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The American Healthcare Conundrum

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Re: The American Healthcare Conundrum

#661

Post by mexicocitinluez »

conductr wrote: post #452
mexicocitinluez wrote: post #440

Earlier quoted context omitted.

Yes, that's what a contract is. I don't remember asking for a definition.

But you blame the contract as to why commercial pays less, when it’s because that’s what someone accepted. They’re obviously going for a low number and it’s your sides job to negotiate for yourself. I just made another comment about lazy managed care, then you prove my point here. While you didn’t ask for a definition, you should try and connect the dots.

The contract pegs reimbursement to Medicare rates. That's not laziness that's literally how most commercial payer contracts work. "You should have negotiated harder" isn't the own you think it is when the outcome of good negotiation is still a Medicare-indexed rate.

Re: The American Healthcare Conundrum

#662

Post by mexicocitinluez »

kstrauser wrote: post #569
mexicocitinluez wrote: post #361

Earlier quoted context omitted.

> But Medi care was right with the commercial insurers on reimbursement. As I said in another comment, I'm with a provider and Medicare is easily one of our best payors. We actually have contracts with private insurers that say they have to reimburse us at least 80-85% of what Medicare would. They also give us the money up front, with a public formula that we can count on vs. a hidden formula that requires us to go b…

That back and forth is a huge time suck. Knowing that Medicare will reliably pay $X for code Y makes life vastly easier. Contrast with, say, UHC: “preapproval? That mean we agree to pay $Z, but only if we want to!”

Absolutely. It's not as black and white as people make it out to be.

Re: The American Healthcare Conundrum

#663

Post by rexroad »

TuringNYC wrote: post #327

The problems are so vast it is difficult to even describe to outsiders. For example, if I purchase a particular medication at a local pharmacy, it costs $25. However, my insurer mandates that I purchase it via their Pharmacy Benefit Managers (PBM) Optum, which charges $125. Easy enough right, you price shop? Well then it doesnt count towards your deductible. The whole thing is an elaborate trap to not pay. Sometimes…

Your example captures two distinct extraction mechanisms in one transaction. The $25 to $125 gap is spread pricing: the PBM pockets the difference between what they pay the pharmacy and what they bill the plan. The deductible non-application is a separate mechanism: by routing through their own mail-order or in-network channel, the PBM ensures that cost doesn't reduce your out-of-pocket maximum, extending your exposure for the year.

The FTC's 2024 Interim Report documented $7.3B in specialty drug markups from the Big 3 PBMs (CVS Caremark, Express Scripts, OptumRx) in a single year. The Ohio Auditor found PBM spread pricing extracted $224.8M from one state's $2.5B Medicaid drug budget annually. This is the subject of the next issue being released this Sunday.

Re: The American Healthcare Conundrum

#664

Post by rexroad »

cmiles8 wrote: post #337
TuringNYC wrote: post #327

The problems are so vast it is difficult to even describe to outsiders. For example, if I purchase a particular medication at a local pharmacy, it costs $25. However, my insurer mandates that I purchase it via their Pharmacy Benefit Managers (PBM) Optum, which charges $125. Easy enough right, you price shop? Well then it doesnt count towards your deductible. The whole thing is an elaborate trap to not pay. Sometimes…

Prescriptions are a total racket. A good portion of actual medication literally costs a few dollars at most. Then there’s layer upon layer of bloat and bureaucracy that add no value but drive the cost up 10x or more. It’s totally bonkers. When these Rx cards and Marc Cuban CostPlus drugs came out where you just pay cash and a fraction of the price I thought there must be some catch or scam here. But turns out no, the…

[dead]

Re: The American Healthcare Conundrum

#665

Post by rexroad »

LorenPechtel wrote: post #582
ethbr1 wrote: post #501

Earlier quoted context omitted.

> The entire point of the insurance business model is to avoid paying for [human well-being] as much as possible For-profit health insurance. Which imho should be illegal. A lot of the US' quasi free-market, in-name-only health insurance problems would be solved by: 1. Requiring all insurers to be not-for-profit (critically: also including all corporate owners of insurers too) 2. Tying financial incentives and disinc…

Big problem here: You get more KPI, not better outcomes. Things like no doctor being willing to risk working a high risk patient. We have already seen it with things like Medicare Advantage plans doing sign-up meetings on the second floor of buildings without elevators etc.

Fair point about KPI gaming, and it's a real problem in value-based care. But the fix in Issue #3 (commercial reference pricing at 200% of Medicare) is a price cap, not a quality incentive structure, so it doesn't directly create the risk-avoidance problem you're describing.

Montana Medicaid has used 200% Medicare reference pricing since 2015. Published evaluations haven't shown measurable quality deterioration or patient-selection effects in that program. The RAND Round 5.1 study underlying the savings estimate controlled for case mix, so it's comparing equivalent procedures at equivalent acuity. Risk adjustment is still genuinely hard at the individual level, and the concern is well-founded for P4P schemes. It's a separate question from whether commercial payers should pay 254% of Medicare rates for the same surgery at the same hospital.

