an extractive zero-sum game in terms of actual healthcare provided.

When I was looking for healthcare after my employer went tits up right before the ACA went into affect, I couldn’t buy insurance at any price because of a pre-existing condition. Mine you that I have had my ore-existing condition since birth in 1974, had one surgery my entire life - foot surgery in 1996 - and this was 2011 and now I’m 52 and still haven’t had any complications from it and don’t expect to.

I was also a part time fitness instructor, runner and could past any of the standardized fitness assessment standards for someone who was 5 years younger as far as push ups, sit ups, running etc.

I had a contract so I could have easily paid more based on risk.

Before anyone mentions COBRA, that’s only an option if your former group plan still exists and it didn’t when the company went out of business.

Just looking, even now the ACA Silver for my wife and I would be around $800 a month in my state. Even ignoring medical costs have gone up more than inflation, that would have been $550 a month in 2011 if the ACA had been available.

Costa Rica is a beautiful country. But it is in no way “first world”.

It has no military, and is effectively dependent of the US and in best cases neighboring countries. It has excellent weather and soil which account for its fruits exports… and outside of some niche industry, is mostly reliant on tourism which means importing money.

I love that country and have been many times. But if it were god forbid wiped off the face of the earth, it would be sad and annoying at best.

Costa Rica has “free healthcare” / healcare from taxes because it has 5 million people, about 1/2 of New Jersey.

This isn’t some mechanism that the US just refuses to use. It’s a matter of scale. You either don’t know and should remain silent on the topic, or do know it and lack the honor to not state it.

Costa Rica purposefully got rid of its military so it could provide services. It didn’t feel a need to fund three unnecessary wars in two years.

Guess which other country has universal healthcare - China. They are just slightly more populous than the US.

> This isn’t some mechanism that the US just refuses to use. It’s a matter of scale. You either don’t know and should remain silent on the topic, or do know it and lack the honor to not state it.

China does have a military…

Maybe you should take your own advice. Every other country in the world seems to have figured this out.

Please stop spreading lies and propaganda. China does not have "universal healthcare" in any meaningful sense. They may claim to have it, but it's not something that poor people can actually access for expensive treatments. Patients have to pay out of pocket for most services.

So let’s talk about Canada, Great Britain, every country in the EU…

Is that Canada and Britain that the have an ever persisting complaint that the delays are absurd? Among the specific points that…

With Canada now ending the life of 100k citizens a year making their MAID program now the leading cause of death in the country out ranking cancer and heart disease? How strange that in Canada you can deduct health expenses on your taxes… what a strange thing for a place with free healthcare?

And in Britain you mean the scandal-free and extremely popular NHS? I guess you have a great point there because it’s not their elite would immediately come to the US for care.

The grass is not greener. This is a bad system made worse and worse by heavy handed government “helping”. Healthcare in the US only got worse after ACA.

You know that before the ACA, there were lifetime maximums and if you couldn’t get treatment you would probably die?

And all of those people with pre existing conditions didn’t have just “delays” getting healthcare they didn’t get it all.

So sure insurance is great in America for you if as your handle suggests you work in tech in SV.

I don’t have a dog in this fight. I’ve got an exit plan if I have to get insurance before I’m 65 amd may just retire here even after 65

> With Canada now ending the life of 100k citizens a year making their MAID program now the leading cause of death in the country out ranking cancer and heart disease

Nope. Total MAID deaths (since 2016) is expected to reach about 100k in mid-2026. Most of them elderly people with a terminal cancer diagnosis.

It's a difficult fix, because the real issue here isn't who pays, but how much it's paid, total. If the cost of care in the US was the same as the cost in, say, Spain, the vast majority of people would have little problem paying out of pocket, and having just high deductible insurance for really big ticket items. At the same time, it'd be easy to have the government pay for it all. The US system is just very expensive in general, so it's a problem regardless of who pays for it.

Most of the costs are ultimately salaries to Americans, and money handed to American companies, so most savings would come from someone's livelihood. That's why we cannot reform: The party that actually cuts costs will build resentment for decades, and create a blip of unemployment. Nobody wants to do that, and therefore you aren't going to be a serious, relentless attempt at cutting costs. We've seen how the attempts that the ACA made were counteracted by consolidation at all levels.

Serious cuts have to have no mother. Say, if we ever did have an AI that worked well enough at this, and outcompeted primary care physicians. Foreign pharmacies bypassing all controls and being able to hand you much discounted drugs the day after. Telemedicine and cheap travel put together to make surgery that didn't involve an ER visit just as easy and much cheaper than using the US system. Straight out disruption, because the incentives are such we sure aren't getting improvements in regulation.

Would doctors need to make as much money if the cost of education wasn’t so high? Would they need to charge as much if they didn’t have go have a staff to chase down payments from patients and deal with insurance companies?

Not to mention that because of Bush, the government is not allowed to negotiate drug prices.

In a vacuum sure. But insurance companies operate the only part of the healthcare system that is moderately competitive. In the end employers are the ones largely paying and they are professional negotiators enough to put price pressure on insurance plans. 20% of $0 is $0.

As such, as light of an incentive it is - it’s the only party in the entire system that is incentivized in any way whatsoever to keep costs down.

Insurance providers also rarely operate at the full freight 20% either way though. So they are at least at this time incentivized to control costs at some level since every dollar saved is a dollar added to the profit line. Otherwise they would not be known for denying claims so often.

This is ignoring a whole lot of very important complexities as well - such as self funded insurance plans that most major companies utilize. There the insurance company is simply a plan administrator getting paid the same either way.

It’s one of those tropes that has a source of truth behind it but the actual reality is far less satisfying of an answer. Makes for great sound bites and ability to shut down further thought on the subject though. The uncomfortable truth is that there is no simple fix and no one bad actor that is the cause of all the insanity.

It's such a small market that it's really not competitive. Further, because medicine is so expensive, it means there aren't going to be newcomers to the market who can shake thing up. It requires way too much startup capital to start a new insurance company. The agencies with the most negotiation power don't because it negatively affects their bottom line.

This is why there needs to be a real second option. A public option like medicare for all would be the way to go. Let everyone choose between either private insurance or public insurance. Then you'd actually see some real competition.

Insurance is really not the issue, it’s provider cost. And just the total cost entirely of the system of insanity. If you look closely into it there is no single (or few even) knobs you can tweak to fix the system. Not even Medicaid for all, at least as it’s currently designed.

No argument from me that insurance is not competitive enough. But they are almost all public corporations that are highly regulated so the numbers on profit and expense ratios are easy to get for yourself to prove the point. No need to take my, or anyone with an agenda word for it. Almost everyone wants a simple answer to a complex interdependent problem that does not have one.

If there was a single solitary answer of “what is the problem with US healthcare” I’d have to go with it being a principle agent problem. If everyone who consumed healthcare had to pay up front very few services would cost what they do. Even changing it so people were billed directly and then had to submit insurance claims later like how pet insurance or car insurance works would go a long ways. But even that doesn’t solve the problem entirely, as it leaves massive gaps. Second answer would be “administrative class bloat” like in all areas of the US today.

Single payer is certainly a major part of the answer, but in isolation it’d solve almost nothing and potentially make things even worse as all the inane cross-subsidy comes crashing down overnight.

Edit: the point is medical loss ratios, admin overhead, etc. is public information not hidden behind some private company firewall. The fact non profits haven’t captured 100% of the market by being crazily cheaper should be telling on its own.

Many of the largest health plans are non-profit, not publicly traded corporations. This includes most of the Blue Cross Blue Shield Association licensees as well as some other large payers such as EmblemHealth.

Blue Shield/Cross is a federation, and Emblem is regional.

The real players are big corps like United and CVS, who control the whole vertical of provider and payer. They own the doctors, the pharmacies, and the insurance.

Trying to understand why healthcare in the U.S. is so expensive is like trying to understand why building subway in New York is so expensive: https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-.... The issues lend themselves to facile explanations ("insurance companies are greedy," "NYC's government is wasteful") but those are driven by ideology not analysis.

What we can say for certain is that heath insurance companies in the US stuff their pockets with tens of billions in profits each year and that Americans are paying far more while getting less for their money than other developed nations. I don't think those two things are unrelated.

What is the profit margin of a health insurance company? Google suggests 2-4%, with United at about 6%. This does not seem that extravagant.

Something around half of UnitedHealth Group (UHN) profits come from other business units that aren't directly related to UnitedHealthcare insurance plans. They have a huge software business under the Optum brand that would be one of the top 20 largest US tech companies if it was broken out separately.

That means the insurer part makes even less profit.

U.S. healthcare spending is over $5 trillion a year. That’s $5,000 billion. So the “tens of billions in profits” you’re pointing to accounts for very little of what people spend on healthcare.

That’s what I mean when I refer to facile ideological reactions. For many people, “profits” are the problem, and they don’t care that health insurers on average are less profitable than Subway franchises. It’s just the mirror image of people who say the New York MTA is a disaster because the government is running it, and don’t care that governments in other countries manage to run cost-efficient train systems.

> they are almost all public corporations that are highly regulated so the numbers on profit and expense ratios are easy to get for yourself to prove the point

Big players like United just shuffle money around because they own the entire vertical market. Their insurance arm is regulated so they just move the money to to their service provider arms like Optum which are unregulated with uncapped profits.

> part of the healthcare system that is moderately competitive.

That’s only half the story though insurance companies also try and reject way more claims, cover fewer people, and are just harder to get money from than Medicare.

This means hospitals can’t afford to give them cheaper rates as they just require vastly more work from staff for the same procedure.

The industry isn’t blind to this effect, but has little reason to change.

Hospitals and clinics can only take so many Medicare patients as a ratio to private pay because it’s very well known that Medicare and Medicaid is often provided at below cost. It’s of course area and demographic dependent but as a rule any private clinic has a cap on these patients they will accept overall. Hospitals cannot cap it realistically speaking, so looking at clinics is a good proxy.

Private insurance subsidizes Medicare and Medicaid even after you add in admin overhead.

The MLR incentive question is one I'm digging into for a future issue. The short version: the ACA's 80/85% MLR floor was supposed to constrain overhead, but vertical integration changed the math. When UnitedHealth's Optum division provides services to UnitedHealthcare's members, those internal payments count as "medical expenses" for MLR purposes. The money stays in-house but reports as care delivery. On the denial rate point: 15-17% initial denial rate, 80%+ overturned on appeal, but less than 1% of patients actually appeal. That gap between the overturn rate and the appeal rate is where the profit lives. If you deny 100 claims and only 1 patient appeals, you've effectively reduced payouts on 99 claims at the cost of processing 1 appeal. I'll have the numbers on this in a later issue.

> That gap between the overturn rate and the appeal rate is where the profit lives.

Or doesn’t live.

https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...

All the other managed care organizations have similar 2% profit margins.

It is funny seeing complaints of excess profit margins from businesses earning 2%, that compete against non profits, from people on a forum composed of employees of tech businesses earning 20%+ profit margins. I wonder how much Epics’s profit margin is?

And then there is also pharmaceuticals, also earning double digit profit margins. And then the law firms in medical malpractice suits, who I imagine are not working for 2% profit margins either.

Profit margins are difficult to compare across industries, game developers on average have great profit margins in part because all the studios that fail quickly stop counting.

Grocery stores on the other hand are a known as a low margin business, but as people constantly need more food every month it can be really stable. Further as most stock turns over multiple times a month your return on capital can be extremely high. Even better during a downturn when people buy 20% less food you also need to buy 20% less stock and employ fewer people to stock shelves etc, which makes your profits far more resilient.

Suddenly grocery stores are looking like a much better investment than making games.

