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Health insurance companies are useless (latimes.com)
291 points by howard941 on Aug 6, 2019 | hide | past | favorite | 261 comments

The problem with the "insurance" companies is that they're not really insurance companies anymore. As the current top comment by raintrees points out, our so called "insurance" is acting far less as insurance (coverage in the case of a major but unlikely incident), but additionally standard payment for regular healthcare services. And this creates all manner of perverse incentives that messes with the pricing and makes it more expensive for everyone.

Ironically, when I had a bout of un-/under-employment in the 2008-2009 downturn, my only option for medical care was to ration my healthcare services to those actually needed, and pay cash when I actually received service. I paid less per service individually by paying cash (doctors, imaging, and testing clinics, etc, all really like cash, it makes their life much simpler). And overall I paid less by paying only for the services I needed when I needed it, instead of paying into some high monthly payment to have a battery of services I may or may not ever need pre-selectedly available for me.

I think healthcare costs would come down for most if we could get back to something approximating that: medical insurance being actually and only medical insurance -- covering high cost emergencies to prevent such from breaking one financially -- and covering only that. Paying for day-to-day regular medical services can and should be handled differently. In all fairness, I don't know how to get there, and I don't know what the options for the latter would look like, or what they should be. But I do think it would be helpful in the near and long term to put our energies in that direction.

I think the biggest complicating factor is that everything you just said is true, but health insurance is also still sometimes insurance, as well as redistribution. So it's doing three things at once:

- Paying for routine care for people who could otherwise afford it.

- Paying for unexpected and unaffordable care, like chemotherapy.

- Paying for routine care for people who can't afford it.

Note that the third category doesn't refer only to poor people. Routine childbirth costs thousands of dollars. Any reforms targeted at the first category of spending, which hurt people in the second and third categories, are politically unacceptable. Add to that another complication:

- Unexpected/catastrophic medical expenses and routine care are closely related, especially in the long tail of expensive patients.

For example, the number of emergency room visits a patient makes (especially very expensive patients who make a lot of visits) is lower if the patient is making regular doctor's appointments and following their doctor's orders. But when regular care and monitoring come out of the patient's pocket, and emergency room visits don't, the incentives are horrible.

So these are extremely difficult political and business issues that health insurance has, which e.g. auto insurance doesn't. Most of the solutions to one of these problems, will have negative side effects for the others.

I agree in principle, though i'll add that part of the problem is that if you insure high cost emergencies only, you incentivize people to transmute their low-cost non-emergencies into high cost emergencies. The simplest way of performing that trick is to ignore your low-cost non-emergency until it becomes a high cost emergency. This is part of the reason why insurance companies want to pay for regular checkups and things like that. It's also why they want to incentivize healthy lifestyles, to avoid hyper-expensive things like, e.g. diabetes.

The problem with healthcare is that everything is connected. The low-cost regular stuff feeds back into the high cost stuff in a way that means anyone insuring you for the high cost stuff also ought to care about the low cost stuff. It's really a nasty problem.

The car insurance industry is by no means the most useful comparison, but it does make some provisions that resolve a number of these issues. By that I mean with car insurance, a reasonable deductible and the knowledge that submitting an insurance claim will likely result in higher premiums, tends to keep people from over-reacting to small things. Most car insurance companies also offer a variation of the "preventive" care at reduced, or even no cost, such as with window rock chips - its far less expensive to fix those rather than replace the entire window.

I'm not suggesting copying the car insurance model over to health insurance, but I think there are some worthwhile areas to explore, as I don't see the current health insurance system being sustainable much longer.

The article actually provides data that belies this line of argument. 50% of healthcare users account for 3% of the cost. Essentially all that preventative care or routine care is actually quite cheap on a systems level. It's not actually the driver for medical costs.

Chronically sick patients, older patients and patients with major events drive the costs. In this case an insurance model of some sort is appropriate. However, I'm increasingly unconvinced that private insurers without extremely tight regulation are the way to go. I'd choose something like Switzerland or Germany where you have a heavily regulated insurance market with price controls. They get better outcomes than we do at much better prices.

Granted the docs will take cash and bill you for less, but I'm not sure that's all that it seems on the surface. If you're insured your copay may end up being less than the cost you'd pay straight up, and the negotiated price between the insurer and provider may be lower still than what you'd see on a bill. You may still be ahead, but it's complicated.

Did you mean "3% of healthcare users account for 50% of the cost"?

I think they meant what they wrote, but it might have landed better as "50% of healthcare users account for 97% of the cost".

Basically, the healthier/younger half of the population costs almost nothing.

No if you look at the chart from the NIHCM about halfway down the article, you see that 3% of total costs cover the first 50% of people.

The top 5% of people account for about 50% of spending and the top 10% account for 2/3 so conveniently the statement you made is actually pretty accurate too :)

Unfortunately this won't work for me since my prescription medication costs over $1,000/month without insurance. You can limit your trips to the doctor as long as you are young and fit, but many people don't have a choice.

The young and fit will pay the 1000/month for you (or most of it). But let's call it health care tax (or something like that). Because "insurance" is misleading.

It's insurance against genetic unluckiness too.

You are right that misaligned incentives is the #1 problem in healthcare. Health and wellness need to be something that is paid for differently. I think there is no reason that this can't be more like some kind of government funded healthcare.

We also need move healthcare insurance away from employment. This is a relic of WWII labor shortages and not something we see for life/house/fire/etc kinds of insurance. When these companies have to compete on an open market, we'll have better competition and prices. Additionally, we can start charging people more for poor choices. Life insurance charges more for smokers and health insurance should too. Again, I'm talking about choices not pre-existing conditions. We will still need that protection and I admit that some conditions are the result of systemic bad choices. It could be that we can find a reasonable measure (HA1C?) for tracking poor nutrition and lifestyle to price that in as well.

> Life insurance charges more for smokers and health insurance should too.

It does. (It didn't help.)


> To account for tobacco users' excess health care costs and encourage cessation, the Affordable Care Act (ACA) allowed marketplace plans to impose a surcharge on tobacco users' premiums.

In fact, it appears to be actively counter-productive:

> Relative to those facing no surcharges, smokers facing medium or high surcharges had significantly reduced insurance coverage (-4.3 to -11.6 percentage points), but no significant differences in smoking cessation. In contrast, those facing low surcharges showed significantly reduced smoking cessation. Taken together, these findings suggest that tobacco surcharges conflicted with a major goal of the ACA – increased financial protection – without increasing smoking cessation.

Isn't the whole point of insurance the basic bet that I will need an expensive service so I will make small payments towards that possibility, against the insurer's bet that I will not need that service and will instead be able to keep those payments as a profit? If so, that arrangement has been abused by using it for health care, instead of insuring against a low probability major health incident...

It seems this would be the same as car insurance also paying for tolls, road maintenance, car maintenance, etc. instead of just covering against person/property injury from vehicle operation.

If health insurance instead is used for typical day-to-day payments for health care coverage, then the costs of that insurance will logically exceed the cost of that care because the insurance company exists to make a profit through offering that service.

Similar to paying the government to do something that would be more efficiently done privately - Maybe the same outcome (if one is fortunate) for far greater cost.

Anecdotally, I used to have a health insurance plan that had a very high deductible and fairly low monthly payments for my wife and myself. It's sole purpose was to hedge the bet that one of us might need ambulance and major medical treatment at an expensive facility (hospital) that might break us financially without that hedge in place.

The Affordable HealthCare Act in the USA ended that arrangement, we now have triple the payment size for a third of the coverage we used to have. To me, that is a clear case of my government getting involved and the results being a net loss.

Edit: Sorry, it did not end that arrangement, it made it far, far more expensive.

I worry that this is the classical HN analysis: axiomatically derived from premises that seem intuitively true but are empirically false.

So, to start with, the ACA lowered the rate of growth in health insurance premiums. If it had done nothing else, you'd ostensibly still be better off with it. But it did more than that: it also provides Americans with guaranteed-issue insurance, which did not exist previously. What people in general seem not to understand about health insurance rates is that they've been skyrocketing since the early 2000s. Employers have been having uncomfortable conversations about health benefits long before the ACA.

More broadly: health insurance isn't expensive because it pays for day-to-day care. Health costs are dominated by chronic illness and inpatient/outpatient procedures, not the overhead of people visiting their GPs.

I'm sorry you had an insurance policy you liked that the ACA killed off. But huge numbers of policies, including from health insurance giants, were abusive: they were marketed (effectively!) as real solutions, but had exclusions and coverage caps that made them worth very little if you actually wound up in a situation where you truly needed insurance. We're better off without those policies.

> Isn't the whole point of insurance the basic bet that I will need an expensive service so I will make small payments towards that possibility, against the insurer's bet that I will not need that service and will instead be able to keep those payments as a profit?

Nope, health insurance isn't insurance because literally everyone will need access to health care at some point in their lives. 100% of us will die of heart disease, cancer, trauma, etc. It's like if we had a 100% chance of houses burning down, we wouldn't call it fire insurance. It's not insurance because it's intended to be consumed, it's a communal pot.

Further, no matter what there will be more things wrong with us than resources to deal with it so the other goal besides efficient administration of a health system is rationing access to care.

No need to profit here, there's plenty of other ways to make money in the world.

All these "the ACA raised my premiums crap" is just that. You didn't have heath insurance before, you had a program that you thought was health insurance but would have absolutely bankrupted the average person if you ever needed to draw on it.

"Nope, health insurance isn't insurance because literally everyone will need access to health care at some point in their lives."

Do you then also not consider whole life insurance to be real insurance, because everyone dies?

I have whole life insurance. It's for a fixed amount, which would pay off the house with a little extra so my family would be okay.

And importantly: once you get to a certain age the premiums start going up significantly, and you can't get it past a certain age IIRC is 65 on my policy.

Everyone dies, but not everyone who does so needs life insurance.

>All these "the ACA raised my premiums crap" is just that. You didn't have heath insurance before, you had a program that you thought was health insurance but would have absolutely bankrupted the average person if you ever needed to draw on it.

Why do you say that with certainty? I had a low premium / high deductible plan that was a good fit for me at the time that was both simple and lived up to it's promises, something I have not encountered since.

