Earlier quoted context omitted.
Why would you care, when your copay is $30 flat?
Because my premiums could be lower?
Why would they be? They are both employer sponsored and would still rise to drive profits for the insurance companies.
The US spends more on healthcare for no gain says new report from Johns Hopkins
301–310 of 537 posts
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#302Earlier quoted context omitted.
> Paying a few billion dollars to a big pharma company is not going to make them invest more in research. They will instead pay the money out as dividends. This is a misconception. No investor wants their money back. Investors want a promise of MORE money back in the future. If investors wanted their money back immediately, they wouldn't have bought stock in the first place! The vast majority of investors prefer (ex:…
You don't have to pay dividends, you can just do a stock repurchase. Regarding investor preferences, they only want the money spent if it gives them a positive NPV. Pharma companies are already paying dividends, which means they have funds in excess of their NPV>0 projects, which is why they return them to shareholders. Hell, half of the shareholder activism literature and the policy payout literature is about CEOs o…
> Regarding investor preferences, they only want the money spent if it gives them a positive NPV.
Precisely. And cash rarely gives the best NPV. You put money into companies with the expectation that they make MORE money in the future.
> Pharma companies are already paying dividends, which means they have funds in excess of their NPV>0 projects, which is why they return them to shareholders.
And there you have it. It means that Pharma Companies are making more profits than they know how to reasonably invest into themselves. Which is PRECISELY why people get annoyed at them, especially when they have huge marketing budgets and $800 Epipens.
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There is a Christian Parable about the man with 1 Talent (where Talents were a unit of Gold in the time of Jesus). The man buried his gold, because he was too worried that he'd lose the gold.
The man's peers however invested the money and grew their Talents. The man with 10 Talents had 20 Talents at the end. The Man who started with 5 grew to 10.
The man who buried the gold ended with just 1 Talent (the only one he started with), and was therefore punished. The religious message here is not to hoard your Talents (ie: Gold), but to invest them and grow yourself, and your masters.
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I guess not everyone is a Christian. But if Pharma companies can't figure out where to invest the money, then perhaps they could at least return the money to their customers by lowering the price of their drugs.
Returning the money that they started with is... not growth. Companies are supposed to grow (through new R&D, improvements, etc. etc.).
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#303The book The Healing of America by T.R. Reid, 2010 was a phenomenal look at this subject and the conclusion was this: we are the only developed nation whose government allows for-profit health insurance companies to exist with ZERO regulation to cap healthcare prices. Because of this, we spend 20% of every dollar on "administrative" costs compared to 3%-7% in the European and Asian countries. The goal for American he…
I read that book too, and agree it's phenomenal. It's not just about capping insurance profits. The countries doing the best also have price controls on the healthcare providers. Doctors make a lot less money. On the other hand they generally don't have to pay for medical school. France, Germany, and Japan all have similar systems, according to the book. They have private nonprofit insurance, some kind of mandate to…
Germany and the UK have very similar health outcomes [1] but the UK spends significantly less - 9.7% vs 11% GDP [2]. The UK probably should spend some more on healthcare but it's an open question whether that would be more effective at improving health outcomes vs spending the money on reducing poverty.
[1] https://www.commonwealthfund.org/chart/2017/mortality-amenab... (2014 figures)
[2] https://data.oecd.org/healthres/health-spending.htm (2014 figures)
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#304Earlier quoted context omitted.
This is common PhRMA talking point that needs perspective. Large pharmaceutical companies spend twice the their readers h budget on marketing, a good percentage of now is that is spent on patient oriented marketing. (e.g. “Talk your doctor about Xyzzy!”) If there would be a loss of revenue, any reduction in R & D costs lies purely with c-suite’s priorities. https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p…
They spend on marketing because they are trying to sell as much as possible of the drug during the patented years. If people do not realize there's a superior drug out there, they will never part with the money for the improved treatment
Well.. yes. My point was that a person makes the decision to what to cut. Saying that eeasearch will be cut, is the same as saying marketing über alles. Punting and trying rationalize such a decision as saying “must maximize shareholder profits”, is simply myopic post hoc rationalization.
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#305Earlier quoted context omitted.
> Does this make us immoral for "freeloading", because we prefer putting our limited money into cost effective treatments? It doesn't make you immoral, but it is important in understanding the tradeoffs of suggesting that the US switch to an NHS-style system. > Also, is it not worth looking at why pharma R&D costs so much? The pharma industry seems to run at a very healthy profit margin compared to most other industr…
I try investing a lot in smaller pharma companies... and they are hammered by the big ones. Not on innovation, but on marketing. I disagree about NHS type system, that reduces access. A healthy mix is required, though. A lot of upfront costs are also footed by users and government/non-government funds. And a lot more of those costs are due to government regulation and essential insurance at development. Pharmaceutics…
How does an NHS type system reduce access? Everyone is covered and can go to the doctor without worrying about paying thousands in copays.
