> all prices need to be +\- 50% of what Medicare pays.
This is actually close to what happens with private insurers- they negotiate with a hospital to pay n-times what Medicare pays for some set of treatments.
So why does Medicare pay the least? Because they have the most patients covered of any insurance network in the US. That's a hell of a bargaining factor. More patients = cheaper prices.
The logical conclusion is to then have Medicare for all. That'll regulate all prices to be exactly what Medicare pays!
That still doesn't explain how prices of medical services in many other countries turn out several order of magnitudes smaller than commonly encountered prices in the US.
I've discussed this before, but I think there's quite a bit of funny money in hospital bills -- a 10k bill rarely actually materializes in 10k transferred across all parties involved.
Doctors bill $10k to your insurance, the insurance decides its too much, lawyers are on-hire to negotiate and take a 30% cut of the outcome, and finally 2k is paid out; the absurd bill naturally accounts for the absurd process, and I don't think anyone except the consumer ever expects 10k to really be 10k. And ofc, the insured consumer only ever pays $500 of it from his deductible.
This was basically Shkreli's defense as well -- the insured patient doesn't pay anything close to the bill given; and I'm pretty sure, neither does the insurance. If you want to raise the price be $10, you add $1000 to the bill.
This type of billing practice causes a mess of winners and losers, essentially unless your insurer has good pricing with wherever you end up getting treatment (often not a choice you get to make in an emergency), you can end up holding the bag for the cash price, usually half of the $10k number you mention. Quite ridiculous when other insurers are paying less than half that price, smells of a scam.
What’s ironic (?) is that by mismanaging a scheme to get everyone on private insurance they’re really working towards socialized insurance. Which good or bad, there is no going away from once you have it.
I'd be curious to know how much of that is caused by malpractice insurance. I mean if hospitals were overcharging so much, then surely we should see lines of rolls royce in the hospital parking lot. Doctors are well paid in the US but they are typically not rich.
> Doctors are well paid in the US but they are typically not rich.
What doctors do you know? My friends who are just getting out of residency and such are making a few hundred thousand a year. My college roommate’s father was an anesthesiologist making $800k/year.
Just because they don’t draw attention to themselves with ostentatious vehicles doesn’t mean they couldn’t afford to (the anesthesiologist only had a Porsche for each of his kids).
Not outrageous, but that puts all of them in the top 4% of US incomes, and after a decade or two of that basically all should be counting a few million in assets. That’s rich and far, far beyond average in this country let alone the world. Compare to other first world nations where doctors typically make half that (or less), but probably aren’t saddled with the unreasonable educational expenses.
As I said, I don’t think they’re actually charging that much — negotiation with insurance is expected, with like 80% reductiond to initial price. They’re still paid very well ofc, but I think complaining about the high initial bills itself is a red herring, because no one involved expects that amount to actually materialize
HDHPs are becoming extremely common. A $500 deductible would be amazing. Deductibles in the thousands of dollars are more common - mine is on the higher end, $6600, while still costing more than 20k a year.
Are the prices that Medicare pay orders of magnitude different? ISTR that Medicare and the VA both pay about $10k per patient per year, which I think is comparable with the NHS. No sources as this is half-remembered.
People on Medicare are over 65 and people in the VA have been in the military. Both of those groups of people are going to have much higher medical needs than the general population.
We would also need to know the average number of visits per patient before this data means anything otherwise it's just data without context or meaning.
No. Medicare pays the least because the don’t negotiate. They just set prices. As a hospital/doctor you can choose to accept Medicare patients or not. Most providers lose money on Medicare patients, or so the like to say.
Even if I turn up at a private hospital here in Norway, I pay nowhere near what you would pay in the US. Which tells me that either hospitals are run extremely inefficiently in the US (orders of magnitude worse than here) or there are layers of pretty substantial profit margins.
I may be a bit peculiar, but I think a healthcare sector that is set up to mainly benefit execs and shareholders is a bit immoral.
