7 ms·

I just don't see how an operation like Oscar fits into the US healthcare landscape. If the benefits are denominated in dollars and you don't have strong negoti

I just don't see how an operation like Oscar fits into the US healthcare landscape. If the benefits are denominated in dollars and you don't have strong negotiating power (Aenta) and are not vertically integrated with the health care provider (Kaiser), how can you not be screwed? The provider can bill $5000 for one Advil and there's little that can be done about that. There's no way out of this problem except federal laws that sets the prices of services. Ibuprofen has a market price of less than a penny per milligram and that should be the end of the story. It shouldn't be possible to bill them at $100 each just because the patient couldn't object. As long as we have a system where the prices for goods and services come as a complete surprise to everybody, it is impossible to have a working "market" for insurance against risk.

Ntrails 10y ago
> As long as we have a system where the prices for goods and services come as a complete surprise to everybody, it is impossible to have a working "market" for insurance against risk. Bearing in mind I'm English, so there's risk of ignorance here... My understanding is that Insurance companies have agreed pricing deals with providers? That was the point of restricting access to certain providers etc within schemes - so that they could keep users in a relatively controlled pricing system. Realistically though - pricing needs to be agreed at a national level and then have all providers/insurers included. Of course, this prevents strategies like vertical integration but frankly I don't see that as a great loss.
- refurb 10y ago
  You are correct. Payers (insurance companies) and providers enter into contracts that lay out costs. It may as simple as "I'll pay you 30% of your chargemaster rates" (these are the crazy inflated list prices for the hospital) or they can anchor to Medicare rates - "I'll pay you 130% of what Medicare pays". That's why you end up with preferred providers and in-network/out-of-network providers. Where things get interesting is that rates are often dependent upon negotiating power. If you're a big insurer and you can push a lot of volume to a provider, you have more power to push reimbursement lower. If you're a provider in an area where they are lots of other providers, you lose leverage vs. being the only provider in a semi-rural area.
- CWuestefeld 10y ago
  pricing needs to be agreed at a national level The USA is a big country, with vastly different demographics across it. Medical provider costs (especially wages) are going to be vastly higher in some locales than others. Also, the risks in some areas (complications due to pneumonia, for example) are going to vary by region. So it can't really be a single national list.
zaroth 10y ago
Of course the insurance company should never pay $5,000 for an advil. If they did that then they deserve to go out of business. The insurance policy does not cover any service at any price. You cannot just fraudulently invent a bill for services with absurd prices, and then demand payment. Some of you reading this of course get a good chuckle because they know this is exactly what's happening. One good Attorney General pressing criminal fraud charges in a case like this would get the ball rolling. So, how do you price the service when it's covered by an insurance policy? This can't really be an unsolved problem. What's interesting here is separating the price discovery problem from the socialization aspect. Can you fix one without necessarily resorting to the other? So in the ER the price of the drug should reflect the cost to administer it. Or maybe you should be charged a separate daily fee plus cost of supplies. What we want, first and most of all, is price transparency. Frankly the pharmacist and the attending are not paid that much, so where is the money going? A room full of equipment costs a lost of money, so isn't the solution to introduce different cost rooms based on condition? Too much diversity in the room / environment could be a problem, but right now it seems like they go for absolute uniformity?
- honkhonkpants 10y ago
  "You cannot just fraudulently invent a bill for services with absurd prices, and then demand payment." You have obviously never enjoyed the services of the US health care system!
  - zaroth 10y ago
    Hence the next sentence!
drawkbox 10y ago
Until we disconnect healthcare from a job then pricing will be out of wack and way off market value. Once healthcare is more consumer focused and everyone has individual plans then pricing can be scrutinized. Currently it is a backdoor game with insurance and health services greatly disconnected from the customer. We don't get auto, life, home or any other insurance from our companies, nor should we, so why do we still do healthcare? It causes all sorts of problems (starting business, stuck in jobs/quitting is more difficult, ageism, etc). Imagine if all your insurance for your auto, home and life ended when you quit a job, it is silly that healthcare does for people without individual plans. Also companies like Aetna and BlueCross are company focused, very different than in auto, home or even life insurance where it has to be mostly individual focused (think Geico, Progressive, Nationwide). We need to disallow getting healthcare from an employer (money can be given to help pay it but as salary). This has to change first otherwise every price control is still set in a closed fantasy market and will never change the game, far disconnected from the user product/service market value.
