France, Germany, and Japan all have similar systems, according to the book. They have private nonprofit insurance, some kind of mandate to purchase it, a government price list on services, guaranteed coverage of anything on the list, and digital medical records.
A lot of German primary care doctors don't even hire office staff. They prescribe whatever they want, swipe your medical card, and they're guaranteed to be paid in a week, no questions asked.
Japan has a clever way to handle the mandate. If you don't pay your premiums, nothing happens, but if you need healthcare you're not covered until you pay your back premiums.
I wish all the Americans who think the rest of the developed world runs on single payer would read this book. None of the three countries I just mentioned use single payer. The book also covers Canada and the UK, both of which are single payer (and single provider in the UK), and while their results are pretty good, they're not as good as the other three.
"there is no reason my money should pay for the care of others, but if I personally need care, then it should be of the absolute best quality and should be provided until my last breath no matter what"
The people maintain the system themselves by insisting on that, and that is the root of every other problem. Before alleviating restrictions for med school, US people should think about pulling the plug on the legions of evidently terminal patients receiving maximal care that just prolongs their intense suffering every day around the country.
Why do you think your doc does every exam under the sun as soon as you step foot in the office?
1 - if solo, more money; if networked, makes you look better for the "employer" (insurance company/hospital/HMO, etc.)
2 - if you have too many exams, you will complain on the internet. If you have too few exams and something goes wrong, you will drag the doc into court.
Weigh the incentives and I think even the most conservative person should see a problem.
Your healthcare industry: "if you personally need care, then it should be of the absolute best quality and should be provided until your last cent no matter what"
Isn't the cultural issue largely a idealogical issue - things like the UK NHS are avowedly socialist? In the words of Aneurin Bevan, founder of the NHS:
" A free health service is pure Socialism and as such it is opposed to the hedonism of capitalist society."
Personally, at least when it comes to healthcare, I'm a socialist:
"The collective principle asserts that ... no society can legitimately call itself civilised if a sick person is denied medical aid because of lack of means."
Another point is that IMO, you can't go extreme on one principle without impacting the others. Nonmaleficience is clearly a problem in the US.
That's somewhat mitigated by negotiations between insurers and providers, but not entirely given out-of-network charges.
Plus, providing complete price info itself is not free. Talk about administrative inflation!
The dictionary has socialism as "means of production, distribution, and exchange should be owned or regulated by the community as a whole" and I've never thought of health care as a "means of production". Now if the government tries to own all the factories that's socialism.
The NHS is a socialised system based on socialist ideas and indeed can be seen as a socialist construct within a capitalist overall economy. Nothing inherently wrong with that, that's just objectively the way it is. Bevan just said it the way it is.
Now, the military and police are regalian functions of the state. The government and regalian functions cannot really be labelled 'socialist', that would make much sense.
Sorry to nitpick, but does "regalian" mean something else than emblems or insignia of royalty?
A credible sovereign state generally needs some force projection capability within it's political domain, hereditary monarchy or not.
Hence military is definetly in a different category than healthcare.
"Regalian functions of the state" is a common term that means the basic powers of the state (monarchy or not) that used to be the prerogative of the sovereign. I.e. law & order, military, and taxation. You could also call these "inherent powers of the state".
It's really not; I mean, I've got a poli sci degree so I've seen it, but it's not really a common term.
> that means the basic powers of the state (monarchy or not) that used to be the prerogative of the sovereign. I.e. law & order, military, and taxation.
The pre-modern-limited-governnent prerogatives of sovereigns were much broader than law enforcement, defense, and taxation. And, in fact, the principle thing denoted by regalian power is the fundamentally ownership of all land which is superior to all private title, which is the root of all the other (essentially unlimited) powers associated with sovereignty, in a “my house, my rules” kind of way.
The term “regalian functions”, though, is most often used to refer to the three functions Adam Smith identified as essential to the sovereign in The Wealth of Nations, which are still much broader than what you suggest:
“The first duty of the sovereign, that of protecting the society from the violence and invasion of other independent societies, can be performed only by means of a military force.” 
“The second duty of the sovereign, that of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice, requires two very different degrees of expense in the different periods of society.” 
“The third and last duty of the sovereign or commonwealth, is that of erecting and maintaining those public institutions and those public works, which though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual, or small number of individuals; and which it, therefore, cannot be expected that any individual, or small number of individuals, should erect or maintain.” 
> Hence military is definetly in a different category than healthcare.
This is true, not in the sense of not being subsumed within “regalian functions”, but in the sense that the military is the first regalian function identified by Smith while healthcare delivery systems that broadly and effectively serve the whole population are in the third.
 book V, chap. 1, part 1
 Ibid, part 2
 Ibid, part 3
That's your interpretation but that's really a political view, and indeed the definition of that third duty is highly subjective. As I wrote in another comment, the line must be drawn somewhere.
Note that my point wasn't to discuss regalian functions in general but to counter the argument that calling the British NHS 'socialist' was like calling the police or the army 'socialist'.
(Btw, I heard the term "regalian functions" in secondary school/high school...)
Smith's concept of regalian functions is just as much a “political view”.
> and indeed the definition of that third duty is highly subjective.
So are the definition of what particular actions of sovereign are within the boundary of the what is essential within the other two (and all three expressly vary by context, including available physical and social technologies, as perusal of the relevant parts of the Wealth of Nations makes clear.)
> Note that my point wasn't to discuss regalian functions in general but to counter the argument that calling the British NHS 'socialist' was like calling the police or the army 'socialist'.
Which the reference to regalian functions fails to do: all fall within the broad ambit of what could be considered those functions, and whether the dpecifics of either do is debatable, and, in any case, whether or not a function is within the scope of regalian functions is irrelevant to whether or not it is socialist.
As also said, health are is a productive service that has the potential of being 'socialist'.
I'm not here to argue for the sake of it and I don't see any actual argument on the original points in your replies...
Why is that - one is defending the citizens of the state against external threats and the other is defending the citizens against medical threats?
The line must be drawn somewhere.
You can imagine healthcare being provided fully by the private sector without state intervention (how that works for the poor is another issue) but the military has to be controlled by the state even if in fine the state hires mercenaries.
Doesn't that annoy people?
The hostility I think comes not from the fact that it is mandatory, but from the fact that if it is managed by the state, it will be badly managed, abused by a minority, and you end up over-paying while getting a bad service yourself the day you need it.
Fact you say? Sounds like an opinion to me.
A worker who is free to offer his labour to whomever he wants knowing that his healthcare is not tied into their employment has more options and choice to them then someone who can't change jobs.
A point on your last point, people would argue that even in the US you can still access the emergency room when you have no money so no one is turned away due to lack of means.
Financially they're the most efficient of all the countries in the book.
American insurance is merely rent seeking. It soaks up money like a goddamn sponge and offers absolutely nothing in return. It's literally worse than nothing since it's driving prices up. There are companies out there with--no joke--hundreds of thousands of employees, just growing bigger by the day, and offering negative value to Americans. UnitedHealth has 270000 employees. That's as big as Apple and Microsoft combined, but they've got nothing to show for it except colossally fat and minimally taxed earnings.
Forgive my ignorance but how is that possible? The highest out of pocket maximums for Marketplace plans is $15700 for an entire family.
That's the biggest benefit of Kaiser IMHO, no wacky out of network stuff at their hospitals.
The idea of driving past a hospital to get to another which is more friendly to my insurance plan completely blows my mind.
I'm sure that the 1% have other arrangements but that's another thing altogether.
I haven’t used the NHS for the 6 years that I’ve lived here tried it once when I was looking for some physiotherapy for my knee got told by the GP that it will take 3 months called AXA which was then my provider and got an approval for 3 sessions which was then extended to 12 the same week.
I don’t even book GP appointments via the normal NHS route any more all of the GPs are technically private anyhow they just accept NHS patients and getting a booking via private health care is just that much more convenient since they see you within 24 hours and evening appointments are much more available.
That's kind of the opposite of what I was saying anyway. It's fair enough if you are making a decision to go to a more expensive hospital for your own reasons.
Yeah, private healthcare in the UK is convenient but far from essential. Physiotherapy was actually exactly what came to mind, I believe it's one of those parts which are always chronically under-resourced.
If you go to A&E sure NHS is good enough, but for preventative care and general appointments however it’s pretty poor same goes for any kind of specialist care unless you are getting it at the hospital.
