
The Astonishingly High Administrative Costs of U.S. Health Care - digital55
https://www.nytimes.com/2018/07/16/upshot/costs-health-care-us.html
======
Bucephalus355
I wish I had a link for this, but I believe as Obamacare was being drafted /
the economy was in dire straits in 2009, the Obama administration had to make
a choice about whether to radically streamline health care, but at the cost of
killing employment in (at the time) the only growing sector of the United
States.

They chose to not streamline it, which is understandable, but obviously a
price had to be paid at some point.

Related story, went with my wife into a small but advanced local hospital
where she has a surgical consult about her sinuses. This hospital was
beautiful and fully loaded with all the latest technology, big screen TVs,
tablets, etc. Nonetheless, in the waiting room there were 5 office admins each
with dual monitors checking people in. It’s like they didn’t get any benefit
at all from the technology......

~~~
EliRivers
Graeber in "Bullshit Jobs" quotes President Obama, but I can't find an
independent source of the quote right now.

 _To account for that persistence, Graeber quotes President Barack Obama on
the topic of privatized health care. “Everybody who supports single-payer
health care says, ‘Look at all this money we would be saving from insurance
and paperwork,’ ” the former President noted. “That represents one million,
two million, three million jobs.”_

[https://www.newyorker.com/books/under-review/the-bullshit-
jo...](https://www.newyorker.com/books/under-review/the-bullshit-job-boom)

~~~
bunderbunder
A more optimistic formulation would be that that represents millions of people
who could be doing something a bit more generally useful than mastering the
intricacies of the layers and layers of bureaucracy built up around medical
billing. And probably wouldn't mind having a slightly less mind-numbing job
themselves.

Too bad the US is also epically bad at supporting people in career
transitions.

~~~
ethbro
The magnitude of the data systems migration is usually discounted as well.

Insurance companies generally have atrocious IT (it's not their core
competency) and consequently inflexible IT stacks.

Elimination the layers and layers of bureaucracy also means change /
rewritting all the places that's embedded in code.

... and the real kicker? Those changes have to happen on both sides of any
party / counterparty transaction. While supporting a normal volume of work.

Small example? ICD-10 code support
[https://www.cms.gov/Medicare/Coding/ICD10/index.html](https://www.cms.gov/Medicare/Coding/ICD10/index.html)

~~~
bunderbunder
I think, though, that they would find a way to clean this all up toute de
suite, if only they were given a proper incentive to do so.

For example, if there were real competition in the marketplace (say, by moving
to a system where most consumers go to actually shop around and choose their
own health insurance company), I expect you'd find insurance companies start
to streamline their own processes, both internal and external, more-or-less
immediately.

~~~
mmt
Indeed, imagine a system where some providers are cash-only. They wouldn't
even care about that ICD-10 stuff, let alone pay even the cost of entry for
the proprietary coding system.

Of course, I realize, that were an insured patient to use such a provider,
that would shift the insurance claims burden onto the patient (much as is
often the case PPO out-of-network claims today), but this could be a point of
competition for would-be insurers under your proposed system.

~~~
ethbro
If a patient is cash-only, how would their electronic records be stored, if
not ICD-* compatible?

~~~
mmt
Using any technology that predates ICD-*, including paper.

Current regulations may preclude using anything but a compatible EMR, but this
implementatino detail is hardly fundamental to the practice of medicine.

~~~
ethbro
Ironically, when I asked an old timer about the IDC field format, I was told
they were that way "because that's how they were on the previous paper forms."

Point being, using proprietary data formats works up until you need to share
data (e.g. labs, consults). And then the forms _are_ the API. So either you're
writting a translator or you aren't communicating with the other system.

But this is prolly a bit of a tangent. Standardized forms and coding are
actually a huge benefit to efficiency.

The biggest loss in productivity (I saw) is the back-and-forth nature of the
system. Provider submits claim. Insurance rejects it. Phone call is made.
Claim is updated. Insurance rejects it for a different reason. Claim is
updated. Claim goes through. Note: rejections are usually for technical /
procedural reasons, not necessarily not wanting to pay the claim. And that
process is different for each insurer.

