
Why Is U.S. Health Care So Expensive? Some of the Reasons Turn Out to Be Myths - aaronbrethorst
https://www.nytimes.com/2018/03/13/upshot/united-states-health-care-resembles-rest-of-world.html
======
harshreality
The meat of the article:

> There were two areas where the United States really was quite different:

> We pay substantially higher prices for medical services, including
> hospitalization, doctors’ visits and prescription drugs.

> And our complex payment system causes us to spend far more on administrative
> costs.

> The United States also has a higher rate of poverty and more obesity than
> any of the other countries, possible contributors to lower life expectancy
> that may not be explained by differences in health care delivery systems.

Which is amusing, because people who argue against single-payer tend to argue
that a) single-payer would lead to an inefficient government bureaucracy
handling billing and administration, rather than the status quo of "efficient"
hospitals and insurance companies; and b) private health insurance that
requires everyone (or their employers) to pay for their own healthcare
encourages more healthy living and more efficient pricing due to a more direct
awareness of the costs.

~~~
SlowBro
It seems we in the United States have traded inefficiencies. Though our
payments are higher, from the (little bit of) evidence I could gather from
other single payer systems our wait times are far lower. This CNN opinion
piece offers supporting evidence:
[https://www.cnn.com/2017/09/25/opinions/single-payer-
failure...](https://www.cnn.com/2017/09/25/opinions/single-payer-failure-
opinion-atlas/index.html)

It's been my own experience as well. My dear friend in Australia who otherwise
praises her system has had to wait over a year for some very important foot
surgery. I was able to schedule a not-very-critical knee surgery in a matter
of days, and I have the lowest-cost insurance plan my company offers.

Even while unemployed and on government insurance, my daughter was able to
have open heart surgery when she was six months old. She waited a few weeks
for an opening. I shudder to think how long she might have had to wait in
Canada.

I can't see the article because my free views are up; Do they discuss what I
view as the two most heavy flaws of United States healthcare? The increased
regulations and the ability of doctors and hospitals to charge exorbitant
prices due to insurance itself.

Regulations (in my observation) consistently bring heavy cost burdens to every
industry they are applied to.

And insurance permits cost hiding: It doesn't trouble me terribly that a
saline bag costs $70 if 3 million of those on my plan pay less than a penny
each to pay for my saline. Doctors and hospitals have jacked prices sky high
since insurance has become the norm. Whereas stories abound of cash payers
getting their hospital bills slashed by significant margins. Only because they
bypassed insurance.

~~~
dalore
My daughter was born a month premature, with her stomach outside of her belly
still. She was in the ICU for a month in one of London's top hospital. There
was no waiting (obviously), and this was all for free. I shudder to think of
the costs that would have been in the US. I would say 100k easily and I would
be bankrupt.

I've also lived in Australia and when I needed a eye operation, it wasn't even
life threatening or dangerous (probably in 30 years it might have blinded me).
I got surgery scheduled on the same day.

So really the wait all depends and of course it's on a triage system. I would
say if your daughter needed her surgery in a socialised healthcare system it
would have been triaged and made a priority.

~~~
kazen44
This is my experience aswell. (in the dutch healthcare system).

i was also born prematurely, and as a result of that had to have some pretty
major surgery done as a child. All of these surgeries where done rapidly
aswell to keep the impact to a minimum.

Compared to a couple of months ago, where i needed to get some surgery done in
my hand, in which i had to wait a couple of months. The issue with my hand was
annoying and slightly painful at times, but nothing life threatening or
"serious" compared to my premature birth surgeries.

Sure, the wait time sucks, but healthcare is (in my opinion) something
collective that should be done by society as a group.

if i have to wait a couple of months to get my hand fixed. While at the same
time it allows a premature child to get fixed up and get's a proper chance to
live, so be it.

~~~
RobertRoberts
As much as I am opposed to the collectivist view points on society in the
world, it seems this is one area where an individualist perspective doesn't
work as well.