Don’t get me wrong universal healthcare is important single payer universal isn’t, and the NHS’s trust structure is really poor so if you live in an area where the trust is literarily bankrupt the level of care you get is piss poor at best.
I think the biggest mistake the Brits did is to prevent the NHS from providing premium services at a cost like better rooms or cosmetic surgery.
The best healthcare systems in the world are those in which the healthcare providers are non-profit, are required to maintain a specific subset of services defined by the government, aren’t allowed to deny service but are allowed to make money on the side with things that aren’t covered by the government.
That extra money is key because as non-profits the only thing they can do with it is to reinvest it in either their staff or their services there are no shareholders to give dividends too.
This is something the NHS lacks I would much rather pay the NHS the same money I pay to Bupa and get the same service as I can get now knowing that some of that money is going to go into improving the NHS as a whole.
When we once elected to go private to queue jump we got to see an NHS consultant privately, in an NHS hospital, and all follow on treatment was on the NHS. So it was a simple case of a few hundred pounds for private scan and consultation.
Most hospitals and maternity units have private rooms as an option. As far as I know they're not restricted or limited in any way, unless it's changed since our experiences. We've not needed a hospital for a while.
Most hospitals have private wings, but the NHS doesn’t see any profit from that.
If I see an NHS consultant privately they get a little extra personal income. So if I took a private room where does the profit go in the current system? Treasury?
He may have been attended-to by out-of-network practitioner: https://www.nbcwashington.com/news/local/Out-of-Network-ER-S...
In fact in the 25 years I’ve paid for mine or my families health care I’ve never seen what you describe over lots of ER visits.
There are lots of things wrong with the US health system, providers systematically trying to get out of network fees isn’t one of them.
> It is basically impossible not to get fleeced by "health care" in the US.
The experience is evidence against this very strong statement. You have uncharitably decided it was making an equally strong statement in the opposite direction.
Out-of-network does not have this protection. Your insurance will possibly cover some of the bill, normally up to some percentage of what they consider a normal amount for the procedure in the area, and then you will be billed for the entire balance. Say your provider bills $100k and your insurance says they think that procedure normally only costs $50k and you have 80% out of network coverage. You would be billed for 20% of the $50k covered as coinsurance, plus the remaining $50k that would've been written off if you were in-network.
This is generally how people get surprise bills.
For a real world example: last year my insurance got billed ~$3k for a routine blood test for my wife as part of an annual checkup. It was in-network and the insurance paid $27 and the provider wrote off the rest.
This would be a grave defect if the purpose of democracy was to achieve good government, but in fact we haven't the faintest idea how to get good government, democracy is a fix for bloodshed during the inevitable power transitions. So, a bunch of idiots with no clue are still in charge, but now a _different_ bunch of idiots can take over without having to murder a bunch of people to do it.
There's been a lot of revealing reporting over the past decade but people don't seem to care: the price of a procedure in two different hospitals in the same city can vary by 10x because they literally pull prices they charge from their asses. They tend to justify this by saying "no one ever pays that price".
But when I got a bill for my wife's surgery that included 15k for 1 hour in a recovery room, another 25k for 1 hour in a surgery room, and 9k for an overnight stay (on top of the 20k from the surgeon, 3k from the anesthesiologist, and 3-5k from random doctors we saw for a few seconds) those words sure as shit were not reassuring.
All my past attempts to get an idea of what something might cost me, even when I knew insurance wouldn't cover it, have failed. It takes days worth of time on the phone only to get the wrong answer. One even told me that I only get the cash price if I don't have insurance even if my insurance won't cover it - and I must have insurance because its illegal to not have insurance so I can't get the cash price. What the fuck man?
Hospitals can fuck off. I have no idea why they don't get more blame in this mess.
Same situation here; "health care costs are for those sick losers. I'm not going to get sick, so it doesn't matter to me how much it costs, and I don't want to pay more tax to reduce healthcare costs for those losers".
I exaggerate, but it does seem like there's something like this going on...
I don't think it's specifically an American thing to avoid much thought about becoming really ill. It's an uncomfortable subject.
But those attitudes are carefully cultivated by the media. They don't just happen.
Congress and the Senate are full of corrupt leeches, and both parties are equally guilty.
Votes make no difference. Corporate money buys political careers, and it pays for both sides.
There are a few exceptions, cultivated to maintain the appearance of representative democracy, but they're rarely - if ever - allowed anywhere near policy.
No, the Democrats and Republicans are not the same.
One party is suppressing the vote and constantly sabotaging the workings of the government to retain power.
Both parties eat food.
Both parties drink water.
What's the point of this equivalency? I identify a moved goalpost. Your initial post was "both parties are equal." We are far from there, down here.
In most cases you will not know that it's an OON provider. You may be under sedation at the time.
The practice is outlawed in many states, as far as I know.
I cannot wait for reform and I hope it hits before I get old and need it often.
As an aside, even the billing system is fucked up. When I get a receipt for covered care, it often looks a lot like a bill. This has to be by design. Its bad enough that I just ignore both "receipts" and bills and wait for the collectors to call me. That's how I know which is which.
I had this in US. Shoulder pain, that was diagnosed via an XRay... But the doctor decided he wanted an MRI. That's no unusual, but unnecessary in my case. Got charged extra $500 for the pleasure. Thankfully I was on an HDHP, so the HSA savings got hit.
Xray is mainly for bone problems. MRI shows well soft tissue. In medicine, if something you suspect even it has a low probability and the diagnostics are not invasive, it is better to check than to miss and regret later. Why are you so sure that MRI was not necessary in your case?
I have an irritating bone spur in the shoulder, that's the only problem.
The doctor ordered both Xray and MRI at the same time, while there was literally no need for one of them.
Speaking to the 500$ charge, are you saying that is a typical cost around the world for a MRI? Is there something about the machine's cost that justifies this or are you just saying that a 500$ charge is typical in the american system?
I got charged with two things - XRay and MRI. One was enough, apparently... And I wasn't in any critical condition to an XRay immediately.
Another factor that is relatively rarely discussed is the quality. You can do a fast scan or a good scan. That’s inherent in how MRI works.
A good gynaecological, cardiac or liver scan takes about 45mins, and there isn’t much you can do to improve on that as you are limited by metabolic activity (eg liver or heart contast wash-in and wash-out). If corners are cut here diagnosic quality will be reduced.
I regularly see scans that are of such poor quality that they are initially mistaken for the survey scans/scouts that we use to localise the patient in the bore. They are generally from places that you would intuitively avoid for healthcare, but not always.
I checked if he needed to do that with my other doctor - he said that only one was needed, not the other.
Went to Germany got it done on the same equipment in luxury stay for 14 days at $870
You need to travel more. The German system, for example, is very old, very simple and works very well.
A mixed system - government-managed for important things, with extra healthcare you can pay on top, like the one we have here in Uruguay, seems to work best.
As far as I can tell, we have the best healthcare for anything but special/rare cases which would be best served by a top specialist from the US or Germany. For the remaining 99% of cases it beats any system I know of.
We are having some trouble due to austerity cuts and freezes by the current conservative government. But in the whole it works.
 https://www.commonwealthfund.org/chart/2017/mortality-amenab... (2014 figures)
 https://data.oecd.org/healthres/health-spending.htm (2014 figures)
There are other policy interventions that could also make a big difference to health e.g. making our urban environment friendlier for exercise by reducing traffic, reducing emissions, introducing dedicated separate cycle lanes, stricter punishment for speeding, and making our mental environment less hostile by e.g. stricter controls on advertising, control of body fetishism e.g. Love Island etc. in the media, limiting development/improving access to nature, etc.
One-third of the US population is on a US single-payer system right now.
How does all of this additional overhead provide more value to the consumer at the end? How are they actually differentiated?
Japan's healthcare cost is the lowest of the three though, at 5% GDP, despite an aging population of heavy smokers. So there doesn't seem to be that much overhead.
Which seems a bit like a tragedy of the commons situation.
In that insurance company X is paying me for later life benefits that may be reaped by insurance company Y that I have 40 years from now.
We need to hurry up and get to baseline genetic risks, then directly rebate insured out of a central pot if they exceed their expected fitness metrics.
I don't necessarily agree with that policy, however it does appear to be effective in cutting healthcare causes. In the US a large fraction of our healthcare expenses are due to chronic conditions related to obesity.
There are differences. The voluntary insurance usually pays 2x to 3x of the mandatory one and covers more treatments that are seen as optional by the government insurance. E.g. physiotherapy is covered by government insurance only for clear indications while private insurances might cover it as a precautionary measure in many more cases. Also private patients can usually skip some waiting time (e.g. days instead of a few weeks).