The point of a profit margin is to be able to compare a seller's pricing power across industries. It invalidates attempts to claim the seller is able unilaterally act in their interests without the customer having recourse. For insurers, not only do customers have a choice to switch to a different insurer, but insurance prices have to be approved by government employees.

And total returns are the end all, be all for measuring investment performance. Just because some volatile video game businesses go bust does not make the grocery business or insurance business attractive. I could just as easily put my money into SP500 and earn far more with far less (almost zero) risk.

> It invalidates attempts to claim the seller is able unilaterally act in their interests without the customer having recourse.

By that logic the cap’s on annual profits by insurance companies suggest significant pricing power by insurers.

As to S&P vs a grocery store, there are grocery chains in the S&P there’s nothing wrong with the business model. As always the arguments for starting a business are more complicated than the alternatives due to the amount of leverage you can get etc. Further a weekly turnover at 2% is a rather insane annual ROI, we’re talking 100% return on investment though obviously actual business don’t just concern themselves with groceries, labor, and rent.

>By that logic the cap’s on annual profits by insurance companies suggest significant pricing power by insurers.

I disagree. If I was a seller, and if I had pricing power, then I would not settle for a 2% profit margin when the cap is 15% or more. The only reason I would settle for 2% is because I cannot sell for my product or service at higher prices or in higher volumes to get more than 2%.

>Further a weekly turnover at 2% is a rather insane annual ROI, we’re talking 100% return on investment

I don't know what definition of return on investment you are using, but it does not match any that I am familiar with based on share price and dividend history of any publicly listed grocer (kroger/albertsons/walmart/target). Obviously, Costco has done well, and Amazon, but those are not strictly due to selling groceries, or retail in general.

A 10% or 20% cap is only relevant if the company is hitting the cap. Operating a subdivision with a lower profit margin is a different matter, that’s no longer an insurance company hell they could be selling porn and it would be equally irrelevant.

Instead what matters here is that insurance companies by your own admission clearly have pricing power and that’s a problem.

> does not match any that I am familiar with based on share price and dividend history of any publicly listed grocer

Return on capital when starting a company is different than return on investment when buying a public company. If a company is kicking off 1 Billion dollars a year it doesn’t matter if it cost 10 million or 10 billion dollars building the company, you pay for the share based on future revenue. When starting a company however it very much matters if it takes 10 million or 10 billion to get off the ground.

That's true to an extent, and those minimal controls are why Medicare also wastes billions on paying fraudulent claims.

https://relentlesshealthvalue.com/episode/ep502-how-some-pre...

Yes but the Medicare and Medicaid reimbursement rates are below breakeven so cash and insurance rates have to be above provider breakeven. The main cost frictions are administrative costs for billing on both the insurance and provider sides.

That's true to an extent, but some provider organizations manage to survive with patient populations that are almost entirely Medicare / Medicaid. Many provider organizations are just badly managed and haven't taken steps to optimize their finances through automation or participation in value-based care programs.

See the above comment about fraudulent billing for non-existent illnesses that don't need treatment.

They waste billions on fraudulent claims because they don't fund the program well enough to have compliance enforcement or auditing.

Also, I'm not going to trust a podcast owned and operated by Stacey Richter, who also just so happens to be the co-president of Aventria Health Group and QC-Health.

Trust is irrelevant. You can verify all of the statements made by Brian Machut on that podcast with independent sources if you like.

> They waste billions on fraudulent claims because they don't fund the program well enough to have compliance enforcement or auditing.

These are synonyms for having higher overhead, right? If you pay a billion dollars in claims with ten million dollars in administrative costs then your "administrative overhead" is 1%, even if half the claims are fraud. If you increase "administrative costs" to a hundred million to get rid of the fraud, in practice you just saved 410 million dollars but now your "administrative overhead" is up to 20%.

There's another reason. The harder you make it for a provider to get reimbursed for a service (in order to cut down on fraud), the more difficult it is for legitimate patients to access that service. Medicare patients are elderly. Many of them aren't able to chase after doctors to get the services they need.

I'm working on a project in an area of healthcare where there was massive Medicare fraud decades ago. Medicare now requires extensive documentation for each claim and the paperwork is so onerous that providers have exited the market and it's very, very difficult to access care.

Right, CMS plays whack-a-mole with Medicare claim fraud. When they catch on to a systemic pattern they clamp down in a way that creates extra burdens for everyone, and then the fraudsters move on to something else.

This isn't even close to true. Keep in mind that Medicare, together with Medicaid (which operates under much of the same administrative rules), account for nearly half of medical spending. So basically, if a provider doesn't want to play by their rules, they MUST deal with Medicare. That is, the government is nearly a monopsony in this industry.

There's a common, misleading, claim that Medicare is more efficient because they spend far less than commercial insurance on overhead like claims processing. This claim is true. But the impression that it gives is absolutely the opposite of reality. The reason that Medicare doesn't spend as much on admin is that they offload all of this work onto the providers. Every hospital in America has a "Medicare Reimbursement" team. A moderate-sized hospital is going to have something like 2 FTEs focusing just on the reimbursements from Medicare and Medicaid. And that's a lot more work than just filing the right forms for each case. There's a ton of additional work. Each spring they have to file a HUGE "Medicare Cost Report", requiring a couple of months of work to get all the data in place for it. (Source: my wife was "Director of Reimbursement" at various hospitals for quite a few years, before going into consulting.)

That Medicare Cost Report that I mentioned is, beyond a huge effort sink, the source of many other evils. Because of the amount of work that's needed to gather and collate all this data, hospitals naturally structure their Accounting around the way Medicare wants them to report. The thing is, that's largely orthogonal to the way a rational person would do cost accounting. The result is the common criticism about how widely varying the cost of a given specific line-item is between hospitals: they don't really know how much a given procedure costs because that's not how they track their expenses, so they apply some allocation heuristics, and every hospital does that a bit differently.

There are also various perverse incentives in the system. For example, Medicare is smart enough to know that it costs more to deliver care in NYC or SF and so forth. Every locale has a Cost Index that scales how much they expect to need to pay. This leads to hospitals needing to show that their expenses are higher so they should be classified into locale X rather than neighboring locale Y.

Another one my wife told me about her hospital: Medicare realized that a lot of UTIs were hospital-acquired, and they rationally said that they would no longer pay for UTI treatments unless the hospital could prove that they were not hospital acquired. Well, maybe that wasn't rational, because with Medicare/caid being such a huge portion of their business, they changed their policy to test for UTI for everyone at admission, so that they could furnish the proof demanded. Think of all that wasted lab work...

So no, Medicare is NOT more streamlined and efficient. It's absolutely, 180-degrees, the opposite of that.

> nearly half of medical spending

> something like 2 FTEs focusing just on the reimbursements from Medicare and Medicaid

2FTE’s vs what?

The question isn’t is this free, the question is how large is the total staff including price negotiations, doctors, and IT time spent handling billing issues, and is Medicare more or less than 50% of the total.

I am ware of one hospital and 2 medical clinics where the difference is very much in favor of Medicare.

2FTE’s vs what?

versus nothing. Hospitals don't have to maintain a whole team for UnitedHealth, or for Anthem, etc.

This is my point. Medicare cooks the books to look more efficient by offloading their administrative costs onto providers. Other payers can't do that because, even if huge, they don't operate at the same scale.

Think about it: we often hear on the news about disputes about contracts when a local hospital's agreement with some insurance company comes up for renewal. They play hardball, getting local news to run stories on how many people will be affected if they can't come to terms. But you'll never hear this in the context of Medicare/caid. Hospitals have leverage to negotiate with commercial payers, but not with the government.

Depending on the size of the health system it may not be a team of multiple FTEs but they absolutely do expend significant resources on managing differences between commercial payers. They all have different rules about covered services, step therapy, prior authorization, hospital admission, etc. Sometimes those differ significantly even between health plans offered by a single carrier.

This isn't really true anymore (if it was ever true). Providers are spending a huge amount of time dealing with prior authorizations and appeals for private insurance.

I work in this area and you're right that Medicare can require a huge amount of paperwork from providers. And a hospital will have far more than 2 FTEs for this (it's called Revenue Cycle Management).

Many providers report that dealing with Medicare has clear rules they can follow while dealing with private payers causes a huge burden.

2 FTEs vs a department. Most hospitals have entire departments to handle insurer coding and some even have departments just to handle insurer disputes.

to handle insurer coding

Coding is a different layer. Everything needs coding, whether for gov't or commercial payers. So the folks doing this coding can't be separated out for commercial. In fact, it's kind of the opposite:

CPT codes (for procedures) - these are defined by AMA, but mandated by CMS (i.e., Medicare/caid). Because the gov't mandated them, the commercial payers adopted them too.

HCPCS codes (equipment and supplies) - defined by CMS.

ICD-10-PCS codes (hospital inpatient stuff) - defined by CMS.

And yet my point still stands. Hospitals employ more people to handle private insurer coding than they do to handle Medicaid.

Medicare has overhead, but you’re not saying whether it is more than commercial insurance. The admin expense/profit portion of commercial insurers also don’t take into account provider admin costs (not to mention the huge amount of time patients can deal with denials, appeals, etc.)

It's further the case, regarding Medicare expense ratios, that their admin costs are low relative to private insurance because the median private insurance customer incurs far lower medical costs, leaving admin as a higher fraction.

It can't be both: either insurers are incentivized to authorize as much care as possible so as to fit more money through the 20% opening, or they're incentivized to deny care to minimize their expenses. Which is it?

What do you mean elevators go up and down clearly someone only wants to go in one direction. If they are below 80% they want costs to increase, over 80% costs better decrease.

The ideal long term strategy is to drive everyone’s costs to go up slowly over time slightly faster than inflation. Adding administrative burden to medical institutions is a perfect way to achieve that, but clearly that never happens…

You're right that there's no single bad actor, and that's exactly the framing of this series. Each issue isolates one mechanism with one savings estimate. The 254% figure is RAND's. What I added is the HCRIS cost-to-charge analysis across 3,193 hospitals showing the variance by ownership type.

The surprise was nonprofit hospitals: median markup of 3.96x actual operating costs, versus 2.39x for for-profit and 1.87x for government hospitals. That's hard to square with the narrative that nonprofits deserve their tax exemptions ($28-37B/year) because they serve charitable purposes.

On the self-funded employer point — you're correct that self-funded plans have more negotiating latitude, and thousands of them already use reference pricing (capping hospital payments at a percentage of Medicare). That's actually the policy fix this analysis proposes. Montana Medicaid implemented it and saved $47.8M. The question is why it isn't the default.

More like kickbacks to the dipshit in HR who signs the dotted-line.

What OP said is true. You’re forgetting that health insurers are just one organization in the corporate chart. They often work to own the providers as well to funnel money to parent corporations.

So if United is the insurer they’re owned by an umbrella, that umbrella takes 20% or less. However United makes special deals and steers people to providers owned by the Umbrella. So that the Umbrella makes more money as well. This is true for medicine as well. For example Cigna requires all maintenance medication be purchased through express scripts as a means to retain or increase profit.

United has a history of also squeezing organizations by forcing them into pre-payment review when they’re high volume. This causes the providers to basically not have no revenue for months on end until it gets sorted. Then they might get a chunk or settle out of court. Often they go bankrupt and are purchased by the umbrella.

In terms of Medicare/Medicaid another catch-22 is that insurance handles the claims for providers. The insurance can recode claims and pocket the difference without telling the provider. It’s on the provider to catch it.

There is a tremendous amount of dark money, shadow games, hidden corporate structures, Wyoming and NM LLCs with Anonymous owners, etc.