But the problem here, as you pointed out, is that to implement this idea in
America, people would have be less selfish and more responsible for their own
health. Neither of which is a core tenant of our modern society. 50-70 years
ago is when we should have done this.

------
edmundhuber
There's something horribly wrong with a system in which the doctor cannot
readily tell you how much a procedure will cost.

It's not like the doctor is building a new space rocket every time they do an
appendectomy, or designing something completely new. It's a procedure that is
done thousands of times per day. But still, no one can tell you how much it
will cost.

There's layers and layers of waste in American healthcare. No one seems to
really want to take point in fixing it. Frankly, it seems like a hopeless
situation that will only get worse.

~~~
chimeracoder
> There's something horribly wrong with a system in which the doctor cannot
> readily tell you how much a procedure will cost.

There's a reason for this, and I've written about it in more detail on Hacker
News before, but in short:

Medicare reimburses rates below-cost. About 7% below COGS, which means
providers lose money _per-patient_ , even before they have to pay doctors,
nurses, janitorial staff, building upkeep, etc.

To make up for this, providers inflate the rates they charge to private
insurers. They don't expect private insurers to pay the full amount that they
bill for, of course, but private insurers usually peg their final
reimbursement agreements to multiples of what Medicare pays (e.g. "350% of the
Medicare rate)[0]. The provider can't tell you what you'll end up paying,
because they literally don't know - it depends on the rate your insurer
ultimately agrees to pay, which depends not just on what your provider
charges, but also on whether the insurance network has existing payment
agreements that apply to your treatment and supersede the rate that they bill.

Private practices that don't accept insurance can always tell you what they'll
charge you. Private practices that accept _only_ private insurance actually
can sometimes tell you, because they don't have to do the roundabout dance to
the same degree[1], so they often have more standardized rates with private
insurers. However, standalone private practices are a dying breed - most are
part of practice groups, which are themselves owned by hospital networks, so
it's very hard to find a doctor who _does_ accept private insurance but is
_not_ part of a provider network that accepts Medicare patients[2].

[0] It doesn't help that, in many cases, private insurers are required _by
law_ to reimburse more than Medicare does, which perpetuates this whole cycle.

[1] They may still have a back-and-forth billing negotiation, but because they
don't have to use privately-insured patients to subsidize the publicly-insured
ones, they have a much better idea of where it will end up.

[2] Some hospitals are actually talking about dropping Medicare altogether,
because it's so expensive and complicated for them to accept Medicare
patients, but even if they ultimately decide to, it will take a long time to
actually implement, for a number of reasons which are rather tangential to the
topic at hand here.

~~~
DoveBrown
Why do providers accept a loss doing treatments for Medicare?

If it's a loss per patient, it's a loss and you'll go out of business. What is
the advantage for the provider to do any Medicare work?

~~~
chimeracoder
> Why do providers accept a loss doing treatments for Medicare?

They don't really "accept" it, as much as Medicare can set the rates
unilaterally, and providers don't really have a choice (other than refusing to
treat Medicare patients).

> If it's a loss per patient, it's a loss and you'll go out of business.

Exactly.

> What is the advantage for the provider to do any Medicare work?

There... isn't a great incentive, really. This wasn't always the case, but
it's gotten worse in the last 10-15 years. That's why many private practices
_have_ gone bankrupt and closed (or gotten bought out by larger systems), and
others have stopped taking Medicare patients.

Larger hospitals have some tricks they can use to make the numbers work out,
but as Medicare's reimbursement rates have gotten worse and worse (compared to
COGS and inflation), they've been feeling the pressure too. That's exactly why
some are starting to talk about refusing to treat Medicare patients
altogether.

There are some exceptions, too. For example, Medicare has a special program
for hospitals in rural areas that treat large numbers of Medicare patients,
and they'll essentially pay them an extra sum on top of their normal
reimbursement rates, to make up for the fact that they don't have many
privately-insured patients to overcharge to make up the difference. (But most
hospitals aren't eligible for this, even if they treat large numbers of
Medicare patients).

For independent practices, refusing to treat Medicare patients is easy (and
many already have). For larger practice groups and hospitals, refusing to
treat Medicare patients is the "nuclear option". It'll take a lot of work
structurally to adjust the way they're organized in order for this to be
feasible. But the way things are headed, that's what we'll start to see,
because, as you pointed out, you can only lose money per-patient for so long
before you go out of business.

------
tyfon
I don't live in the US, but I've always though it was because it is for
profit.

In most countries the hospitals don't have to return a profit to the owners
and run at cost. In the US they have to pay the profit on top of the cost. In
addition you have an insurance industry with high administrative cost and the
need to turn a profit that makes it even more expensive.

This in addition to very high medicine prices results in an overall expensive
healthcare system.

The article seems to support this notion although it doesn't spell it out
directly. The punchline is “It’s not that we’re buying more pizzas, we’re just
paying more for each pie,”

