It seems to me a reasonable fix would be to legislate hospitals have to set open and fixed pricing for procedures/services for all. So no group/insurance company discounts. Make them compete openly and without discrimination. Then people/business can select fairly for non-emergency type treatments their hospital on a level playing field.
That said, I'm fortunate to have lived in several countries that have great universal healthcare. I thoroughly believe achieving this should be one of 3 key goals for any country.
The thing that is driving this problem is that medicare pays less than it costs for the service.
Hospitals have to make the money up somehow, so they bill everyone else inflated prices. The insurance companies know the prices are inflated, so try to negotiate them down.
Hospitals agree to be negotiated down since at least they make something. And of course some insurance companies get a better deal (for various reasons) than others.
What ends up happening is that everyone pays a different price, and standardizing the price would only hurt the hospital.
This is completely unfixable so long as medicare pays so little.
Some people want to fix this with a single payer system, not realizing that doing so would only make things worse. Either medical costs will go up for the government, or hospitals will go broke. Neither outcome is acceptable to people.
And that is how we ended up in the pathetic state we are in today.
That argumet doesnt make sense because hospitals are not forced to take Medicare. It is a profitable business decision to take Medicare otherwise they wouldn't do it.
> Some people want to fix this with a single payer system, not realizing that doing so would only make things worse. Either medical costs will go up for the government, or hospitals will go broke.
I don't buy this. USA has huge per-person medical costs beyond any other country. There is absolutely room for efficiency by society/government that private enterprise isn't delivering. Look at some of these comparisons:
http://www.pbs.org/newshour/rundown/health-costs-how-the-us-...
Comparing the US with other countries is useless. America subsidizes medical care for the entire world. (Specifically research, by paying higher prices for new treatments.)
There might be some efficiency to achieve in the US by single payer, maybe, but cost for the government will still go up. The only way they could do it is by raising taxes. People would save some money by not having to pay insurance (i.e. employers could increases wages by the amount send to insurance). Some people will win, some will lose.
But it's never going to happen, raising taxes will never happy, increasing spending will never happen, and Americans prefer to handle that kind of thing themself.
Also, reducing medical expenses means firing people, which is another no-no.
> Comparing the US with other countries is useless. America subsidizes medical care for the entire world. (Specifically research, by paying higher prices for new treatments.)
I've heard this claim several times, but have never seen any of the data to support it.
Specifically,
a. That the treatments that are thus found are on average effective. Many FDA approved treatments are shown, usually in retrospect (as opposed to the loaded pre-approval trials), to be only marginally better than existing treatments.
b. That the cost for medical research is prohibitive. The cost breakdown in the US for pharma marketing is about twice that of pharma research, whereas in most single payer countries it is much lower than that of research. In a single payer setting, you could probably cut medical care industries' income by 2 without harming research funds.
c. That the research is in fact subsidized by the cost of treatments. Many new treatments have their origin in publicly funded research. It is pharma that pays the $400M/new drug to get it to market (and they like it that way - almost insurmountable barrier to entry to newcomers), which IS of course paid for by the expensive treatments - but most people wouldn't call this part research.
Furthermore, the US has an entire and very lucrative section of the economy (medical billing on one hand, health insurance on the other) which is essentially nonexistent in single payer countries; This has nothing to do with new treatments, and is just a black hole providing no benefit to society compared to single payer systems.
> But it's never going to happen, raising taxes will never happy, increasing spending will never happen, and Americans prefer to handle that kind of thing themself.
It happens all the time. There is a part of every W-2 employyee's salary, affectionately known as "payroll tax, employer part", which is a tax paid directly by the employer, and which is - if I am not mistaken - prohibited from being disclosed on the pay stub by law. Most americans are completely unaware that thay are paying this tax, and -- make no mistake, it is the employee paying this tax, not the employer.
> Also, reducing medical expenses means firing people, which is another no-no.
Yeah, sure. <s>And that's why no industry ever fires anyone</s>. Recent drug decriminalization and legalization will eventually cause firing DEA agents, corrections officers and even police officers. And in increasing part of the population - the majority in a few states already - are all for it.
There is a regulation like this in Germany. It leads to a behaviour where hospitals try to have as many well-paid treatments as possible. 'Surgery 1' does not pay well by list so they add 'Unnecessary Treatment 2'.
My point: such a list would have failures and they would be exploited.