Insurance as a whole tries to own the entire feedback loop for healthcare. They don’t like you going out of their feedback loop.

Digi is correct here.

>For example Cigna requires all maintenance medication be purchased through express scripts

Important note: Cigna owns Express Scripts. Today the biggest "insurance" companies are actually massive conglomerates that own the clinics, the doctors and the pharmacies. United = Optum. Aetna = CVS + Caremark. Humana = CenterWell. Elevance/Blue Cross/Anthem/Carelon. Centene = Envolve

Once a giant like United gets big enough in a city, say ~40% of the population, they lower the reimbursement rates for independent doctors and if the doctor refuses the contract, they are kicked out of network and lose 40% of their patients. Go bankrupt or sell to Optum.

Digi is also right about Medicare upcoding. It is a well-documented $$billions scam where Medicare Advantage insurers comb through patient records to add diagnostic codes making the patient look sicker on paper than they actually are so the government pays the insurer a higher flat rate for that patient.

Why wasn't it set up so the government is the insurer. Rather than 3rd partying it. It is akin to federal reserve using wells fargo to store their money.

Because of regulatory capture and lobbying and campaigning to get people to vote against their self interest.

That's communist talk I'm told. We must have lobbyists (remember, money is people, too) instead.

Because that is evil socialism

Pharmaceuticals are a small component of overall US health spending. Upcoding is endemic across the entire system; it's endemic across the whole system. Ironically, the complaint you'd be making with upcoding under Advantage is that Medicare should be denying coverage to people; Advantage upcoding involves altering risk scores to authorize more care.

I’m well aware of the vertically integrated systems. But that’s not the entire market - just getting to slowly be more and more common.

Insurance as standalone entities are not much better or worse for total cost than these giant vertical monopolies. At least yet, thy are only recently becoming large enough to truly put the screws to people. Because insurance was not all that profitable made it prime targets for these sorts of shell game shenanigans.

It’s basically the point I was making. Fixing “insurance” isn’t a fix at all because the problem is far greater than just that layer of the onion. Costs are hidden and embedded and cross-subsidied to the point no one can unwind it without burning the entire thing to the ground. It’s grift from bottom to top. Aside from a few poor souls actually at the ground level who are still true believers trying to provide service to patients. And a lot of those are burning out. I think out of the 5 or 6 medical doctors I met while they were in medical school, only one is still practicing. They would now be late 30s to early 40s and in theory at the prime of their careers. Instead they got out as soon as medical school debt was paid off and moved onto other less stressful things. Another hidden cost in the shit-tier system rarely talked about.

I’m simply pushing back on the idea that the 20% medical loss ratio is the source of all (or even most) issues for the cost of healthcare or why insurance sucks so much to deal with. It’s nearly irrelevant.

> In the end employers are the ones largely paying and they are professional negotiators enough to put price pressure on insurance plans. 20% of $0 is $0.

That's assuming price is the only variable.

Suppose one insurance company is accepted by more providers, including ones that might be closer (but pay higher real estate costs) or have nicer rooms etc. Meanwhile employers are looking for cost/benefit rather than just cost. If they give employees a better insurance plan they could pay them less or provide less of some other benefit and still get people to work there.

So before the insurance company didn't really care if you got a $10,000 plan or a $20,000 plan if they both had a $2200 margin, or if anything would prefer the former because they make the same money with lower costs. The employer is likewise fairly ambivalent as long as the more expensive plan seems like it's buying something (even if the something is convenience/luxury). But now the insurance company isn't allowed to have a $2200 margin on the first plan and still is on the second, so that's what they market, and then what more employers choose, resulting in higher average costs.

> Insurance providers also rarely operate at the full freight 20% either way though.

There are only really two options, right? Either the market is actually competitive and then a margin cap has no effect because competition would prevent margins higher than that regardless and the rule should be gotten rid of as totally redundant, or the market is less than perfectly competitive and then it does something but the something is a bad perverse incentive to raise costs to cheat the rule and it should be gotten rid of as actively harmful.

They really aren’t. They package benefits to try to hit different price points. Obamacare accelerated consolidation of providers and most regions have a cartel of 2-4 health networks.

You've identified a real issue with cost-plus pricing. But there's more to it than that. Commercial insurers have to pay more than Medicare, for the very simple reason that Medicare's pricing terms are that they get a discount beyond whatever the lowest price is that you charge anyone for the same thing.

(Is it a 60% discount? No; a 150% margin has to be explained in other ways. But the phenomenon is real and important.)

It's a bit more complicated than that. First, most large health plans regulated under the Affordable Care Act are actually subject to an 85% minimum medical loss ratio. Some of the larger payers which also have their own providers as employees within the same parent corporation are able to shift money around with internal pricing agreements so that they make larger profits on the care delivery side.

But at the same time, the business is still pretty competitive with the employers and consumers who purchase policies or rent networks being price sensitive. Employers will switch carriers to get a significant cost savings so that holds down prices (and carrier profits) to an extent. Most large employers (and unions) are now self-funded so the "insurance" company isn't actually bearing much risk, they just set up a provider network and process the claims.

Most doctors are almost completely ignorant about the broader issues of healthcare financing and medical economics so take anything you hear from your friends with a grain of salt. (And to be fair, it's not something we should expect them to be experts in.)

Most insurance is funded by employers who would switch insurers if they feel they're getting screwed by them.

> So insurance companies spend more so they can collect higher premiums.

This part is still true though. Insurers want you to consume more healthcare, so they'll happily pay for your chiropractor, acupuncturist, acne treatment, and Chanel gift bag [1]. Patients are happy with their benefits. Employers are happy with increasing employee retention in a tax advantaged way. Insurers are happy with the profit. Of course, you aren't going to see much health improvement from this though.

[1] https://nypost.com/2024/07/25/lifestyle/nyc-hospital-bills-3...

Ding Ding Ding. We have the correct answer. And this was a predicted consequence of that profit cap.

>So insurance companies spend more so they can collect higher premiums. That's how they make more money. >

If this is correct, then how come there are so many complaints about insurance denying payment for healthcare or the hoops they make patients and doctors jump through for pre authorizations?

If the path to more profit was spend more money, then there would be no reason to question a doctors’ orders? Nor threaten doctors and hospitals with leaving the network if they don’t agree to lower prices?

Yet, one often hears about so and so plan will not have so and so hospital system in network unless they come to an agreement.

> If this is correct, then how come there are so many complaints about insurance denying payment for healthcare or the hoops they make patients and doctors jump through for pre authorizations?

Because those anecdotes get reader and viewer engagement. Charts comparing how much U.S. insurers pay on average for common procedures compared to, say, the UK NHS, don’t drive forward the narrative.

You should interrogate the media sources you consume and ask why you’re fed so many stories like that, and investigate what the real data is. A few years ago my friend got a continuous glucose monitor for Type 2 diabetes. I looked at the coverage polices for continuous glucose monitoring (for Type 2) for my insurer and some of the other big ones. Turns out that most US insurers, Medicare, and Medicaid in 45 states+DC cover continuous glucose monitors for people who have type 2 even those that don’t use insulin. At the time, most Canadian provincial systems didn’t cover the technology except for Type 1 or people who take insulin. UK NHS was worse, covering it only for Type 1, or Type 2 with certain conditions (such as you’d otherwise need to do 8 or more pin prick tests a day). https://www.diabetes.org.uk/about-diabetes/looking-after-dia...

You should take your own advice and widen your media sources.

Yes, you only get a continuous glucose monitor for free if you really need it on the NHS. If you want one otherwise you need to spend $100. It's not going to bankrupt you.

That’s the price for one monitor You need to buy a new monitor every 10-15 days. And your point about my media sources doesn’t make sense. As stated, I researched the coverage of continuous glucose monitoring because my friend got prescribed one.

The point isn’t that the UK NHS should cover CGM. I think they shouldn’t; it’s a waste of money unless you really need one. My point was about why the media pays so much attention to denials of coverage while you don’t hear about the over-coverage. You can’t go by the anecdotes. Talking about insurance covering unnecessary procedures doesn’t generate clicks.

Complaints about denied claims or prior authorization requirements should generally be directed at employer HR departments. Most HN users in the USA probably have employer-sponsored group health plans, and often those are self-funded where the insurance company doesn't actually bear any risk but just administers the plan. Commercial insurers would be happy to sell plans that pay every claim that comes in at 100% with zero denials. It would be less work for them. But naturally employers don't want to pay for that, so the HR departments have the insurance carriers impose more restrictive coverage rules to hold down medical expenses.

> Commercial insurers would be happy to sell plans that pay every claim that comes in at 100% with zero denials. It would be less work for them. But naturally employers don't want to pay for that, so the HR departments have the insurance carriers impose more restrictive coverage rules to hold down medical expenses.

This is not my experience as a buyer of health plans on healthcare.gov, or as a buyer of health plans as an employer (where the employer is not self insuring). The prior authorizations and denials happen all the same.

Additionally, the premiums are the same between employers’ self insured plans and healthcare.gov plans, so the coverage must be similar.

https://www.kff.org/health-costs/how-aca-marketplace-costs-c...

>In 2024, individual market insurance premiums averaged $540 per member per month, slightly below the average $587 per member per month premium for fully-insured employer coverage.

The idea that health insurers can simply spend more to earn more is not passing the smell test.

Your experience is irrelevant. Insurance carriers have some standard default policies but they'll write whatever custom policy that a group buyer is willing to pay for.

Your claim was

> Commercial insurers would be happy to sell plans that pay every claim that comes in at 100% with zero denials.

And yet I have never seen one of these after buying insurance in 3 different states.

Again, the grandparent claim was that insurance companies can increase profits simply by increasing their expenses. Yet there is no evidence of this, and the fact that everyone has to deal with approval and denial of healthcare coverage means it cannot be true.

You're really missing the point. Have you ever been in charge of employee benefits for a large group buyer? Obviously such plans aren't available to individual consumers but commercial carriers will absolutely customize products for larger customers.

timtim51251 wrote this:

> The actual reason commercial insurers pay more is that's the only way to can make more profits.

>Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money.

dmitrgyr wrote this:

> Ding Ding Ding. We have the correct answer. And this was a predicted consequence of that profit cap.

These statements indicate there should exist an insurance plan with a policy to pay for anything and everything. It does not matter what large self insuring employers choose to buy, as there are still significant number of people covered by non employer insured health plans.

This is the same problem with cost-plus contracts in the military. In theory, capping profit is meant to reduce profiteering. But in practice, if your profit is fixed at 6% of the cost to built a jet fighter then you're incentivized to make that jet fighter as expensive as possible. The way to maximize profit under a cost-plus regime is to maximize the cost.

I will piggy back off of your comment because I was going to say a very similar thing. In my state, electric utilities are guaranteed a rate of return on investment of approximately 12%, if I remember correctly. And so there's a lot of incentive for build out and maintenance that's high in total dollar amount and high in volume of work done. In some ways it's the system working as designed but the "cap" can incentivize erroneous build out, as you noted in the jet fighter example.

So you have an excessively built out electrical system... sounds like a win to me.

I'm sure it sounds good to you as long as it's OPM

https://en.wikipedia.org/wiki/Averch%E2%80%93Johnson_effect

They said excessively expensive, not excessively robust. There is a difference.

There's not necessarily a difference because they overlap on the venn diagram. The returns to the shareholders go up the more you build out, the benefits and performance face diminishing returns. Different utilities around the country get different scores for reliability and infrastructure integrity, because a dollar spent by one utility on one grid doesn't necessarily have the same impact as a dollar spent by another.