- chimeracoder 10y ago
  > We don't get auto, life, home or any other insurance from our companies, nor should we, so why do we still do healthcare? Health insurance isn't like auto or home insurance, because it's not purely insurance. Some part of it is, because you're insuring against the risk of rare and catastrophic conditions, but a good chunk of it is covering routine care, which is by definition predictable. Under an insurance model, the insured price of a routine procedure would always be slightly higher than the out-of-pocket (uninsured) price. The phrase "health insurance" is misleading. Real insurance has a negative expected value - you pay slightly more in expectation in exchange for having a lower variance on your possible outcomes. But people don't want that with health "insurance". They want health insurance to cover things that they otherwise wouldn't be able to afford, both routine and catastrophic. That's not insurance, which is why comparing health insurance to any other form of insurance doesn't really make sense.
  - pjc50 10y ago
    > a good chunk of it is covering routine care, which is by definition predictable I'm curious to know what you consider "routine" here? I'm trying to think of what I'd call routine NHS care and the examples I can come up with are childhood vaccinations (not employees), elder care (not employees, medicare in the US), OTC trivia like paracetamol (not exactly covered in either system), and population screening programmes like for breast and other cancers. Then there's chronic conditions such as asthma and diabetes, and the question of whether people who've lost that particular lottery should have a permanently lower standard of living or not.
Steko 10y ago
> I just don't see how an operation like Oscar fits into the US healthcare landscape. > There's no way out of this problem except The fact that operations like Oscar currently don't fit well is not very high on the list of problems that need to be fixed. > if ... how can you not be screwed? Well you can limit your enrollment and allow your reserves to grow so that haha that's not how you get in the unicorn club.
chimeracoder 10y ago
> The provider can bill $5000 for one Advil and there's little that can be done about that.There's no way out of this problem except federal laws that sets the prices of services. First, no insurer pays $5000 for Ibuprofen, the same way no (sane) customer pays sticker price when buying a car. That number is intended as the starting point for negotiation with the insurer, and they all know that. Secondly, the reason that this negotiation is necessary is, indirectly, because of a federal agency artificially setting the prices of services. Medicare owns 40% of the payer market and also reimburses about 7% less than COGS. That is, not counting for the fact that any practice has overhead and SG&A (labor) that it needs to pay for, Medicare reimburses 7% less than what it costs providers to cover their own direct costs of supplies. Basic accounting tells you that's not sustainable unless you overcharge the rest of your patients. So, they make up for it by doing this awkward dance where they attempt to overcharge the private insurers by 50x or more, and then the private insures come back and say, "no, how about we only pay you 300% what Medicare reimburses", and then they agree on that.
- merpnderp 10y ago
  I went to a doctor a while back that had a sign on his window saying he'd like to charge less than $50/visit, but medicare by law said he must charge at least $50. Government should be for the bare minimum of things a market can't provide, and subsidizing insurance plans for the needy and poor would be a lot better than the government, through I'm sure just some twisted set of unintended consequences, setting MINIMUM prices.
- gm-conspiracy 10y ago
  Correct me if I am wrong, please. Medicare is actually split into four separate regions, each with its own reimbursement rates.
  - CWuestefeld 10y ago
    It's a lot more analog than that. There's a baseline schedule, but the rates for any provider are still going to vary due to other variables, in particular the "wage index" which recognizes that their labor expenses are going to be higher in areas with higher prevailing wages.
supster 10y ago
An insurance company makes money from the difference in premiums collected and expenses paid. Because Oscar is a startup you are right that they have a significant disadvantage in negotiating rates with providers. But they can lower costs in clever ways by lowering utilization. For example they offer free preventative routine care like immunizations, flu shots; free generic drugs (thus shifting consumption away from brand name drugs); and free primary care visits (which over the long term shift costs away from costly complications (e.g. in diabetes), or ER visits). In addition Oscar appeals to a younger tech savvy crowd which will inherently utilize health services a lot less.