But (nearly) everyone is covered, government or private, and can go to the doctor without worrying about money.
Even the government insurance isn't a single entity, but you can choose between multiple providers. All charge the same 14.6% of pre-tax income (capped at ~55k income) plus an additional 0.7% to 1.x% depending on the provider. They also compete on additional services. E.g. my provider adds a free professional tooth-cleaning per year and free travel-vaccination among other things.
See, now, that just really doesn't sound like a good idea to my ears. Why should someone be forced to sit through weeks of suffering while a handful of others don't, for the sole reason that they have more money to throw at the problem? I can understand buying better or more thorough treatment, or buying treatment from more expensive providers I guess, but line jumping via money just seems immoral when it comes to health care.
It's more like your car broke down and you have to wait longer than the guys who pay extra to get a same-day repair. But if you are a taxi driver and depend on it, they repair it anyway on the first day.
The private insured patients also sponsor better treatment for the government insured patients.
It's a good compromise (and I'm saying that as someone who is government insured) and there is law in place like a maximum of 3 weeks wait time for a specialist appointment.
Not everyone agrees Person A's needs should be paid for by other people. The system described (that pays for everyone, but treats people that can afford it better) may be a reasonable compromise to those people.
- There is no way to support roads without everyone supporting them for everyone. It's not possible to pay for "just the roads I use".
- Educating the next generation helps everyone.
- Keeping someone else healthy does not help me in any real way (I disagree with this, but it is a viewpoint that can be had).
So despite this problem, the Canadian health care system still manages to be superior to the US system. Perhaps in the field of health care, "top talent" is not as pressing a question as is often implied.
Arguably our stronger safety net and better education system, while not technically part of the healthcare system, is also part of producing better health outcomes.
The problem in Canada seems to stem from an inefficient manner with which health care is being administered. In hindsight, Canada's health care is following the US model, which have for a lot of reasons, failed spectacularly to provide what it was mandated to do - provide health care accessible for all.
I don't think inflating your own wages to match a system that appears systemically ineffective is the right response, especially when your own system is more effective overall than the one you are losing talent to.
In the USA, medical practioners get paid more and the country might gain talent as a result, but the people pay more for it and it results in it being less accessible and less effective overall.
Germany pays doctors less, and can, because the switching cost is far higher. Canadians get to keep their first language (most of them do at least), stay on the same continent, which reduces travel to see old friends and extended family, and otherwise have fewer culture shocks to adjust to.
But as others have pointed out: we're culturally and linguistically contiguous with the U.S. and have fairly free movement of skilled professionals. It's hard to compete with an economy with a population that is ten times ours.
It's the same in our/my industry. Being right next to the U.S. means the bulk of the quality engineers here go straight south to the valley after getting their very good subsidized university education. This is a problem.
And doctors need to stop being corrupt by reducing supply of doctors through restrictive medical school entry.
Most residency programs are federally funded, although some are also funded directly by teaching hospitals. If you want a larger supply of doctors then lobby the federal government for more residency program funding. And knock off the uniformed conspiracy theories.
But, I suppose no one will be able to sway you from your current opinion...
There's an odd balancing act in Canada. On one hand it was doctors that fought (tooth and nail) against the introduction of "single-player" (we just call it Medicare) back in Saskatchewan in the 60s, including going on an (unsuccessful) strike. And they are continually in a battle with the provincial governments about rates, because in Canada (unlike the NHS in the UK) doctors are independent businesses and not on salary (unless they're in the hospital system I believe?)
On the other hand, doctors in Canada have become huge advocates of our Medicare system and a big political opponent of privatization and tiered medicine generally. Not completely, but on the whole and through their professional organizations. 50ish years of working with the medicare system and seeing its outcomes, and seeing the failure to our south I think has made our doctors advocates of our system.
Canada's system is by no means perfect. It's probably not a good model for the U.S. as it is. But it's much better than what the U.S. has.
In general wait times here are a product of restricted resources, not institutional inefficiences per se. MRI machines are expensive, and doctors ration their use based on evidence-based criterion. E.g. no MRIs and back surgeries for non-specific low back pain, etc. because medical science doesn't really support it.
It's also worth pointing out that it was a huge battle to get it here. A big struggle that was successful at the time because at that point Canada's left wing was much stronger, and we had no strongly entrenched insurance mafia like in the U.S. Also Canada, as a British ex-colony, had the U.K's NHS as a model, and politics here was still _very_ strongly influenced by U.K. politics, where the Labour party was very strong.
I'm not sure what the path to U.S. single payer would be, but it would be very difficult one.
Any sort of change towards this in the United States (and I agree, it's a good one) will be spun as losing jobs and crushing the economy, which is a very hard argument to defeat.
For quality results, the book used rankings by international organizations, based on statistics like "cure rate after diagnosis of major disease." For cost, it used percentage of GDP and cost per capita. Germany, France, and Japan were tops in quality, and Japan was also the cheapest at 5% GDP. Germany spent 13% GDP but with expansive coverage.
Incidentally, the UK is not single payer like we're talking about in the U.S. It's also single provider. All doctors in the system are employees of the NHS, much like the VA in the U.S.
For England that's completely incorrect.
Services are commissioned mostly by local clinical commissioning groups (There are about 195 of these across England), but sometimes centrally by NHS England, but they are provided by a range of different organisations. Some of these are NHS organisations, but they don't have to be. It's possible that NHSEngland and CCGS commission NHS services from non-NHS providers.
Doctors (and all other healthcare staff, and all manager, and all admin staff) are employed by NHS Trusts, or by other provider organisations.
Some examples of non-NHS providers who are commissioned to provide NHS services might be-
Livewell South West, a large community interest company that provides a range of in-patient and outpatient treatment. https://www.livewellsouthwest.co.uk/
Priory Group, a large private provider that also provides some in-patient NHS treatment, especially around in-patient eating disorder treatment or inpatient learning disability "care". https://www.priorygroup.com/
(Note that LiveWellSW are pretty good, and Priory Group are piss-poor and often abusive.)
Even NHS Trusts aren't single provider. They are their own organisation, with their own executive boards and accounts, working independantly from other NHS Trusts. If they're a foundation trust they have a bit more freedom with their budgets and staffing.
Here's a nice description of what the NHS is and how it works: https://www.kingsfund.org.uk/audio-video/how-does-nhs-in-eng...
Wouldn't it always be a good idea to not pay premiums until you have a major expense then?
But if it turns out to be a problem, you could always charge interest.
My understanding of Japanese culture is that, by and large, people don't do that. Americans, meanwhile, have a pretty heaping helping of petty asshats. For exhibit A, go look up some of the asinine BS tax protesters try to get out of pretty basic civil responsibilities.
The system doesn't seem too different from the US to be honest, in that people with poor financial planning skills may decide to skip on insurance premiums and end up not having enough money saved to pay for medical expenses/back premiums when they occur.
So what happens when you go to the ER? Obviously if it's a true emergency they'll save your life and try to bill you later, but then what?
Would it ever make sense to deliberately stop paying your premiums? If you can pay "out-of-pocket" for medical expenses, you might be better off saving your premium money until you need medical care that's actually more expensive than the back premiums. That creates an adverse selection problem (assuming that enough of your prospective customers are devious enough to try this). Even if you can't pay out-of-pocket, you could just stop going to the doctor until something serious happened.
Here's the relevant chart: https://i.imgur.com/s97bp9R.jpg
"Health-Care Paradox Threatens to Add to Japan’s Debt Problems"
"Japanese seniors, who enjoy the world’s longest life expectancy, pay as little as 110 yen ($1) out of pocket for specialist appointments. While these visits may help prevent expensive-to-treat diseases, they’re becoming unaffordable in a country where almost 1 in 7 people is 75 years or older, and annual health-care expenditure grew at a pace 40 times faster than the economy from 2000 to 2016."
Japan's healthcare system doing so well given current stresses is a testimony to it's strength.
In the UK we pay nothing. I think this article is biased by American thinking.
I sort of imagine conversations going like:
Doctor A: You might have this other nasty thing, but I'd have to send you to doctor B to check. Doctor B will cost you a hundred bugs.
Patient: I don't have a spare $100
Doctor A: we'll just hope it isn't that then.
That's hardly unusual. I come from a similar system.