Absolutely not. The way to spend as much money as possible is to do intentionally inefficient repairs (e.g. last minute/reactive). The providers gain from grid unreliability since by causing problems, they get to justify spending money to "fix" them.

Except for the cost to the ratepayers.

Depends on if the investments were in the right stuff or not. Overbuilt sounds great, so long as it’s overbuilt in capacity and reliability.

If those were malinvestments instead it’s simply throwing money away for not even a theoretical “someday” return. Plenty of ways to look busy while spending massive amounts of capital.

Generally agreed in principle though. Investment in the grid is pathetic almost everywhere in the US and has been for generations.

It's about threading the needle between a well funded grid, and an over engineered grid. There's a point where diminishing returns makes investment greater than that threshold wasteful relative to opportunity cost of spending that tax money on different public services.

This is correct, but neglects the compounding effect.

Insurers are also adding some %+ increase on premiums every year, which is taken as a % of their yearly spend, ie 2-3%.

ie (1+inflation)^N*(base_prem+overpay_prem_increase) = new_premium. The compounding of $ returned is pretty big on this.

That being said underwriting risk, under the law and avoiding correlated risks, is tough.

This isn't the whole story. There's a lot of "legal" self-dealing going on where insurance companies essentially own providers and then pay the providers which allows the insurance companies to circumvent the medical loss ratios.

More here:

https://healthcareuncovered.substack.com/p/self-dealing-ille...

Several doctor friends told me your doctor friends aren't real.

I remember consulting for a healthcare company in .... 2003. Very short assignment so I never got deep into it, but anyways my consulting company made me read up an in house guide about ALR and MLR (Administrative or Medical Loss Ratios). Obamacare or not, such constraints already exists. Maybe they varied by state, maybe there were other loopholes such as not supporting pre-existing conditions, but IIRC there were restraints on pure profits, so even then the same perverse incentives existed. More revenue you can get more profits.

I am going by very old memory of a few days/weeks of work, but it will be good for a medical system historian to chime in.

You mean that there is a rule which prevents for-profit companies offering personal health insurance from pocketing more than 20% of revenue?

Those poor, benighted shareholders. What a socialist hellscape.

There are other structural issues at work that you see across US government procurement generally, Medicare just being one example.

The unit costs of doing business with the US government are higher than with private companies even after accounting for economies of scale. The US government also requires that they pay the lowest price. Consequently, unit economics are usually worse when dealing with the government than when dealing with private companies.

The maths often don't math but the law doesn't care. Most inexplicable and bizarre pricing you see related to government procurement are structural tricks vendors use to indirectly fix the unit economics across their customers while technically staying compliant with bad regulations. Everyone else who is not the government is collateral damage of that byzantine theater.

Ideally, we would all drop the pretense that the US government deserves the lowest price just because they are very large, instead letting it reflect the true overhead cost.

I'd argue it's a subsidy/incentive problem. Since every subsidy works by raising a cost somewhere which is used to subsidize a cost elsewhere, I'm inclined to believe in the Bennett hypothesis. Our government mostly subsidizes demand, and does little to incentivize productivity/outcomes. You see high prices everywhere the government funnels money: in education, healthcare, even the military - as where's the incentive to lower costs if the government is on the hook and will fund it no matter the cost?

The problem is the market isn’t competitive due to hidden pricing and also anti competitive aspects like insurance. The supply of doctors is itself artificially low. There is a lot more regulation needed than something as simple as Obamacare.

This would only hold empirically if prior to the ACA, commercial insurers did not pay more.

That's not why prices continue to increase. They can't just let prices skyrocket to pad their pockets. If they try, government regulators will block premium hikes, regular people will ditch them for cheaper competitors, and big businesses that pay premiums from cash will fire them for not keeping medical bills lower.

But prices already have skyrocketed, and insurance execs have already become significantly richer. Why didn't the feedback loops work?

> regular people will ditch them for cheaper competitors

I love the particular irony of people who advocate for regulations then attempt refutation of free market theory for what is already unquestionably and objectively not a free market.

> The people who design easily gameable systems belong in the lowest circle of hell.

-- Charlie Munger

Managed risk pools should not be for profit.

You can really just say anything and get upvoted on this website.

If this were true then private insurers would have paid comparable rates to Medicare prior to the ACA passing, and that's just not the case. This fact has been a fixture of the US healthcare system since the creation of Medicare.

My understanding is that there are a number of reasons why commercial insurance companies pay more. A big one is that Medicare has enormous pricing power because people on Medicare are a huge segment of the population and also the segment that consumes the most healthcare services. Your local healthcare system can't NOT take Medicare. They're effectively stuck with the reimbursement rates that Medicare sets. On the other hand, healthcare systems have a ton of power in their local markets. A healthcare system can afford to not be in network for a particular insurer, but if that insurer loses access to the biggest healthcare system in a particular market, it can be devastating for them. A major employer is not going to be happy if their executives have to all change doctors because the big local hospital system is no longer in network.

> Obamacare requiring 80% of the money they collect to be spent,

did they not write unit tests for this when it was proposed to catch obvious subversions like you mentioned.

Huge chunk of the costs come from the fact that Doctors pay astronomical malpractice insurance rates in some states with no tort reform. Some have to spend more than 100k on insurance - 1/3 of their total pay. Since some states allows multi-million dollar judgments from juries that raises insurance everywhere, which raises not only prices for everyone but also dramatically contributes to more procedures and tests being done at even higher costs to avoid liability. The risks of having your entire livelihood wiped out chases out doctors from those states and reduces availability of care for patients as well. If you want objective cost comparison, compare Veterinary care which has similar consumables and training, but no insurance and liability impact on prices.

The doctor that delivered my middle child said he had to deliver three babies a week just to cover insurance, and he had never had a case against him in his decades of practice.

Yup, obstetrics is a really nasty one. The problem is in many cases it's impossible for the doctor to prove he didn't harm the baby, the jury sees a baby that needs a lot of care and they see deep pockets.

And then you get stuff like the local case the lawyers were using as a poster boy for supposedly blaming the insurance companies. Baby had serious problems. Trial #1, 90% fault to the mother, IIRC 10% to the birthing center (which was no longer in existence.) By state law she couldn't collect because she was more than 50% at fault. Trial #2, same case, refiled in the name of the baby. 90%/5%/5% to one doctor who saw her once several hours before delivery. The whole $6 million judgment landed on him and last I heard that was being litigated over sticking him with the whole bill.

Hey, both juries agreed she was the problem. But there's no way to prove the others were blameless.

I've also seen this more directly: mock jury. Their screening questions weren't adequate--I knew how things would actually play out. Claim for IIRC ~150k, defense presents a smoking gun, but I don't think they went far enough on arguing the implications of it. We "settled" (didn't have to be unanimous) on ~30k, giving her a fifth of what she was asking for--except that doesn't make the medical bills for running up the tab go away. Lawyer is going to get his percent, docs will get the rest, she will see nothing. I kept quiet about this part as I knew it was information their screening questions missed.

Maybe if we didn't have enormously expensive healthcare that is tried to our employers the payouts would need to be so huge. If I'm injured by medical malpractice and can't work I'm going to need a lot of money to make me whole in the US, even more so if I need additional medical treatment.

The money that goes to the injured is dramatically smaller than the money that everyone in the system pays to cover the insurance liability calculated insurance rates when the payouts can be arbitrarily set by juries. So if one jury says 600 million for one egregious case, all insurance for all doctors and all care for all patients skyrockets to trillions based on the risk assessment of insurers at that point. It is better to manage the risk with better measures (some states have a damage pool)

Am I completely tripping out or does rexroad's profile use a template where they were supposed to fill in a blank but forgot? "Former [your background if relevant]".

Really opens my eyes to all the other politics posting accounts that have a similarly constructed profile description .. But of course, they'll never be banned and instead they get front page of HN and hundreds of upvotes.

Yeah, day old account too.

What do you see as the bad part of this? That the user is trying to farm points by copying patterns of upvote-winning users, or that there's a flood of inauthentic new users? Genuinely asking.

every forum has busybodies who try to make something out of nothing

I saw Jim Clark (founder of SGI, Netscape, Healtheon) talk one time about entrepreneurship. He said something that compactly explains a lot of issues humanity faces in general: "One person's inefficiency is someone else's bottom line."

A lot of the things that the original post shares has this characteristic. Sure, things in US healthcare are wildly inefficient, but that's how a lot of these companies make a lot of money. And they will lobby and fight to the death that cash flow.

Until we eliminate for-profit health insurance companies, i will never be convinced this isn't anything other than a massive scam to over-inflate costs, and inflate insurance margins as much as the people can tolerate.

Im sure big-pharma has an interest in over-medicating too, but that should be solved by transparent pricing.

It still blows my mind i cant window shop hospital procedures.

The opaque-ness of medical billing in the US only further favors the for-profit insurance company margins.

Burn it all down. Single-payer for all. I really have zero sympathy for insurance companies who pride themselves on denying their paying clients life-saving care in favor of shareholder returns. It's such a crazy moral hazard that really highlights a sickness in America.

We already have multiple forms of socialized medicine, it isn’t perfect. Burning our current system down and shoving them all into Medicare and the VA system would kill thousands or more people, healthcare needs to be operational 24/7/365.

I think a gradual move to single payer is the way, but even if you could get that passed as legislation, which you can’t due to a rigged senate balance, and not struck down by SCOTUS, you’d need 10 years to begin the changeover. It’s really that massive of a project.

But it won’t happen with the current solidifying conservative governmental systems. Say hello to your future, it’s now.

Public perception is that the US is not willing to pay for universal healthcare. However, the US spends enough money, it just spends it inefficiently.

The US spends ~$900 Billion a year on Medicaid [1] and ~$1.1 Trillion a year on Medicare [2]. If the US spent this money as efficiently as Japan (or UK [3], ...) it could pay for Universal Healthcare without increasing its budget.

[1] https://www.kff.org/medicaid/medicaid-financing-the-basics/#...

[2] https://usafacts.org/answers/how-much-does-medicare-cost-the...

[3] https://www.bbc.com/news/articles/cwy7zvp5xrqo

Incomes are dramatically higher in the US than in Japan. Their economy has imploded so badly due to debt + currency destruction that they're now just barely above Lithuania (which has come a long ways of course) on economic output per capita.

Japan is no longer a primary economic power and their (perpetually falling) purchasing power + incomes represent that.

US GDP per capita is estimated at $92,000 for 2026. Norway is $96,000 for comparison. 340 million people vs one of the world's richest nations at 5 million people. The UK is $60k, and Japan is a mere $36k.

Read that again. US GDP per capita will soon be 3x that of Japan.

Doing a direct comparison of healthcare costs is silly accordingly. At a minimum you need to 2x to account for the drastically higher US incomes vs Japan, and at least 50% higher vs the UK.

Japan is also way thingger than America, which the article points out: > The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD. That gap is roughly $3 trillion per year.

Need to have people go in for checkups and get shamed for unhealthy habits, not really a money question.

I don't agree with your framing but let's accept it for the sake of this conversation.

The UK and Japan are not the only countries with more efficient healthcare systems than the US. We can look at a variety of countries, some of which have a higher GDP per capita than the US.

If we look at a graph of 'healthcare spending per capita' by 'GDP per capita' [1], we can see that the US is a massive outlier spending ~2x countries with comparable GDP per capita.

In fact, the US has a higher healthcare spending per capita than every other OECD country. By a large margin.

[1] https://www.healthsystemtracker.org/chart-collection/health-...

Japan's economy imploded because it was doing better than the US and Japanese were buying big American names like Rockefeller Center, so the US forced Japan to destroy their currency, which popped the Asian miracle.