That’s what most providers claim. In my experience (healthcare Corp finance), it’s typically closer to breaking even on Medicare. Especially if you cut out some fluff/unnecessary spending companies like to engage in. I’ve worked with Medicare and they actually try to do a bottoms up, zero based, pricing to determine what something should cost. So when a hospital is built by some award winning architect and has fountains and statues etc. Medicare doesn’t cover that (donors often do in the hospital example, but not other lines of services). I often have to explain to C suites that Medicare should be seen as a high volume that basically helps break even thus covers your fixed costs in entirety and making commercial patients all the more profitable.
That said, every branch of healthcare works different and could be upside down from this where they make a ton on Medicare but not commercial
Considering private pays almost 200% what medicare pays, I doubt it.
Its more like how airlines work: they make money on first class, and coach is something that fills the plane to cover some costs. If planes were made mandatory to only have coach, they would go bankrupt.
At least from what I know, its accepted medicare is below cost. I cant attest for padding or number fudging, but at least in primary care medicare pays crap and below physician salaries.
I was referring to private healthcare without reimbursements or insurance. And mind you: Norway has a pretty high cost of living so it isn't like this is a low cost country.
Which suggests to me that prices do not reflect actual cost, but rather inflated profit margins.
> Which suggests to me that prices do not reflect actual cost, but rather inflated profit margins.
There are lots of healthcare companies that are public. Healthcare insurance companies are amongst the lowest earnings of any insurance, contrary to the argumentational of Bernie Sanders.
Also, one of the biggest health insurance companies, blue cross, is a non-profit.
Furthermore, 60% of hospitals are non-profit. And hospitals are 30% of the national healthcare spending.
If we are theorizing at random on what changes could impact the cost-effectiveness of healthcare, it is the increase of profits, not the decrease, that would be a more significant change.
That private healthcare in the us is heavily and negatively affected by regulation.
US has..
- a very low doc/population count, due to the artificial constraints of medical licensing and immigration law.
- a draconian FDA process for drugs and an unreasonable patent application to drugs.
- An incredibly distortive public service implementation (Medicare) that provokes cost-shifting (by paying below cost), that creates heavy admin burden (fee-for-service), and that overpays specialties and punishes primary care (fix reimbursement fees in multiples for specialties, giving a very low primary care doc count)
- An incredibly distortive tax credit for the wealthier to spend on healthcare (the richer you are, the more tax effective it is to get better insurance through your employer)
- A free-market abolishing regulation requirement: tying healthcare provider to employer.
Wouldn’t it make more sense to properly separate private and public? If hospitals can be either Medicare-only or no-Medicare (using Medicare as the name of a future broad/universal system much larger than Medicare/aid is today) then hospitals would chose to be Medicare in proportion to how many are covered. If everyone (including those who chose a private insurance) pays a full insurance premium for the public system on their taxes, the private insurers’ patient lists would shrink very quickly, and so would the number of hospitals that could survive by providing treatment to those patients.
So looking from outside it looks like “hospital prices” is just another one of the problems that would be solved by a tax funded public universal healthcare insurance?
Example (Sweden): I pay a full public insurance through taxes, and I have a private insurance via my employer that lets me cut some waiting times for certain procedures from 90 to 14 days. It’s an expensive way for my employer to make sure I’d be back to work quicker than I would otherwise be. Obviously, this is a luxury few use or need so the number of hospitals that provide this care is extremely limited (a few percent).
If you have public hospitals that are tax funded and private hospitals, you will see that private hospitals will only provide profitable services (cardian, neuro, etc) and give all loss patients to public hospitals (psychiatry, managed care, etc). Public hospitals will have a unreasonable burden of high-cost patients.
I think you misunderstood: anyone who uses private would do so while also paying for a full public health insurance. That is, the public system is fully funded regardless of whether anyone wants to operate private hospitals.
Yes - it makes private insurance an added luxury product. This is normally how it works where there is a publicly funded universal system. On the other hand the public insurance covers many expensive things very well (e.g cancer treatment) so the private insurance is for things like getting a knee surgery without waiting time where the public system can have 90 days waiting time. Someone like an athlete wouldn’t want to wait that long but for most people it’s acceptable if it keeps premiums (taxes) lower.
The “paying twice for the same thing” is a feature, not a bug. Most people wouldn’t do that of course, meaning they would simply get rid of their private insurance.
It makes it inefficient in economic terms. I think you are attempting to frame it in terms of cost-shifting: making the "rich" pay for "the poor" by paying twice.