~~~
barrkel
You have your conception of profit backwards.

The existence of profit is supposed to act as an incentive to competition.
Profit isn't something that is added on top of the cost; profit is the
difference between the cost and what the market is willing to pay. Lots of
profit attracts competition, and competition reduces the market's willingness
to pay.

Normally profit arises from looking at what the market is willing to pay, then
figuring out how to provide that for some cost that is lower. Profits are
normally increased by decreasing costs, since increasing prices is not
normally an option - the market won't pay the higher costs due to
alternatives.

What stops the market functioning is irrational markets (e.g. people always
want the best and won't settle for second-best, so they overpay; or they want
treatment even if risks and costs due to treatment are worse than the
probability adjusted costs of the thing being treated), barriers to
competition (lots of regulation - for good reason), monopolies (e.g. drug
patents), information inefficiencies (lack of pricing transparency so price
isn't able to act like the signal it should), information asymmetries (doctors
know more than the patients, who are actually paying for the healthcare),
incentive misalignment (employer-provided healthcare being a big one), etc.

~~~
tyfon
It's not really backwards though.

There is nothing to stop a non-profit hospital from being as efficient as a
for-profit one.

In that situation the non-profit will always be less expensive as the for-
profit one unless the investors are willing to take a 0% return on their
equity.

When it comes to what the market is willing to pay, what will a man that is
about to die be willing to pay to be cured? Quite a lot I guess so there is
nothing really to stop price gauging if the patient is paying for it directly.

~~~
nhumrich
> There is nothing to stop a non-profit hospital from being as efficient as a
> for-profit one.

Sure, but there is also no motivation to do so. NASA never even thought about
having a rocket return. SpaceX/Blue Origin, that was the first thing they
thought of "how do we reduce cost over time, this is wasteful"

~~~
motiw
The solution could be a government lower cost alternative to the private
health care so they can keep each other in control. Same as us post office
does for ups and fedex

~~~
nhumrich
I actually really like that idea.

------
dtech
A lot of padding before the core:

> There were two areas where the United States really was quite different: We
> pay substantially higher prices for medical services, including
> hospitalization, doctors’ visits and prescription drugs.

> And our complex payment system causes us to spend far more on administrative
> costs.

> The United States also has a higher rate of poverty and more obesity than
> any of the other countries, possible contributors to lower life expectancy
> that may not be explained by differences in health care delivery systems.

So the explanation for "why is this so expensive" is "we pay more"...

------
c8d3f7b49897918
A daily reminder that the US spends more per-capita on socialized medicine
than any other country except Norway, and spends more on _socialized_ medicine
per capita than many first world countries (e.g. france, australia, japan)
spend on medicine in _total_ , both public and private. [1]

Conservatives (I am a conservative) who say we have a free market system are
wrong. Liberals who say we are too heartless to pay for a socialized medical
system are wrong. Anyone who says our military spending is why we don't have
public healthcare is wrong. Anyone who suggests the US is competent enough at
public administration to implement a public health care system is also
probably wrong.

Collapse appears to be the only way out.