A high deductible plan would bankrupt the average person if they ever needed to draw on it. The average American can't come up with $500 let alone $5000 so for them the high-deductible plan (the only only the could afford) is as good as nothing at all. You're still going to be relying on medicaid.

It's not a real health insurance plan because it doesn't cover the realities of every-day life. You're leveraging (literal) survivorship bias in defense of this plan. You could make the same exact case if you didn't have health coverage at all, and nothing happened to you (that it was a good fit for you and it was both simple and lived up to its promises).

What if Stronico could afford $5000 in an emergency, and could also afford to pay for the much smaller incidental treatments not covered?

It is clearly false for you to claim Stronico didn’t have insurance.

If something serious had happened they would have paid the $5000 and the rest would have been covered by their plan.

I agree that this might not work for the average American, but that’s the only valid part of your claim.

To your point I was speaking of the average American and not necessarily the poster themselves. Their plan worked just as well as not having insurance because they didn't need to draw on it.

This is misleading.

Their plan would also have worked had they needed to draw on it.

The fact that they didn’t need to draw on it has no bearing on whether their plan would have worked for them.

Again, not for the average American.

Firstly there in fact are no average Americans.

If you want to use a statistical model to say how many people it would or would not work for, by all means do so, but otherwise this is just an empty definition.

Secondly, you actually argued that it only didn’t work for him because he didn’t make a claim. That has nothing to do with the average American and is simply a false statement.

I agree that it wouldn’t work for everyone. But it would clearly work for many people, including him.

If you want to argue about the average American, then you need numbers and facts, otherwise it’s just an empty opinion.

By your reasoning is there any circumstance where a high deductible plan, albeit paired with an HSA, could ever work for anyone, at any time? Because it worked quite nicely for me for quite some time.

Yes, if we allowed people that could not pay for treatment to die? That's the rub, right? If 999 out 1000 people in your insurance make the right decision, but one person gets... emergent liver failure by Hep C or needs a lung transplant, then the system only works if it is ruthless and the cost for treatment is not socialized (Medicaid).

"The average American can't come up with $500"

>The lowest-income households in the U.S. on average spend $412 annually on lottery tickets[1]

>In the U.S., people living below the poverty level and people having lower levels of educational attainment have higher rates of cigarette smoking than the general population[2]

>Among smoking households, the mean quarterly expenditure on cigarettes in constant 2015 dollars was US$458[3]




Being able to come up with a dollar a day isn't the same as being able to come up with a year's worth of lump sum at once.

Being poor changes how you think about money. Every time you save a few dollars, something happens - an unexpectedly high electricity bill, an unexpected doctor visit, losing your phone - and that minute bit of savings goes out the door. It's easy to get into the thought pattern that you might as well spend on something fun while you've got it.

As for cigarettes, being as addictive than heroin will do that to ya.

Does not saving prevent those events from happening? How are those events handled without savings? How would giving them more money resolve this problem?

> Does not saving prevent those events from happening?

That's not the point. Of course it doesn't - but that unexpected $35 copay for the urgent care visit would've wiped you out, whether you'd bought the $1 lottery ticket or not. At least you had a little burst of "man, if I won, I'd..."

We know from studies that poverty dramatically changes short-term vs. long-term decision making.


> How are those events handled without savings?

Be hungry the week after, pawn a possession, payday loan.

> How would giving them more money resolve this problem?

How would having money solve money problems? That's really the question?

>How would having money solve money problems? That's really the question?

I have shown that they do have $500 to cover an emergency but they have chosen to spend it on lottery tickets and tobacco products. You claim that this is due to being poor and how they have poor impulse control and that makes them unable to save the money and instead the immediately spend it. If I give them another $500 why wouldn't they just spent that on more lottery tickets and tobacco products?

> I have shown that they do have $500 to cover an emergency

You have not. You've shown that after a year of not buying lottery tickets they might have that $500, with the caveat of the fact that we know that's not really how that works - any savings gets wiped out by the next unexpected bill long before that.

> If I give them another $500 why wouldn't they just spent that too?

Where was that suggested? That's a silly approach to the problem.

Far more comprehensive solutions are necessary. Better housing policy, living wage, national healthcare, better regulation (or banning) of payday loans, guaranteed access to banking services, etc.

>You have not. You've shown that after a year of not buying lottery tickets they might have that $500, with the caveat of the fact that we know that's not really how that works - any savings gets wiped out by the next unexpected bill long before that.

I don't see how this math works. Lets say my total annual income is $5000 to keep the math easy. My spending looks like this:

get $5000 paycheck (for the sake of ease of math)

spend $3000 on rent

spend $500 on lottery tickets

spend $1000 on food

spend $500 on tobacco

Now I have a $500 bill that I don't have the money for.

Conversely I could:

get $5000 paycheck

spend $3000 on rent

spend $1000 on food

Now I have a $500 bill that I can cover because I did not buy all those lottery tickets.

You continue to pretend poverty doesn't have one key fact: There are always more bills to pay.

Your car breaks down. You get a parking ticket. Your kid gets sick. You get evicted and some of your stuff gets ruined by the rainstorm because the landlord put it on the lawn.

Exactly. Car-job-house, lose one and the other two quickly fall. You're one bill away from homelessness. As a Markov chain, ultimately everyone in poverty crashes at some point or another.

>There are always more bills to pay.

If saving money causes more bills to appear as you suggest the solutions seems to be to give the poor less money so they will have less bills.

> If saving money causes more bills to appear

Sigh. I'm not sure if this is a comprehension issue or if you're deliberately misrepresenting what I'm saying.

Saving doesn't cause bills to appear. The bills are already there. They've likely been piling up for years, and continue to do so.

If you're $20k in debt, and it keeps growing, and every time you've tried to save up a few dollars to pay it down you've had to spend the couple bucks you managed to accrue on yet another critical bill you can't put off any longer, it starts to feel pointless to save.

> you suggest the solutions seems to be to give the poor less money


I laid out specific, systemic interventions that are necessary, none of which require giving the poor less money.

>The bills are already there. They've likely been piling up for years, and continue to do so.

>If you're $20k in debt, and it keeps growing, and every time you've tried to save up a few dollars to pay it down you've had to spend the couple bucks you managed to accrue on yet another critical bill you can't put off any longer, it starts to feel pointless to save.

If they have so much debt buying so many lottery tickets? Seems like a bad idea. What if they never bought lottery tickets to begin with? Who keeps extending them credit when they clearly never pay any bills?

Do you extend this same logic to firms like Amazon? Amazon spends virtually every dollar they make, does that mean they are poor? Should the government step in a give them money because of how poor they are?

I don't see why, "You have to stop buying lottery tickets" is a non-starter when talking about Americas poor. First stop buying lottery tickets, then we can talk about money problems you may have.

> Who keeps extending them credit when they clearly never pay any bills?

Predatory lenders, utilities and hospitals that may not be legally permitted to deny service but can still attempt to collect, etc. They're certainly not getting a 2% cash-back credit line from Chase.

They're also not never paying bills. They're juggling them, so the latest and most critical get paid. Squeaky wheel gets the grease - you'll probably pay to get your car out of impound before you'll pay your kid's school lunch debt.

> Do you extend this same logic to firms like Amazon? Amazon spends virtually every dollar they make, does that mean they are poor?

My "I'm being argued with in bad faith" senses are beginning to tingle.

> I don't see why, "You have to stop buying lottery tickets" is a non-starter when talking about Americas poor.

Again, systemic solutions are required here.

Add "get rid of lotteries" to my systemic fixes list, if you like.

I think the meaning here is that the average American finds themselves unable to execute on the fact that they have the means to save an emergency fund and are instead too focused on the short-term dopamine hits that they can get immediately.

Couldn't come up with that amount of money all at once. Lottery tickets and smoking add up to $2.38 per day.

Seems like this system would motivate insurers to develop anti aging measures. Good.

It's more profitable to just deny cover than invest in risky strategies like life extension. This is what we see play out on the regular.

Not in a mutual insurance system (obviously there is none large enough to do that kind of research yet).

The point of health insurance is that nobody should worry about the costs of regular maintenance and emergency service to their meatbag. Ever. As you point out, it costs much more if there is a for-profit organization in the middle.

Single-payer tax-funded health insurance means that each person contributes based on their capacity, and nobody has to pay when they receive services. Then the tax collector has an incentive to increase effectiveness of health services by educating and encouraging the population to eat well and exercise daily.

> The point of health insurance is that nobody should worry about the costs of regular maintenance and emergency service to their meatbag.

(emphasis mine)

Strongly disagree. What you refer to is a health benefits plan. Insurance should cover only unlikely events, not routine events. Just like your car insurance doesn't pay for new tyres or burnt bulbs.

As someone who does my best to stay healthy, I don't think my lifetime health bill will come to anything close to what I pay for insurance. But I want the insurance for the random stuff I can't control.

With the ACA, insurance companies have incentives to encourage the people they cover to take as good of care of themselves as possible more than ever. I think they are currently and in the future will do a better job of that than the tax collector ever will.

Especially when it comes to preventable diseases, good health insurance companies are doing some really interesting work on effective behavioral change and early intervention. My insurance for instance pays me to walk every day.

They are incentivized to boost their 20% cut. That doesn't work if everyone is too healthy.

I'm not sure what you are referencing with the 20% cut remark, but there isn't harm to health insurance companies (actually, providing care through medicare advantage may be an issue...) if everyone is extremely healthy. Then the main costs truly would be the unpreventable diseases, most of which come unexpectedly. This is the exact market that works for risk pooling!

> I'm not sure what you are referencing with the 20% cut remark

The ACA requires insurers to spend at least 80% of premiums on direct patient care. To grow profits, they must grow premiums.

> Then the tax collector has an incentive to increase effectiveness of health services by educating and encouraging the population to eat well and exercise daily.

But then the population doesn't have an incentive to follow that education and encouragement—at least not a monetary one. As a comedian said, "You see, I don't have to exercise, because I have health insurance."

You had me until you said the tax collector has an incentive to increase the effectiveness of health services.

Currently the largest medical payer in the US is medicare, a government program. It is also one of the most expensive programs the government runs. The government already has this "incentive" and yet we don't seem to be getting healthier nor do people seem to eat better and exercise more. People seem to be getting more obese, not less [1].

