YC Research: Universal Healthcare

This, times 1,000 !!

Imagine you go in for an oil change. You ask how much it costs, and find out it's $20. Great. You get the oil change. One month later you get a bill for "environmental disposal" for $35. The next month you get another bill for "Safety specialist" for $15.

This is how healthcare works in the US. If retail worked like this, we'd be in a worldwide depression in about 6 months. Lunacy.

> In the united states we can't successfully implement negotiation on drug prices for MediCare. They literally can't negotiate with their suppliers. By law.

On the flip side, Medicare sets reimbursement rates for services essentially by fiat[0], which can be below the marginal costs of providing service. Most providers cannot legally refuse to treat Medicare patients, so they are forced to accept the rates that Medicare sets (they have no ability to properly negotiate). Medicaid is a whole different system, but in this aspect, it also works the same way.

This turns into a system in which privately insured patients subsidize Medicare patients through their premiums[1] (separately from their tax money, which also goes towards Medicare)[2]. Medicare has no incentive to change this, because it allows them to increase their (effective) operating budget without requiring Congressional approval.

The reason Medicare drug price negotiation was blocked is that people (both pharmaceutical companies and policymakers) were afraid that it would turn out just like Medicare's "negotiated" rates for inpatient and outpatient services.

[0] And private insurers are legally prohibited from reimbursing less than Medicare does

[1] And uninsured patients receive the same (inflated) bills that private insurers receive. (Whether or not they actually pay their bills is a separate matter).

[2] If you've ever wondered why the sticker prices for inpatient services seem so high, this is the underlying reason. Privately insured patients and uninsured patients aren't just paying for their own care (and for the care of others in the same risk pool). They also have to cover the amount of money that providers lose on Medicare and Medicaid patients.

That's a vast over simplification of the issue and ignores issues around implementation.

First off, Medicare Part D plans are run by private insurers and they certainly do negotiate on price. In fact, they tend to get better prices than commercial plans. Those savings are used to compete for Medicare dollars to cover those patients (i.e. savings are passed on to Medicare).

Second, physician administered drugs are paid for at a rate that is the average of what private payers pay. So no negotiation, rather a piggybacking on discounts to private insurers.

Finally, if you roll in the 340B discount (23% minimum), Medicare is getting a pretty good deal on drugs.

I would argue that unless Medicare threatens to NOT cover some drugs, it won't reduce costs one bit. Currently there are a number of protected classes where Medicare HAS to cover those drugs. That needs to be fixed first.

If you don't believe me, look at the CBO estimate of savings if Medicare is allowed to negotiate. Their findings were "minimal savings".[1]

CBO estimates that enacting S. 3 would have a negligible effect on direct spending and would result in spending from appropriated funds of $2 million in 2008 and less than $500,000 annually in subsequent years. Enacting S. 3 would have no effect on revenues.

[1]https://www.cbo.gov/sites/default/files/110th-congress-2007-...

I love this idea, and this seems like the right way to do it. Operational inefficiencies are a huge burden and it would be great to find a solution for it. I really like the idea of starting this in a small community and scaling up.

Exactly! Hospitals don't care about inefficiencies because insurance pays for it. Patients don't care either again because insurance pays for it. Insurance can't negotiate with hospitals as patients don't ever want to lose their doctors and revolt if insurance even brings up dropping a hospital for charging exorbitant rates. Add to it an insane 4 years in college + 4 years med school curriculum that does not incentivize more people to even attempt getting into med school.

It is however possible to consider at least some technology solutions - build a more transparent system. Let patients do some cost comparison and incentivize them to find cheaper (but good options). People do care about their health and they can and should be trusted to make these decisions.

Start more clinics like the One medical group (just an example) to make preventative care easier and accessible.