[1] -
[https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...](https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita#/media/File:OECD_health_expenditure_per_capita_by_country.svg)

------
doktrin
Maybe I just haven't had enough coffee, but this article felt really lacking.

> There were two areas where the United States really was quite different: We
> pay substantially higher prices for medical services, including
> hospitalization, doctors’ visits and prescription drugs.

> “It’s not that we’re buying more pizzas, we’re just paying more for each
> pie,”

We already know we pay more. That's literally stated in the title. _Why_ are
we paying more? Isn't that the central question being discussed?

> It’s often argued that patients in the United States use too much medical
> care. But the country was below average on measures of how often patients
> went to the doctor or hospital.

They don't specify, so I have to wonder if they made any effort to distinguish
between hospital visitation rates for people with and without insurance (or
with and without _good_ insurance). Considering that visiting the hospital -
or even worse, ending up the ER - can be financially crippling for those
without adequate insurance, I have to think this is an important variable.

Also, this article doesn't address what is probably one of the most oft-cited
explanations for high healthcare costs in the US : prescription medicine.
Specifically the idea that the US 'subsidizes' pharma R&D by virtue of not
having any entity that is capable / willing to negotiate the prices that many
other countries enjoy. You'd think that an article that purports to debunk
'common' explanations would at least mention the most common one of them all.

------
coldcode
One benefit for other countries is experience. Germany, where a national
healthcare system started when the country did (originally Krupp offered it to
their employees), when Germany became a country in the late 19th century, they
adopted Krupp's ideas on a national scale. I have a relative that works in a
Doctor's office in a small town in Germany, she sometimes drives them on house
calls. People there don't worry about getting health care or paying for it,
however on weekends and evenings you do have to drive to another town to get
care. No system is perfect, but it generally involves little stress to the
"customers" other than inconvenience. Also in Germany when you have surgery
people are commonly sent to rest "resorts" to recover, so that when they
return to work they are over the surgery. Her town is filled with these places
because there are a lot of walking paths and nature for people to enjoy. All
paid by the healthcare system. Of course they have challenges paying for this,
yet it's still half of what the US pays per capita. No one gets rich working
in healthcare in Germany, but no one goes bankrupt using it.

~~~
kazen44
> No one gets rich working in healthcare in Germany, but no one goes bankrupt
> using it.

the notion that one should get rich working in healthcare is a strange one to
me?

You work in healthcare because you want to help other people in getting a
healthy (and hopefully happy) life? Money should not be the prime motivator
for working in healthcare in my opinion.

a good example of this is my S.O, which works in specialized care for the
mentally ill. She makes around 30K euro's a year (which is slight below the
global average in NL). Its a decent wage, it's not going to make you a
millionare. It's a very demanding job in terms of working hours, stress and
physical labour but the energy she get's from it makes it absolutely worth it
for her.

Money should not be your prime motivator in life.

~~~
Endy
If only you could convince most of America of that last point. I am reminded
of the 'temporarily embarrassed millionaires' quote about Americans and
socialism.

------
motiw
I recently realized that maybe the biggest scam of the American health care is
that we pay twice for healthcare. when young and healthy we sponser the profit
of the health insurance industry and sponsor the older people higher expenses
through taxes (Medicare)

------
throwaway2016a
Since this is Hacker News, I feel like asking...

What startups working to fix these issues? Large companies? Is there a market
opportunity here?

------
srge
I’ve read the article but I am surprised by its lack of substance. The basic
TL:DR is: health care is more expensive because we pay more for the same.

That’s pretty obvious and also the reasons why it’s more expensive are not
really detailed in the article (besides admin costs).

------
peg_leg
1) Profit

------
asmth
Sad to here that..

------
nkkollaw
Oh, no. Even the NYT uses click-bait titles, now.

"journalism is dead, the reason will completely shock you!".

~~~
aninhumer
It kinda sounds like that's an intentional reference to a common clickbait
format. My guess would be the article is about how clickbait has affected
journalism?

~~~
nkkollaw
I don't know because I don't click on those out of principle and didn't click
on this one, either :-D