I don't know of a single organization or program that has managed to have long-lasting reductions in obesity. Diets routinely fail because people can't maintain them, and exercise by definition is hard so again it's hard to stick to. One fundamental issue is we don't quite understand why people get fat. It's not clear how the basal "fat" set point that everyone has gets set, but it is clear that deviating substantially from that set point is very difficult and that it might shift over time.

[1] https://www.stateofobesity.org/obesity-rates-trends-overview...

> it made it far, far more expensive.

isn't that the point of insuring uninsured people and ending preexisting condition coverage. if the agreement is "hey we need to cover riskier people because its the right human thing to do" costs are going to go up. thats the trade off. in this case, you being angry that costs went up shouldnt be directed towards government inefficiency. costs ballooned because coverage expanded (and age banding aka community rating, which is similar, agreeing to cap elderly costs and having young people pay. and everyone under 26 being a child, consuming but not paying in.)

anyone paying attention going into the aca, knew that costs would go up for healthy people over 26 but not yet retired. (democrats did do _a bit_ of lying about costs going down for everyone and being able to keep existing plans, to get it passed, a fib they admit.) if you are a part of that range, and you voted for the law knowing all this, you were either being compassionate, or hedging that someday you might fall into an uninsured condition situation, or both.

The problem with privatized healthcare is that it's not a problem which market forces will solve naturally. Sure for some things, like elective surgeries (lasik for example) or routine dental care, people can shop around, and prices will reach a sane level. But the majority of healthcare does not work like that.

For instance, in the case of lifesaving treatments, the demand is essentially infinite, and this is a fact which Pharmaceutical companies use to raise the cost of treatment to astronomical levels. When the alternative to expensive treatment is death, there is simply no countervailing market force to bring costs down.

The same goes for pre-existing conditions. It may have been fine for you and your wife to pay for a reasonably-priced high deductible plan, but without the ACA, that simply would not be an option for a huge number of people. Without government regulation, there is absolutely no incentive for an insurance company to cover a chronically ill or high-risk individual. The rational way to operate that type of business in order to maximize profit would be to cover healthy people only, and remove anyone from your coverage who is likely to file a large claim, and we have seen this come to pass.

> Sure for some things, like elective surgeries (lasik for example) or routine dental care, people can shop around, and prices will reach a sane level. But the majority of healthcare does not work like that.

This is precisely because there is no health "insurance" middlemen for purchasing those services. The market drives those costs down.

If - like in pre-ww2 America - instead people saved up for the inevitable doctors visits and paid out of pocket directly to the doctors and hospitals, costs would be FAR lower both due to competition and price sensitivity. This is the fundamental problem with using health "insurance" for expected costs, rather than just unpredictable emergencies.

"If - like in pre-ww2 America - instead people saved up for the inevitable doctors visits and paid out of pocket directly to the doctors and hospitals, costs would be FAR lower both due to competition and price sensitivity."

So like, real question here... How does would that work if you're poor, chronically ill, have cancer, need an organ replacement, have HIV, etc? How do I know if I'm getting my money's worth, given I do not have medical education? What happens if I can't make a choice of what services I consent to because I've been rendered incapacitated due to a medical emergency?

Yes but it is also because those specific types of treatments respond well to market forces: they are common enough for there to be a lot of competing providers, and if the price is too high, people can elect not to receive those services.

For a counterexample, look at dental surgery. This is also often not covered by insurance, but it's much more expensive, and low-income individuals often take on debt and risk their financial security to undergo these procedures because the alternative is often a severely degraded quality of life. The difference is that the demand is much less flexible, so providers can get away with higher prices. Many healthcare procedures fall into this category.

And what if you happened to not be able to save? Or if something was too expensive for your savings? Or if you chose the wrong savings vehicle and the stock market tanked just when you needed that new hip? How much should you save? How do you know?

Pre-WW2 America isn't a place most people would want to return to in terms of healthcare. It was far far less advanced, people died much more easily and you may recall a certain Great Depression which made it so those savings weren't quite as reliable as people hoped.

Oh and when you go to the ER after getting hit by a bus, are you going to call around for the best deal?

You might argue that's what insurance is for, but now you end up back where we are today, with a middle-man paying for things. Things that are essentially guaranteed to happen but unpredictable in their magnitude.

I'm not saying we shouldn't have more market information, but it's just incorrect to say the market will solve this. Serious medical problems are a, "your money or your life" situation, pure unregulated markets are going to really struggle in this area.

>Pre-WW2 America isn't a place most people would want to return to in terms of healthcare.

I dunno, the differences weren't huge, and at least people didn't go bankrupt (data not from the US, but close).


"Life expectancy of mature women taken from Hollingsworth8 and OPCS data for England and Wales

Date Life expectancy of women at 15 years (years)

1480–1679 48.2

1680–1779 56.6

1780–1879 64.6

1891 61.6

1901 62.6

1911 66.4

1921 68.1

1951 73.4

1961 75.7

1971 76.8

1981 78.0"

1989 79.2

That seems to indicate a 16% increase in life expectancy between the last pre-WW2 data point and the most recent data point. That's pretty huge, especially when you consider that those are averages, meaning that the disparity is made up not so much of old people dying older, but more of young people not dying from illnesses that are now preventable.

As a specific and personal data point, I have chronic kidney disease, which developed rapidly when I was 25. With pre-WW2 medicine (no transplants, no dialysis), I might have lived to 26, maaaaybe, and even then only if I'd been able to control my blood pressure long enough for renal failure to set in instead of a stroke or heart attack.

Thanks to modern medicine, I'm now nearing 40 with a good prognosis; there's no reason to believe it will impact my life expectancy, and the impact on my quality of life is relatively minimal. Compared to dying in my mid-20s, that's a vast world of difference. I will not willingly go back to pre-WW2 medicine, thank you very much.

Not to derail whatever point you're trying to make but its important to note if you use WW2 as the middle point, you're splitting the data between a pre-penicillin world and post-penicillin world. If anything I'm amazed that its only a 16% increase after such a massive change.

Yup, that's because it's about averages.

To take a contrived and simplified example, imagine a hypothetical world in which everybody dies on their 90th birthday by default, but a handful of diseases cause 25% of the population to die on their 30th birthday instead. That brings the average life expectancy to 73.75y.

Now imagine a bunch of medical breakthroughs bring the 30-year-old mortality rate down from 25% to 7%. That enormous difference brings the average life expectancy to 85.45y.

That's in increase in life expectancy just shy of 16%, despite the fact that it comes from a 72% reduction in 30-year-old mortality rates.

That's obviously a massive oversimplification, and real distributions look different, but it illustrates the problem with just looking at average life expectancies; it makes it look like everyone's life span has just been scaled up by 16%, which is not the case. If you look at it from the perspective of, "what are the chances my life will be cut short by some preventable disease?", the magnitude of the change is much greater. Some of that change is due to very cheap innovations like bread-mold-as-antibiotic, and some of it is due to very expensive innovations like organ transplants. Either way, I for one am glad those days are over, despite the appealing economic simplicity.

To nit pick, it's not really a bet from the insurers point of view. The idea is that they operate on a scale where they know the total cost they will have to pay out in any given year is less than what they charge in premiums. The key is operating on a big enough scale that they can forecast their costs accurately enough to be able to set their premiums to always make a profit.

With that in mind, from a consumer point of view I prefer to look at it as buying peace of mind rather than betting against the insurer (because in the long term the insurer will always win).

Amongst other things, the ACA removed the cap on payouts, making them more like actual insurance. What was the maximum lifetime payout on your previous high deductible plan?

Exactly. ACA and any other business friendly arrangement proposed by the 'private sector' sponsored democrats (the proverbial 'establishment') will have that effect. Because it still 'stimulates' the business side of things to react in a way that makes it profitable. This should be an all-or-nothing type of deal.

Insurance is the type of thing that I believe the Blockchain could really solve: Instead of paying a "for profit" company, let's create a set of smart contracts where we can execute the payments (transfers) to a "concentration" account, and when someone needs to cover medical costs, we transfer from that account to the person in need.

We can have third-party "evaluators" that anonymously evaluate and guarantee the reality of the medical claim, and let the network approve or reject the claim based on those evaluations.

That's very easy to suggest. The challenge is to come up with a scheme where individual actors' interests cause their behaviour to be aligned with our goals for the system as a whole.

This is extremely hard to do. It isn't at all clear that it's even possible. Merely suggesting it isn't enough; to add something valuable to the discourse, you really need to describe the scheme itself, and that scheme needs to have a credible chance of success.

> Insurance is the type of thing that I believe the Blockchain could really solve

There's always one...

How is that different from a regular single-payer system found in many countries?

In that it is not managed by the government. I don't have a problem with that (I myself live in a country with socialized medicine), but it seems that a lot of people in the USA don't like the government meddling into some of their business.

As an outside observer, sure, you don't strictly speaking need them in some theoretical America, but in the America I see there's a large group of people who do not believe government can or should do this work and will work very actively to make it happen. The last bit is crucial.

Suppose that you are disappointed that Obamacare did not contain a public option. Suppose that Obamacare did contain this provision in the law, it would most likely be implemented the way the cfpb was. The cfpb is great, except how good it is depends on how good the government in place is. If there's people in government that want it to fail it will simply fail. Thus merely incorporating the public option into law is not enough to have to have a dedicated political body that wants to make it work. I don't think that's the case in America.

I guess what I'm saying is, the specificity of the law doesn't seem to be as important as peoples dedication to making things work

A majority of voters of both parties support Medicare for All policy proposals.


Voters were split on the ACA mandated carriage of private insurance.

In my state at least, the ACA bankrupted the smaller participants and allowed for the Blue Cross to eat up that market, all while increasing their price 50%-100% year-on-year. Forcing someone to purchase these products, combined with our campaign finance problems in the US, I wonder if this wasn't a submarine corporate welfare bill.

More charitably one might call it a half-measure when one needs a full.

I have my doubts.

The term ‘Medicare for All’ is a fairly new term that has only been exposed to public discourse (of the sort that reaches the average unengaged voter) within the bubble of Democrat primaries.