If you really wanted to eliminate hours spent in billing, enriching the
"negotiation" phase somehow would be best. But also difficult because you're
essentially coding the legal contract between insurer and provider, then
attempting to apply it to an actual situation. And have to play nice with the
existing systems on both sides.

~~~
mmt
> when I asked an old timer about the IDC field format, I was told they were
> that way "because that's how they were on the previous paper forms."

That's not actually surprising, since the current insurance/billing situation
easily predates the prevalence of EMRs (the recency of which those of us in
the computer industry may have forgotten).

> But this is prolly a bit of a tangent. Standardized forms and coding are
> actually a huge benefit to efficiency.

I don't doubt standardization is a boon to efficiency by some measure.
However, it doesn't _necessarily_ translate into better medicine (which was my
tangent). Less tangentially, it may not translate to cost savings, especially
for a cash-only business, where it may be merely a premature optimization.

Least tangentially, there's little reason to believe that continuing with
existing standards, skewed toward insurance/billing (which I admit more
describes CPT than ICD), is more efficient for a cash-only provider than an
alternative.

------
conorh
At my wife's practice they employ two people full time _just_ to do insurance
authorizations.

edit: actually one of those people does verification (checking to see what
insurance patients have, what is covered, and estimate what they will owe) and
the other person just does authorization (getting the insurance company to
approve the procedure)

~~~
fma
What's interesting is I heard that if you pay cash, up front the doctor's
office will charge you less. So I had this appointment (forgot for what) and
they gave an estimate with my insurance. I asked...if I wanted to pay for all
of it right now, how much would it cost...and she said it would be the same.

Of course I said ok, fine...run it through insurance. That year I wasn't going
to meet deductible so I had no incentive to go through insurance.

~~~
randysavage
My wife needed an MRI last year. The hospital quoted us $4000 as self-pay, but
would knock it down to $2000 if we paid cash up front. This was late December,
so we picked up insurance through the marketplace and she had the MRI done in
January, billed to insurance at $250.

This still boggles my mind... I understand the insurance provider negotiates
bulk rates, but we were paying up front, in cash, and were still quoted 8x the
insurance price.

~~~
deathanatos
I've had a doctors office tell me that it was literally impossible for them to
estimate, let alone quote me, a price for how much my visit would cost.

(My finger was infected. I needed a week of antibiotics. That was it.)

~~~
pm90
Yup. Same experience here... had to have an emergency appendectomy and my
biggest worry wasn't the operation itself but its cost. I persisted in asking
the doctors for an estimate, but they wouldn't budge. Neither would the
clerical staff... which made 0 sense to me. Its not the first operation they
have done, I just wanted rough figures (i.e. 5k? 50k? 500k?) but they wouldn't
give me that either.

Final billing: 55k in total, but because of insurance I paid about 5k. Which
still left me wondering... what did people without insurance do? How could
they possibly pay that much money, if they couldn't even get insurance?

~~~
photojosh
They go broke. The exact number is disputed [0], but health costs are a major
cause of bankruptcy in the USA (as opposed to most other developed countries
where this uncertainty about costs doesn't exist).

I discovered an interesting fact the other day about the US's massive % of GDP
spent on health; they spend about the same % of public monies on health that
other developed countries do, the extra % is private spending! [1]

Anecdata: I am in Australia and have private health insurance (notably:
otherwise I'd be paying an extra tax levy and be worse of in $ terms), but all
that has meant is that I can go to a private hospital instead of a public one
for elective surgery. For ~$2k a year. A few years back I broke both my
collarbone and my ankle on separate occasions. The ankle repair was entirely
free. The collarbone was setting too slowly (opportunity cost: I needed to get
back to work ASAP... normally they just put your arm in a sling and let it
stitch naturally), so I opted to have a surgical repair, which was about $2k
all up for the out-of-pockets.