The direction is right. Total US healthcare spending is $4.87T for 335M people ($14,570/capita, CMS NHE 2023). Japan's per-capita is $5,790, with the highest life expectancy in the world and lowest infant mortality in the OECD. The annual national gap is approximately $3T.

The series is not arguing for a specific coverage structure. It is documenting where the excess goes, mechanism by mechanism. Four issues in, $128.6B is accounted for conservatively: drug pricing, hospital commercial markups, PBM extraction. Each mechanism has a defensible, operationally precedented fix that does not require redesigning the entire system. Montana Medicaid adopted commercial reference pricing at 200% of Medicare and measured no quality deterioration. The FTC documented PBM specialty drug markups and three states have already enacted clawback restrictions. None of that required universal healthcare.

There's so much culturally different here that blaming just the differences in the system of health care is effectively meaningless.

Yearly physical exams are much more thorough in Japan. Unless you are optimally fit, you will be prescribed lifestyle changes to make and there is a strong expectation that you will work hard on these. Your employer will be involved. There is _tremendous_ social pressure if you are overweight.

Healthy food options are ubiquitous there with healthy and cheap meals available 24/7. Combini food certainly has bad options but nothing compared to American fast food or the American diet generally.

There are other health problems that are significantly overrepresented in Japan compared to the western world. Alcohol, smoking and stress-related illnesses. Liver & Kidney diseases. Peptic ulcers, GI problems in general.

> The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD.

Ethnic Japanese in the US live have about the same life expectancy as Japanese living in Japan do (within 1 year). US GDP per capita is about 2.4x Japan's. So the numbers don't look nearly as bad when you adjust for that. The higher drug prices in the US are definitely part of it, part of it is our population is less healthy in general (fatter, worse diet, more drug and alcohol abuse), but part of it is Baumol's cost disease[0]. Biggest barrier to lowering healthcare costs in the US is it probably requires paying doctors, nurses, etc. significantly less and most of them work hard and feel like they deserve to be paid as well as they do.

[0]: https://en.wikipedia.org/wiki/Baumol_effect

Edit: to some extent high US drug prices are a public good that subsidizes healthcare for the rest of the world. I don't know the data but I would guess the US is responsible for a disproportionate share of new drugs.

I think the root problem is fee-for-service.

Doctors and other providers bill for each individual thing they do. But that means that their incentive is to do as much as possible, so they can quickly rack up billable codes.

It's like if developers billed their employer per line of code they wrote: the incentive is for churn, when it should be for slowing down and thinking about quality.

Doctors in Canada also bill the government for everything they do but I've never felt pressured for procedures by my doctor. Don't kid yourself, it's the insurance companies.

I like this. It'd be great to see such a table of the key issues with proposed solutions, to highlight how the waste isn't an insurmountable impossibility to solve. Having said that, federal lobbying by the healthcare industry was $750 million in 2024 [1], and this is the blocker that needs to be addressed first to be able to enact change.

[1] https://www.managedhealthcareexecutive.com/view/health-syste...

We rarely discuss the primary source of health care cost differences in the United States -- US doctors get paid a lot more than elsewhere. I haven't seen a credible proposal to address that. Most of the salary difference can be blamed on deliberately created shortages of doctors in many specialities. Not enough medical school slots (horror stories among my kid's friends of not getting accepted) and then also shortages of residencies that allow foreign trained doctors to work in the US. The only change in recent memory is replacing some primary care physician services with nurse practitioners.

Idk why but I feel the need to add an empty “co-sign” comment. It is 100% this and I have so many stories from friends who are doctors and nurses that back up every detail.

One note: the doctors won’t agree or want to hear this, as they too are human, but listen to how they talk about nurses. Hit me once I had both a CRNA (advanced nursing degree in anesthesiology) and an anesthesiologist friend

Edit: glad I did add an empty cosign, right after replying, the parent is now downvoted to gray. And gets it much, much, better info than any other comment, and I read all of them. Last thing I’ll throw out to back it up is, check into who decides how many seats there are at med schools. Can’t remember the exact name but it’s basically the doctors union / professional organization. AMA?

I really don’t think doctor salaries are the primary difference when they make up less than 10 % of health care costs:

> However, new research by Stanford health economist Maria Polyakova and colleagues — using unique data on physician income — shows that physicians’ personal earnings account for only 8.6 percent of national health-care spending

https://siepr.stanford.edu/news/just-how-much-do-physicians-...

That’s the thing about American health care costs. We pay so much more than everyone else, but there’s no obvious single thing that costs more, or even a few factors together. It’s a ton of different things all adding up. Which means it’s very hard to fix, because there are so many different things you’d have to fix.

This is a more comprehensive survey that’s light on methods but from a respected industry watcher with similar conclusions:

https://www.commonwealthfund.org/publications/issue-briefs/2...

Doctors are only part of the problem. Nurses and all of the other skilled positions also all suck up huge amounts of money because there are shortages of all of them.

It was bad even before COVID, it’s even worse now. There are tons of regulations prohibiting the significant increase in creating new doctors and nurses (and air traffic controllers, but that’s a different but remarkably similar story).

Limits on new providers, and tons of corrupt regulation keeping people from opening new medical schools, clinics, and hospitals.

A ton of it is simple supply and demand - and the supply side is capped. Go to a place with a functioning competitive market and the prices (and wages) are a fraction of what they are in the US.

Again like doctors, nurse wages aren’t a major factor in the discrepancy between US healthcare costs and elsewhere. They are a factor, in a death by a thousand cuts situation.

In a source posted by another commenter, their wages are accountable for 5% of the difference.

I also don’t think it’s accurate to say regulations are what’s prohibiting an increase in nurses. They don’t have a government imposed mechanism like residency funding that creates a bottleneck like the one in medical training.

We have a nurse shortage because we have an aging population increasing demand, it’s a tough job, and people are leaving the profession.

But why is it a tough job? Partially it's the shift hours, they could offer it with less hours and more nurses for example. But they don't due to undersupply, and on it goes.

> Japan spends ~$5,790 and has the highest life expectancy in the OECD

Is Japan's life expectancy because of its healthcare or culture? I'm pretty sure Americans would not live to the same age as Japanese even with Japanese healthcare because of our low nutrition high sugar diets...

Life expectancy is not a useful health care system comparison because the primary factors that cause divergences between developed countries aren't based in the health system --- they're things like traffic accidents, homicides, drug overdoses, and suicide. Yes, CVD will appear in that list of factors, but it's noisy; despite having structurally the same health care system, states in New England will have Scandinavian CVD outcomes while southern states (some of whom actually do a better job than New England at making care available) have developing-nation CVD outcomes.

Firey take, but health insurers are not the problem they are made out to be. They're on your team and benefit from lower prices just as much as you do. They don't make any money either, don't argue with me, buy their stocks if you are so convinced and see how that goes over.

Health care providers carry immense blame. It's full of passionless people in it for the outsized paychecks, who once inside will just seek whatever local minimum to stay employed.

They add an entire layer of make work and waste just for existing.

[flagged]

Exactly, ask anyone in a job for the money how their week was.

Not saying nursing is stress free, or every nurse is bad, but like tech companies in 2021, it's full of directionless people who pushed through the cert program to get paid $50/hr with $100/hr weekend shifts and be disgruntled with you that you are making them do work.

The disillusionment comes from hospital admins constantly squeezing blood from a stone.

Patient populations are up, nursing FTEs down. Support staff down.

And those Admin Idiots never cut staff in Admin, it's always the Nurses and Doctors who get the pressure

What an arrogant comment.

Nursing is one of the most physically and mentally demanding jobs I know of, at least in Germany.

And I bet 80% of the Techbros here wouldn't last a month in it, given how many lost their minds over a simple RTO-Mandate.

Maybe watch the movie "Late Shift" to get an idea of how a Workday is https://m.youtube.com/watch?v=C7o-omvW_DI

I doubt that "directionless" people would put up with those working conditions, and many leave the sector after a few years, simply because they burn out. Nearly no one works 100% long-term, just because it's too much too.

Perhaps unlike Germany, in the US, people in those positions will not be able to come close to earning what they earn if they leave. Probably only half at best. A medical cert doesn't translate to much else besides the cert.

So like you mentioned, it's very difficult and grueling work, and people (in the US at least) get trapped because of the money. Passionless souls doing something they hate because they'll lose their upscale home and Mercedes if they quit.

I doubt that they hate what they do, it's just the shitty working conditions that render you unempathic and cynical.

Most of them care very much about what they do, and give everything they can for the patients. Otherwise they would have quit a long time ago. (I've had to do a 3-month nursing internship as part of my medical studies, it's mandatory in Germany)

Better staffing makes a day and night difference. I've experienced it first-hand as a doctor. The more overworked you are, the more cynical and unempathic you get.

After a weekend or some time off, it's already much better

In other countries with better staffing (Switzerland or Austria), it's a also very noticeable how much better the mood and morale is of the staff.

Nurses in Germany could never afford a Mercedes or an upscale home, but they would also probably make less, switching jobs. It's not that they don't love their job, they just can't take it anymore. You also rarely see old nurses for that reason.

Well then, I am glad Germany figured out better pricing for healthcare. If the pay is middling and the work hard, you end up with mostly committed workers, because others don't enter the field with dollar signs in their eyes.

I hope you see that my point isn't that nursing is easy, my point is that (in the US) the pay is very high and the barrier to entry is moderate. So it becomes a magnet for people who just want to make money. This becomes even more true for med tech jobs, where you can blast through a cert in a year, and land a $30/hr job pretty quickly. That's about 50% more money than people typically in that education class earn.

Nurses in the US are actually very highly paid. Ask anyone how their week was. They'll all say it was crap.

> health insurers...'re on your team and benefit from lower prices just as much as you do

You're missing a very, very, very important piece here.

Which is that the lowest price of all is to deny treatment entirely.

They are not on your team, they are the opposite team. Their revenue is basically fixed, at the level of your premiums. But the more health care they pay for you to receive, the less profit they make. That's just arithmetic.

This is why there are so many horror stories of people being denied necessary treatment, or having to fight for months and years to get their treatment actually paid for. Insurance providers are incentivized to do their absolute best at taking your money and then not paying for care, through every sort of technicality and "mistake" and arbitrary judgment and limit they can come up with.

No, that's not how it works. Due to the ACA minimum medical loss ratio, most health plans have no direct financial incentive to deny treatment.

It's nice to know they do it just for the love of the game.

Mostly they do it because their customers (employers that sponsor health plans) ask them to in order to hold down costs.

They still do, because that's a minimum. If they have to spend 80% of premiums on medical care, then they make a lot more profit by spending just that mandated 80%, as opposed to 85% or 90%. Which they can achieve by denying claims. That's the direct financial incentive.

You seem to be confused about basic arithmetic. First of all, the minimum MLR for most health plans is actually 85% (and most come in significantly above that for competitive reasons). And due to the MLR, health plans actually have a perverse incentive to approve more claims because 15% of a large number is more than 15% of a small number. This is one of the many reasons why total healthcare costs have continued to grow faster than inflation.

Or perhaps you're the one who is confused.

First of all, I used 80% as an example, and it is the number for individual and small-group plans which are very common. On the other hand, 85% is the number for large-group plans. However, many plans don't have to follow the MLR at all when they're self-insured employer plans, which are also very common.

Second, your claim about the "perverse inventive" is simply incorrect. The denominator here of the 80 or 85% is premiums, not expenses. There is never any incentive like that to approve more claims above the minimum. Your arithmetic is simply backwards here. This is not a reason for rising healthcare costs.