Re: The American Healthcare Conundrum

#666

Post by rexroad »

youknownothing wrote: post #368
Turskarama wrote: post #353

Earlier quoted context omitted.

> In many ways the quality of care in the US is far better than what folks get elsewhere, which in part is probably why there isn’t a total patient rebellion How sure of this are we really? Other countries mostly have problems with emergency departments being full, but that's less because those emergency departments are worse and more because in the US people aren't going, they just stay home and hope they don't die.

As a person who has lived in Spain, UK, and now California, I can attest to one thing: the quality of care in California (I can't speak for the whole country) is vastly superior to what I received in both Spain and UK. Sate-sponsored universal healthcare is amazing, I love the concept, but it also means that they have to run it like a very stingy HMO. They have a rulebook and they go by it, if your case is even the s…

Personal experience with specific interventions reflects something real: US cancer survival rates, cardiac procedure outcomes, and access to cutting-edge treatments are genuinely strong for people with good coverage. That's not disputed.

The cost-outcome tradeoff shows up at the population level. US life expectancy: 77.5 years. Spain: 83.6. UK: 81.6. Infant mortality: US 5.4 per 1,000 vs. Spain 3.4, UK 3.7 (OECD 2023). The US spends $14,570 per capita. Spain spends $3,300, UK $4,100. If the premium were buying 10 extra years of life expectancy and half the infant mortality, it might be worth the argument. The data shows the opposite at population scale.

The newsletter's framing isn't that US clinical quality is poor. It's that the US is paying $3T more per year than Japan (same life expectancy, lowest infant mortality in OECD) for aggregate outcomes that are worse.

Re: The American Healthcare Conundrum

#667

Post by fragmede »

nicoburns wrote: post #568
eitally wrote: post #536

Earlier quoted context omitted.

I don't think so. With state funded healthcare you get rigid rulebooks and policies. In the capitalist-ish US model, if you are a successful advocate then you can get better than average care because there's enough flexibility in the system (in many cases, physicians can individually decide to over-extend for one patient if they choose to) to allow for this. Having a private payer market absolutely helps here.

Having care depend on "being a successful advocate" does not sound like a good thing to me! Albeit it's probably impossible to avoid entirely. We want good care for everyone. I'm mostly familiar with the UK system, but medical professionals make pretty much all the decisions here, with a large degree of discretion according to their professional judgement (and they never have to adjust or delay their care based on wh…

> Having care depend on "being a successful advocate" does not sound like a good thing to me!

It's not. You have to become a horrible demanding person to get a decent level of care instead of things being nice.

Re: The American Healthcare Conundrum

#668

Post by rexroad »

fblp wrote: post #50
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!

Thank you for the feedback and support! I've added some charts to the repo and have charts in the substack.

Re: The American Healthcare Conundrum

#669

Post by youknownothing »

rexroad wrote: post #666
youknownothing wrote: post #368

Earlier quoted context omitted.

As a person who has lived in Spain, UK, and now California, I can attest to one thing: the quality of care in California (I can't speak for the whole country) is vastly superior to what I received in both Spain and UK. Sate-sponsored universal healthcare is amazing, I love the concept, but it also means that they have to run it like a very stingy HMO. They have a rulebook and they go by it, if your case is even the s…

Personal experience with specific interventions reflects something real: US cancer survival rates, cardiac procedure outcomes, and access to cutting-edge treatments are genuinely strong for people with good coverage. That's not disputed. The cost-outcome tradeoff shows up at the population level. US life expectancy: 77.5 years. Spain: 83.6. UK: 81.6. Infant mortality: US 5.4 per 1,000 vs. Spain 3.4, UK 3.7 (OECD 2023…

The cost and life expectancy differences are indisputable, but the rationale may need more nuanced: that's not necessarily a problem with the healthcare industry, but with lifestyles, safety regulations, food standards, and a long et cetera of reasons. For instance Spanish people, on average, have more balanced diets and are more active than American people. They also lead much less stressful lives. That's a big factor.

Re: The American Healthcare Conundrum

#670

Post by andrekandre »

glitchc wrote: post #259
graemep wrote: post #60

> The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD. That gap is roughly $3 trillion per year. The difference in life expectancy will be influenced by multiple factors and may have more to do with diet and lifestyle than with healthcare. Japan also spends less per capita than the UK, France or Germany. The US spends a lot more than any of those so th…

Try seeing a doctor in Japan as a foreigner. Just a simple consult costs $300 USD or so, and it goes up from there. It's actually a rather expensive system.

  > Try seeing a doctor in Japan as a foreigner.
you mean as a foreigner without insurance no?
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