[0]: [https://www.thebalance.com/medical-bankruptcy-
statistics-415...](https://www.thebalance.com/medical-bankruptcy-
statistics-4154729) [1]: [https://www.healthsystemtracker.org/chart-
collection/health-...](https://www.healthsystemtracker.org/chart-
collection/health-spending-u-s-compare-countries/#item-u-s-similar-public-
spending-private-sector-spending-triple-comparable-countries)

~~~
stevenicr
go broke as you mention, and often go without care.

Sometimes being dumped from a hospital in the middle of the night drugged at
some random location.

Often times a small problem gets put off and becomes a much larger problem.

It becomes a burden on family and friends, sometimes leads to amputations and
other surgeries such that otherwise could of been avoided with better care.

This a huge problem for a lot of people, especially if you add in the dental
care that is needed and not obtained around the country.

ymmv

------
tabtab
As worded, it sounds like emulating the Switzerland or Germany model is the
best solution. They offer decent patient choice but don't pay significantly
higher for that choice than single-system countries. USA citizens on average
prefer choice, and would probably agree to pay a little more to get choice.

------
Simulacra
I think the biggest driver of healthcare costs is the middle-men. All of the
people who pad the bill, add fees, etc. The doctors who step into the O.R. for
a minute and charge a fee[0]. They all add to feeding at the trough, so to
speak..

[0]. [https://www.nytimes.com/2014/09/21/us/drive-by-doctoring-
sur...](https://www.nytimes.com/2014/09/21/us/drive-by-doctoring-surprise-
medical-bills.html)

------
richpimp
I wonder with more frequency every day if there will ever truly be a solution
to the problem of rising health care costs in the US. I see a lot of posts
here suggesting that privatization should be removed, and any jobs lost that
are related to the current industry will be unfortunate byproducts of getting
rid of a broken system; a necessary evil that will ultimately make way for a
health care system that is both cheaper and available to all.

It's tempting and easy to adopt that line of thinking given where, I would
suspect most of us here, are at in our lives from a career and financial
perspective. As a software developer, it's easy for me to switch jobs and make
a good wage. I can weather most unforeseen costs. In the decade plus that I
spent working blue collar jobs for a very low wage, I would've been screwed if
I'd lost my job.

This speaks to a much larger problem that is consuming the US every day. I
don't have any answers, but I can empathize with those who fear their
livelihoods being taken away, even if saving those jobs has a net negative
effect on the economy and job market. There isn't a day that goes by,
especially in today's political climate, where I'm not thankful for having the
opportunity to put myself in a better position. I'm the outlier, though. Most
people can never bring themselves up out of poverty.

~~~
analog31
_...any jobs lost that are related to the current industry will be unfortunate
byproducts of getting rid of a broken system_

I'm tempted to argue that an equal number of jobs are lost every day to the
opportunity cost of people not taking business risks due to the added risk of
losing their healthcare, myself included. My optimistic vision is that the
economic growth resulting from removing this burden will absorb the displaced
workers, plus create even more jobs on top of that.

~~~
nojvek
We forget. This isn’t going to happen overnight. Sure people will lose jobs,
but not millions overnight.

Imagine how many humans are spending their lives doing busy work. We can free
them up to do better things.

Imagine how many good doctors have to join a medical factory where they churn
out patients and slap big bills. Going solo doesn’t make sense.

Just the way cloud made it so Indie hackers can build great products with a
small team, Healthcare needs this “cloud” like system which takes care of all
the unnecessary bullshit related to insurance and payments so they can focus
on the core of providing great service and making people healthier.

~~~
analog31
Going one step further, just eliminate insurance, and the entire billing
system becomes unnecessary.

My mom had an experience in a country with national health care. She got
injured while hiking, and got treated at the clinic in the first town she
reached. Whey they were done, she asked how to pay. They said: "You don't pay
for health care." Well, what about foreigners? It turned out they simply
didn't have any way of figuring out a price or taking her money. Those
mechanisms didn't exist. It was probably cheaper for them to dish out free
care to a few foreigners, than to manage a complete billing and collection
infrastructure.

------
assblaster
Administrative = bureaucratic.

Government-run healthcare has the same problems associated with heavily
regulated sectors like our current healthcare system, but to a much larger
degree because of lack of incentives to improve performance.

The way to decrease cost is decrease regulation and get rid of all the
unnecessary paper pushers we have right now.

~~~
jjoonathan
Back in Health Care Policy class I dug through these numbers and the opposite
was true: bureaucratic overhead was much larger in the US system. The US
system also wound up being twice as expensive overall.

Has that changed or are you just repeating a talking point you heard
somewhere?

Markets serve the person with bargaining power. If doctors and drug companies
have all the bargaining power -- and in the most important health care
situations, they do -- why do you think a free-er market will give you a
better deal?