It’ll be instructive to see how these numbers stand up to scrutiny during the general election—assuming the Democrats elect someone who supports it as advertised.

It’s pretty well documented by political studies the delta between what voters broadly want and what political leadership in the US generally delivers. That poll covered Democratic, Republican and independent voters. Independents being the unorganized third party in similar size to both other main parties.

On the plus side, the recent Democratic debates have delved into the subject in impressive detail, with candidates grilling each other over differences, as well as the moderators. It's a remarkably nuanced discussion within the party. Not that most voters care about nuance, but for those who do, the information is there.

In addition, the "Medicare for All" branding is deceptive, as the plan on offer is nothing like Medicare.

Some candidates are trying to jump onto the brand without supporting the core proposals, but the Sanders/Jayapal senate and house bills for Medicare for All are the core proposals by which the others should be judged.

Yes, the Sanders and Jayapal bills are the ones I meant are nothing like Medicare. I was trying to say that those "Medicare for All" bills are nothing like the current Medicare program.

For better or worse, those same anti-government people do functionally support social programs from which they directly benefit. They may pay lip service to their ideological stance on the subject, but the money is green and they will happily continue to take what they are "entitled" to.

Their major opposition is to social programs they don't benefit from.

There is nothing ideologically inconsistent or hypocritical about saying "I don't think this government program should exist" and also making use of the program that currently exists. There's a game-theoretical issue here: you might want everyone to stop, but unilaterally stopping hurts no one but yourself.

Along the same lines, from a different political perspective: many people advocate higher tax rates, but few people will unilaterally send in a higher tax payment or decline to take a deduction.

My neighbor is a good example. He is on Medicare but he is violently opposed to socialized health care and Medicare for All.

This is extremely common in middle America where I live. People using social services but opposing it for others. They believe they have earned and deserve it, and the others are abusers who haven't.


Could you please stop posting unsubstantive comments to Hacker News?

If you wouldn't mind reviewing the site guidelines and using HN as intended, we'd be grateful:


He is a regular guy. I don’t think he is that atypical.

Never attribute to malice that which is adequately explained by stupidity

Yeah but malice is a thing too.

I was trying to find a razor that means the opposite of Hanlon's since I find malice/greed etc is far more often the cause of problems than stupidity. Seems there is no accepted named one.

¿Por qué no los dos?

Exactly. Which is so strange when you see which states are against government involvement and which states need the most government assistance.

Maybe we should take them up on their offer.

The Netherlands has mandatory private insurance and it works well for them. The insurers are heavily regulated though.

"Mandatory" is the key thing, though. The system doesn't work if all the healthy people opt out until they have a crisis and show up uninsured at the emergency room.

See: https://www.kff.org/health-costs/issue-brief/how-repeal-of-t...

What also works in The Netherlands is that insurance is not tied to employment.

I've heard that many American workers quit in the early days of the month, so that their ex-employer is still covering their health insurance that month, and their next employer (presuming they have another job to go to) picks it up in the next month. I can't imagine how many people are stuck in jobs they hate just because they are afraid to be without insurance. It can't be good for anyone.

> I can't imagine how many people are stuck in jobs they hate just because they are afraid to be without insurance. It can't be good for anyone.

It seems like it is good for employers for employees to be more precarious and dependent on them.

I really doubt anyone times their quitting to the start of the month. People just up and quit because they don't want to work.

Also, many health insurance plans from your employer don't start immediately. Sometimes you have to tiptoe around for 90 days until you get coverage.

Source: American, and it's always funny to hear what people in other countires 'think' about the USA

>I really doubt anyone times their quitting to the start of the month. People just up and quit because they don't want to work.

I won't defend the specific scenario given but the second sentence there is a huge generalization. You're correct that insurance plans don't start immediately, but that also leaves people in a difficult, even if temporary, situation.

Europeans however are correct to think that the healthcare system in the US is abysmal, because it is. All this goes without saying that employment-tied insurance puts people in precarious positions, which is obvious.

My (family) insurance plan carries a $2,000 monthly premium charge (which is far cheaper than the care we've received in the last year). I timed my last two departures to maintain coverage for the month, as its the only way I can get time between jobs without having to (immediately) purchase health insurance.

It would be nice to not have to do that, but in the grand scheme of things (less than) a month is not a very long period of time.

Actually it's worse, I've done much more involved backbending and hoop jumping to make sure I was covered between jobs than just quitting around the beginning of the month.

N=1 I 100% quit the first of March such that I was covered for that month. Pretty much my only option to keep my perscriptions and scheduled blood tests affordable. And Im a tech worker with piles of disposable income, imagine if the potential 1000$ medical charge wasn't something I could absorb.

The US systems is royally fucked; sardonically quipping about "those crazy foreigners" doesn't make it better.

I've most definitely timed my job changes to insurance coverage. And luckily in the software industry, insurance tends to kick in on day 1.

I have both done this and advised other people to time their departure like this. I take a few weeks off between jobs and I only had to get screwed the one time before I learned I had to take that into account.

Do the Netherlands also have doctors who expect to make $300k-$1M/yr and drugs that cost 10x what they do in any other country?

No but they are high up on a recent list of doctors salaries[1]. US is #3 and the top spots are the usual European countries for top salaries.


Before clicking on the link, I guessed Switzerland would be ahead of the US, and I was right. Switzerland has ACA-like mandatory insurance that's even more expensive than ACA.

Notice how for the US the article doesn't even mention the upper bound for specialists. That's because there is none, and they expect that.

GPs are quite affordable, if it was just the GPs I wouldn't mind paying them $200-300 directly for a visit. But the specialists can really get you crying for mercy, especially if there's no insurance company between you and them.

I broke a leg a few years ago, and if I did not have insurance, the cost to me would be $55K (probably more, this doesn't count the follow-up visits). Surgery alone was $30K+ for about 2 hours of work, not including cost of anesthesia ($5K). Insurance got the total down to about $7K, which is still a lot of money for a relatively run-of-the-mill surgery. Cost to me was my deductible: $1K.

As a Canadian, it just baffles me reading these kinds of posts. Like, I could break my leg on the way home from work today and any surgery I needed would be completely covered other than a $45 ambulance charge and maybe $50 for painkillers or whatever was needed afterward. (And prescription drug coverage is on the radar going into this fall's federal election, see: https://www.ndp.ca/pharmacare, https://www.greenparty.ca/en/our-vision/health-care)

No drama, no discussion, no appeals or scary forms to fill out. Is this really what Americans mean when they talk about "freedom of choice"?

As a US citizen, your tax rates and multi-month waiting lists baffle me as well.

Getting into a doctor in the US requires long waits, too! The last time I bought insurance, I decided to get a long-overdue checkup, so I went hunting for a doctor in-network. There goes one afternoon, just calling around to GPs to see if they were accepting new patients. Nope.

A few weeks later I tried again and found someone could see me three months from then!

And I'm paying $400 a month to get this with a $6500 deductible??

The "long wait times" critique of Canadian health care makes no sense in the face of actual American health care access. It's the same here, except we pay coming and going for it.

Well, that is the perspective that is preventing the situation from improving. However, if you take the time to look into it, you may find that the situation is not as dire as conservative talk radio pundits would have you believe.

For starters, nobody waits in an emergency. If you need urgent care, you get it— with no second mortgage needed. Waiting times vary a lot across the provinces and depending what kind of care is needed. Cancer treatment, for example, is very fast.

Generally speaking, wait times are a function of overall funding, and funding has been cut repeatedly over the past three decades, as Canadians have consistently voted for tax cuts over investing in health care. See the decline as reported by the Fraser Institute: https://www.fraserinstitute.org/studies/waiting-your-turn-wa... (Although of course, they're a right-wing think tank, so their agenda is further tax cuts and privatization... take from it what you will.)

As far as taxes, again beware of what you hear from US-based commentators about how bad it is. In fact, the income tax we pay is almost identical: https://en.wikipedia.org/wiki/Comparison_of_Canadian_and_Ame...

Don't look at doctor salaries. Look at per capita costs. And by that measure, the US is far more expensive than Switzerland, the Netherlands, or any other country.

It's not that there's something uniquely good about those countries' models. It's that there's something uniquely bad about ours.

> Don't look at doctor salaries. Look at per capita costs.

Per capita costs are in large part (though not completely) determined by how much providers charge. Why shouldn't we look at "doctor salaries"?

Because when you look at doctor salaries out of context, you get a misleading answer.

I looked it up. The US health care system costs 25% more than Switzerland (the second most expensive in the world). That's not because of doctor salaries.

The Netherlands expenditure per capita is also quite high. I cant believe how high it is actually in Western European countries. If you compare it to South Korea or Singapore the Netherlands looks just as expensive as the US of A, just on a different scale.

Nevermind ..

> Just pass a law making it illegal for teens to smoke

Did anywhere do that? I see laws making it illegal to _sell_ cigarettes to teenagers, and I see laws making it illegal to _advertise_ cigarettes in a way that will attract teenagers but I don't see any laws that jail teenagers for smoking.


This goes into more detail - yes, in some states it is illegal for teens to possess tobacco, but the penalty is usually something like a small fine, or you have to attend a class.

Not all legislation has the citizenry as its subject, or creates criminal offences. Legislation can also bind the actions of government, or establish rights which must then be fulfilled by a government.

Public healthcare is typically not provided by creating criminal offences for citizens.

Nevermind ..

That's just not true:

Page 131 of the ACA bill:

"In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure."

For a codified citation, this is 26 USC § 5000A(g)(2)(a), an is accompanied by a provision also ruling out tax liens and levies at § 5000A(g)(2)(b), so neither criminal penalty nor the usual compulsory fallback civil collection methods are permitted by the ACA.


No teenager has been to jail for smoking a cigarette. Underage possession laws have penalties like (usually small) fines. People might go to jail for selling tobacco to minors, but that is different!

Nevermind ..

Those same people oppose all sorts of existing social programs too, and those programs continue to function anyway.

The CFPB was a special case as a small agency with little visible impact that few people even knew existed. Messing with people's health care is quite another matter. See also: “keep your government hands off my Medicare.”

> Those same people oppose all sorts of existing social programs too, and those programs continue to function anyway.

