Kind of a silly take in my opinion. While it's may be true that the majority of money in a medical transaction (which is inflated) doesn't go to the insurer, it goes to the provider, it doesn't change the fact that "insurers" absolutely add a layer of uncertainty to the process. In times of uncertainty (ie: getting sick) anything that adds uncertainty will rightfully be hated.
In Canada, their system has a number of major shortcomings. But in college when my girlfriend got appendicitis, I just took her to the hospital without worry about in/out of network, and without worrying about if we'd get a claim rejected after the fact and have our small college student bank accounts drained. That is huge, and should not be underestimated. Here I do not have that luxury. Even though I have plenty of money saved up, it doesn't ever feel like enough. If one of us has a major illness, it can get wiped out due to a claim denial. And who makes the approve/deny choice?
The author of that post does some bad thinking here by completely missing the source of the vitriol directed at insurers. While providers do charge out the ass, at least they are doing something useful, while in these times of great uncertainty and pain, insurers only rent seek, blood suck, and do not offer anything of value.
I think most of what you said is on the mark, but the core problem is still what the providers are charging. I wouldn't worry so much about in/out-of-network or claim denials, and might not even worry about having insurance coverage at all, if: a 90-minute ER visit (even for a false alarm) didn't cost $10k; or if one night in the hospital (just for observation and a couple blood tests) didn't cost $50k; or if anything actually serious didn't cost hundreds of thousands or millions of dollars.
Now, why doesn’t the United States have universal public healthcare? Because every time it’s been proposed since the 19th century there’s been stiff opposition from doctors, hospital owners, and private insurance companies. So while it’s true that they didn’t start the problem, it’s fair to blame all of them for the problems of a system they’ve poured enormous amounts of money into preserving.
The US doesn't have universal public healthcare because it is a country of 350M people and would probably be a disaster. Significantly smaller countries (UK/Canada) have major issues with their systems with a fraction of the population.
That’s just silly. What mechanism do you believe makes healthcare fall apart in a larger country but not, say, the larger EU? Similarly, these alleged major problems don’t seem to show up in stats where residents of those countries live longer and healthier lives at much lower cost, and medical bankruptcy is rare.
The EU is not one country. It is certainly not one healthcare system.
But yes, I 100% agree with you. If the US wants to implement public healthcare, it should follow the EU's lead and implement it at the state level with very limited (if at all) top-down interference from the Federal government. Imo, the only thing that it makes sense to do at a nationwide level is negotiating drug prices.
To answer your (flawed) question though, humans have demonstrated time and time again that they struggle to top-down manage large economical undertakings at scale. It seems that at a small scale, we have the capacity to do all sorts of things with all sorts of means of management. But past a certain point we start to get in our own way with internal strife, graft, poor abstractions and assumptions, etc. Some people think AI will help us figure this out, but I'm skeptical. So far the only consistent tool that helps us work against this is the invisible hand of a free market, which does enough to align incentives that the problems become tractable.
> The EU is not one country. It is certainly not one healthcare system.
That was my point: even if there is some hypothetical property of size where a national healthcare system would fall apart, which we have no reason to believe exists, letting each of the 50 states run their own should be similar to the European model where a larger population is covered by a variety of programs and that provides natural experiments for the efficacy of different approaches.
disaster is a strong word, but yes, it would definitely have issues. but would it be an improvement over what we currently have, for most people? that is the standard that matters.
no system will be perfect. i'd argue that no healthcare system will even be that good, knowing human nature, especially given the culture in the US which values the individual's right to obtain money over most everything else. but even given these facts, i think it's defeatist to think that this is honestly the best we can do.
I didn't say it was the best that we can do, merely that I don't think humans currently have the capacity to manage a project of that nature and scope effectively.
My alternate proposal would be for states to implement public healthcare on their own, which they can already do.
> Yes, why don't we already have public healthcare per state?
I don’t know, but what does that have to do with my point?
> And why do you think that a nationwide system (which by necessity needs to be vastly more complex) is more achievable?
I never said that nationwide would be more achievable. I think both options would work.
I’m asking why you think public healthcare works for countries with 90 million inhabitants but doesn’t work for 330 million.
What’s the thing that prevents scaling?
