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

41–50 of 690 posts

Re: The American Healthcare Conundrum

#41

Post by rayiner »

phil21 wrote: post #35
cogman10 wrote: post #26

Earlier quoted context omitted.

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…

Insurance is really not the issue, it’s provider cost. And just the total cost entirely of the system of insanity. If you look closely into it there is no single (or few even) knobs you can tweak to fix the system. Not even Medicaid for all, at least as it’s currently designed. No argument from me that insurance is not competitive enough. But they are almost all public corporations that are highly regulated so the nu…

Trying to understand why healthcare in the U.S. is so expensive is like trying to understand why building subway in New York is so expensive: https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-.... The issues lend themselves to facile explanations ("insurance companies are greedy," "NYC's government is wasteful") but those are driven by ideology not analysis.

Re: The American Healthcare Conundrum

#42

Post by phil21 »

Retric wrote: post #37
phil21 wrote: post #20

Earlier quoted context omitted.

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.…

> part of the healthcare system that is moderately competitive. That’s only half the story though insurance companies also try and reject way more claims, cover fewer people, and are just harder to get money from than Medicare. This means hospitals can’t afford to give them cheaper rates as they just require vastly more work from staff for the same procedure. The industry isn’t blind to this effect, but has little re…

Hospitals and clinics can only take so many Medicare patients as a ratio to private pay because it’s very well known that Medicare and Medicaid is often provided at below cost. It’s of course area and demographic dependent but as a rule any private clinic has a cap on these patients they will accept overall. Hospitals cannot cap it realistically speaking, so looking at clinics is a good proxy.

Private insurance subsidizes Medicare and Medicaid even after you add in admin overhead.

Re: The American Healthcare Conundrum

#43

Post by Manuel_D »

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 is the same problem with cost-plus contracts in the military. In theory, capping profit is meant to reduce profiteering. But in practice, if your profit is fixed at 6% of the cost to built a jet fighter then you're incentivized to make that jet fighter as expensive as possible. The way to maximize profit under a cost-plus regime is to maximize the cost.

Re: The American Healthcare Conundrum

#44

Post by nradov »

piva00 wrote: post #30
levocardia wrote: post #18

Earlier quoted context omitted.

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.

If you want to understand the hidden cross-subsidies in the US healthcare financing system then a good place to start is the book "The Price We Pay: What Broke American Health Care--and How to Fix It" by Dr. Marty Makary.

https://www.bloomsbury.com/us/price-we-pay-9781635574128/

Re: The American Healthcare Conundrum

#45

Post by catlover76 »

vjvjvjvjghv wrote: post #15
shdudns wrote: post #10

Earlier quoted context omitted.

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

Obamacare was totally subverted by the medical lobby during its creation. They had a lot of great ideas but there were way too many politicians in Congress who had sold out to the lobby (Lieberman, Baucus on the democrat side) and would block anything that would reduce cost. And since then it has been a fight for survival without much chance for improvement. The republican refuse anything that could improve it but wa…

[dead]

Re: The American Healthcare Conundrum

#46

Post by omgJustTest »

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 is correct, but neglects the compounding effect.

Insurers are also adding some %+ increase on premiums every year, which is taken as a % of their yearly spend, ie 2-3%.

ie (1+inflation)^N*(base_prem+overpay_prem_increase) = new_premium. The compounding of $ returned is pretty big on this.

That being said underwriting risk, under the law and avoiding correlated risks, is tough.

Re: The American Healthcare Conundrum

#47

Post by lotsofpulp »

dmitrygr wrote: post #36
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.

Ding Ding Ding. We have the correct answer. And this was a predicted consequence of that profit cap.

>So insurance companies spend more so they can collect higher premiums. That's how they make more money. >

If this is correct, then how come there are so many complaints about insurance denying payment for healthcare or the hoops they make patients and doctors jump through for pre authorizations?

If the path to more profit was spend more money, then there would be no reason to question a doctors’ orders? Nor threaten doctors and hospitals with leaving the network if they don’t agree to lower prices?

Yet, one often hears about so and so plan will not have so and so hospital system in network unless they come to an agreement.

Re: The American Healthcare Conundrum

#48

Post by mothballed »

nradov wrote: post #31
cogman10 wrote: post #17

Earlier quoted context omitted.

This seems like we need similar price caps for healthcare providers, medical equipment providers, pharmaceuticals, etc. Done just in isolation for 1 part of the healthcare industry results in this obvious bad effect. Removing the rule wouldn't help things.

Price caps always and everywhere cause shortages, including long queues for certain types of care. This may be acceptable but we need to understand the trade-offs when making any changes.

Price caps create shortages when they are the rate limiting factor, which is always the case when imposed on a free market whenever the cap is below the market price, so this is an extremely accurate statement when dealing with things like lightly regulated commodities.

Whether they would be the rate limiting factor in health care remain to be seen, since health care is highly regulated with regulatory capture, licensing, and violence enforced market manipulations. As a thought experiment, in the extreme that health care were a pure monopoly, then I could envision some price caps somewhere between cost and price where the supply curve is relatively flat on either side thus creating minimal effects to supply.

Re: The American Healthcare Conundrum

#49

Post by nradov »

Retric wrote: post #37
phil21 wrote: post #20

Earlier quoted context omitted.

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.…

> part of the healthcare system that is moderately competitive. That’s only half the story though insurance companies also try and reject way more claims, cover fewer people, and are just harder to get money from than Medicare. This means hospitals can’t afford to give them cheaper rates as they just require vastly more work from staff for the same procedure. The industry isn’t blind to this effect, but has little re…

That's true to an extent, and those minimal controls are why Medicare also wastes billions on paying fraudulent claims.

https://relentlesshealthvalue.com/episode/ep502-how-some-pre...

Re: The American Healthcare Conundrum

#50

Post by fblp »

rexroad wrote: post #2

Author here. The 254% figure comes from RAND Round 5.1. I built a Python pipeline on CMS HCRIS cost reports (FY2023, 3,193 hospitals) to compute cost-to-charge ratios by ownership type. The surprising finding: nonprofit hospitals have a median markup of 3.96x actual costs. All scripts are in the repo. Happy to discuss methodology.

Thank you for doing this analysis! I'd suggest adding some charts to better represent some of the issues you've found!
Post reply on HN