This would have nothing to do with guaranteed profits. If people don't like the prices no-one will go to the hospital and profits wont exist. They simply have to price transparently at amounts that are available for all people without discrimination to someones healthcare company or lack of.
If you refer to the original comment you will see this refers to non-emergency treatments. In this people have choice and can largely travel to an alternate locations making this solution feasible for the majority. For emergency treatment, a different model would be needed to reduce gouging issues, likely more direct market intervention for areas the discussed wouldn't benefit. I'll leave that for another day.
>It seems to me a reasonable fix would be to legislate hospitals have to set open and fixed pricing for procedures/services for all. So no group/insurance company discounts. Make them compete openly and without discrimination.
Legislation created the current environment, I do not believe more legislation will fix it.
I don't know why this is surprising, since it's purely an outgrowth government policies. The state mandates hospitals provide certain kinds of care without providing funds under EMTALA. That money has to come from somewhere, so it comes from the patients who can pay.
Since insurance companies and the government can get negotiated rates (or just dictate rates, in the case of the government) the only people left to squeeze are people without insurance but with enough money to pay.
What this map is really telling you is which hospitals have large concentrations of patients who can't pay for care. Before they shut down King-Drew Medical Center in LA six out of seven patients couldn't pay their bill, so if you showed up at the ER without insurance they were going to try to charge you enough to cover the six people in front of you.
What makes this so much worse is that no doctor or hospital will tell you upfront what something will cost.
So the uninsured go into one of these hospitals... can't compare prices, or even find out what something will cost before they agree to it... and later get hit with a ridiculously marked up bill.
Biggest problem is that in the US we keep trying to apply capitalism to something that does not really fit the supply/demand model. EVERYONE will get sick or injured, and at that point it is not a a luxury. When you get a heart attack, it is not a choice weather you go to get medical attention. Therefore you cannot run it as a free and open capital market.
Besides how is it that we are the wealthiest country the world has ever known and yet we fail to provide the basics (health, education, and care for the elderly) to our citizenry?
The root issue is the US will be forced to re-evaluate its blind allegiance to capitalism as the end all be all system to regulate costs and provide services. We need a more balanced approach.
Whenever I see examples of reported price gouging in sensitive industries like Healthcare, I try & pull up the financials of the companies. Two of the biggest owners of these hospitals are Hospital Corp. of America (Ticker= HCA) & Community Health Systems (Ticker=CHY) (1)
This is compared to Google (11.9%), P&G (6.5%) & Walmart (7.9%)
For those not familiar with ROA, it is taken as Net Income/ Total Assets. This should give you a rough idea on the return one gets on the assets / capital deployed. The higher the ROA, the better the earning power.
So, in the case of HCA/CYH, if they are price gouging so much, why aren't they generating far superior returns?
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Updated: Some people in the comments are suggesting that they are only price gouging the un-insured population. But Return on Assets (ROA) metrics are across the population base. So:
if we reduce the price gouging for the un-insured through regulation, then one of two things
a) the return on assets (ROA) go down to uneconomical levels & hospitals go bankrupt (2) - See examples
b) Costs for insured population (e.g. Medicare etc...) goes up to meet return on capital requirements.
What is the tradeoff one needs to make?
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(1)Officials at Community Health Systems of Franklin, Tenn., which operates 25 of the hospitals, and Hospital Corp. of America, based in Nashville, which operates 14, said hospital charges rarely reflect what consumers actually pay.
http://www.washingtonpost.com/national/health-science/why-so...
Because these prices only apply to the 13% of people that are uninsured. The remainder have an insurance company that negotiates with the hospital on their behalf.
So- if we reduce the price gouging for the un-insured through regulation, then one of two things 1) the return on assets (ROA) go down to uneconomical levels & hospitals go bankrupt (1) - See examples 2) Costs for insured population (e.g. Medicare etc...) goes up to meet return on capital requirements.
This is the same as Google - a company in an monopolistic position for much of their earnings. While I'm not sure I agree ROA is the best way to measure price gouging, using your method and the new statistics, does this change your view?
But what stops the management of these hospitals from paying themselves extremely well (check out who are the top paid people in a random hospital) or spending money on other perks?
Obviously the answer is that the uninsured are getting gouged because they have no leverage. When the negotiation is between giant corps the playing feel is more competitive.
That said, I'm fortunate to have lived in several countries that have great universal healthcare. I thoroughly believe achieving this should be one of 3 key goals for any country.