It seems to work that way in France too, my mother lives over there half the time. She gets medical appointments and treatment almost immediately for almost anything where in the UK she'd be in multi-month long queues. I'd take the NHS over the US system any day, but there definitely seem to be useful lessons to learn from Europe as well.
I'ma huge Maggie fan, she was our best post-war PM by far, and a good candidate for best PM ever, but her market based reforms of the NHS were utter failures.
So what happens if you don’t pay your premium but then have to use the ER? Do they refuse to take you, or are you stuck with a bill? Does that bill go away if you pay your back premiums or not!
The ER don't doctor spent about 2 minutes with her and wrote a prescription for some topical thing.
Later the hospital sent her a bill for about $1500. I went with her to the hospital's billing Dept, helped her fill out a form that basically said "I have no insurance and no money".
The hospital ate the bill.
What they can do - specifically relevant if you're a US citizen - is send you a bill and then after you don't pay it send it off to collection agencies, which then harms your credit rating for the next five or seven years (I believe various states have different laws on when these have to drop off your credit rating, it's usually either seven years or slightly less). This has improved a bit lately, with new credit scoring updates that considerably reduce the hit from medical bill collections on your credit. However it's obviously still a ridiculous situation.
Most non-private hospitals in the US have low income programs you can sign up for (eg if you go into the ER due to an emergency and run up a big bill), that eliminate most or all of your bills if you fall under a certain income level. That's subsidized by government funding programs. Typically though if you're at that low of an income level, you should just sign up for Medicaid anyway. Those programs are usually most valuable when someone in the eg 22-50% income bracket (the most vulnerable in the US insurance system, where you're above Medicaid and below typical good paying career or job status) is caught inbetween insurance / jobs for a number of months and gets hammered by an ER visit.
I have never been to a German doctor who didn't have some staff. It's true however that they usually do not have admin-only staff.
They have, depending on the size (and specialty) of their operation, 1-3 "Medizinischer Fachangestellte" (MFA, qualified medial employees) per doctor and maybe 1-2 "Auszubildende" (people still in training). This a qualified job which requires formal training and a diploma. Usually it's one person in charge of the appointment book and reception/waiting room and additional people helping the physicians.
They are helping during examinations, calling up people from the waiting rooms, keeping appointment books, keeping the patient files and printing out the prescriptions etc (to be signed by the doctor), and to some degree interact with the health insurers. But they also do some hands-on jobs, like they are usually allowed to apply some medications, and operate medical equipment on their own (e.g. last time I visited my dentist, the x-ray machine was operated by an MFA; she had to have a special qualification for that). They are also in charge of writing the invoices for procedures not covered by health insurance providers (e.g. additional checkups).
My GP is a single lady shop, and she hired 3 MFAs. My dentist shop has 3 dentists working there and one "technician" and has an MFA support staff of maybe 15.
So there is still a lot of admin work, after all.
>They prescribe whatever they want
Not exactly. German doctors prescribe an "active agent" (even tho a lot of times they will put a brand name). German public insurers will only pay for a max price for a given agent. So if "generics" are available, the pharmacies will likely fill prescriptions with those.
>swipe your medical card
Eh, you give your card to the doctor's MFAs and they will put it in their card reader, etc. It's not like there is a checkout line where you swipe stuff yourself.
>they're guaranteed to be paid in a week
Usually one month to four months.
It goes like this: Every physician has to be a member in the "Kassenärtzliche Vereinigung" (KV, physicians association, and KZV for dentists) of their federal state. Otherwise, you cannot be reimbursed by the public insurers. There is about 160k physicians and 60k dentists organized in the KVs and KZVs.
The physicians then report all the items (procedures, prescriptions, consolations, etc) they want to charge to the KV, which collects the information, tallies up everything and calculates the earnings based on a complicated "points" system, charges the insurers and distributes the money back to their members.
The physicians are paid once a month (usually the 15th of each month for most KVs) a progress payment, based on the estimated earnings for a quarter, estimated based on previous quarters in particular. The actual final tally is done only once a quarter where any money not yet paid through the progress payments is paid out. In the worst case, this could be a negative number, meaning a physician has to pay back some of their previously collected progress payments. That's why (AFAIK) KVs will usually underestimate the progress payments to avoid exactly this later.
>no questions asked.
The KVs will totally ask questions if your doctor starts billing a lot "funny" items (e.g. if a single doctor would charge a lot of flu vaccinations during the summer months, the KV will ask about it). And last I heard, there are spot checks/(not-so) random audits too. The KVs by law are required to make sure everything is OK, so they also dabble in fraud detection and quality control.
I co-founded a company that sells practice management software to primary care doctors in Germany. We work closely with the Hausärzteverband -- something like a union for primary care physicians -- and I speak with doctors in Germany, board members of the HAVG, and so on basically every day.
Germany has three different medical/insurance systems -- KV, HzV, and private insurance -- I worked with HzV so am most familiar with that but everyone has at least a passing understanding of KV as well since it was the only one until recent decades. HzV is more popular in certain geographies -- for instance if you work for Volkswagen you'll be in the HzV system and not the KV system under a BWQ contract.
I've never met a doctor in Germany that doesn't have staff. A quick check of the analytics of all the practices using our software doesn't show a single one.
As rndgermandude says, every single one has at least an MFA (and nowadays probably a Vera as well, since they can earn extra money that way). Our analytics shows 2-3 MFAs per doctor is the average but there are always edge cases.
This is not really true. Every insurance contract will have different rules about what can be prescribed. They can't FORCE a doctor to follow those rules but they doctor is monetarily incentivized to do so. For instance, getting a bonus every quarter so long as 80% of their prescriptions follow insurance company rules. The checks are done at run-time, every doctor knows instantly if a prescription is against insurance rules, and practice management software is REQUIRED to suggest alternatives that meet insurance requirements.
Doctors are basically NEVER paid in a week. They submit their billing at the end of the quarter (here I'm speaking primarily of HzV contracts; I'm not sure how the third option -- private insurance -- works) and then get paid a while after that.
No, this is not remotely true.
Have you noticed how there are next to no startups disrupting the health industry? Why can't you sign up for insurance like you can sign up for a stock account on RobinHood?
There's no free market. Government licensing and regulations have created huge barriers to entry. I thought this would be more understood by those technically/entrepreneurially minded.
When things are too expensive, you need to raise the supply to get the price down. Not create price controls and socialize markets.
Read this article because it explains the problem better than I can.
Some people talk about a hypothetical second workable model, which involves a massively de-regulated free market system. It's important to note that nobody has successfully deployed this model in an industrialized nation, and it's not clear if it can even be implemented in practice -- for political as well as practical reasons (unregulated medical providers tend to kill people, so voters enact regulations, and then you're on your way out of the sweet spot.)
Whatever your preferences, the important thing to keep in mind is that while both of these two points may exist, the points between them are highly suboptimal. Removing 10% or even 50% of the regulations on our current healthcare system is unlikely to produce a substantially more efficient system. It produces a new system with most of the weaknesses and entry-barriers of our current approach, but replete with massive new profit-taking opportunities and substantially worse protection for patients.
This is why two decades of political infighting in the US have failed to fix healthcare. There is literally zero chance that the working, de-regulated system is going to come into existence. There is some probability that we can get closer to regulated single-payer, since we already have Medicare and it's much more efficient than private insurance, even though politicians have restricted its bargaining power. There is an overwhelming probability that in the process of trying to deregulate the current system, you end up making everything substantially worse.
I quickly found some numbers from 2008. All numbers are a percentage of GDP:
US: 7.4% public, 8.5% private
Switzerland: 6.3% public, 4.4% private
Sweden: 7.7% public, 1.7% private
France: 8.7% public, 2.5% private
Healthcare economy is naturally inefficient if free. Information asymmetries and other market failures emerge without good regulation and
I agree there are needs for regulations--more like proper norms though and a good tort system.
If you need a piece of rebar removed from your chest, then you need a piece of rebar removed from your chest. The price doesn't matter, the choice of provider doesn't matter. The "consumer" is completely at the whim of whatever provider happens to be closest. That's not how free markets are supposed to work.
That's like saying we should socialize food distribution because people can't negotiate when they're starving.
If the price of beef is too high, I can buy pork instead.
If the price of a hip replacement is too high, what are you supposed to do? Get an appendectomy instead?
Healthcare is bigger than just things that you absolutely need. Obviously, there are those things, but that's what INSURANCE is for. Then, when you are healthy, you can shop around and when insurance is too expensive and has too many items you don't need, you can instead get a barebones plan which would cover the things that you seem to be worried most about.
