Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The American Healthcare Conundrum

github.com

Post reply on HN
Print view View original

21–30 of 690 posts

Re: The American Healthcare Conundrum

#21

Post by thaumasiotes »

timtim51251 wrote: post #7

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits. Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money. Several doctor friends have told me this as well.

You've identified a real issue with cost-plus pricing. But there's more to it than that. Commercial insurers have to pay more than Medicare, for the very simple reason that Medicare's pricing terms are that they get a discount beyond whatever the lowest price is that you charge anyone for the same thing.

(Is it a 60% discount? No; a 150% margin has to be explained in other ways. But the phenomenon is real and important.)

Re: The American Healthcare Conundrum

#22

Post by cogman10 »

bmcahren wrote: post #14
shdudns wrote: post #10

Earlier quoted context omitted.

This. It's hard to believe that the Obama team could have been this financially incompetent.

It's easy with hindsight to believe you could have capped expense at 200% medicare but getting what we got passed was nearly impossible at the time. Before Affordable Care Act, insurers had every tool available to deny care, maximize profits, and skim more than 20% off the top. It's great we're getting closer to the point that it feels to you like incompetence that these things aren't fixed today but your anger with…

Yup, pre-existing conditions, in particular, was a beast. The patient protection portion of the ACA is one of the better parts of the whole bill.

Re: The American Healthcare Conundrum

#23

Post by SideQuark »

timtim51251 wrote: post #7

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits. Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money. Several doctor friends have told me this as well.

[dead]

Re: The American Healthcare Conundrum

#24

Post by hdgvhicv »

jltsiren wrote: post #11
recursivedoubts wrote: post #5

[flagged]

Daily reminder to always check data definitions before interpreting statistics. According to the OECD data, US 2023 healthcare spending was 28% by the government, 55% by private health insurance, 11% out of pocket, and 5% from other sources. OECD lists all US private health insurance policies under the "compulsory health insurance" heading. Apparently because there is no clear separation between compulsory and volunt…

Total medical expense of any type per capita is far higher in the us - even as a percent of gdp - than anywhere else.

Re: The American Healthcare Conundrum

#25

Post by raw_anon_1111 »

shdudns wrote: post #10
timtim51251 wrote: post #7

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits. Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money. Several doctor friends have told me this as well.

This. It's hard to believe that the Obama team could have been this financially incompetent.

It was the best they could do to get 60 votes because universal health care was too radical even though every industrialized country in the world does it.

Re: The American Healthcare Conundrum

#26

Post by cogman10 »

phil21 wrote: post #20
timtim51251 wrote: post #7

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits. Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money. Several doctor friends have told me this as well.

In a vacuum sure. But insurance companies operate the only part of the healthcare system that is moderately competitive. In the end employers are the ones largely paying and they are professional negotiators enough to put price pressure on insurance plans. 20% of $0 is $0. As such, as light of an incentive it is - it’s the only party in the entire system that is incentivized in any way whatsoever to keep costs down.…

It's such a small market that it's really not competitive. Further, because medicine is so expensive, it means there aren't going to be newcomers to the market who can shake thing up. It requires way too much startup capital to start a new insurance company. The agencies with the most negotiation power don't because it negatively affects their bottom line.

This is why there needs to be a real second option. A public option like medicare for all would be the way to go. Let everyone choose between either private insurance or public insurance. Then you'd actually see some real competition.

Re: The American Healthcare Conundrum

#27

Post by nradov »

timtim51251 wrote: post #7

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits. Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money. Several doctor friends have told me this as well.

It's a bit more complicated than that. First, most large health plans regulated under the Affordable Care Act are actually subject to an 85% minimum medical loss ratio. Some of the larger payers which also have their own providers as employees within the same parent corporation are able to shift money around with internal pricing agreements so that they make larger profits on the care delivery side.

But at the same time, the business is still pretty competitive with the employers and consumers who purchase policies or rent networks being price sensitive. Employers will switch carriers to get a significant cost savings so that holds down prices (and carrier profits) to an extent. Most large employers (and unions) are now self-funded so the "insurance" company isn't actually bearing much risk, they just set up a provider network and process the claims.

Most doctors are almost completely ignorant about the broader issues of healthcare financing and medical economics so take anything you hear from your friends with a grain of salt. (And to be fair, it's not something we should expect them to be experts in.)

Re: The American Healthcare Conundrum

#28

Post by nostrebored »

raw_anon_1111 wrote: post #19
timtim51251 wrote: post #7

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits. Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money. Several doctor friends have told me this as well.

So I happen to be in Costa Rica for the month. Just like every other 1st world country, it has managed to have universal health care that is better and cheaper without private insurance. Even if you do get private insurance for quicker access, it’s still much cheaper than the US. I just spoke to someone who flew down here to save $30K on dental work. The problem isn’t the ACA, it’s the ass backwards American health c…

ACA enshrined the worst parts of the American healthcare system for years to come. It is a politicized victory that is the best solution for no American citizens. Places I’ve been with fully privatized healthcare or single payer are both significantly better for consumers.

Insurance companies have raised prices to restore profit, were briefly a mandatory expense, and will exist for years to come.

Re: The American Healthcare Conundrum

#29

Post by watersb »

shdudns wrote: post #10
timtim51251 wrote: post #7

Lots of people are saying nonsense here. The actual reason commercial insurers pay more is that's the only way to can make more profits. Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money. Several doctor friends have told me this as well.

This. It's hard to believe that the Obama team could have been this financially incompetent.

It's almost as if no healthcare legislation gets passed before private insurers have figured out how to extract shareholder value.

(Which makes the system worse. The fiction of a fiduciary responsibility to extract top dollar from a business regardless of consequences is the opposite of "capitalism". Which derives its name from the practice of sound investment to build something of lasting value.

To say nothing of the social deviance of for-profit healthcare.)

Re: The American Healthcare Conundrum

#30

Post by piva00 »

levocardia wrote: post #18
paulddraper wrote: post #4

This is a believable result. Meta-analysis is 141-259% [1]. Three reasons: 1. Medicare has quasi-monopolistic negotiation power that private insurers can only dream of -- Medicare spend two-thirds of all the private insurers combined. That's why private insurers would combine in a heartbeat if the FTC allowed it. 2. Moreover, that Medicare volume is concentrated in a specific segment of the market. If many providers…

Also, commercial insurers are essentially cross-subsidizing Medicare: the higher revenue from commercial insurers is partly why Medicare can be paid less. Similar dynamics exist with drug prices: the high US cost is a cross-subsidy to other countries. Maybe this is good (someone's got to fund R&D), maybe this is bad (it's a net wealth transfer to the elderly), but it's an important part of the dynamic either way.

Would like sources about the pharmaceutical sector being "subsidised" by the American system, heard it many times but haven't seen it substantiated.
Post reply on HN