~~~
chimeracoder
> Markets serve the person with bargaining power. If doctors and drug
> companies have all the bargaining power -- and in the most important health
> care situations, they do -- why do you think a free-er market will give you
> a better deal?

Contrary to popular opinion, doctors have close to zero bargaining power in
the US. That's why private practices have been rapidly shutting their doors
over the last 10-15 years - they've been losing money, so they've had to sell
their practices to large provider networks. But even those hospital networks
don't have much bargaining power, which is why many of those have been going
out of business and either shutting their doors or consolidating in the last
5-10 years.

~~~
jjoonathan
My point: the consumers are powerless. Whether doctors are individually
powerful or only powerful as a member of an organization is entirely
tangential, except in that the consumer is even less powerful in the second
case.

EDIT: I now have two people providing evidence that actually reinforces my
core point in order to argue with me about a synechdoche. I don't know whether
to laugh or cry.

~~~
chimeracoder
> My point: the consumers are powerless.

Yes, but that's a far cry from saying the doctors are powerful. They're not.
They're powerless too.

> Whether doctors are individually powerful or only powerful as a member of an
> organization is entirely tangential.

Doctors are neither powerful as individuals _nor_ as members of any
organization. Despite common misconception, they have almost as little power
as patients do.

~~~
jjoonathan
s/Doctors/Health Care Providers then. The more you insist on precision, the
less accessible this debate becomes. I hope you have a good reason.

The salaries say that doctors are more powerful than patients -- but we both
agree that they are powerless compared to the organizations that employ them.
What of it?

~~~
chimeracoder
> s/Doctors/Health Care Providers then. The more you insist on precision, the
> less accessible this debate becomes. I hope you have a good reason.

Yes, because there's a big difference between doctors and provider networks,
and as I've already explained above, _neither_ has the level of power that
people generally believe they do.

> The salaries say that doctors are more powerful than patients

I have no idea what this is even supposed to mean. You're not comparing like
quantities.

> we both agree that they are powerless compared to the organizations that
> employ them.

No, we don't, because I've already said that the hospital networks (which
employ the majority of doctors these days) don't really have much power
either.

------
chadmeister
Healthcare tends towards natural monopolies. Without competitive pressures,
what incentives are there for them to slim?

------
snarfybarfy
The health care and pharma industry is in serious need of some whistle-
blowers.

------
cozzyd
"Your desire to live is my opportunity" \- some health care administrator.

~~~
ethbro
Never ascribe to malice, what can be explained by apathy.

~~~
tedajax
If you're so apathetic as to be actively harmful that's still malicious.

Also, as they are actively looking to increase profits, I can't possibly see
how this is "apathetic".

Quit making excuses for garbage people.

~~~
ethbro
You know what's easy? Blaming people.

"How could they be so evil / greedy / stupid / mean / etc? Don't worry. We'll
fire them and bring in new people. Everything fixed."

You know what's harder but more productive? Admitting there are systemic,
_structural_ issues. And having enough compassion for people trying to do
their jobs.

Because suddenly there's no easy scapegoat. And the only response is to
actually change the system.

\--

The issue with the US health system isn't some malevolent Oz pulling strings
behind the scenes, but that none of the legally defined and empowered players
have their interests fully aligned with the patient.

~~~
tedajax
Suggesting there aren't malicious forces actively pushing for their bottom
line over say, structural changes that would improve healthcare for everyone
is really really dumb.

Sometimes there really are just evil greedy people being bad.

~~~
ethbro
Are there greedy people out there? Of course. Do I spend time focusing on
them? Not a minute. That's what the justice system is for, and it's not
terrible at punishing people who break the law.

Th difference is in outcome.

If you focus on people, you get to feel righteous, targeted anger, and nothing
ever changes.

If you focus on the system, you're left viscerally unsatisfied ("The US
healthcare system is dysfunctional? I can't yell at that..."), but might
effect real change.

------
mkirklions
If you ever want to know why something sucks, just look at who is bribing
politicians:

[https://www.opensecrets.org/lobby/top.php?indexType=s](https://www.opensecrets.org/lobby/top.php?indexType=s)

So here is the process it takes to get medicine that is legal in china.

>Schedule appointment, talk to 1 person

>Wait in the lobby, talk to 1 person and fill out government HIPPA + clinic
paperwork

>Go to back room, talk to nurse. Fill out paperwork

>Wait

>Talk to Physicians Assistant or Physician, get perscription

>Pay office 120 dollars

>forward perscription to pharmacy 1-2 people involved

>Go to pharmacy

>Talk to person at register

>Pay

Remember that in China, you just go to the store to buy 4$ amoxicillin. And
despite the Physicians in the United States screaming about superbugs, China
and Mexico both havent made superbugs despite not having massive regulations.

This is a self made problem from corruption. The Medical profession milks the
consumer because the consumer has no other option.