If a person failed to get insurance, well... that's not good. We shouldn't encourage that as a society. If someone runs out of resources and has to demand it from others, they are a burden and that is bad. If too many people do that, society collapses.
Obviously, there are going to be those people and I'm not saying we shouldn't care for them, but the more we have a socialized system--one that has a shared resource pool everyone takes from--the less efficient it will be because the incentives applying to individual encourage them to use as many resources as possible because they aren't the ones who bear the cost.
With medical there's no way to know when you got ripped off because prices vary wildly for the same services and there's no price transparency.
If I broke my leg doing something stupid you can bet your ass I'd call around and get quotes if I could. It only takes ~10min, far less than the EMT response time where I live. The problem is I can't even get quotes.
Sometimes you have no options and you get screwed but the vast majority of medical care is not people who will bleed out if they don't go to the nearest hospital ASAP. If normal services didn't cost an arm and a leg and you could reasonably shop around then healthcare and therefore health insurance wouldn't cost nearly as much because the lions share of services would be priced competitively.
Furthermore, price transparency is not incompatible with any other approach to healthcare since that information necessarily needs to exist.
Quotes for...what? Even with price transparency on actual services, “I broke my leg” doesn't tell you with much specificity what services you need. And that's not even to discuss, “I'm having chest pain and dizziness”.
Sounds a lot like "my car is making a funny noise" or "my septic is backed up". Diagnosis should be cheap/free depending on how involved it is and then you get a quote for how much it will cost to fix and the quote usually includes some language like "and if X happens we'll stop work and call you/charge X to fix it as well".
Figuring out what work needs to be done based on vague descriptions by people who don't know the subject matter is what professionals do. I don't see why doctors should be held to a lower standard.
The fact is "my car is making a funny noise" or "my septic is backed up" are not life threatening situations; they are inconveniences with ready substitutes available. Health care is not a free market like car mechanics and plumbing are.
>> The goal for American healthcare companies is increasing shareholder value, not reducing costs
Reducing costs increases shareholder value. The shareholders don't benefit from these inflated administrative costs. This is money that could be converted to profit and distributed to shareholders.
This suggests something else is going on
Half of US healthcare spending is public payers - Medicare and Medicaid. They do set prices for providers and still spend far more than other countries.
And if you’ve been involved in US healthcare you’d realize it’s drowning in regulations already. It’s not a free market by a stretch.
Both institutions work in tandem with one another to establish pricing guidelines. That's why your hospital-purchased ibuprofen is $10 per pill instead of $6 per bottle. The insurer and hospital "work out" a price that let's them achieve the profit needed to pay their administrative costs, plus margin.
In the USA(this is all from a US citizen's perspective), there are regulations that limit what percentage(15% in my state) of an insurer's income can be profit vs administrative cost. This means that a higher hospital price results in a higher profit for the insurance provider. This provides both parties an opportunity to set prices for an optimal profit. With government-mandated health insurance participation, the pool of people paying into this system has increased.
It is what is. Tell your elected official if you think it would help.
0: Anthem, Blue Cross, and UHC executives sit on the Baptist Health(hospital chain) board of directors, and vice versa.
The only benefit an insurer would have from a higher price is if they have a monopoly position - no other insurer. Otherwise the other insurers will pay less, charge a lower premium and grab all the customers.
When choice is harder, they can play the price game better.
Insurers already have an incentive to limit prices, though, which is essentially what their contracts with providers are. As in, they list how much they'll shell out for CPT codes.
The upward pressure on prices is also from the insurers. Insurers have an "80/20 rule" from Obamacare that only 20% of their revenue can be spent on non-medical expenses (ie. profit, insurance administrative overhead, etc.). They pretty quickly hit the caps, and now only by increasing medical expenditures (the other 80%) can the pie slice that contains their profit grow year after year.
I'm merely debunking your assertion that insurance companies don't have a financial incentive to keep costs high.
What's the trend line since 2010? Since the 80/20 rule went into effect, has the rate of provider costs increased or decreased or stayed the same? If it hasn't increased, does your hypothesis actually explain any empirical observations?
If not, are you concerned this might be a just-so story?
If there was one health insurance marketplace and set of rules, and everyone, young, old, poor, rich, healthy, infirm, we’re forced to buy from it, then it would actually be possible for insurance companies to compete.
Right now, it’s basically a game of hot potato to try and not get stuck with the million dollar hemophiliacs in each state. A lot of the healthy are separated out into employer based insurance plans, and there’s not sufficient possibility of business to have more than one or two insurance offerings on healthcare.gov.
In terms of these insurers who control providers, can you give an example?
Next time you go to your primary doctor ask them how many faxes they get from the pharmacist instructing doctors to change prescriptions. Then ask the pharmacists where they get those instructions from to fax to the docs....the insurers.
I’ll admit the star ratings are related to costs, but short term costs. All this watered down care and cookie cutter treatment will lead to higher costs long term (ie hospitializations, waiting until health problems escalate instead of preventative care or proper management).
It’s also why the big groups have reinvented HMO, now called ACO, bc even they don’t want outcomes based payment, so with ACO they can get paid $x/patient per year and make the care fit. HMO failed from a cost and care perspective, again not in the short term but in the long term, and it’s literally being rebranded as ACO by the insurer/provider groups.
In other words if you aren’t a Medicare patient and are insured by UnitedHealth for example, you will be subject to the same networks of doctors/hospitals as their Medicare plans, so private is driven my the Medicare plans, because Medicare rules are driving the consolidation of the market.
And yes everyone will tell you star ratings are about “outcomes” not price, but if you knew/know anything about the star rating metrics it’s obvious “outcomes” is marketing/PR for cost cutting. Otherwise I’d ask to point out any metrics that increase star ratings that don’t lower costs, whereas it’s easy to point out the metrics that result in better “patient outcomes”/higher star ratings but lower quality of care.
The reason we spend so much on Medicare and Medicare is because people are less hesitant to use the service. On a per capita basis, the public payers have reduced overhead and costs compared to the private markets. If you have sources proving me wrong, I’d be happy to look at them.
And while the US market my be drowong in various regulations, it is severely lacking in price control regulation - the whole reasons for this discussion.
Yes, they reduce costs by saying “this is what we’ll pay”, but it’s still much more costly than other countries’ systems.
My personal hypothesis is that Americans get a lot more healthcare than most countries provide, combined with higher prices. Not all of it is all that beneficial.
If you want to read something really eye-opening, check out this McKinsey report, bottom of page 14 It basically compares US healthcare spending across categories, adjusting for GDP (expecting the US' higher GDP means we spend more).
For inpatient care (hospital care), the US actually spends inline with what other countries spend. For long term and home care, the US spends less than other countries. Same thing with durable medical equipment.
Almost all the "excess spend" is in the outpatient setting. American's get a shit ton of procedures done that other countries just wouldn't do. Have a hernia? Providers in the US fix that, where other countries might say "we'll do something if it becomes a problem" (for example).
(Yes, yes, I understand that to an economist, a "free market" is free of regulation, a product of laissez-faire economics. But to the lay person, a "free market" is one where prices are set by perfect competition, which requires a balance of power, the prevention of monopolization, and information symmetry.)
I just use the term "free enough market" to describe it.
- The story I'm looking at now had someone complaining he couldn't afford his Lantus.
- Lantus is pretty much the most expensive 24 hour insulin available. Last I checked it was something like $275 per bottle.
- Walmart has cheaper insulins R, N(PH) for somewhere in the range of $20-25. They're older insulins and don't work as well, but they are an option for any diabetic that can't afford the newer insulins. (Note, I can't find it on Walmart's web site but, as I understand it, you can't but it online, so that may be why)
- My insurance doesn't cover Lantus either. I take a generic (to be fair, I don't believe that generic was available at the time of the story) version of it.
- I used to take R and N insulin
It's time to stop perpetuating this myth. Especially in a thread directly about how the US overpays for everything compared to literally every other developed country on the planet.
If Medicare managed all of US health care and nothing else changed (that is, if we relied on Medicare for funding and kept the rest of the system we had intact), we'd reduce prices by something in the low teens percentage points. Families upset about the cost to insure their families on the ACA markets would not be mollified by that level of price relief.
There's zero regulation on the software industry, and prices have trended to zero. I suspect the problem with the health care industry is much deeper than not enough regulation.
California and Vermont found this out when both determined single payer options; read : the state; were not affordable without seriously curtailing care options. As in, when you tell people no it becomes affordable, when you bend over for every little thing it suddenly becomes what we have today.