Sorta, barely.

When I was unemployed a few years ago, it took me months to get basic state medical coverage in Kentucky. I had to spend hours waiting in line at the office because the phone service simply didn't work, and then had to jump through endless bureaucratic hoops.

As a single guy who's fairly bureaucracy-savvy, I eventually managed it. If I'd been a harried and undereducated single mom, I might never have made it through.

That was the second time I had to sign up for Kentucky Medicaid. Five years previous, it was a breeze. Then a Republican governor cut funding to the bone, and now it's awful. That's not an accident.

Most Americans vote with their feet to avoid this sort of governance.

The kind of people who need Medicaid don't always have the luxury of relocating themselves and their family to another state.

> I see there's a large group of people who do not believe government can or should do this work and will work very actively to make it happen

do you have any numbers to back that up? There's a very 'vocal' minority holding that opinion but don't assume that group is large enough to matter when it comes to voting for/against it.

You can see Gallup's historical polling results on this question here: https://news.gallup.com/poll/4708/healthcare-system.aspx

Since 2000, the percentage of respondents who have said that providing healthcare coverage "is not the responsibility of the federal government" has fluctuated from a low in 2006 of 28% to a high in 2013 of 56%. (In their most recent survey, it's 42%.)

I've always wondered why people seem to think it should be "the responsibility of your employer". As someone who didn't grow up in the US, who is now a US business owner, it seems totally insane but everyone just nods..

This is the crux of the problem. Sometime ago- the wise people in power decided to push the responsibility of medical coverage onto employers. Funny they chose that instead of housing or food- but thats what it is. Now everyone has to find a job that has health benefits- but employers are finding ways around it

That’s not what happened. The federal government capped wages during WWII, and in response the unions threatened to strike, which would have shut down the war effort. To mollify them, the health insurance that unions had negotiated as a fringe benefit from their employers was temporarily made tax-free (normally you pay taxes on the cash value of fringe benefits).

After the war, it was supposed to go back to normal — but people had gotten used to not paying taxes for their insurance benefits, and it became politically impossible to go back to the way things were pre-war.

Not only that, but there's also the problem of how you ask people the questions. When you ask, "Do you think we should have socialized medicine" a large percentage will freak out and say "NO! We don't want socialism here!" But if you ask them, "Should we defund Medicare?" they'll also loudly scream "NO! We need our Medicare to stay alive!"

It's not just insurance companies that are a problem, and that's a common but annoying oversimplification. Other countries (such as Japan, Germany, and Switzerland) integrate private insurers without the massive cost overruns of the American model. It looks to me like there's a systemic feedback loop somewhere that leads to price inflation. And if private insurers aren't the root cause of that feedback loop, then getting rid of them won't solve the problem.

Example: I suffer from a rare chronic illness (respiratory papillomatosis, aka warts on my vocal cords) that requires regular laser surgery treatments to control - two to four times a year. Until recently, treatment consisted of going to the specialist's office, where he had the laser and endoscopy camera. He conducted the operation with two assistants - a laser tech and an ordinary nurse. I was in and out in an hour.

But my most recent treatment was different. This time, I had to go to their "surgical center", wear a gown, get wheeled to the room, and there were a half-dozen assistants that were mostly not doing anything. I had to wear a blood pressure cuff, which kept retriggering when I wiped away tears during the treatment (it HURTS and tears of pain happen). I complained to the doctor about this, and he didn't like it either, and said flat out he thinks they do this to charge more money.

This isn't a dangerous surgery. It's as unpleasant as it sounds, but... it's wart removal. I'm not under general anesthesia. I'm not going to stroke out. He can't kill or even seriously injure me with that laser. The old, simple office-based routine was better for patient and for doctor - and a lot less expensive, I'm sure. And that's the point there, isn't it?

So there's your feedback loop, maybe. Insurance companies can be hit on to cover even unnecessary work, so providers tack on unnecessary work, which raises premiums, which means more money is available, so...

Almost(?) every other developed country has price controls (all payer rate setting) - that's a more general reason why prices are lower.

I find it fascinating that price controls are pretty much the only difference between the US and Japanese models (well, that and price controls eliminate the concept of networks), and the Japanese model costs half what ours does for better and universal care.

Rent seeking.

Literally getting paid to have a pile of money and sometimes pay part of people's medical care while skimming fat profits.

Would you also describe auto insurance and home insurance as rent seeking? Because it sounds like the same thing.

They could be. I'd argue the real problem is competition. A person buys their car insurance. The purchaser is the customer, there are lots of competing companies, and prices are good as a result.

In health care typically your employer is the customer. The doctor and/or hospital also are customers. The insurance company is itself a customer.

Unlike - say - car repair you don't get a good estimate up front so it's hard to shop. Many times there aren't many good alternatives anyway. If you don't like a choice one of the actual customers made it doesn't matter because you have no real purchasing power anywhere in the system.

For almost all non-emergency care you can get a good cost estimate up front though. Even for much "emergency" care it wouldn't be hard to provide an estimate and then stick withing a certain % of that. Stuff like stitches, pulling fish hooks out of people and all sorts of other "routine" things that are uncommon individually but are common from the perspective of the emergency room can also be estimated accurately. Chronic illnesses and long term care are what's really expensive.

Health insurance isn't actually insurance though (at least not only insurance), it's more like prepaid medical care.

Yes, it IS insurance.

Its value is not to reimburse you for routine visits or minor procedures, it's to prevent you from going bankrupt if you get cancer or any similarly expensive condition to treat.

A useful way to look at it is the cost to treat each condition multiplied by your odds of getting that condition. That's also why pre-ACA, insurers would discriminate against patients with pre-existing conditions: the cost to them was nearly guaranteed to happen as the odds were close to 1.

If you were to start a health insurance company and only have a small pool of customers, you'd essentially be gambling as the variance is too unpredictable. (In reality, you'd be re-insured but that's a different story.) That is why a large pool of patients makes the most sense, and ideally, if the { pool of patients } = { country population } then you can rely on Public Health stats for risk modeling. And if you're not beholden to shareholders demanding a profit/dividends, there are some efficiencies that can be gained.

>Its value is not to reimburse you for routine visits or minor procedures, it's to prevent you from going bankrupt if you get cancer or any similarly expensive condition to treat.

Notice the parenthetical where I said it's not only insurance.

Clearly the value of most health insurance plans isn't only to cover catastrophic illnesses. Look at the difference in cost between catastrophic illness plans or a very high deductible plan and the cost of a more traditional plan.

A huge chunk of your premium and therefore a huge chunk of the value is to pay for routine and less than catastrophic medical costs.

IIRC insurer's "fat profits" are now limited by ACA to some small percentage of premiums. They were previously not. Ironically this seems to be having the opposite of the intended effect and prices are only growing faster.

Because insurance companies are now incentivized to work with the hospitals to raise overall prices so that their percentage is worth more.

Who will double check a doctor’s orders? Voters clearly don’t want the government to do it. Do people have enough money to visit a second or third doctor to get opinions regarding decisions that costs tens of thousands of dollars?

WTF?! There’s literally no entity I want less involved in healthcare decisions than the private insurance industry. The conflict of interest is shocking... how we arrived at this place is bewildering.

Whether or not people want the government to do it implies nothing about whether the government would be good at doing it. And neither of those things imply anything about whether private insurers are good at checking doctor's orders.

I would say that for any reasonable definition of "good", whether in skill or virtue, private insurers have shown they are definitely not good actors in our health system. Our health system might just be better off without them.

As for your question, I for one would like _doctors_ to double-check doctors' orders. Not an actuary.

As for your question, I for one would like _doctors_ to double-check doctors' orders. Not an actuary.

To be fair, with private insurers, it's usually BOTH a doctor and an actuary reviewing care. Which isn't to imply I like insurance - I'd much prefer an NHS-style system where my taxes fund the majority of care and I can buy a private policy if I want a "Cadillac" plan.

Medicare is strongly supported by the seniors who receive it - surviving against decades of attempted rollbacks. I don’t know how one ends up thinking people are unhappy with government administered billing and payments in healthcare.

Strongly supported because they love it, or strongly supported because they have exactly zero other options?

They have Medicare Advantage private options. Anecdotally I think people vastly prefer the public Medicare over the more complex private versions.

The MA programs typically offer better benefits than 80/20 Medicare part B because they selectively market to groups of seniors in relatively good health but mostly because they get one hell of a taxpayer subsidy.

To the surprise of no one the promised efficiencies never materialized.

> The MA programs typically offer better benefits than 80/20 Medicare part B

...because the coverage of Medicare Part A + Part B is the legal minimum for Medicare Advantage, so they are necessarily on average greater coverage.

> strongly supported because they have exactly zero other options?

Like all Americans, they're free to buy private health insurance.

Seniors vote in large numbers. A politician with a good plan for giving seniors a better option would have a huge advantage. That nobody had used this tactic to attain high office suggests that better options are hard to come up with.

Can't they get health insurance through the Obamacare marketplace now?

No, eligibility for marketplace plans ends when Medicare eligibility starts.

Medicare Part D (which covers all Medicare patients) and Medicare Advantage are run by private insurers.

A person needs to be at least a nurse, veterinarian, or pharmacist to meaningfully double-check a physician's orders. Accountants and actuaries can provide helpful inputs, but they lack both the training and patient familiarity to make those decisions medically that they are currently effecting through the back door, by controlling the payments.

As a society, we trust the government to employ lawyers as circuit judges, appellate judges, and supreme court judges. It would be little difference for it to employ double-check nurses to review diagnoses and treatment plans against published standards and procedures, triple-check physicians to review contested or flagged cases, and quadruple-check physicians to ensure that the patients involved in difficult cases are receiving the best available standard of care, and to establish or modify standards for future cases that may be similar.

A lot of people don't even have enough money to visit a first doctor. And aside from that, families may have enough money to send one member to one doctor, and everyone else with perceived-to-be-lesser medical problems then has to forego treatment altogether. The diabetic gets improved insulin, while the asthmatic has to make do with too-frequent use of rescue inhalers, because the maintenance inhalers are too expensive, and the beesting-allergic person panics every time something flies nearby, because then there's no money left over for epinephrine autoinjectors.