~~~
fma
You're being downvoted probably because of the superbug statement...but my
wife had surgery to remove a breast lump. It cost $3k and with all these
appointments it happened over the course of 2 months. The cost does not
include all these other scans and crap before.

My cousin went to China (family visit). Lump was discovered here...surgery in
China. Got seen in one day, surgery the next. $800.

When my wife discovered a new lump...just doing follow up scans was $900. $500
for imaging center, $200 for the doctor at the imaging center...and $200 for
her annual physical (they billed it as a problem visit and not an annual
because she brought up the fact she has a lump, rather than the doctor finding
it, even though breast cancer detection is part of annual!...still fighting,
but I'll probably drop it because it's so stressful and time consuming)

~~~
madengr
So that’s why I can’t be seen for a physical and problem at the same time.
What a load of shit.

~~~
fma
Yeah...its all about the money. I have mild allergies in the spring that don't
really bother me... Last year I did my appointment for my annual in the
spring. Doctor goes, you have allergies. If I write you a prescription I gotta
charge you as a problem visit. I recommend you try over the counter Claritan
and if it doesn't help, come back.

Now this doctor didn't own the practice, it's a decent size local franchise.
Maybe that's their policy. But atleast the doctor told me up front. For my
wife...we didn't know till we got the bill. Funny thing is the doctor signed
paperwork that my wife did an annual (i get $$ from work if we do annuals)

------
mhkool
The reason that health care costs rise in almost all countries is that we are
doing something wrong. The question is what? Can it be that doctors who do not
try to find the root causes of diseases have no solutions ? Can it be that
doctors who prescribe drugs to suppress symtoms cause problems in the long run
?

Cancer is a disease with high costs where a lot can be gained. Watch a
documentary about Dr Burzynski who has a cure for various types of cancer:
[https://www.youtube.com/watch?v=rBUGVkmmwbk](https://www.youtube.com/watch?v=rBUGVkmmwbk)
The documentary shows how officials and the National Cancer Institute work
against him and hence continue the high cost.

On websites like [https://drhyman.com](https://drhyman.com) and
[https://www.chriskresser.com](https://www.chriskresser.com) you can find
doctors who explain a lot about root causes of diseases and how to cure
oneself. If all would read these sites the costs for health would drop more
than 50%.

~~~
tathougies
Chris Kresser -- despite his many virtues -- is not a doctor. Moreover, he has
never published any research indicating his findings or results are
statistically significant. While his advice is often good, there is no reason
to believe that it offers 'cures' to diseases hitherto considered uncurable.
If anything, the fact that you think he's a doctor with magic cures suggests
the need for ever more regulation, and thus bureaucracy.

~~~
LyndsySimon
> If anything, the fact that you think he's a doctor with magic cures suggests
> the need for ever more regulation, and thus bureaucracy.

Why? Why should the state assume the burden of protecting someone from
themselves?

I might see it differently if knowledgeable, well-researched care were
difficult to find... but it's not. If someone decides they want to go to a
homeopath to treat their terminal illness, why should we stop them?

~~~
aninhumer
Because working out if someone is a competent doctor is hard and expecting
every single person in society to work it out for themselves, regardless of
their level of free time, education, or access to information, is a massive
burden.

~~~
taeric
To rephrase this. As wasteful as it may seem to "protect people from
themselves" there is a good reason to believe not having some of those
protections is actually more expensive.

Consider the costs of seatbelt enforcement. They are real and exist. More, for
most people and most rides, the seatbelt truly did nothing for you. To the
point that if you got a ticket, it almost certainly cost you more than you are
projected to save from having a seatbelt in the short term.

However, for society at large, we tremendously benefit by having everyone use
seatbelts. From less time lost on the job, to fewer ER trips from lower
collision wrecks.