Ntrails 10y ago

> As long as we have a system where the prices for goods and services come as a complete surprise to everybody, it is impossible to have a working "market" for insurance against risk. Bearing in mind I'm English, so there's risk of ignorance here... My understanding is that Insurance companies have agreed pricing deals with providers? That was the point of restricting access to certain providers etc within schemes - so that they could keep users in a relatively controlled pricing system. Realistically though - pricing needs to be agreed at a national level and then have all providers/insurers included. Of course, this prevents strategies like vertical integration but frankly I don't see that as a great loss.

refurb 10y ago
You are correct. Payers (insurance companies) and providers enter into contracts that lay out costs. It may as simple as "I'll pay you 30% of your chargemaster rates" (these are the crazy inflated list prices for the hospital) or they can anchor to Medicare rates - "I'll pay you 130% of what Medicare pays". That's why you end up with preferred providers and in-network/out-of-network providers. Where things get interesting is that rates are often dependent upon negotiating power. If you're a big insurer and you can push a lot of volume to a provider, you have more power to push reimbursement lower. If you're a provider in an area where they are lots of other providers, you lose leverage vs. being the only provider in a semi-rural area.
CWuestefeld 10y ago
pricing needs to be agreed at a national level The USA is a big country, with vastly different demographics across it. Medical provider costs (especially wages) are going to be vastly higher in some locales than others. Also, the risks in some areas (complications due to pneumonia, for example) are going to vary by region. So it can't really be a single national list.

zaroth 10y ago

Of course the insurance company should never pay $5,000 for an advil. If they did that then they deserve to go out of business. The insurance policy does not cover any service at any price. You cannot just fraudulently invent a bill for services with absurd prices, and then demand payment. Some of you reading this of course get a good chuckle because they know this is exactly what's happening. One good Attorney General pressing criminal fraud charges in a case like this would get the ball rolling. So, how do you price the service when it's covered by an insurance policy? This can't really be an unsolved problem. What's interesting here is separating the price discovery problem from the socialization aspect. Can you fix one without necessarily resorting to the other? So in the ER the price of the drug should reflect the cost to administer it. Or maybe you should be charged a separate daily fee plus cost of supplies. What we want, first and most of all, is price transparency. Frankly the pharmacist and the attending are not paid that much, so where is the money going? A room full of equipment costs a lost of money, so isn't the solution to introduce different cost rooms based on condition? Too much diversity in the room / environment could be a problem, but right now it seems like they go for absolute uniformity?

honkhonkpants 10y ago
"You cannot just fraudulently invent a bill for services with absurd prices, and then demand payment." You have obviously never enjoyed the services of the US health care system!
- zaroth 10y ago
  Hence the next sentence!

drawkbox 10y ago

Until we disconnect healthcare from a job then pricing will be out of wack and way off market value. Once healthcare is more consumer focused and everyone has individual plans then pricing can be scrutinized. Currently it is a backdoor game with insurance and health services greatly disconnected from the customer. We don't get auto, life, home or any other insurance from our companies, nor should we, so why do we still do healthcare? It causes all sorts of problems (starting business, stuck in jobs/quitting is more difficult, ageism, etc). Imagine if all your insurance for your auto, home and life ended when you quit a job, it is silly that healthcare does for people without individual plans. Also companies like Aetna and BlueCross are company focused, very different than in auto, home or even life insurance where it has to be mostly individual focused (think Geico, Progressive, Nationwide). We need to disallow getting healthcare from an employer (money can be given to help pay it but as salary). This has to change first otherwise every price control is still set in a closed fantasy market and will never change the game, far disconnected from the user product/service market value.