Third, even if health plans do come in over the legally mandated minimum --let's say it's 85% for one plan, and they come in at 88%, that's often because they're creating a buffer since it's impossible to know perfectly in advance where it will hit by the end of the year. Premiums are known and constant, expenses are unknown and variable.

The basic relationship holds true: the more medical expenses they approve (beyond the MLR when it exists), the smaller their profit margin is.

The several+ times in my life I've had to sort out billing issues, the health "insurance" agents have been helpful and friendly, stating what bills should be in no uncertain terms, even offering to conference call with billing departments to get things resolved, etc... Meanwhile provider billing departments routinely try to defraud me, even going so far as to bully me to pay those fraudulent amounts, don't follow up on things (eg filing claims) that are their responsibility and that they've said they will take care of, and generally make their problems into my problems.

This certainly isn't a defense of health "insurance" companies though! I just think they're better modeled as Lovecraftian horrors animated by paperwork and compelling the creation of ever more paperwork to feed on, rather than money-grubbing cheapskates as the pop-political narrative goes. And the approaches for fixing one are much different than the approaches for fixing the other.

Insurers are only allowed to keep a % as profits. Higher spending increases the absolute amount of profit that can be retained.

If health insurers are on my team why do they blatantly lie about their network coverage to me? Why do they list providers as in-network, when the providers consider themselves out of network?

Why aren't the executives of these insurers shilling ghost networks not in prison for mail fraud?

Having worked in medicine, I agree about providers. People who probably got in it to help people burn out immediately and become like the rest of us looking for the best paycheck with a tolerable workplace.

Insurance companies make plenty of money though. Cigna makes $7-8B per year and pays a decent dividend.

They pay a 2% dividend and the stock is up 10% in 5 years.

That's a D tier stock.

I don't think how it relates to other stocks is meaningful to the question of whether or not insurance companies make money.

> Issue #4 examines pharmacy benefit managers ...

I'm curious to read that. I worked for a PBM back in the 90s/early-2000s. When I was hired, it was just a job; I had no idea what the business did to make money. After working there a few years and learning - well, I would've felt better about myself if I had become an actual drug dealer, selling cocaine and meth. That's not a huge exaggeration.

This is a believable result. Meta-analysis is 141-259% [1].

Three reasons:

1. Medicare has quasi-monopolistic negotiation power that private insurers can only dream of -- Medicare spend two-thirds of all the private insurers combined. That's why private insurers would combine in a heartbeat if the FTC allowed it.

2. Moreover, that Medicare volume is concentrated in a specific segment of the market. If many providers dropped expensive United contracts, the insured people/companies might move to a new insurer. But Medicare's base will never leave.

3. Since Medicare covers older individuals, often on a fixed income, there is natural discriminatory pricing. (Think of the "senior discount" at your local entertainment venue.)

[1] https://www.kff.org/medicare/how-much-more-than-medicare-do-...

Look at hearing aids. 50,000% markup or higher, even up in the 70k% range in some examples. Old people don't know what to be skeptical of, or at least haven't been nearly skeptical enough, and some industries are getting away with terrible exploitation, all blessed and sanctioned by the FDA.

Also, commercial insurers are essentially cross-subsidizing Medicare: the higher revenue from commercial insurers is partly why Medicare can be paid less. Similar dynamics exist with drug prices: the high US cost is a cross-subsidy to other countries. Maybe this is good (someone's got to fund R&D), maybe this is bad (it's a net wealth transfer to the elderly), but it's an important part of the dynamic either way.

Would like sources about the pharmaceutical sector being "subsidised" by the American system, heard it many times but haven't seen it substantiated.

If you want to understand the hidden cross-subsidies in the US healthcare financing system then a good place to start is the book "The Price We Pay: What Broke American Health Care--and How to Fix It" by Dr. Marty Makary.

https://www.bloomsbury.com/us/price-we-pay-9781635574128/

Looked into a summary of the book, with notes by chapter and haven't found any mention of the American system subsidising pharma prices for other countries. It mentions a lot PBMs (like CVS, Cigna, etc.) as the culprit for high prices in the USA and talks about how when pharmacies are allowed to compete the prices do go down.

From the book it seems much more like the American public is being taken advantage of by the prescription fulfillment from pharmacy networks rather than subsidising anything for the rest of the world.

> Today, approximately 80% of Americans get their medications through a PBM.2 American businesses financing the coverage and the employees paying for their medications are usually oblivious to the price gouging. When people get frustrated that drug prices keep going up, they often point the finger at pharma bad boys like Martin Shkreli. More often, though, the price spikes are taking place right under their noses.

> If we could slash the spread, it would make a tremendous difference for thousands of businesses. According to a recent analysis in the journal Health Affairs, reducing generic reimbursement by $1 per prescription would lower health spending by $5.6 billion annually.

> Health insurance companies direct their business to their own PBMs, which increases their margins. For example, OptumRx, one of the big three PBMs, is owned by America’s largest health insurance company, UnitedHealth Group. Insurers may offer less expensive health insurance premiums. But then they use their PBM to achieve a greater profit margin.

> The PBM Express Scripts is now owned by the insurance company Cigna, and as I write this book, a merger between the PBM CVS Caremark and the insurer Aetna is being finalized. Together, the big three PBMs—OptumRx, Express Scripts, and CVS Caremark—control approximately 85% of the U.S. market and manage medication benefits for most people in the United States.

That book is very good, but yes it is US-only.

If you want the international perspective, see "The Price of Global Health" (Schoonveld) or "The Right Price: A Value-Based Prescription for Drug Costs" (Neumann, et al).

The short version is that the high price of drugs in the U.S. is the driving force in drug research.

The cross-subsidy argument is one hospitals use to justify high commercial rates: "Medicare underpays, so we have to make it up on commercial." The HCRIS data lets you test this. If cross-subsidization were the full story, you'd expect cost-to-charge ratios to be tight — hospitals would charge commercial just enough to cover the Medicare shortfall. Instead, the median markup is 2.6x across all hospitals, and 3.96x for nonprofits. That's not cross-subsidy. That's pricing power in a concentrated market.

Of course it's not just to cover costs...

Who says to being paid more?

Thanks for the meta-analysis reference. The 141-259% range tracks with what I see in the HCRIS data. The variance across hospitals is enormous — even within the same bed-size category, the P75/P25 ratio for cost-to-charge is 2.5-3.4x. Hospitals in the same peer group are charging wildly different amounts for equivalent services. All the scripts are in the repo if you want to dig into the hospital-level data: github.com/rexrodeo/american-healthcare-conundrum

Does anyone here remember how health care was delivered before medicare and medicaid was enacted in 1965? It was not pretty. Prices were low then because it was all private pay and charity. Why do you think so many hospitals are named after saints? The church made a significant contribution to running healthcare. But when the govt got involved in 1965, the MBAs started salivating. Now we have a system that is built around govt style procurement that we cannot afford. As our population ages, as salaries continue to remain flat, we will have hard choices to make.

Or we could adopt universal healthcare like every other developed nation, pay less, and have a healthier nation?

1965 was 61 years ago. Are you saying you yourself had significant experiences with the pre-1965 healthcare system?

Chicken barter, presumably

Not in Maryland

https://en.wikipedia.org/wiki/Maryland_hospital_payment_syst...

All payer is really the most viable policy direction to save the US from medical bankruptcy.

Yeah, but on our way to medical bankruptcy a lot of people are going to get stinking, filthy rich on it...

It's great to see work being done to highlight an issue but I do wonder what background does the author have? Would recommend gestalt/cleveland as a good grounding, the visualizations is editorial rather than analytical.

Choosing US versus Japan, which Japan has the lowest cost and highest life expectancy in the OECD, it's cherry picking. I'd recommend showing the full distribution of OECD per-capita spending rather than just a single cherry picked comparison.

This also is troubled by McNamara Fallacy, we're looking at metrics that are qunatifiable but ignoring what can't be measured or overlooked, is speed of access being considered, how about innovation incentives, quality and outcomes variation across systems, patient choice and flexibility, in addition to workforce compensation (nurses and physicians in the US earn significantly more). Where are the trade-offs?

Summary Statistics can be dangerous. 254% of medicare is a single ratio summarizing enormous variation across thousands of hospitals and procedures. Median markup of 3.96x inherently hides the distribution, some hopsitals may be higher or lower, why is that?

I think the biggest one to me was the confirmation bias, the $3 trillion gap that represented 'fixable waste' was the conclusion. Every price difference is interpreted as waste rather than investigating the potential cost drivers, was there a null finding framework in place where US spending appears justified or is it all bad?

Overall, glad someone is looking into the data and pulling insights, please don't take this as discouragement just a comment from the peanut gallery.

I recently had a preventive CT angiogram and the cash price was $500 and the price with insurance was going to be $1000. The system we are in makes no sense at all.

When you really dig into the difference it's metabolic health that is driving most of it, and that will be fixed by agricultural and food regulation for the most of it, starting with going with the whitelist system that japan and the EU have for food additives & manufacturing processes vs. the wild west that is GRAS in the USA, and way more strict food quality / inspection standards than you would think.

This! I flew from Madrid to SF last year and I can't begin to describe the difference in the quality of food. The scale of agricultural industrialization is terrifying - I wish you luck but I don't think anything short of this becoming a major campaign issue will help you.

I think it is possible that the majority of Americans do not know what they are missing. It is difficult to really understand how much better simple things like fruits, vegetables, and bread can taste without experiencing it. It's like The Matrix, you just have to see it for yourself. Well, taste it for yourself. I find that in America even local farm produce at the "farmer's market" often tastes flat and uninspiring. For whatever reason, heirloom tomatoes tend to be good though - they constitute an exception.

To be fair, I was not born in America. So it is possible that it's not that American food is actually subpar, it's just that I became used to particular nuances of how certain foods taste back when I was a child and I do not get that from most American food, and to Americans their produce tastes extremely delicious. I'm pretty skeptical of this idea though. My hunch is that I'm not experiencing some sort of chemical nostalgia, and that American produce actually isn't very good.

RFK Jr. successfully made some of this kind of stuff a minor campaign issue in the most recent US presidential election, so whatever one thinks about RFK Jr., at least it seems that there is some demand for food production reforms in the US electorate.

Lifelong American Midwesterner and I'm also convinced there's a big difference in the taste of some produce between what you get at a typical American grocery store and a farmer's market or my local natural foods store. I get all my produce there, and people who don't normally shop there often comment on how much better my raw vegetables are when they eat at my house.

Someday I should go buy some produce from each store at peak season and try them side by side.

Author here. Issue #4 is now live — pharmacy benefit managers.

Three companies process 80% of US prescriptions. The FTC spent two years investigating them and documented $7.3B in specialty drug markups at PBM-owned pharmacies alone. Ohio's state auditor found $224.8M in spread pricing extracted from one state's Medicaid program in a single year.

Six mechanisms, $30B/year booked conservatively. Running total across four issues: $128.6B.

github.com/rexrodeo/american-healthcare-conundrum

Looking at this as a math problem is a bit navie.

Americans don't want cheaper healthcare.

We've collectively decided the nightmare of employer based health insurance is a good idea.

Single payer healthcare will never happen.

Imagine if you will an Apple farmer willing to supply an entire town for a set amount per person.

One town, call it NordicTown says this is a great idea. Everyone chips in.

Another town, Jamestown has lively debate on the issue, but half the population believes unworthy people will get apples.

Since it's the policy that if anyone who shows up at the apple market starving they'll always get an apple, the apple farmer figures out they can bill the town for whatever they want.

Jamestown then ends up implementing special taxes to pay for poorer people to have apples. They could actually extend this to cover everyone without raising taxes.

But this will never happen. Someone you consider lazy might get a free apple. So you gladly pay 3 times as much.