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#306Earlier quoted context omitted.
It’s more complicated, the insurers essentially tell providers how to practice (ie prescribe this generic not the name brand, don’t prescribe 30 day Rx prescribe 90 day and don’t see/treat them in the meantime, etc...) and if the providers don’t listen the provider gets dropped from the network and either the patients are forced to new providers who the insurers control behind the scenes, or more and more the patient…
Ok, but Americans overconsume health care and are prescribed more procedures than other countries --- that's a dominant factor in our health care costs, unlike prescription drugs and admin costs. How do insurers, which have a direct financial incentive not to fund care, own that problem?
As I said below:
The upward pressure on prices is also from the insurers. Insurers have an "80/20 rule" from Obamacare that only 20% of their revenue can be spent on non-medical expenses (ie. profit, insurance administrative overhead, etc.). They pretty quickly hit the caps, and now only by increasing medical expenditures (the other 80%) can the pie slice that contains their profit grow year after year.
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#307Earlier quoted context omitted.
Why would you cap healthcare prices for insurers, they don’t set prices. You mean providers? Half of US healthcare spending is public payers - Medicare and Medicaid. They do set prices for providers and still spend far more than other countries. And if you’ve been involved in US healthcare you’d realize it’s drowning in regulations already. It’s not a free market by a stretch.
You cap healthcare prices for insurers because they are heavily influencing the provider prices. Both institutions work in tandem[0] with one another to establish pricing guidelines. That's why your hospital-purchased ibuprofen is $10 per pill instead of $6 per bottle. The insurer and hospital "work out" a price that let's them achieve the profit needed to pay their administrative costs, plus margin. In the USA(this…
It is actually the other way around - Govt regulated costs (medicare and medicaid) highly influence insurer compensation to private practices and hospitals.
Medical Providers (doctors/hospitals) negotiate based on multiple of Medicare as payment.
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#308The book The Healing of America by T.R. Reid, 2010 was a phenomenal look at this subject and the conclusion was this: we are the only developed nation whose government allows for-profit health insurance companies to exist with ZERO regulation to cap healthcare prices. Because of this, we spend 20% of every dollar on "administrative" costs compared to 3%-7% in the European and Asian countries. The goal for American he…
From what I understand, the healthcare market isn't free at all. LOTS of regulation is what has caused this mess I believe.
healthcare costs in the US were at one time far lower.
Before the rise of medicare and medicaid and EMTALA (hospitals must treat anyone regardless of their ability to pay)
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#309Why do people keep thinking about this in the terms "who should pay for that" while in the market economy, it won't change anything? It's about supply and demand, just force medical schools prepare more doctors, for example threatening them with automatic diploma recognitions and green cards on arrival, for medical professionals from every first world country who could speak decent English.
Re: The US spends more on healthcare for no gain says new report from Johns Hopkins
#310Earlier quoted context omitted.
That doesn't mean anything at all. The problem is dissipation of rents -- when an industry gets an economic rent, expenses will tend to increase to the maximum allowed by market discipline. This is true for all bureaucracies -- e.g. Universities are always out of money but keep charging more. Hospitals are always out of money but still charge too much. That a firm finds a way to spend the money does not mean that the…
So where does the money physically go? If I’m a rent-seeker, I still have an incentive to be stingy with my expenses. The only reason I wouldn’t would be if someone else had a monopoly and was rent-seeking on me, but who’s doing that? I wouldn’t rule out the possibility that it’s rent-seeking all the way down, but you’d have to make that case. Suppose you say, doctors and pharma companies are rent-seeking, and I say…
And as a completely different example, what this principle suggests is that nations with a low interest rate environment will generally see a decline in profits corresponding to the lower rate. So for example Japan, a nation where corporate profits became notoriously low after the period of zero interest rates. Or, for example, China, where various subsidies to the cost of capital result in very low and sometimes negative cost of capital to state owned enterprises (SOE). It's these SOEs that end up doing weird things like a metal mining SOE building a replica of an Austrian village for a tourist attraction (https://www.youtube.com/watch?v=hP-7f1XW7jE). How on earth would a mining company do that except for the fact that they have a lot of money lying around due to earning economic rents? They find ways of spending money up until their return is the market return.
This is completely independent of their pricing power or monopolistic status.