chimeracoder 10y ago
> We don't get auto, life, home or any other insurance from our companies, nor should we, so why do we still do healthcare? Health insurance isn't like auto or home insurance, because it's not purely insurance. Some part of it is, because you're insuring against the risk of rare and catastrophic conditions, but a good chunk of it is covering routine care, which is by definition predictable. Under an insurance model, the insured price of a routine procedure would always be slightly higher than the out-of-pocket (uninsured) price. The phrase "health insurance" is misleading. Real insurance has a negative expected value - you pay slightly more in expectation in exchange for having a lower variance on your possible outcomes. But people don't want that with health "insurance". They want health insurance to cover things that they otherwise wouldn't be able to afford, both routine and catastrophic. That's not insurance, which is why comparing health insurance to any other form of insurance doesn't really make sense.
- pjc50 10y ago
  > a good chunk of it is covering routine care, which is by definition predictable I'm curious to know what you consider "routine" here? I'm trying to think of what I'd call routine NHS care and the examples I can come up with are childhood vaccinations (not employees), elder care (not employees, medicare in the US), OTC trivia like paracetamol (not exactly covered in either system), and population screening programmes like for breast and other cancers. Then there's chronic conditions such as asthma and diabetes, and the question of whether people who've lost that particular lottery should have a permanently lower standard of living or not.

Steko 10y ago

> I just don't see how an operation like Oscar fits into the US healthcare landscape. > There's no way out of this problem except The fact that operations like Oscar currently don't fit well is not very high on the list of problems that need to be fixed. > if ... how can you not be screwed? Well you can limit your enrollment and allow your reserves to grow so that haha that's not how you get in the unicorn club.

chimeracoder 10y ago

> The provider can bill $5000 for one Advil and there's little that can be done about that.There's no way out of this problem except federal laws that sets the prices of services. First, no insurer pays $5000 for Ibuprofen, the same way no (sane) customer pays sticker price when buying a car. That number is intended as the starting point for negotiation with the insurer, and they all know that. Secondly, the reason that this negotiation is necessary is, indirectly, because of a federal agency artificially setting the prices of services. Medicare owns 40% of the payer market and also reimburses about 7% less than COGS. That is, not counting for the fact that any practice has overhead and SG&A (labor) that it needs to pay for, Medicare reimburses 7% less than what it costs providers to cover their own direct costs of supplies. Basic accounting tells you that's not sustainable unless you overcharge the rest of your patients. So, they make up for it by doing this awkward dance where they attempt to overcharge the private insurers by 50x or more, and then the private insures come back and say, "no, how about we only pay you 300% what Medicare reimburses", and then they agree on that.

merpnderp 10y ago
I went to a doctor a while back that had a sign on his window saying he'd like to charge less than $50/visit, but medicare by law said he must charge at least $50. Government should be for the bare minimum of things a market can't provide, and subsidizing insurance plans for the needy and poor would be a lot better than the government, through I'm sure just some twisted set of unintended consequences, setting MINIMUM prices.
gm-conspiracy 10y ago
Correct me if I am wrong, please. Medicare is actually split into four separate regions, each with its own reimbursement rates.
- CWuestefeld 10y ago
  It's a lot more analog than that. There's a baseline schedule, but the rates for any provider are still going to vary due to other variables, in particular the "wage index" which recognizes that their labor expenses are going to be higher in areas with higher prevailing wages.

supster 10y ago

An insurance company makes money from the difference in premiums collected and expenses paid. Because Oscar is a startup you are right that they have a significant disadvantage in negotiating rates with providers. But they can lower costs in clever ways by lowering utilization. For example they offer free preventative routine care like immunizations, flu shots; free generic drugs (thus shifting consumption away from brand name drugs); and free primary care visits (which over the long term shift costs away from costly complications (e.g. in diabetes), or ER visits). In addition Oscar appeals to a younger tech savvy crowd which will inherently utilize health services a lot less.