
What Atul Gawande Got Wrong about U.S. Health Care Spending - fluentmundo
https://bostonreview.net/science-nature/adam-gaffney-what-health-care-debate-still-gets-wrong
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aaavl2821
30% of US healthcare spend goes to hospitals, and 20% to physicians (many of
whom are employed by hospitals even if they are outpatient clinics -- the % of
physicians employed by hospitals in the US is at an all time high)

Hospital consolidation has been increasing the last few decades. Many
hospitals are regional monopolies and have a ton of leverage in negotiations
with insurers. Insurance companies put the squeeze on smaller providers,
increasing pressure on them to sell to big hospitals. After buying a smaller
hospital or clinic, the hospital system can bill insurance companies at the
hospital systems' much higher negotiated rate -- for the exact same care (at
least this is what i heard from several execs at big hospital systems).

My first job out of college was an investment banking analyst and our most
profitable clients were hospital systems (HCA, Community Health, Tenet
Healthcare, etc). They were so profitable that their profit margins were
20-30% even after writing off 30% of their revenues as uncollectible (this was
before the Affordable Care Act).

These hospital systems were major targets of private equity buyouts. A buyout
fund would buy a big hospital system, finance the deal with a ton of debt,
then buy more hospitals and clinics and roll them up into the bigger system.
They made so much cash that they could pay down huge amounts of debt quickly
so the private equity groups made tons of money. Many non-profit hospital
systems engage in similar aggressive behavior

~~~
vkou
How can we fight this, when so much money is on the line, to make sure that
this golden goose keeps fleecing the middle class?

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dominotw
allow doctors on H1B to come from india. That's what they do in UK.

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basementcat
Wouldn't that help the bottom lines of hospital conglomerates even more?

~~~
vkou
If two million trained software engineers magically arrived in the US
overnight, it would certainly help the bottom lines of AMFGOOG in the short-
term, but would probably drive down the long-term cost of 'I want some
software built'.

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secabeen
> When most people speak of health care “prices,” they often have in mind
> point-of-service prices one pays when picking up a prescription, being
> hospitalized, having a baby, or seeing a doctor.

This reminds me of the infuriating pattern in some health care conversations
when discussing consumer discounts and rebates for prescription drugs. The
pharma company will say, "we give pricing relief to our customers, and ensure
that no patient will pay more than $20 for a monthly supply!" That's all well
and good, but it elides over the fact that the insurance company is still
paying $1000+/month for their share of the prescription, and that money
eventually comes out of the patient or the employers pocket, which means it
eventually comes out of our pockets as their consumers.

> However, when economists refer to “health care prices,” they mean the
> overall payments for a service—not just what the patient pays to the
> provider in the form of a copay or deductible, but what the insurer pays to
> the provider on behalf of the patient...But the distinction between these
> two ways of thinking about prices leads me to the second problem with the
> emerging price consensus: the failure to consider what is baked into the
> payments that payers (whether public or private) make to providers.

Fundamentally, if we were able to reduce our spend as a percentage of GDP to
that of the average OECD country, it would remove $1 Trillion in annual
revenue from our health care system. The existing health care industry is
going to fight that tooth and nail. That doesn't mean we shouldn't do it.

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zarro
Prices are high because of inefficiencies in the markets caused by bad laws
attempting to subsidize one class of people by another.

Hospitals aren't able to refuse treatment to those that can't afford to pay
for their services, insurance companies are forced to insure unprofitable
people and the net effect is to try and coerce people into a redistribution of
money from people that require more care from those that require less care to
cover these expenditures.

Because there is no mechanism to coerce people to do this willingly both
industries to give the invoices to the government (who created the problem)
thereby getting rid of the requirement to think about how they will fund their
expenditures - making it the governments problem to figure out.

This thereby allows them to continue uncontrolled expenditure in an ever
increasing downward spiral to catastrophe as in effect they are spending
'other peoples money' in the hopes that "eventually these invoices will be
paid" through some sort of government sponsored coercion mechanism forcing
socialized heath care or some other such method with the same result.

Its really quite simple and clever.

-5% of the population accounts for more than half of all health spending. -50% of the population with the lowest spending accounts for only 3% of all total health spending.

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geodel
Similar pattern is there for College education in US. A lot of discussion is
around loans and financial aid but not why basic classroom based degrees cost
so much.

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Mathnerd314
There I think it's just supply and demand. Around the 1970s the job market
shrunk and suddenly everyone wanted a college degree so they could get a
decent job. The pressure's continued to increase to the point where you have
400+ students in an introductory classroom.
[http://www.nbcnews.com/id/21951104/ns/us_news-
education/t/mo...](http://www.nbcnews.com/id/21951104/ns/us_news-
education/t/monstrous-class-sizes-unavoidable-colleges/)

There are some new universities being founded to increase supply, but online
education is taking off too.

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j8014
I really wish we had transparent pricing, it's maddening, outrageous and needs
to be required by law.

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geodel
First step towards transparent pricing would to hospital turn back patients
who cannot pay. Without that they roughly need to collect payment from those
who pay for those who don't.

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j8014
Hospitals manage uncompensated care right now, its not as if its an unknown.

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notadoc
tldr: health care spending is high because prices are high

That seems obvious in general, but should be extra obvious to anyone who has
ever received a bill from anything in the US health system.

~~~
RcouF1uZ4gsC
When you are designing a service, you can optimize for median latency or tail
latency. Sometimes when you optimize for tail latency, median latency gets
worse.

It is similar to the health care systems. The US system is awesome at doing
really crazy life saving stuff. For example US is probably the best in keeping
premature babies alive. In addition it has a ton of resources. If you want an
MRI scan, you can get one in the US pretty quickly and easily. Also, the
profits in the US subsidize worldwide drug development. This is why, if you
look where all the really rich rulers decide to go for surgery or other
complicated care, it is the US.

Canada and other countries optimize for the median case and rely on the US for
their outliers. Look at the instances of Canadians coming to the US for
surgery or MRI scans because they cannot get them in Canada in a timely
manner.