Healthcare is extremely regulated, but poorly. In addition to the much-talked-about “more vs. less” dimension of regulation there is the much more important “better vs. worse.”
I'm not saying this model is right. I'm just saying that doing away with it will have fundamental consequences to healthcare R&D
EDIT: To be clear, a minority of drugs are either very hard to manufacture (It's been a while for me so I don't recall their exact name, but I think they may be called "biosynthetics" – please correct me if I'm wrong) or researched for a very small number of patients (so-called "orphan drugs"), which confers them additional protection from generics and competitors. These generally have much higher prices than the "standard" drug.
By anyone's standard, they are not representative of the U.S. Pharma market as a whole.
Teva is doing the same nonsense with generics, Turing did with their toxoplasmosis drug, Mallinckrodt bought Ofirmev then jacked up the price by several hundred percent, Allergan & Pfizer were trying to merge solely to tax advantage of Ireland's (and the US's) dumb IP/tax laws, GSK, Abbott, and J&J have all paid billion dollar settlements for their fraudulent marketing practices. Look at the PBMs that are suddenly worth billions of dollars purely by being middlemen between Pharma and Insurance companies.
There is so much obnoxious 'financialization' and tax optimization to justify share prices.
It is. If the US starts paying what Sweden pays for drugs, there is no one left to pay the cost of developing drugs on this planet.
Some characterise this as freeloading, but looking at the NHS for example, they set relatively clear limits for how much they will pay per quality-adjusted life year that a drug provides. If a drug costs more than this limit, financially more people will lose out if our healthcare system purchases this drug over something else (more doctors, hospital beds, etc.).
Does this make us immoral for "freeloading", because we prefer putting our limited money into cost effective treatments?
Also, is it not worth looking at why pharma R&D costs so much? The pharma industry seems to run at a very healthy profit margin compared to most other industries. Maybe the lack of market pressure is allowing the pharma industry to remain fatty? Obviously there's a fear that cutting US pharma revenue would hurt global medical R&D, but I don't see this as being a foregone conclusion. It could just as possibly be market failure and regulatory capture keeping pharma R&D expensive.
It doesn't make you immoral, but it is important in understanding the tradeoffs of suggesting that the US switch to an NHS-style system.
> Also, is it not worth looking at why pharma R&D costs so much? The pharma industry seems to run at a very healthy profit margin compared to most other industries. Maybe the lack of market pressure is allowing the pharma industry to remain fatty? Obviously there's a fear that cutting US pharma revenue would hurt global medical R&D, but I don't see this as being a foregone conclusion. It could just as possibly be market failure and regulatory capture keeping pharma R&D expensive.
They may be doing well, but you may not be seeing all the little pharma companies that die trying. At the end of the day, investors are allocating capital where they think they can get returns. If you reduce the returns of pharma, you reduce the attractiveness of investing there.
I disagree about NHS type system, that reduces access. A healthy mix is required, though.
A lot of upfront costs are also footed by users and government/non-government funds. And a lot more of those costs are due to government regulation and essential insurance at development.
Pharmaceutics researchers aren't exactly rich, btw. Your dentist probably makes more than many researchers of life saving drugs.
Drugs in the US are priced at the profit-maximizing price. That profit-maximizing price has nothing to do with how much pharma earns in other countries.
And it has absolutely nothing to do with the cost of R&D. R&D is a sunk cost, has no effect on drug pricing.
However, the decision to bring a drug through clinical trials (the "D" in "R&D") is gated. The potential price of the drug is estimated and the financial costs and potential return are calculated. If the return isn't that great because you can't get the volume or price, the R&D investment isn't made and the drug "dies".
So in other words, price controls on drugs would lower the prices of drugs already approved, but it would likely also kill a number of drugs currently in development.
Yep, that's part of Medicare Part D, in turn part of the "Medicare Prescription Drug, Improvement, and Modernization Act", and went into effect in 2003 under Bush 43.
Medicare - gets an automatic discount equal to the average discount that commercial customers pay
Medicaid - gets another 23.1% discount on top of what Medicare gets
VA - lowest price of all customers, get at least a 24% discounts on top of what Medicare gets
Having $70k HepC healing drug is OK. Having daily medication that's $50 per dose is not, unless the target demographic is exceptionally small.
That's not how this works. Volume is fixed because you effectively already know how many patients there are and COGS is minimal because drugs are generally very cheap to produce, so price and SG&A are the key drivers to determine returns
I'm not sure that you disagree with me. The higher the price the higher the returns, but price too high and you earn less money, because volume is not fixed. (I'd bet a lot less Viagra would be sold if it cost $500 per pill.)
That was the genius of Martin S. He felt, correctly, that Daraprim was mispriced. That's why the price per pill was raised to $750 from $13.50.
Viagra is a different ball of wax since you not taking it will never reduce how many years you'll live.
I consider Martin to be a scumbag, but not much more than your average human being. He's a scapegoat, to the industry that would prefer a flashy Martin to scrutiny of their own actions. He should be free, as his conviction was a witch-hunt.
But not compared to other high risk, capital intensive industries, i.e. tech.
It depends on whether some drugs that your system considers affordable today as generics, would have not existed without being funded by US taxpayers, I suppose.
It's not US taxpayers that are footing the R&D bill, but United States based customers of non-generic prescription drugs. These are technically two different sets of people.
Or profits because the company gamed the market.
As far as I know, R&D never included advertising.
- Paying doctors to prescribe the drug to patients for "research purposes."
- Paying doctors for their "valuable opinions" about the drug.
- Paying for advertising to recruit patients into clinical trials.
And so on.
I don't think there are any industry-wide statistics, so you'd have to look at the break down for each individual drug (where available). If you read pretty much any book on the pharma industry it will go into this, there are no shortage that you can find on Amazon.
The 2nd point sounds like consulting fees, not advertising.
And the 3rd point is required to recruit for clinical trials. And the drug doesn’t even have a brand name at the point. Doesn’t seem like what the general public would call advertising.
Usually post approval clinical trials. Since pharma companies wouldn't be allowed to pay doctors to prescribe their drugs for no reason, they just spin up new trials after the drug is already approved and pay doctors in exchange for getting the patients to do something nominal like filling out a survey.
> The 2nd point sounds like consulting fees, not advertising.
Consulting is a form of advertising, at least in the way it's actually done in the pharma industry.
The ability to raise the price for a single drug is really the last thing I want in a company I invest. I want long lasting customer base or high impact justifiable expenses, that US HMOs and EU governments will gladly pay(reason why I bought Gilead when I heard about their HepC cure).
And Gilead's Truvada strategy, why I divested as a result.
Paying a few billion dollars to a big pharma company is not going to make them invest more in research. They will instead pay the money out as dividends.
The goal of patents is to create incentives for future research, but if you change the rules by increasing the extent of EpiPen patents after the drug was created, where is the incentive?
This is a misconception. No investor wants their money back. Investors want a promise of MORE money back in the future. If investors wanted their money back immediately, they wouldn't have bought stock in the first place!
The vast majority of investors prefer (ex: Tesla) a company to spend all their money asap on infrastructure, research, development, etc. etc.
Dividends are a last resort, only to be used if a company doesn't know what to do with its cash. Once a company starts paying dividends, it means that it has run out of ideas for how to invest into the future.
Besides: its more tax efficient to grow the stock price rather than to pay the profits back in cash.
Even a big company will want to at least appear that it is growing even bigger, through R&D funds and what-not. If you start to give out a lot of dividends, investors will probably take it as a bad sign and flee.
Regarding investor preferences, they only want the money spent if it gives them a positive NPV. Pharma companies are already paying dividends, which means they have funds in excess of their NPV>0 projects, which is why they return them to shareholders.
Hell, half of the shareholder activism literature and the policy payout literature is about CEOs overinvesting and doing empire-building instead of returning the money to shareholders..
Precisely. And cash rarely gives the best NPV. You put money into companies with the expectation that they make MORE money in the future.
> Pharma companies are already paying dividends, which means they have funds in excess of their NPV>0 projects, which is why they return them to shareholders.
And there you have it. It means that Pharma Companies are making more profits than they know how to reasonably invest into themselves. Which is PRECISELY why people get annoyed at them, especially when they have huge marketing budgets and $800 Epipens.
There is a Christian Parable about the man with 1 Talent (where Talents were a unit of Gold in the time of Jesus). The man buried his gold, because he was too worried that he'd lose the gold.