The system does not currently consider whole-family finances as a medical consideration. It attempts to maximize profit on a per-patient basis, ignoring that at some point, that strategy may force a parent to choose which one of their children gets to survive. That's something that not only influences votes, but also creates activists.

The voters might not want the government to do it, specifically, but they are clearly not satisfied with the status quo.

The government already does this via Medicare/caid. They are considered the gold standard of reimbursement for insurance companies and hospitals. Medicare/caid's guidelines on what they will and will not pay for are very clear and they stand by their rulings.

Insurance companies, on the other hand, will break their own agreements left and right. One major health insurance company in the US has an internal policy of blanket denials of claims. Meaning, if you have them as an insurance provider, it's about as effective as having no insurance. Unfortunately I can't name names.

You mean Cigna? Not sure why you think they would hunt you down for name dropping. These policies aren't affected by you mentioning them on HN.

Why not?

I can't provide proof without potentially going to jail and/or pissing off a billion dollar company. The chances may be small, but the risks are really high.

But perhaps some fellow HNers have anecdotes of an insurance company how's denied every claim they've made.

Way too cautious, I think. Because the FBI is not going to ask HN for your IP address on behalf on an insurance company's complaint about somebody lying.

Providing proof surely would. But I will say this company is more concerned with shielding themselves than their clients.


>Who will double check a doctor’s orders?

last i checked, insurance companies do not do this to any extent that is beneficial to the patient. in fact, my experience with this is that the insurance companies get in the way of the doctor doing their job and the patient getting the care they need close to 100% of the time. they only check to make sure the doctor isn't trying to use medical resources which are "too" expensive or similar.

i would be fine with getting the government to do it -- provided that the insurance companies were forced out of business in the process. at this point, i don't see a future where american life expectancy improves with insurance companies still existing in any form.

>Who will double check a doctor’s orders?

medical licensing boards perhaps?

> Who will double check a doctor’s orders? Voters clearly don’t want the government to do it.

Which voters? Do you have any numbers to back up the 'clearly' statement?

This article is spot on. Unfortunately the Health Insurance industry is extremely powerful--the NRA have nothing on them. Real change in our health care system requires destroying these companies.

Insurance companies actively work to not-deliver the thing they are paid to deliver.

If your profit is limited to a max percentile by law, the only way you can possibly increase profits is to increase expenditures. Insurance companies have every incentive to increase costs so they can increase premiums, their only path to increased profits.

Salaries and shiny new buildings are expenses, and not constrained by profit caps.

The minimum loss ratio in the ACA sets a minimum for how much is paid out as claims. New buildings don't count toward meeting the requirement.

If we're getting to the point where we can openly talk about getting rid of the industry -- unlikely but not an impossibility -- perhaps the industry itself missed a few opportune -- not opportunistic -- steps.

My health insurance company is a non-profit. And I also supplant my coverage through a religious non-profit health expense coverage company. I'm not religious, but I answered their screening questions honestly and they accepted me.

Providers and cover-ers are playing a game where the costs are an insurance against non-payment in and of itself. We've all heard the stories of a $10K bill here which would cost $400 elsewhere. If insurance companies want to be super-profitable, and if costs are aligned to unreasonable pricing tenets that can't be justified long term, the system will collapse, and deservedly.

There are many ways to do capitalism, and some of them are bad for too many parties except the organization.

They are quite literally, the death panels republicans were screaming about during the effort to pass the ACA.

To be fair: This role actually has to exist in some form. By definition healthcare will cost resources and so providing all conceivable care will cost infinite resources. You don't have infinite resources, so there will be rationing, your choice is _how_ to ration, not whether.

In the UK for example we have NICE the National Institute for Clinical Excellence, which uses a methodology called Quality Adjusted Life Years (QALYs) to decide what a treatment is "worth". Resources are, as I said, finite, so we need to decide how many blind toddlers regaining their sight is worth one teenager who will otherwise die of brain cancer; how many hip replacements that let a nice little old lady walk to the shops without excruciating pain are worth a new treatment that prevents a newborn baby dying from exposure to the air?

Politicians have to periodically re-learn that meddling with this is not in their interests. The UK had a period recently for example in which politicians overrode NICE to create a cancer fund. Cancer is sad you see, so a pile of money was put aside to buy people cancer drugs. Nothing else, only cancer drugs, because cancer is sad. But, wait, we just got done arguing about how many blind toddlers is worth one dead teenager - well, the cancer fund said the answer is Infinity. If we can save one cancer-struck teenager, with that fund we should, no matter how many toddlers are blind instead because blind toddlers don't get access to that fund. And eventually the voting populace realised this was bullshit and turned on the cancer fund and it went away again.

Yes, that is entirely fair and I'm being somewhat flippant about it but there's a huge disconnect over private insurance and the fact that it's in their best interest to spend the least amount possible for maximum gain, whereas any government run system should have the interests of it's citizens in mind, and a healthy society is generally a more productive and happy society

Well no, "death panels" where the political term used to describe mandating doctors discuss end-of-life treatment for patients. Effectively, they would have a conversation with the patient and their family over what treatment will look like and when treatment should cease when the patient is terminal.

The bulk of the costs of care comes during the last few months of life. Medical staff are required to keep a person alive without considering their quality of life. So a person may not want to live out their life intubated, catheterized, and bedridden with several broken ribs from CPR, but they are forced to because no one asked the patient what they wanted.

When you ask people what they want, most would prefer to accept their time has come and not put themselves and their family through the trauma of being kept alive in such a manner. But this was tantamount to killing them, ergo, death panel.

That was not what they were talking about though. It was "THE GOVERNMENT IS GOING TO DECIDE IF YOU LIVE OR DIE BASED ON YOUR USEFULNESS" type of Death Panel.

But that's the origin of the concept. Clearly, the government advocating advanced directives is a slippery slope to straight up utility calculations (in the minds of these people).

Regulating the hole-digging and hole-filling industries out of existence is a politically difficult move considering how much money they’re shoveling into the back-hoe business

And anyway we'd prefer to have broken windows, because otherwise what work will employ our glaziers?

Many of the arguments in this article are great arguments against rent-seeking, but many would apply to a public options. For example: consolidating the market didn't create more efficiency because it reduced competition - yet somehow consolidating the market into one single payer and eliminating competition will create efficiency (even though there's no more competition). The author is concerned about private insurers trying to keep their lucrative position, but government organizations face similar incentives in trying to keep theirs.

I agree, though I think a universal, single payer system under government oversight without profit seeking drive would be better. Consolidation under the current system is identical to McDonalds and Burger King consolidating the fast food industry, they will still be driven to outperform the other to consumers and to investors/owners.

Instead, a single system under the Us government shifts negotiation of drug prices, care expenses, and more to one entity backed by the government, not just a set of insured customers, which has excessive power to negotiate. Like other nations that function this way, there is no skimming off the top for shareholders or profits and as the only other party at the table suppliers/hospitals can't play opponents against each other or take a kickback to give better pricing to the larger insurer or something.

Ideally, it consolidates and simplifies negotiating pricing or allows the government to step in and say, "No thanks, we'll pass a law or budget for that on our own unless you lower prices or cut a better deal.

Also, a government system could cut out administrative and bureaucratic paperwork like billing, coding, and more potentially removing a large % of overhead costs that exist currently, by default lowering expenses for healthcare similar to Canada.

the biggest issue I see is that about 1/6th of the US economy is built on health care/insurance/etc companies. shifting that away from corporations into private hands could cut tens of thousands of jobs (like billing and adjusters) while shifting that cash flow under the US government as well. There would be fallout as people would need social safety buffer for unemployment or retraining or education. I don't think it could happen without pairing up with reduced/free college and smart expansion of some needs based aid. That requires some sort of tax, maybe like Warren has suggested, to cover intermediate costs and friction.

The good news is it could save the average family over $5000 per year in insurance costs alone while bringing millions out of medical debt and providing a better standard of care and options for everyone. It's not libertarian to shift something under the government but if it makes economic and ethical sense to give such a monopoly to the feds (like with infrastructure, the military, and more) while improving choice for citizens (no longer tied to employer healthcare or entering debt to resolve acute or handle chronic medical issues) it could be a huge boon for choice and freedom. I'd be one of the first to start my own business if I didn't have to worry about my chronic health issues being fully covered and paid for by my employer plan.

I definitely see where you're coming from, in terms of this being a worthy goal. But I think there are a lot of challenges:

* While a government system could cut out administrative paperwork, that doesn't mean they always do. Many government agencies have a lot more paperwork than their private equivalents.

* Negotiations are tricky things. On the one hand, negotiating for a lower price is great, because it means you save money. On the other hand, it also means you are paying a lower price, and that can come with a different set of consequences. Yes, loss of jobs as you indicate, but also potentially less supply of health care. The fact that government is the negotiator doesn't mean that the effect of supply and demand gets suspended.

* I haven't read deeply in the area, but everything I have read indicates that this comes at the expense of wait times. I think, for example, I heard the stat recently that the average wait time for an orthopedist in Canada is 22 weeks.

* I get the moral argument that we should provide care, but I think the single payer raises other moral issues. If the goal is that if a doctor and patient agree on a particular treatment, it's evidently not the case that in socialist medicine that's enough for it to happen (see e.g., https://www.independent.co.uk/news/health/nhs-rations-operat... ).

IDK. I'm not a fan of insurance companies. They can go away for all I care. OTOH, it seems to me that a risk to Medicare-for-all is that the hospital industry and doctor's groups will lobby and capture the very Medicare payment agency that supposed to be saving all the money. Then we're right back to spending 17% of GDP on healthcare.

Even if that scenario happens (which I would argue wouldn't happen) then American citizens would STILL be far better off. They would retain that health care coverage during periods of unemployment or while working for employers who don't offer health insurance coverage, and they would never be kicked off their insurance plan due to pre-existing conditions.

i think those conditions also hold true under the ACA plans right now (unless Trump dismantled those conditions.)

anyway, a major selling point for Medicare-for-all I'm hearing is that overall it will result in a big savings. if that system-wide savings does not materialize, if we still have to pay the same amount we're paying now through higher taxes that amount to the same thing, then I would think Medicare-for-all didn't actually deliver on the promises.

the other thing I wonder about is: look at prescription drug prices now: the FDA has been captured by Big Pharma. drug prices are way higher than they need to be. Medicare-for-all needs some real safeguards, something really strong, to prevent that sort of price inflation. and since single payer would eliminate competition, it has to be some other mechanism.