Everyone in America is a single expensive illness away from ruin. We like living in a dystopian nightmare where you have to pick between medicine, a car note and rent.

Did I mention Jamestown residents who relay on free apple programs regularly vote against free apples?

You and I look with dismay at the high prices, but remember that a million hospital administrators are high-fiving themselves. So ideas like "just cut waste" are opposed by a large group with a lot more skin in the game.

Interesting case study (video; ~2 min): https://www.tiktok.com/@thesephew/video/7476558168059809067

"Our high spending is overwhelmingly a product of our high incomes and if other OECD countries had our exceptionally high material standard of living most of them would be spending very similarly, with similar utilization, similar intensity, similar prices, and otherwise not obviously better overall outcomes."

https://randomcriticalanalysis.com/2018/11/19/why-everything...

Not to hold the commercial insurers' balls here, but if I were a doctor, I'd probably demand more from them. The patient age distribution is not uniform. Most patients are going to be old. If medicare gives me peanuts, I just have to deal with it, for if I don't accept whatever crumbs medicare sends my way, I no longer have a practice. If a private insurer tries to throw me peanuts -- especially when that insurer's customers only make up a percent or two of my practice -- I can easily tell them where to shove those peanuts, so they had better pay well.

Correction on ownership breakdown: A CMS cost report expert flagged that my CTRL_TYPE mapping in the HCRIS processing script was wrong — I had for-profit and nonprofit hospital categories swapped. The corrected figures: for-profit hospitals have a 4.11x median markup (highest), nonprofits 2.46x, government 2.22x. The 254% commercial-to-Medicare finding ($73B savings estimate) is unaffected — that's from RAND, not my HCRIS analysis. Corrected code and a full audit report are on GitHub. This is exactly why the code is open-source.

I think the problem is the system is designed to inflate what is being done to the point it's barely affordable. This new treatment requires more equipment and time? No problem, it's x% more effective, so it gets rolled out. And as medicine expands, the opportunities to make it marginally better also increase.

If what we defined as care was constant, it would get cheaper over time. But it doesn't stay constant.

As a European I would think a large part of the problem is that Americans are just sick more seriously and often. Your car culture, quality of food, and general preventative healthcare accessibility seem all terrible there. The prevalence of obesity in younger population is staggering. In my (engineering) programme I see one very obese person and a couple fairly overweight, but that's about it.

Australia and the US have similarly higher obesity rates. As you can see in the article, their system is simply just inefficient (arguably, by design)

As a non-American, I find it interesting that so many comments in the thread insist that "No, American healthcare is not that expensive compared to that of other countries; no, the costs of the American healthcare system are not high due to greed and capitalism; and no, the American healthcare system cannot be cheaper or better, it is not perfect, but it works as it is."

As an American, I think most of my countrymen's arguments on the subject resemble something like "learned helplessness". The "healthcare system" is craptasm of kludges that each partly counter the fundamental irrationality of rapacious private healthcare but introduce their own idiocy. So the arguments and "ideas" involve this already dumb measure needs to be changed in that half-assed fashion. A few election cycles ago, an old woman was quoted saying "get the government out of my medicare [medicare is a state program, for foreigners trying to understand this stuff]"

Healthcare can only get you so long, if we're looking at life expectancy

If you're less active, eat worse, throwing more money at fixing the symptoms will not fix the underlying problem.

Not saying that Americans aren't paying outrageous amounts compared to others, but when comparing these things, I think it makes more sense to look at countries with population more similar to US.

Having worked in for profit health care pricing and costing yup that makes sense.

The layering on of profit margins causes costs to grow exponentially

There's a super long episode on The Drive going deep into the mechanics and economics of the US healthcare system, could be a useful addition to the conversation here: https://www.youtube.com/watch?v=QqrpFICtqpQ

This is an interesting way of presenting a topic, I like it. Especially if it’s got included datasets that allow others to mess with said topic. I don’t want to suggest bloating it up with any complicated UIs, but a Jupyter notebook could be nifty. Maybe not for this specific topic, but other data-heavy subjects.

https://www.cms.gov/priorities/innovation/innovation-models/...

They are intermediary between buyers and sellers paid with percentage of the price.

They have every incentive for the price to be as high as possible.

Such entity can't be left to utilize market forces for the same reason cancer can't be left to utilize human physiology.

Healthcare is the one industry we need AI or automation to take over large parts, and a hostile Uber style industry take-over. Make treatment stupidly cheap with innovations, watch the corrupt racket unfold.

Mark Cuban is at it. I doubt the Uber trick would work. Because as with banks, innovative and more efficient businesses get bought out. Or engage in the racket once they make it.

No, they don’t. Medicare’s one of the better payers among major groups.

Source: owned a medical practice for over 20 years, and was staff engineer at a company that processed medical bills.

I don't really think it (late Capitalism) is reversible in anyway. It is better to just let it completes its path, turn a new page and maybe we can start from scratch. A lot of people (you and me) are going to suffer and die. But human nature says that real changes only happen when the old bastion is dead.

Ancient Chinese wisdom: "People praise doctors who delay the progression of incurable diseases but not those who prevent them".

Although I'd be happy to see this insanity die, I don't understand how anyone thinks this is going to "complete its path." Honest question. Can someone describe what that end consists of?

It is just like anything in the world, that has a path to complete. I'm just saying that no one can stop it from completing its path. I don't know what the end consists of, or what exactly the path consists of, but nothing too good for ordinary people, I guess, as an armchair historian observing current affairs.

I recently travelled to Vietnam for dental work, it's really shocking how easy to it to shop around when dentists actually publish their price lists online for easy comparison/perusal. In my native country, dentists rarely if ever publish prices online, and it's hard to get prices over the phone.

If hospitals could be forced to publish price lists, it would be game changing, allowing patients to shop and compare quality/prices.

Trump vaguely mentioned he'd try to do something like this but it's not clear what he's attempting: https://www.youtube.com/watch?v=8PQ7l905aVM&t=10h57m30s

Maybe this? https://trumprx.gov/

Hospitals are forced to publish price lists (charge master).

https://www.cms.gov/priorities/key-initiatives/hospital-pric...

But at a consumer level it's still quite difficult to predict what your total out-of-pocket expense will be for the same course of treatment at two different facilities.

Oh wow. Appreciate the correction. I wonder what improvements in price transparency Trump has in mind. Perhaps it's that website in the parent comment.

In the Netherlands dental service prices are set by the government [1]. Under 18 are universally covered by basic health insurance; for adults average dental for regular work + emergency is 30/month.

[1] https://puc.overheid.nl/nza/doc/PUC_789284_22/1/

I suspect we can solve about 2.9T of waste by eliminating publicly traded for-profit healthcare and for-profit insurance.

For-profit structure is part of the problem but not all of it. Issue 3 analyzed 3,193 hospitals using CMS HCRIS FY2023 cost reports. For-profit hospitals do have the highest cost-to-charge markups: 4.11x median. But nonprofits are 2.46x, and nonprofits hold 75.5% of total national hospital supply spend. The ownership form does not reliably determine pricing behavior when market conditions are the same: opaque prices, patients who cannot shop, no reference price to anchor negotiation.

Maryland has had all-payer hospital rate-setting since 1977 with a largely nonprofit hospital sector. It produces significantly better cost control than the national average. The structural fix for hospital pricing (commercial reference pricing at 200% of Medicare) works regardless of tax status because it creates a known floor price. That is what the RAND data and the Montana Medicaid experience both show. The mechanism matters more than the ownership form.

I’m willing to agree on some points however, the for-profit model is what incentivizes the convolution in the first place. It has been the main driver for injecting complexity at every level. In turn, even nonprofits have to spend capital to make sense of it.

In other words, it does measurable harm to the entire industry and builds the moat wider in favor of the for-profits and shrinks the margins of the nonprofits trying to compete.

for people who prefer a video intro to the mess of the American healthcare system, Brian David Gilbert has an excellent video on the subject, https://www.youtube.com/watch?v=-wpHszfnJns

he manages to make it a fun and enjoyable topic to learn about which is quite a feat imo

Is the author GPT-5?

Probably so. The table heading “Key Finding” smells rankly of LLM, plus the massive overconfidence that they’ve single-handedly figured out the problem with American healthcare with a little data science that only an LLM or a schizophrenic could be capable of (I haven’t read anything beyond the first part of the README because I don’t waste my time with slop, but I’m assuming they’re ignoring the incentive structures which encourage the system to stay this way), plus the simple fact that they call out a completely meaningless $3T gap that doesn’t account for population difference at all. It’s so strange because they mention the per capita difference right before that. That’s the number that matters. But still they go on and say $3T gap, and even measure the issues in terms of a percentage of that $3T gap. It’s nonsensical, right? I’m really tired of this.

Kinda insane no one else is talking about this.

The entire repo reeks of a "Write an extensive analysis comparing the american and japanese medical care systems" prompt.

Not saying all the findings are invalid, but most of them are just the LLM trying to justify it, like the life expectancy one.

Kaiser Permanente solved all of my problems with healthcare. They are what Medicare should be, single payer with one system.

For a country that prides itself on CapItAlIsM, U.S. healthcare is the farthest thing from it.

- Doctors and hospitals don't compete on price

- Prices aren't just opaque, they are unknowable

- Shopping around is not possible

- Insurer incentive is to maximize billing (cost). They pass along cost as increased premiums to an employer. Employer passes along increased costs to employee as below-inflation wage increases

Capitalism doesn’t work well for goods with inelastic demand. Every other developed country understands this and has a nationalized system. The only reason we don’t have universal healthcare is basically unlucky flukes.

> The only reason we don’t have universal healthcare is basically unlucky flukes.

You think its a fluke and not intentional corruption of the system? These companies pays both parties a lot so nobody will ever fix this, that isn't a fluke that is just plain old corruption.

Voters don’t want universal healthcare. There is some lobbying, but an entire party’s voters are composed of people who only care about taxes and ensuring that those less than them do not benrfit from wealth redistribution.

This is why even the meager amount of wealth redistribution we got (which was really young to old and not wealthy to poor) came about due to a fluke 6 months in 2009 that one party had 60 senate votes, and 58 or so votes supported a taxpayer funded option, but 42 did not, so the taxpayer funded option did not make it into the final bill.

https://en.wikipedia.org/wiki/Public_health_insurance_option

It’s disturbing to see multiple comments that “capitalism” is to blame for the costs in healthcare. The US healthcare market is the least free market in the US. Capitalism (when there is true competition) brings down costs pretty universally. Those parts of the market that are market oriented tend to get better and cheaper over time (for example, generic over the counter meds, needles, and even health care panels, AI health advice) all getting better and cheaper. You can get pretty cheap panels of blood drawn, for $200 or less with tons of data. It’s only when you hit the regulatory wall and you exit the market do you see costs explode.

Our imperfect system pays for the worlds medical R&D, so I would actually love to see per capita spending remain similar BUT have the market opened up, with a nice safety net at reasonable cost, and money pouring into curing aging and all disease.

> Capitalism (when there is true competition) brings down costs pretty universally.

"True competition" is doing a lot of heavy lifting here. There are many conditions that must be true for prices to go down.

Capitalism =\= free-market

We have crony capitalism in the US, healthcare is one of the easiest areas to see it.

Free-market is the illusive perfect sphere. Most markets are oval or amoeba shaped. Rarely can the US achieve a true free market in any industry, since money pours into politics and corrupts the laws and regulations.