Humanity is what prevents scaling. We've demonstrated time-and-time again that we struggle to administer something at scale without the benefit of free market dynamics like supply and demand.
Nope, no hard border. Just progressively more difficult (and not linearly). My assumption is that, because any such large-scale human endeavor is a network, the complexity increases by some superlinear rate with size unless a almost superhuman effort is effected to counteract that.
Even in the 50-90M range, healthcare systems start to show serious orchestration/efficiency/coordination issues. Healthcare is just the final boss of this type of thing, because everybody needs it and there actually isn't enough to go around.
Regardless yes, I think the US should definitely have states try to figure this out at a smaller scale before even thinking about trying to achieve it at a national level for 300+ million people. Added benefit that some friendly competition amongst states might actually help move things along.
I would actually say it can only scale linearly or slower than that. Either you gain efficiency due to economies of scale, or worst case, you make 10 smaller systems.
But I still don’t see how the scaling would be worse than linear.
How is managing 300 million people more than 3 times harder than 100 million people? The effort per person shouldn’t increase, and everything common scale lower than linear.
10 smaller systems then require a layer on top to manage those 10 systems. Now you have 11 systems. And there definitely won't be only 2 layers in your public healthcare system for 300M people across 50 different states.
Have you never worked in a large corporation before and seen all the intermediary layers of beauracy? If you have, imagine the largest company you've ever worked for, multiply it by 1000x, and then imagine but there is no profit motive driving efficiency (or competition) and your customers all demand access to a resource that is finite. Except they're not really "customers", so you can't say "sorry no more product left, better luck next time".
That is publicly funded healthcare at scale.
What "economies of scale" do you imagine centralized publicly-funded healthcare has?
It has been a while since I listened to these episodes, but my main recollection is the argument that insurers are the only entities in the system actually fighting to reduce costs (and, of course, high costs are what underlie most of the other problems with the US healthcare system).
To be clear, I don't think insurers (and United Healthcare in particular) and their owners (all of us with index funds in our retirement accounts?) and boards and executives are blameless, but I do think this idea should be more central to the discussion and less contrarian.
I don't think modern health insurers want to lower costs. Middlemen benefit from an increase in costs because they operate by skimming off the cashflows passing through them. This has been codified with the 85-15 rule in the ACA but there were less formal incentives pointing broadly in the same direction even before then. If you take a fixed percentage of every dollar you get, you're going to want to get more dollars.
So one of the problems is indeed that insurers have conflicting incentives, as you correctly described one of them, and it's possible (although I don't know enough to argue either way) that ACA actually made this worse. I think one of the big arguments for a single-payer system, or at least the "public option," is that those middlemen could (ideally, in theory) embrace the position they're in to fight for lower costs without the conflicting incentives that come with being a for-profit entity. I guess that's basically what Noah Smith (author of the parent's linked article) is saying in his conclusion. There are, of course, other arguments for and against. Healthcare is a fascinatingly (and maddeningly) complex problem.
I agree this is a bad incentive, but a conflict of interest alone does automatically mean an ability to act on it.
In the case of health insurance, driving up the costs requires a monopoly or collaboration of firms without defection. As a result, this means one firm cant act in isolation, and cost increases usually come from the industry not pushing back on outside changes that impact all the firms equally.
Examples could be more training for healthcare workers, more expensive standards of care, more regulation and paperwork, ect.
It is pretty telling that UHC prices are not that different than similar plans at Kaiser (which is a vertically integrated non-profit insurance, hospital, pharmacy, and PBM provider). About 15% different when I was picking between them during open enrollment this year.
The incentives go both ways. In the short term, the minimum medical loss ratio rule incentivizes payers to approve more claims and allow network providers to charge higher rates. But longer term payers can only maintain market share with their most important customers (the large self-funded employers) by lowering total medical expenses.
The health insurance industry is effectively a maximally hostile middleman. It's hostile to service providers, and it's hostile to service users. (The most charitable thing you can say about it is that it creates enormous amounts of paperwork, thereby creating jobs and boosting GDP.) It's not difficult to see how it has become so widely hated.
It's the healthcare industrial complex. Just like the military. You get back some percentage of what you charge. They're incentivized to charge more because they'll get more, and sometimes it's an all-or-nothing.