I think it's safe to say that the savings would definitely arise if (if...) M4A is implemented in good faith. Decades of hard data from basically every other developed nation with universal health care demonstrates this. All it will take is the political willpower which is now starting to emerge on the federal level. One also needs to carefully consider what constitutes a "tax" when it comes to health care funding. Premium payments, co-pays, and deductibles all need to be factored in to an apples-to-apples comparison of individual taxpayers' contributions to any M4A system.

There's also a simple mechanism to fix drug pricing: repeal the laws passed in 2003 that ban most US federal agencies from negotiating for bulk medical product pricing, and pass new laws requiring it of all agencies. Currently, I believe that only the Department of Veterans Affairs is legally allowed to negotiate bulk drug pricing. They take full advantage of that, and enable active and retired service members to significantly cut their prescription costs. They're a perfect example of the power of bulk pricing. And again, revising the law in this way is a political-willpower problem, not an economic one.

> a political-willpower problem

right. and, though it may be simple, it's non-trivial. politics and moneyed interests will be the next battle to fight after M4A becomes law under president Warren and Democratic majorities in House and Senate.

and i will venture to guess that the very next day a strange and unexpected coalition of stakeholders will join forces to create exceptions to that new single payer system. the political alliances will probably be fascinating. we might even see a division so stark that one of the two political parties emerges as a shill for hospitals and doctors, while the other party becomes their enemy.

Quite likely. I think Americans in support of single-payer ought to look to Canada, not just as a model of how to run a fair and cost-effective single-payer system, but how to implement it against massive political opposition from incumbent groups that financially benefit from a for-profit system. Americans might not be familiar with the name Tommy Douglas, but to many in Canada he's considered a hero.

I would propose a 3 tier system:

- You pay the first thousand or so a year out of pocket with an HSA-like vehicle to make sure people aren't overconsuming.

- Government program pays 100% of everything over like $20k or so a year

- Optional private insurance fills in the gap between the $1K out of pocket and the $20K where the government starts picking up the tab, and would be very affordable since their liability is capped at both ends.

They actually have something roughly similar to this in Singapore.


Read up on Singapore's model. While it works well for them, I'd be interested to see if it could work here (like hospital quality/comfort, wait times, etc. based on tiers).

What is the alternative for a private person? I understand that large companies can deal directly with hospitals in their region, but if you are not a large company what can you do? Even in Europe we have health insurers, some are state owned (usually the worst), some are private. European model is considered better, how is that?

The alternative is universal single payer health care, paid for by taxation.

And who is dealing with the hospital fees? You need some organization to do this, this is how it works everywhere.

You are aware this currently already happens with Medicare and Medicaid correct?

No, I live in EU, not in US. This is why I ask questions, because I don't know the answers.

The problem is the Medicare / Medicaid rates are not currently enough to sustain the hospitals.

Last I checked, governments are still organizations?

I live in Europe, I dealt with the health care system. Governments here do not manage health care, they have organizations doing that. In my country (Romania), it is called National Health Insurer. Public institution, but it is an insurer - this is what I said. We also have private ones. Yes, Romania is part of the European Union and it has a system that exists in other countries in EU.

Europe is hardly homogenous, their are insurers in Netherlands and Switzerland...but other countries have more public based systems, or are at least mixed (Germany?). So...saying European model isn’t very clear to me.

Especially since Germany's "mixed" mode is multi-mixed: the largest private insurer is a non-profit coop. With all the complaints about for-profit insurance companies, I don't understand why that isn't a thing in the United States. By the people, for the people and all that.

A lot of health insurance providers are technically non profit, just like a lot of hospitals are. Blue shield is non profit in many states (eg California) as is Kaiser. Chances are, your health insurance provider is a non profit, but still has high “administrative overhead” so it doesn’t mean much to you and me.

These non-profits aren't controlled by their members, I take it? Thanks for the info, it's hard to understand the US health insurance system and get hard facts on differences and similarities from afar - mostly the extreme positions & talking points tend to reach everywhere.

I can't remember it but there was a group of people in Oregon trying to start their own health insurance company. They figured out how to do it like a billion times cheaper than the big companies. Eventually they got blasted by a government agency that didn't allow them to operate at those rates because it would be untenable. Unfortunately I think the government doesn't realize it but they have been bending over backwards for the insurance companies to regulate that way.

If you take out the rent seeking apparently healthcare and health insurance may actually be cheap. We just have a ton of laws preventing us from having that. If anyone heard about this group on NPR/OPB let me know I can't seem to find them.

Not sure if this is what you’re thinking of, but https://en.m.wikipedia.org/wiki/Health_care_sharing_ministry is similar. They were grandfathered under Obamacare and are apparently legal in most states.

Of course the thing is the reason the costs are cheaper than insurance is also because they don’t cover as much. Some insurance plans are incredibly expensive just because they have to spend multi-millions on a single person’s care.

Insurance plans are incredibly expensive because not only are you paying for legitimate health-care expenses, you are also paying for:

* hospital administrators to interact with insurers * insurers employees/administration * ICD9/ICD10 coding overhead * and add 10% for the maximum legal profit health insurers are allowed to make

I have to think that removal of those four elements from health insurance costs would result in significantly lower health care cost outlay in the US.

Routine care can be cheap. We really only need coverage for catastrophic care - broken bones, herniated disc, acute injuries, etc., etc., and routine care benefits for those so impoverished as to not be able to afford it. IMO, of course.

"Routine care can be cheap. We really only need coverage for catastrophic care - broken bones, herniated disc, acute injuries, etc., etc., and routine care benefits for those so impoverished as to not be able to afford it. IMO, of course."

Where do chronic illnesses, hearing aids, HIV, diabetes, dialysis, mental health intevention and outpatient therapy, etc. fall under that paradigm?

No it definitely was not a sharing ministry. Those are not real insurance companies. This was an effort to start a real insurance company with rates that reflected a careful study of how much money is really needed to protect its population.

One of the reasons they're so cheap is that they have no obligation to cover claims. Claim coverage is 100% up to their discretion. They aren't really insurance.

Isn't Amazon teaming up with Berkshire Hathaway and JP Morgan to do something similar? I'm sure they have enough lobbying firepower to survive external threats.

I read that the announcement caused other health care stocks shed billions in value. I hope they succeed and actually provide something useful. It makes sense that other companies wouldn't want their paychecks being sapped away by health insurance.

They are but it is first and foremost to cut their own expenses for healthcare. If they can figure it out, they could eventually turn it into a business.

However, part of the cost in today's healthcare is not about the misaligned incentives it is about our need for convenience. We work closely with a hospital group that does over $1B in annual revenue. They built a bunch of UrgentCare facilities to try to lower costs and run a smaller ED unit. What they found is that the UC usage is high but the ED has barely decreased at all. People complain about cost and go the UC when their kid clearly has a cold and has had it for all of 4 hours. It costs a lot of money to build and staff these UCs. That is part of what makes healthcare so expensive. We want our health to be as convenient as Netflix. We want it all on-demand and instant satisfaction. It doesn't work that way, sometimes a virus just needs to run its course and your kid just needs rest. But we pay lots of money looking for magic fix anyway.

As you might know, the whole "death panel" debate came about because a huge part of the cost reduction in Obamacare was supposed to come from rational end of life planning, where nurses would prompt people to describe what they actually want in case of a terminal illness in advance. Right now, we just spend fortunes trying to prolong people's suffering.

However, it got political and the provision died. Politics are stupid.

The quickest fix is to just put in next year's Medicare contract that no provider is allowed to charge any payer more than they charge Medicare. Much of what insurers do to negotiate in-network and out-network pricing with the various hospitals, pharma companies, and doctors becomes irrelevant, and they just end up varying in the reimbursement schedules. Get all of the supposed cost savings of single payer, without a single payer.

If things really do get cheaper, it gets a lot easier to figure out universal coverage. If they don't get cheaper, we learned a lot without having to implement single payer. https://www.manhattan-institute.org/medicare-for-all-marylan...

One thing I've been curious about is whether insurance companies are useful as negotiators with healthcare providers.

At the end of the day, they are for profit enterprises. The cynic will naturally state that they make money only by denying claims while taking people's money. But were I in charge of such an enterprise, only doing that would leave a lot of money on the table since there are still lots of claims that an insurer is still paying out and there is a strong economic incentive for insurers to bargain aggressively with healthcare providers to get access to the pool of healthcare customers they represent.

With this in mind, does anyone familiar with the industry know the impact insurers have on bringing down healthcare costs by putting the squeeze on healthcare providers?

For all the slams on insurance companies - folks should check out what your local hospital or physician group charges if you don't have insurance.

I know everyone loves these medical groups - but I'm not impressed with their billing.

I tried that once, I had a procedure that insurance wouldn't cover if done at the hospital, but the hospital was the only place with the equipment to do it. I had experience with paying cash for procedures being dramatically less expensive, like half, so I called the hospital to find out the cash price.

"So you want the price you would pay if you didn't have insurance and directly paid for it?" "Yes." "But you do have insurance, so you have to contact your insurance company to find out what their contracted rate for that procedure is." We went back and forth a few times, but she absolutely refused to give me a number for how much someone without insurance would pay for that procedure.

Entities that dispute claims can make the system more efficient. Insurance can serve a useful role.

What went wrong in the American healthcare system is collusion and price fixing.

Mergers and acquisitions are also a problem, when companies grow large they have too much power and do much wrong. You cannot have competition if you allow mammoths to rule the market.

How do you butcher the mammoth? Lacking effective antitrust laws and a useful FTC there's positive feedback loop of medical providers merging and consolidating for the enhanced bargaining position vis-a-vis the merged and consolidated insurance industry.

The AT&T mammoth was butchered, it shows it can be done. In this market anything higher than 5% should be forced to split.