~~~
cmiles74
I do not believe that this is accurate, in my opinion this assertion requires
some documentation. I looked up the survival rate of premature babies and the
neonatal mortality rate (28 days after birth) is higher in the US than in
Canada.[0] I'm having trouble finding numbers on other procedures, in my
opinion it may be because because the US is falling behind on them as well.

[0]: [https://www.healthsystemtracker.org/chart-
collection/infant-...](https://www.healthsystemtracker.org/chart-
collection/infant-mortality-u-s-compare-countries/#item-neonatal-mortality-u-
s-higher-comparable-countries)

~~~
RcouF1uZ4gsC
I am talking about premature infants.

The one study I could find from 2000 that compares them showed

>Relative risks for infant death from all causes among singletons born at 32
through 33 gestational weeks were 6.6 (95% confidence interval [CI], 6.1-7.0)
in the United States in 1995 and 15.2 (95% CI, 13.2-17.5) in Canada in
1992-1994;

[https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&as_vis...](https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&as_vis=1&q=preterm+infant+mortality+Canada&btnG=#d=gs_qabs&u=%23p%3Di6pCP5D8fvQJ)

~~~
cmiles74
I'm not entirely sure that this paper supports your theory. While they do
establish that the risks for this subset of premature babies is higher in
Canada than in the US, they do not attribute this to a better level of care
from US hospitals or the US healthcare system. Reading through their
conclusions, it sounds like they didn't even think that was an issue worth
investigating. Instead they looked for population differences and end up
theorizing that the difference might be due to age estimation errors.

The fact that the births of premature children in this category is lower in
Canada could, perhaps, point to the opposite conclusion: because health care
in Canada is less driven by profit, we are seeing better care before birth
which could be lowering this number.

"Our results were fairly consistent between the United States and Canada. The
RRs of mortality associated with mild and moderate preterm birth were
generally higher in Canada. A small part of these differences in gestational
age–specific mortality was explained by the lower absolute and relative
mortality risks among US black vs white preterm infants, but the RRs for
Canada remained substantially higher than those for the United States even
after restricting the US analysis to non-Hispanic whites (ie, 8.1 vs 15.2 at
32-33 gestational weeks and 3.3 vs 4.5 at 34-36 gestational weeks for total
infant mortality among all singleton live births). An even smaller part of the
difference was the result of the slightly lower absolute risks for term (birth
at ≥37 gestational weeks) births in Canada (ie, total infant mortality of 3.0
vs 3.1 per 1000 live births for Canada in 1992-1994 vs the United States in
1995). We are currently investigating other potential explanations and
particularly whether the differences might be artifacts caused by errors in
estimation of gestational age. Regardless of the explanation, however, the
prevalence of births in these gestational age categories was much lower in
Canada than in the United States, and the EFs were therefore similar in the 2
countries."

[https://jamanetwork.com/journals/jama/article-
abstract/19299...](https://jamanetwork.com/journals/jama/article-
abstract/192994)

------
darawk
a) This article purports to answer the question of why medical care costs so
much, collectively. Its answer: 'prices'. But it does basically nothing to
interrogate why prices are high, despite claiming to at several points.

b) One extraordinarily simple thing we could do to deflate medical costs in
this country that would have essentially zero negative effects would be to
create a market in kidneys. Medicare currently spends 90k per patient per year
on dialysis. Allowing people to sell a spare kidney would completely and
totally solve this problem, essentially overnight. Everyone currently on
dialysis would get a transplant, and the costs would go to zero. 7% of
Medicare's budget would evaporate instantly, and the numbers would probably be
similar for private insurers.

~~~
zaptheimpaler
Wow. Incentivizing people who need money to sell their organs has "zero
negative effects"? Really?

~~~
JoeAltmaier
Really. Done all over the world.

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epmaybe
It's also condemned by the World Health Organization unless totally altruistic
because organ trafficking and human trafficking are intertwined with the
politics of organ transplantation.

Living donor programs already exist in many states and hospitals - If you want
to help reduce medicare spending by donating your organs, go for it! But don't
expect to get paid for it any time soon.

~~~
JoeAltmaier
It has negative externalities as well. The poor cannot afford to donate
kidneys - the time out of work, the lifetime extra health maintenance and
checkups. So it becomes a rich person's prerogative.

And it remove a source of cash from an entire population, with all that
entails.

~~~
epmaybe
I'm not surprised - you probably didn't even look into the living donor
programs available in the US.

Many hospitals will cover most if not all of these costs, including your
wages, health maintenance, checkups, etc. If the hospital near you won't cover
these things, the National Living Donor Assistance Program will help.

> And it remove a source of cash from an entire population, with all that
> entails

There's something like 100,000 people on the kidney donor list right now
(UNOS). Maybe 20,000 of these get a kidney donation per year. It's not really
that much of lost productivity, and as we have already explained these costs
are usually covered by programs for living donors.

You're acting like this isn't a solved problem, when it is except that people
are attached to their own body parts. I for one don't really want to give my
kidney away unless I'm already dead. Maybe we should argue for opt-out
deceased organ donation programs nationally, instead of this asinine idea that
we should allow poor people to sell their kidneys.

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JoeAltmaier
That 'asinine' comment seemed out of place. 80,000 people die, and the
problems with 'poor people having a source of cash' is the bigger issue? I
honestly don't understand the emotion surrounding this.

I can sell my life (ok, 8 hours of every day) and no problem.