The man's peers however invested the money and grew their Talents. The man with 10 Talents had 20 Talents at the end. The Man who started with 5 grew to 10.
The man who buried the gold ended with just 1 Talent (the only one he started with), and was therefore punished. The religious message here is not to hoard your Talents (ie: Gold), but to invest them and grow yourself, and your masters.
I guess not everyone is a Christian. But if Pharma companies can't figure out where to invest the money, then perhaps they could at least return the money to their customers by lowering the price of their drugs.
Returning the money that they started with is... not growth. Companies are supposed to grow (through new R&D, improvements, etc. etc.).
> You knew that I reap where I have not sown and gather where I scattered no seed?
He took what belonged to others. And, had the servant with 2 talents lost money instead of making it, I doubt the master would have responded to him with "Well, you tried. Good on you."
If I'm reading this right (and I may well not be), there is a lot of money not accounted for by R&D expenses.
: Nov 6, 2018. Mylan, NV. Quarterly Fillings. Accessed from http://investor.mylan.com/static-files/2909eb6c-4430-452e-94... via http://investor.mylan.com/financial-information/sec-filings
EDIT: "hard to manufacture" is in quotes because it's what I said in my parent comment (though to be fair I said "costly to manufacture"), but I meant it as an umbrella term for everything that can't be substituted by generics
In term of cost syringe‘s cost ~15 cents and work fine in experienced hands, but auto-injection makes them slightly less error prone. It’s litterally over a 300x markup for a rare problem.
There are no "real" implications to calling it one or the other, but people think differently about "a substance I've never heard of" and a common household name.
The epinephrine used in epipens is extremely cheap to produce.
Yeah it must be very hard to manufacture when the manufacturer's revenue is going towards paying off a $465 million settlement for deceptive business practices.
Their clinical trials for new compounds are extremely expensive, freeway-tunnel-under-harbor expensive, Carl Sagan expensive (billions and billions).
They pay generic-drug manufacturers to refrain from making competitors to their compounds for which patents have recently expired.
They pull the enantiomer hack. Many organic compounds have a right-handed and a left-handed version of their structures, only one of which is active as a drug. Chemists call these two versions "enantiomers." The first patent on a compound covers the basic chemistry. Then, when the first one expires they patent the same compound, but only the purified active enantiomer. They then send their sales reps out to convince docs the newly patented drug is way better than the old one.
They lobby the US federal legislature to enact health care insurance laws (Medicare Part D) prohibiting the negotiation of prices.
They claim drugs bought in Canada aren't safe, even if they come from the same factory.
And, Purdue Pharma.
A bit over a decade ago, one very popular modern antidepressant drug used to be citalopram (cipramil). This is the racemic mixture (meaning it contains both the left and right-handed versions). The new one, escitalopram (lexapro) only contains the active stereoisomer. Its dosage is exactly half of the previous version because racemic mixture always (?) occurs in an exact 50/50 proportion.
Both drugs work perfectly well. No statistically significant difference in effect or side-effect. You just don't get the inactive half of the molecules.
Escitalopram wouldn't exist if it weren't for citalopram's patent expiring. Or maybe they were just sitting on the purified version, biding their time.
This is a straight counterexample of the argument that the insane costs of the healthcare system in the US somehow pays for new drug research all over the world.
This industry called "drug research" simply isn't motivated to improve health (not just "find better drugs"), they are just researching whatever is driven by profit.
They will just as happily waste billions of research on a drug that is almost literally identical to one that already exists and is known to work, a copy that nobody needed, only so they can patent it again.
At least they replaced it with something equivalent, instead of something worse. Because they would if they could (and given the state of reproducibility of medical research, probably did at some point or another).
That is not research, that is throwing money into a bottomless pit. Which is what the featured article is about.
Drug research in the US is no exception. You could do so much better research if it was done efficiently (and as a bonus take some pride in your work).
The fact that US drug research dominates the world market is not something that the rest of the world should be thankful for. You waste billions upon billions on such an industry, of course it's gonna dominate. Doesn't mean it's good. Other countries could do efficient drug research but if they don't get billions budgets (because you don't need it), they can't waste it on marketing and push their version of a drug no matter what.
Just because something is expensive, doesn't mean it's good.
But this doc wasn't getting visits and kickbacks from Allergan.
The reason for the high prices is because healthcare in the US is an extremely, extremely lucrative for-profit industry.
I wouldn’t rule out the possibility that it’s rent-seeking all the way down, but you’d have to make that case. Suppose you say, doctors and pharma companies are rent-seeking, and I say doctors don’t really bring home the bacon and pharma has a 5% profit margin. Then you say, well, it’s the bureaucrats, and then I say, why doesn’t some pharma company just fire the bureaucrats and keep the profit margin to themselves? They can’t because of regulations? That’s not even rent-seeking anymore, it’s just over-regulation and you can fix it with deregulation.
OK, well, the doctors have their student loans and the pharma companies have some other requirements that they need universities for, so universities are the real rent-seekers. Except it’s not the universities, who are broke, it’s—well, who seeks rent from universities? I’m not ruling it out, but this is also starting to sound like it leads back to the Rothschilds somehow.
You can’t just say “Americans pay more for X therefore rent-seeking”. There are lots of things that can cause inefficiencies.
But when you are talking about a big organization, they find ways of spending money because the managers of the organization are not aligned with the shareholders. Every organization has pressure to keep expanding because there is always more stuff that could be done, and you can hire people to do that stuff up until the total earnings are in line with the market return irrespective of the above average earnings that could be had without all the extra activity. They will keep spending on marginal expenses to "defend" their rents up until no rents are to be had. This is called rent dissipation.
A good example would be education, and count the number of educational administrators, gold plated dorm rooms, activity centers, weird classes, etc. Then go look at hospital spending. Instead of the nurse giving you a tylenol, they invest in a prescription dispensing vending machine that costs $$$, and they hire more administrators. Then take a look at your standard corporation and look at all the odd positions they have that a "lean" smaller company or a start up would never have. Compliance officers, marketing staff, assistant to the marketing staff, support services, travel support, real estate management services, etc.
So you can think of this as a law of bureaucracy, unless there is someone imposing discipline on the cost side, the managers of a bureaucracy are going to grow that bureaucracy until they run out of money. This is how ATT ends up funding basic research and discovering the cosmic microwave background radiation. Because they have all this money to spend. And I guarantee you that at its halcyon days when it was obviously a monopoly and thus earning monopoly rents, ATT was not earning more than the average market return on their investment because they kept "investing" in hiring more staff and more resources up until the total return fell to the market required return.
The robber baron would actually be preferable, in a certain sense, because at least then, someone would benefit from the rent-seeking. The problem being that if you were a robber baron, there are much better ways to get rich. Also, many of these rent-seekers are not even for-profit enterprises.
This is completely independent of their pricing power or monopolistic status.
If you're saying it's because they have to pay for med school... then maybe it's med school that's taking the bacon :P
And, as rsj_hn, all the bizarre administrative overhead eats a lot of profits which are basically dissipated, it's economic wealth destruction.
No company makes trillions of dollars in profit.
> higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs and higher prices for many medical services
I’m not sure if R&D costs are factored in at all for this particular study.
As far as it’s implications on the cost of healthcare in the US I don’t think there is data for it since it’s pretty hard to measure.
I agree, it’s hard to measure, but do you think those estimates are more than 3% off?
Best case, eliminating all drug research saves you 10%.
Although if costs in other areas are bloated, that is a scarier number.
What I am getting at is that in theory, it should still be possible to do a lot of great R&D work while still providing affordable health care to citizens. I don’t think they are necessarily tied together.
Also more patents is not necessarily a good thing since they can create more legal hurdles and red tape for other pharmaceutical companies who may want to build on top of the ideas and inventions.
The US is also 40% or so of the global pharmaceutical market given its population it literarily funds the profits of the global pharmaceutical industry doesn’t matter if it’s American Swiss or Indian company they all make their buck on the back of Uncle Sam. It’s not clear what the impact would be if the US would say start paying 50% less for health care on the world.
Basically all equity research in the Pharma space backs up this view. Unfortunately I don't have any public data that I can share.
Costs for boring health issues like births, broken bones, diabetes and end of life care are what really matter. Oh, and administrative costs are way higher in the US.
A natural group to pay R&D for patent-free drugs is health insurance companies, who would benefit from the lower costs, and perhaps even come out ahead. But its hard for those companies to organize such an effort, because they can get the same benefit even if they don't contribute. It's a classic public goods problem.