I have doctor friends who quote they spend over 60% of their time dealing with insurance and it's intricacies. It's the fault of the system, with large foundations on insurance and perverse government policy to enrich the leaders therein, and the providers are simply making do with the system they must operate in.
I'll never forget the story I heard about a military squadron that needed like one bolt to fix a relatively important piece of equipment, and it cost like $10 itself.
But the only way they could get it was through a package deal of a million dollars of other insane amounts of equipment that was entirely superfluous and they ended up getting shitloads too many guns and threw away thousands of hardware bits just to get that one screw.
Imo, spherical cow economist take on a field they know little about. The graphic lumps all "Inpatient & outpatient care" together, which is insane. Is it saying all that money is going to physicians, nurses, etc? It seems to imply that, but my guess is much of it ends up in hospital administration costs. Also in this way the cost of UHC etc isn't just their own admin overhead; it also add the hospital's admin and billing costs of dealing with them.
As for the author's claim that the doctor/nurse/admin assistant should know how much your treatment costs beforehand, lol. Yes, in an ideal world they absolutely would tell you. No, in reality they do not know. There's a whole apparatus of administrators and software spanning the hospital and insurance companies with bajillions of codes and negotiated rates. Noah Smith instead thinks doctors/nurses/admin assistants know ahead of time what each treatment costs but decline to inform consumers? A slightly dated but still relevant book is O'Reilly Hacking Healthcare. Iirc there are whole chapters on billing. It's just very complicated to figure out costs before treatment, and that's the fault of insurance/administration, not doctors/nurses/admin assistants.
It at least implies 2 anti medical worker claims. 1) excess healthcare costs are driven by medical worker salaries 2) medical workers could clarify prices but do not in order to mislead patients. Both totally miss the real problems of healthcare cost: the complexity of admin/billing leads to not just increased costs in insurance companies but also in hospital administration, and obscures costs for patients.
Btw, there are good ways of reducing physician costs. Allow straight to med school with no college, reduce med school requirements, maybe let residents change programs. If you make it much easier to become a physician without hurting care too much you then naturally pass savings on to patients. You can have legitimate criticisms of the AMA or hospital administration without jumping to ah greedy providers.
This is a bit ridiculous, because part of the reason that providers are overcharging you is that they need huge finance departments to get their cash back from you or your insurer, which wouldn't be necessary if you had a single government insurer.
Also, the quote from the Courtney Barnett song about Australian healthcare only applies if you somehow end up in a private emergency department, which is extraordinary unlikely since they're often underprepared for critical emergencies and for non-critical stuff you can ask to be taken to a public hospital in the ambulance. You're likely to get charged a couple of thousand dollars for the ambulance ride (depends on state; in mine, membership of the ambulance org is $53 a year and automatically covers you for any ambulance trip Australia-wide, no denials; others are free), plus a few hundred for the consultation. I believe Medicare will pay for some private care in an emergency department.
She's talking about calling 000 because of an asthma attack but also alludes to a panic attack, which means she's not rationally discussing how much it will cost. It's not a scenario where she will have actual crippling debt like it would be in the US. A non-artistic non-panic-attack analysis of the situation is that she'd pay literally nothing as a public patient in a public hospital, and would pay a few thousand in the unlikely possibility she got admitted to a private hospital. Which, yes, would suck, but her worst case is an order of magnitude or two away from the expected cost in the US.
As a counterpoint to many of the other commenters, it is 100% true that providers way overcharge for healthcare in the US. Specialized nurses and doctors have salaries that exceed nearly every other profession in the US. But they are not even the main employees! The healthcare industry in the US employs a substantial chunk of all of America, largely in bloated administrative jobs that aren't really necessary for patients.
I'd say, it's also true that this specific company UHG, specifically had policies in place that led to people dying over denied claims. The author of this piece himself said 10-20% of claims are outright, flatly denied by health insurance. That leads to a world where people die unable to afford healthcare they already paid for. I think both parties are at fault here, and yeah insurance is easier to be mad at, that's an idea that makes sense to me.
He's not the only person being compensated at United Healthcare though.
I've asked this in a different thread, but I'll repeat it here: how much of the remaining "operational expenses" actually add meaningful value to the patients' healthcare?