Agreed on the diagnosis: the inpatient hospital market does not function as a competitive market. Patients arriving by ambulance do not shop on price. Insurance insulates consumers from marginal cost. Regulatory and capital barriers prevent new entrants. The HCRIS FY2023 data for 3,193 hospitals shows what this produces: a 2.6x median markup to actual cost, with the highest-markup hospitals rarely losing patients to lower-cost alternatives nearby.

Your examples of what works are instructive. Generic OTC, needles, blood panels all share the same conditions: price-visible, consumer-controlled, no third-party payment insulation. The RAND hospital data shows the identical procedure (hip replacement) costing $29K commercially in the US versus $14.7K in Germany and $8.7K in Spain. Same implant, same surgeon training requirements. The patient's insurance status varies; the procedure does not.

Montana's commercial reference pricing is not deregulation, but it creates the price-visibility function you are describing: a known floor price that makes it possible for a purchaser to act on price information. Employers have adopted it nationally with documented savings.

Unregulate the insurance industries problem solved. Let people actually buy insurance for it's intended purpose. No insurance company would pay these rates willingly, they do it because of all the regulations. They aren't allowed to profit normally, so they find ways around it. Just let them operate normally, like all sorts of other insurance programs.

Back to pre-existing conditions eh?

Yeah no thanks, let’s do the tried and true universal healthcare that literally every else does. They get better results AND it’s cheaper. We’re literally paying more for something worse.

If healthcare was cost competitive there would be prices listed like a fast food restaurant.

CMS now requires hospitals to publish machine-readable price files under the Hospital Price Transparency Rule (effective 2021, enforcement added 2022). Compliance rates are technically high. The problem is the files run tens of thousands of line items in inconsistent formats, negotiated rates vary by insurance plan, and chargemaster list prices bear no predictable relationship to what any patient actually pays.

RAND's Round 5.1 study analyzed actual paid claims rather than posted prices and found commercial insurers paid 254% of Medicare rates for identical procedures at the same hospitals. The transparency is on paper. The opacity is structural: a price list is only useful if a purchaser can act on it, and the moment of care is not when most patients can comparison shop. Which is why reference pricing works at the employer level (purchaser can act in advance on a population basis) but published hospital price lists have not moved the market.

The problem with healthcare is that it can have infinite cost. The question that each society tries to answer is how much are they willing to pay to prolong the life of each individual. There are no right answers unfortunately, as all of them lead to preventable deaths. But some of them at least promote the concept of a caring society.

One example of this calculation is QALYs (Quality Adjusted Life Years) which is used in the UK to determine what drugs are worthwhile: https://www.nice.org.uk/news/articles/changes-to-nice-s-cost...

Adding a formula just hides the harshness of the decision. It does not change the fact that some people who could have been saved, will die as a result of the policy.

All answers are wrong. But at least the one that you highlight can help us track over time if we are making progress to saving more people.

This resonates — most of the hard problems show up after you ship, not before.

From the top to just above bottom: waste, fraud and abuse and injustice.

If you ever want to "sanewash" healthcare spending in the US, this random guy stood up an entire website to argue that per-capita healthcare spending in the US is more or less in line with expectations based on per-capita income:

https://randomcriticalanalysis.com/why-conventional-wisdom-o...

TL;DR: As people/countries get richer, a larger share of their money goes towards consumption. It's not just that Americans pay more for the same procedures (sometimes they do, sometimes it's just sticker prices) but we consume more healthcare the more money we make. So it skews costs up disproportionally. That wealth also enables chronic health and lifestyle problems that are expensive in their own right.

I'm not sure I'd buy the theory entirely, but it's very well argued and as a null hypothesis it makes a lot of sense.

My personal experience is that people in the US feel much more entitled to consume medical services than people in the country I came from (UK). They are richer, but there's a cultural difference too.

What are some examples?

But USA isn't the richest country on earth yet why do they spend the most?

Edit: I recognize that post now, he uses a special metric "actual individual consumption", which adds healthcare consumed by people as income. So the more expensive healthcare is, the more "actual individual consumption" you will have in the country. That is not the normal GDP metric, but using that special metric USA is on top since healthcare consumed there is so expensive.

I especially love the quadratic fit, chosen with no justification, that brings the US within the uncertainty envelope in the second plot. Also notice how much work the Mexico and USA data points are doing to the previous linear model fit. Oh, my high leverage data point can't be an outlier because it's within uncertainty when I fit the data with the potential outlier included. This is basic linear model validation stuff.

This might be rigth but I don't get a lot of confidence from the start comparing Japan's lifespans to the USAs and implying it's because of health care

Japanese, as a whole, have a vastly different diet than the average USAian. As a whole, they are far less obese, eat far less diary products, over eat less, eat less meat, etc... Again, not saying that's the reason but it's a possibility. USA = 2500 calories a day. Japan = 2000 calories a day. Japan = 3% obese. USA = 33% obese.

Next up is exercise. Sure, lots of people in the country live in rural areas and drive a car. But some large portion of the population does the majority of their commuting and shopping by walk/bus/train/bicycle. That means that on average, Japanese get more far more exercise than the average USAian. Japan gets ~25% more exercise on average

I'd suspect these 2 (3)? are the major reason Japanes live longer. (1) they get more exercise (2a) they don't over eat (2b) they eat healther foods.

Anyway, the point is, the post should arguably not be putting such a specious statement at the top. It suggests the rest is probably just as specious

there’s no conundrum, the lords have the peasants by the neck and they are never gonna let go, you’re choices are an early death or an earlier death.

Removing cars and fast food would probably equal things out a bit in terms of life expectancy.

Removing some patent protections earlier and having a national healthcare system own the clinics and insure people would reduce the cost?

In health care everyone knows the exact problem because they live it and suggests a solution, mostly from opinion or other countries' systems. In the US the system is so bad primarily due to the holy national founding principles: the minimal public support pushes the prices to exorbitant levels due to loss of regulation that ends up to abject profiteering by providers. People try to hack the system so the price is reduced from exorbitant to very expensive. The naive but painful solution is to borrow and adapt elements from other systems and if the Sweden's feels too socialistic, let it be Portugal's or Greece's. The reform will do good to the whole nation, only a few jobs will be lost and some others will see less 6-figure income.

Its called American Medical Association racket.

Agreed. As a spouse of a specialist doctor in the US, average folks don't include doctors when they blame the exorbitant prices of the US healthcare. Sure, big pharma, insurance companies, hospital admins and everyone in between play a part in this big profit-making machine.

But doctors (a lot of them, not all) are complicit in this healthcare complex. American Medical Association is one of the top lobbying groups in D.C. They gate-keep the production of US doctors artificially low by making the candidates go through longer years of education (4 years of college before another 4 years of med school is an overkill for most doctors) compared to other developed nations, resulting in high compensations for doctors AND longer wait-time for patients (due to doctor shortage). They also put up regulation barriers and it requires a lot of certification and exams to become a doctor, so whoever becomes a doctor has the best interest to keep the system (status quo) going.

Average US doctor gets paid a lot more than their counterparts in other developed nations.

The AMA may cause some problems but you can't reasonably blame them for this one. They are not a regulatory or accreditation body. State medical boards control provider certification. Some universities have combined BS / MD programs that cut education time down to 6 years.

Doctors are motivated, intelligent and sometimes self-interested. By no means are all of them against it but like any party there are plenty who unabashedly oppose increased accessibility to their profession in favor of increasing their own value/pay.

I agree. congress actually caps the number of residency slots, which is agreed by many to be the ultimate bottleneck for the amount of doctors produced each year. There are plenty of people willing and well-qualified to go through medical school and become a doctor.

https://pmc.ncbi.nlm.nih.gov/articles/PMC12256077/

> US pays 7–581x more than peer nations for the same drugs

This is what pays for future drug research for the world.

No, it pays for ticket-clipping middle-men and political corruption.

It also does that.

No, this is just what pays big dividends to useless managers.

It’s not a conundrum, it’s a stealth regressive tax. The people who could fix it don’t want it fixed, and there’s are massive commercial incentives to keep perpetuating it, wrapped up in arguments against socialism.

It's neither capitalist nor socialist. If it were fully socialist you would have long wait lists but it would be free and there would be one payer. It is like this for Medicare and Medicaid which I've heard are a fantastic UX. But this is only the case for about half of Americans (the ones who don't pay for it).

On the other side, if it were fully capitalist you would be able to see the price and walk away if you didn't like it. This is what makes capitalism work. Your margin is my opportunity. Instead, the upper middle class, who pays for everything already, and is unable to use Medicaid, is forced to use a certain "network" of providers and never, ever sees the price upfront. This is the cornerstone of capitalism. Does the buyer like the price? If so, transact. It's completely not there. Instead, it's actively discouraged and banned, and the price is maximized post-hoc by the same entities who negotiate directly with the employee's employer. Ie, a quantitative shakedown.

Waitlists are a function of funding, not a direct abstract consequence of socialism. Countries with single payer that have adequate funding - with single payments from taxes that are hugely lower per capita than the US system - do not have long wait lists.

As for walking away - it's hard to do that if you're dying or unconscious.

And of course corporate capitalism always collapses to cartels and monopolies.

The idea that a free market optimised for consumer competition is a mythology, not a reality.

Markets compete for shareholder returns, not customer satisfaction. Customers are only ever a convenient source of profit with inconvenient expectations of service quality and cost.

> If it were fully socialist you would have long wait lists but it would be free and there would be one payer.

That is a crazy thing to say. Not saying that it can't be true, but a socialist system doesn't mean automatically long wait lists.

>If it were fully socialist you would have long wait lists but it would be free [....]

No. Wouldn't wait times are dictated by supply (doctors) and demand (patients), not the political system?

"We've negotiated special rates on your behalf."

The end goal of AI + Robotics has to be robots doing surgery on humans, for a little more than the price of electricity.

I think this is a political and economic problem rather than a technological one.

I cannot think of a more important skill than surgery to continue training humans to do and to be wary of AI robotics replacing. Sure, some surgeries could likely be automated, but the entire point of specialist surgeons is to make choices and act in a timely manner in ambiguous situations with extremely high stakes.

What happens when the robot messes up? What happens when the internet is down, or the hospital is operating under abnormal circumstances? How do you teach, train, and collaborate with human medical workers and caregivers in a world where surgeons have been replaced by robots?

Most of the excess costs for healthcare and surgery aren't the humans doing the work. I think there's a lot of other areas we can optimize first, chief among those in healthcare being the cost structure around private businesses and insurers bloating the bill with administrative costs. There's a reason every other developed nation has a single-payer healthcare system and better outcomes, and I don't think an AI breakthrough is the only plausible solution to improving costs in the US. In fact, under the current system, an AI breakthrough in medicine would likely hurt the workforce more than it would improve costs.

2/3 of the costs are already wasted. Even if your robot is cheaper, the provider will hire more lawyers, admins, facilities staff, etc to keep the budget growing. Prices have been going up 15% yoy for 20 years do you think that will stop?

The US' refusal to move to a single-payer system, while refusing to accept a world where poor people just die if they can't afford healthcare, creates a lot of deeply weird side effects.

No debate about the viability of Medicare-For-All is made in good faith, at this point. The only valid debates are about implementation. No one should entertain any move conversations about whether we should go to a single-payer system, only how we should.

Why? I’m in favor of reform and making our system more like other developed nations. But single payer isn’t the only way it’s done, not even the most common way.

The reason is because Medicare for All is viable both politically and implementation-wise. It's been studied for decades and the bills are already written. Just phase it in by stepping it down: 65+, 55+, 45+, everybody.

All providers already accept Medicare.

The only disruptions will be to private insurance, which is a backdoor white-collar, make-work jobs program for millions of Americans. But most jobs are bullshit anyways. That's a broader problem and we don't need to sacrifice lives to deal with it.

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