Usually we solve public goods problems with taxes, and we could do that here, taxing the insurers and spending the money on R&D for patent-free drugs. Bernie Sanders introduced a bill to this effect several years ago. Iirc it involved "xprizes" for successful treatments, so bureaucrats wouldn't be steering all the research.
You're probably thinking of biologics . These include immunosuppressant monoclonal antibodies such as adalimumab (Humira) and secukinumab (Cosentyx), used in treating autoimmune diseases such as psoriasis, ankylosing spondylitis, psoriatic arthritis, MS, Crohn's, etc. They are derived from biological sources such as Chinese hamster ovary cells . They are also extremely expensive -- often several thousands of dollars per month .
> The researchers determined that the higher overall health care spending in the U.S. was due mainly to higher prices—including higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs and higher prices for many medical services.
Administrative costs of care (activities relating to planning, regulating, and managing health systems and services) accounted for 8% in the US vs a range of 1% to 3% in the other countries. For pharmaceutical costs, spending per capita was $1443 in the US vs a range of $466 to $939 in other countries. Salaries of physicians and nurses were higher in the US; for example, generalist physicians salaries were $218 173 in the US compared with a range of $86 607 to $154 126 in the other countries.
(edit: Having said that, our healthcare costs are out of control and it's not directly because of the R&D. It has more to do with wild overhead in insurance and HMOs where only a small fraction of what consumers pay goes to healthcare.)
The lengthy process is there for a reason, it's not some hamper on profits just to hamper profits. Do we believe that the FDA is full of short sellers? Poor Pfizer, they won't get more money than they've spent! The logic here is sinister. ROI on drugs shouldn't be every dollar spent gets you a dollar ten and a drug, it should be you have a drug. The basic research that informs R&D spending has a ROI of zero by business metrics.
It is sad to think that the trajectory of medical advancement is dictated not by what we can achieve as scientists, but what is profitable for businessmen. When Jonas Salk was asked who owns the patent to the polio vaccine he developed, he replied, "Well, the people, I would say. There is no patent. Could you patent the sun?" In 1988 there were an estimated 350,000 cases of poliomyelitis worldwide, in 2018 there were 29 (1). The global initiative to eradicate the disease would not have been possible had the vaccination been for-profit.
When it comes to some really interesting drugs, prices and their accessibility are really strange.
Take HIV infection preventing Truvada. The "market" price of 30 pills is $1600 in US. It's a good drug for continuous mass use for Gilead. Instead of making it pretty much ubiquitous as vitamins, they chose to target only US market for the low volume high margins. So... I'm actually annoyed with Gilead over this. I own stock and getting good deals in Europe could get up to 50mil people on daily dose of it. That would push the stock wildly up! With 0 extra marketing, as it's not high on adverse reactions with massive preventative benefits.
Private health insurance cannot run at cost, private biotechnology companies cannot run at cost either, and this is because shareholders and executives demand it cannot. Every dollar of ROI in their portfolio is a dollar that could have gone to research and development or lowering drug prices, every yearly bonus could have tipped the scales and let one more person afford to save their life. It is tragically terrible that if you had the right books, you can calculate the exact x% of every dollar people spend towards healthcare that goes toward someone else's luxury rather than healthcare or in support of research. And thats ignoring the other half of the problem with private research, in that projects are decided by white collars and not white coats, so research efforts are focused on what will make a profit or what they can put out quickly before anyone else to dominate market share on a novel treatment, and not treatments for rarer diseases that might be backed with extensive basic research and only need to scale, but is marginally less profitable for the company.
However, if money for healthcare is taken publically, then there is no need to skim dimes on every dollar spent to grant someone a third house and a fifth car. Money can be earmarked directly for research, like basic research is, and what happens to that dollar would be of public record. Capitalism and its sole metric of success of infinite growth is inefficient by design and has no place when it comes to universal needs like healthcare.
Healthcare is not like other goods and services because (a) it's an universal need for which price sensitivity is zero (b) no one should have to pay life-crushing bills because they had no luck in the genetic lottery and (c) even for those health risks that people can control (obesity, cardiovascular problems), we have to admit that educating the population to eat better, sleep more and exercise is a pipe dream, particularly in the U.S. where shitty food is everywhere, the lobby for junk food and sugar is rampant, labeling and advertising for food is downright evil and work is incredibly demanding (unbelievably more demanding than in Latin America or Europe).
Healthcare and Education should be entirely subsidized by the government. Everything else can just be regulated to various degrees, always with the dual goal of minimizing state intervention while ensuring the market remains competitive.
With something like pharmaceuticals, of course the U.S. customers are going to pay the higher price, they need the medicine! That means that European countries are of course squeezing the drug companies (which really means squeezing U.S. citizens) as much as they can get away with. They would be dumb not to.
You also have to factor in that americans take more pharmaceuticals than in other places, likely fruitlessly or even harmfully in a lot of cases.
Might not be a bad thing to try it out and see what the consequences can be.
E.g. my health region in Canada will pay up to $50k or so per year of additional life provided.
And even in doing so, we're getting contaminated meds. See the article at Ars, which is based on a recent study from Kaiser.
we're getting contaminated meds
Even if it's true, we should just fund drug research explicitly.
My dad is a conservative and his talking point about the house member who called trump a motherfucker shouldn’t have said that because she’s a woman. It’s ok that Trump swears but my dad was literally screaming about this representatives language.
Not saying I'm convinced it is true. I'd like to see a deeper unbiased analysis.
“U.S. consumers are in fact subsidizing other countries’ public health systems, at least with respect to drug pricing,” Jacob Sherkow, an associate professor at New York Law School, said."
This btw went up fairly recently especially since Indian generics became accepted world wide in the late 90’s and early 2000’s.
The US used to produce 20-30% of the world’s drug patents now its peaking at 60%.
Since you don't really need to be in US to create drugs for US market.
This doesn’t explain it really what could explain it is that as the cost of developing a drug became higher more and more players dropped out of the game especially as the revenues started shrinking due to Indian generics becoming popular around the world.
It would be if the US system was in fact efficient and good. But it's not. It doesn't work for the people. It's a huge beast that is out of control and costs billions. It will happily "research" identical drugs, worse drugs or unnecessary drugs if it means it can milk patents for a few years longer.
As it currently stands, it's more accurate to say that drug research in the rest of the world is suffering because it's being dominated (because part of the billion dollar budgets go to marketing) by the US pharma industry, including everything that is broken about it.
If we were freeloading, wouldn't we just take the useful results of your research?? But we get the bullshit too, because yes, your pharma marketing budgets are so huge they do in fact reach overseas.
If you don't play ball with a government, you're denying yourself a lot of potential customers. A single person? A fraction of a fraction of a drop in a bucket.
Sort of. We also export our definitions of diseases, and since the market for new diseases is a lemon market it makes sense that other countries should pay less for the treatments. E.g. if people in other countries can't really be sure whether or not hysteria is really a real disease that affects women, it makes sense that they would be less willing to pay the full price for cure. It's just like how consumers in the U.S. probably wouldn't pay full price for a pill to prevent fan death. Overall though the U.S. probably comes out ahead by exporting its medical model.
I think one of the best is perhaps life expectancy - and that's dropping in America, patents or no.
I'm not debating anyone with my comment.
Just a small correction for accuracy; they actually patent the 50/50 mixture of both versions first. And then they patent the purified version that only contains the active enantiomer ("mirror image").
Because of how biology works, turns out that the "wrong" mirror image (that is absent from the new version of the drug) was in fact really inactive, doesn't do anything, and thus offers no advantage over the old version, except being covered by a new patent to milk.
These are the kind of drug research "advances" that the rest of the world is supposedly freeloading off of.
It's not freeloading, it's being dominated by a multi-billion dollar global marketing budget.
"In a Journal of the American Medical Association (JAMA) study published in January 2010, the largest study to date to attempt to quantify U.S. funding of biomedical research by the pharmaceutical industry, government, and private sources, researchers estimate that U.S. biomedical research currently stands at about over $100 billion annually.
The pharmaceutical industry is the largest contributor towards funding research, funding over 60 percent. The government contributes to about a third of the costs, with foundations, advocacy organizations and individual donors responsible for the remaining investments."
I dont think that statement is incorrect. They spend a ton on r&d (20%), which is more than pretty much any other industry
If there would be a loss of revenue, any reduction in R & D costs lies purely with c-suite’s priorities.
There's a lot of issues with drug awareness and appropriateness in US.