But when the public hospital is 10 miles away, and the private hospital is 1 mile away, paying twice effectively lowers the access of care to the people that can't afford to pay twice.
And then, proximity to public hospitals would be so valuable, that housing prices would icnrease close to the best public hospitals, and the richer will again take profit of it, just like it happens with zone-dependent schools.
Doesn't that type of inefficiency already exist when a patient may need (or want) to go to a "network hospital", when there are multiple competing networks instead of one enormous one (that has say 95% of the "market")?
> paying twice effectively lowers the access of care to the people that can't afford to pay twice
My private insurance that kicks in if I e.g. need a knee surgery with 14 days wait instead of 90, will often require me to fly to a different city, likely even a different country, to get the procedure performed at a specialist private clinic. This care is something completely different to the regular care I need day-to-day for a child delivery, cancer treatment, appendectomy or whatever. As there is so very little overlap I'm also not paying twice. There isn't a private insurer that will offer me cancer treatment, child delivery etc.
They don't exist because who would want to pay twice for that?
> Doesn't that type of inefficiency already exist when a patient may need (or want) to go to a "network hospital", when there are multiple competing networks instead of one enormous one (that has say 95% of the "market")?
Not really, because all the insurers typically insure all hospitals. By having multiple insurance companies, hospitals get bargaining power and lower what insurance can ask from them. If you had only one insurance, like the state, you have 3 possible solutions: its the same, it pays more than the competing system (overly generous and thus worse for the tax payer), it pays less (uses monopoly market power and reduces hospital size/supply)
Hospitals and insurance companies are in a bargaining fight constantly, and if you look at the numbers, hospitals have won. However, hospitals are 60%+ non-profit (60% non profit, 20% public, 20% profit hospitals), so its not so clear you want hospitals to lose. Its really messy.
> My private insurance that kicks in if I e.g. need a knee surgery with 14 days wait instead of 90, will often require me to fly to a different city, likely even a different country, to get the procedure performed at a specialist private clinic. This care is something completely different to the regular care I need day-to-day for a child delivery, cancer treatment, appendectomy or whatever. As there is so very little overlap I'm also not paying twice. There isn't a private insurer that will offer me cancer treatment, child delivery etc.
The main benefit of having a single insurance company, or single payer system, is that you dont have to spend so much moeny on administrative costs. If you start getting into the rabbit hole of what will be public or private, at what cost and quality, i suspect the gains from the administrative relief will fade. Economically, maybe the best thing about having a public/private system would be that the public system is dirt cheap and effective, while the private one is simply more expensive. Thus there is some component of redistribution, but also some market forces. I think hybrid beats full state owned (I accept my own ideological bias and maybe hybrid beats fully private, though I believe it wouldnt).
> They don't exist because who would want to pay twice for that?
As an example of this, I can speak of Argentina. Argentina has had a diminishing public expenditure of public funds to public health. It has a very decaying public health system, and a thriving private one. The private one does have price controls, but not too much in effective terms: they biggest cost threat is probably that patients could choose to not have private insurance and just go to a public hospital. The reality is however crude: some public health services are of terrible quality. But its a trade-off: poor people dont pay and receive quite the tax benefit as a whole. Private is thriving and has very good quality metrics at reasonable prices.
So yes, you can have a system with "double paying" that is definitely stable.
Some insurers benchmark Medicare rates for some procedures. It certainly isn’t the majority of rates, those tend to be percent of charges.
And no, Medicare doesn’t have the lowest rates (Medicaid does). The rates aren’t low due to negotiation (hah!), it’s the gov’t basically saying “here is what we pay, take it or leave it”.
Except republicans and bush passed a law a decade ago saying the government can't negotiate drug prices for Medicare. It's beyond stupid and the main reason you see so many niche drugs go up 50x in price overnight lately. The companies have figured out they can exploit that law this way.
This is actually close to what happens with private insurers- they negotiate with a hospital to pay n-times what Medicare pays for some set of treatments.
So why does Medicare pay the least? Because they have the most patients covered of any insurance network in the US. That's a hell of a bargaining factor. More patients = cheaper prices.
The logical conclusion is to then have Medicare for all. That'll regulate all prices to be exactly what Medicare pays!