It was, back when we had a pre-Bork standard for antitrust violations, and a more effective FTC. Not much more but more than totally ineffective. (Incidentally I like the cut of your 5% jib - 20 players may not be enough for some markets)

I tend to agree that health insurance isn't really insurance - it's more like a costly, inefficient payment intermediary that collects money from the young and/or healthy to pay for care for the old and/or sick.

Which seems like an OK idea in principle, but it isn't working very well for patients.

So what happens to our economy when 100s of thousands to people are out of a work because the government shit down the insurance company they worked for? I not saying things can't be better but a instant (or even a short roll out time) would kill our economy. Why doesn't anyone mention that.

Sure we could ban child labor, but then millions of children would be out of a job.

I'm only half joking – the problem with this argument is that it can be used to justify almost any injustice or inefficiency if there is a cost to fixing it.

You are right to flag the issue, and most serious proposals to introduce single payer healthcare in the United States also lay out a transition plan for health care workers to move from the private to public sector.

I've thought about this, and a large component of the importance of continued employment is of course money, but more important is the insurance provided. If a public option came to be, the "safety" of those left jobless would be intact while they searched for another position. Ask any employer, there is a massive talent shortage. Anyone competent should be able to find a job.

Also, health insurance companies could pivot to "fast-lane" service offered through independent providers as an actual benefit, no need to just die.

The insurance industry's crumbling would not happen immediately, and there would be years of legal hearings at the state and federal level. Humana/BCBS would not go down quietly due to legislation. Employees would have plenty of time to slowly leave, and these large employers should have the foresight to not replace 1:1 as they're under the legeslative gun.

Obviously losing "job slots" is a big deal, and I'm sure you'll see people on both sides of the aisle cry foul as this anti-insurance sentiment gains traction, but it's not as big of a crisis as the jobs in jeopardy from global warming and automation. But we can keep an unnecessary institution afloat much easier than we can change global environmental and economic policy, so I expect insurance jobs will be safe for a good long while.

That’s barely a blip in the US workforce and I think they could find other administrative jobs given enough time. Nobody objects to other jobs becoming technologically obsolete (except coal mining for some reason) so not sure what the issue is

Most of the people on the hospital side of this are medical professionals with active licenses and degrees, so finding another hospital job would not be an issue for them. I'm not sure about the insurance side, but I think it's the same situation: they employ medical professionals to review claims to dispute the care given.

The non-medical personnel should also not have any issues finding new jobs. Executives, accountants, managers, and IT people have cross-industry skillsets.

Isn't this like saying we shouldn't shut down coal plants because the coal plant workers would be out of a job?

there's an immediate recession.

yep, it's true. GDP will fall, maybe for a few quarters.

but, i liken it to cleaning out an infection. most job growth in health care is admin., not people who actually see patients. so there's rotten scaffolding propping up the system that's basically completely parasitic (i'm not blaming said individuals here, just stating facts). required reading:


however - and this is key - the rest of the country are better off in the long run, because they can do things like:

- avoid silent taxes like figuring out which doctor/procedure is covered, arguing with insurance companies after the fact, stress/anxiety/putting off care due to above, bankruptcy as a result of whims of insurance companies

- start a business bc they don't have to stay in a horrible job for private health insurance coverage

- invest in themselves (education, etc.) bc they don't have to stay in a horrible job for private health insurance coverage

- start to get healthier and get preventative because they can actually afford to go see a doctor without a high probability of bankruptcy (this occasionally happens even with """good insurance""")

- business can now eliminate this axis as general benefit (does your health insurance accept my dentist?)

so yeah, it's gotta get taken care of. either we do it now (painful) or we do it later (immensely more painful).

They work during the transition period and get jobs working for the single payer type system which will need to be expanded.

Those who don't, can find another job and(!) still have insurance.

Economies restructure all the time. A manufacturing plant goes abroad.. what do we offer the former employees? Job retraining. They can specialize in helping out medicare for all or otherwise find new jobs.

> “I don’t think in ideological terms. I never have,” Obama said, continuing on the healthcare theme. “Everybody who supports single-payer healthcare says, ‘Look at all this money we would be saving from insurance and paperwork.’ That represents 1 million, 2 million, 3 million jobs of people who are working at Blue Cross Blue Shield or Kaiser or other places. What are we doing with them? Where are we employing them?”

— Then-Senator Obama, 2006

So they do talk about it, and it's one of several drag-on-the-economy stealth (useless—one of the categories of the "bullshit" classification, in Graeber's taxonomy) jobs programs we have, because we can't have better-run more-beneficial actual jobs programs since those would be socialist.

[EDIT] source of the quote: https://www.thenation.com/article/mr-obama-goes-washington/

Some of them could work for the government doing the same thing they do now. There's plenty of Medicare fraud that needs to be prevented. If Medicare for all is enacted, fraudsters will be coming out of the woodwork.

Because it isn't true.

The money that used to be paid to them doesn't magically disappear.

I am often disappointed in US healthcare discussions for similar reasons on gun violence discussions. It can work a lot better, we have many examples of this around the world that can scale and be even cheaper/better like the Canadian system or German system.

But for some reason, we want to do it our own way with profit seeking companies who can game the system or lobby the government for their benefit, not citizens. Maybe that's BC/BS or the NRA, maybe it's libertarians or conservatives that want smaller government (that time and time again fails like in Kansas or with the federal deficit hawks and their lovely tax cut).

We have solutions in front of us. We just need to shift momentum and get there instead of spinning our wheels and debating doing anything at all.

seems obvious to me

You should probably also agree that hospital conglomerates are also useless, since normally they force the market for an area to charge more, not less for products.


How are these anti-tech, anti-innovation comments from this account withstanding scrutiny? This is an account that appears driven by hate (given the last 3 comments; which is as far as I could make it). I am sorry for anyone experiencing pain in their lives, but attributing malice to strangers is perverse.

HN has gotten some weird sickness somewhat recently, and I wish someone (i.e. dang) could explain it.

The world has gotten sicker. HN reflects it, but we survive. I think you can probably block that user's comments forever if you want. But it has a decent amount of karma. Have you attempted to walk in his moccasins?

This article is interesting in the fact that it highlights several real issues, but completely fails to understand the true root causes.

"they pay more for hospitals and doctors so they can just raise premiums..."

What kind of crap is that? They can raise premiums without paying more to hospitals. In fact, that would raise their "fat cat" salaries even more.


The ACA requires insurance companies to spend 80% of premiums on medical care. (Sometimes higher and state law can affect this too).

This means that letting prices drift upwards is one of the only ways an insurance company can improve profits, so at least they’re taking a percentage of a bigger pie.

They could also go the other direction and focus on reducing costs and going for more market share. But this is very difficult in practice, consolidation in the hospital industry has given many hospitals immense leverage. You can also save by identifying and rejecting unneeded care-but this is extraordinarily difficult to do and makes the customer extremely unhappy even when you’re correct (more like dead or bankrupt if you’re incorrect) as the doctor is telling them otherwise.

It's about percentages.

The law says they can keep a _percentage_ of the premium. If they charge you $1000 maybe they're allowed to keep $100 of that as profit. If they charge $900 they only get $90. So, provide a "better" service and charge $1500 then they get to keep $150.

The law used to let them keep whatever they could make, so you'd be right, they could buy $400 of healthcare, charge $1000 for and they've made $600 profit. But the percentage rules mean they'd be told to give you $560 back, they'd only be able to keep $40 in profit. So hence as the article says they choose to spend more so they make more money.

It's worse than that. The ACA limits the percentage of their premium that can be used for all non-medical costs - including the insurers' profits, yes, but also including administrative costs like paying people to investigate potentially fraudulent claims. If they put resources into (say) catching that one guy who was fradulently billing them for workout advice at inflated rates[1], not only does it shrink the pool of money they're allowed to keep as profit, the cost of the investigation comes out of that pool and eats directly into their profits. The Affordable Care Act effectively penalizes insurers for rooting out false or inflated bills.

[1] https://www.propublica.org/article/health-insurers-make-it-e...

Amazing how good people are at finding loopholes in government regulations.

Not a loophole,it was specifically written into the ACA to ensure insurance companies spend money on benefits rather than just pocketing everything. Of course, it also has the effect of making the market hard to enter. See, e.g., Oscar

I cannot find that quote in the article. I'm also struggling to follow your post.

> They can raise premiums without paying more to hospitals.

No, they cannot. The ACA sets out an 80/20 split system. 80% of the premium must go towards medical services, leaving 20% of whatever the premium is for "admin" (e.g. salaries).

This has had the unintended consequences of insurance companies trying to raise the cost of medical services in order to increase their slice of the pie.

You left out the rest of the sentence:

> "....and the more money flows to their bottom lines."

The reason is because their profits come as a percentage of what is paid, through the enforced Medical Loss Ratio[1]. There is a clear way to increase profits...

[1]: https://www.healthcare.gov/glossary/medical-loss-ratio-mlr/

Not so, since the ACA requires health insurers in the individual and small group market to spending 80 percent of their premiums on medical costs. This creates a perverse incentive wherein the only way to increase profits is to also increase spending.

They can raise premiums without paying more to hospitals.

No, they can't. Insurance companies are required to payout >80% of premiums on health care costs.[1]

1 - https://www.healthcare.gov/health-care-law-protections/rate-...

Right, so they will encourage providers to raise prices.

Bingo, and that is what’s happening. Insurance companies and providers both benefit from higher prices.

That's what they call a win-win!

BTW a win-win is often a 3 player game and they don't mention how the 3rd one does...

It's also a poor understanding of the unhealthy, co-dependent, and borderline malicious relationship between hospitals and insurance companies (there are no fair players).

Hospitals will attempt to charge an exorbitant fee for any service (usually 3x or more of what they agree with an insurance company to charge). They do this in an attempt to sucker the uninsured out of money.

Then, for us lucky enough to have insurance, the insurance company will reject the charge, saying, "nope, we agreed this would cost $x". The hospital always lowers to the agreed price. You can see all this on your EoB - a hospital once tried to charge me $4500 for a test and the EoB showed the insurance company knocking it down to the agreed $800.

If all we did was follow emotional, binary reasoning and rid ourselves of the insurance companies, providers would just rip us all off. You have to fix the whole rotten ecosystem.

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