6 ms·

> There's no reason for it to cost as much as is does in the US, apart from greed. The reason is people don't "pay" for it. Insurance does, and so nobody cares

by ams6110 10y ago

> There's no reason for it to cost as much as is does in the US, apart from greed. The reason is people don't "pay" for it. Insurance does, and so nobody cares. Edit: Well, the insurance companies should care, but if it's something that's rarely prescribed, it might be easier to just pay the claim instead of devoting people to negotiating a lower price.

mmjaa 10y ago
Who pays for insurance? (Hint: its you and me, buddy.)
- cmdrfred 10y ago
  A lot of those costs are taken indirectly via suppressed wages as many people get insurance via employment. It seems to me that a great deal of effort goes into hiding the costs of services and products from those who are paying them in this market.
- zulln 10y ago
  Yes, but the point is if regular people was faced directly with the cost people would be angry, when hidden by insurance cost it is not made as clear. You expect the masses to think one step further, which will not happen on enough scale.
- therpe1 10y ago
  Um, no, the tax payers pay for it through Medicaid. People seem to have very strange ideas about how the healthcare industry actually works. But it's not a secret, you can go look at their SEC filings and see the numbers in black and white. Most insurance companies are enjoying record profits because of ever-expanding government funded health programs like Medicare [1]. This is just a fact. Now combine the "limitless pockets" of the Federal government with the total lack of price controls and you get exactly what you would expect in the USA -- prices going straight to the moon. I very much expect this is not going to change any time soon. There is no political desire or will to limit Medicaid and/or institute price controls. This makes investing in health insurers very lucrative. The industry has been enjoying record profits since 2009 [2] and this will continue until the American public learns to do math... [1] https://www.healthinsurance.org/blog/2016/03/01/no-obamacare-isnt-killing-the-insurance-industry/ https://www.healthinsurance.org/blog/2016/03/01/no-obamacare... [2] https://www.consumeraffairs.com/news/health-insurance-industry-rakes-in-billions-while-blaming-obamacare-for-losses-110116.html https://www.consumeraffairs.com/news/health-insurance-indust...
HarryHirsch 10y ago
In normal countries they have price controls. That approach works extremely well, in fact so well that price controls on pharmaceuticals in America are politically unworkable.
- ikeboy 10y ago
  http://slatestarcodex.com/2016/09/07/reverse-voxsplaining-brand-name-drugs/ http://slatestarcodex.com/2016/09/07/reverse-voxsplaining-br...
  - HarryHirsch 10y ago
    The vultures that trade in small-volume generics do innovation now? Turing and Valeant do R&D?! The bigger issue is the financing model that causes innovation to happen in all the wrong fields, but that is a different question and very complex.
  - deleted 10y ago
    [deleted]
  - therpe1 10y ago
    That article is long and completely without substance. I don't know why I didn't turn back sooner but lesson learned. Anybody who thinks the drug industry charges so much for "innovation" is just dumb. Like all sellers the drug industry charges exactly what buyers are willing to pay. When the buyer is the federal government (and make no mistake, the federal government is indeed the biggest purchaser of healthcare and healthcare has been thoroughly "medicalized" [1][2]) then there's absolutely no limit to what you can charge. This situation thoroughly accounts for the high drug prices unique to the US and there is no need to crap out a bunch of words about innovation. [1] http://www.commonwealthfund.org/publications/newsletters/washington-health-policy-in-review/2016/dec/december-5-2016/federal-government-emerges-as-top-health-buyer http://www.commonwealthfund.org/publications/newsletters/was... [2] https://en.wikipedia.org/wiki/Health_care_finance_in_the_United_States#Role_of_government_in_health_care_market https://en.wikipedia.org/wiki/Health_care_finance_in_the_Uni...
- JumpCrisscross 10y ago
icantdrive55 10y ago
Through collective bargaining Insurance companies tells big pharma what they will pay for a particuliar drug. They tell all aspects of medicine what they will pay. I once had a blood test, and a newer antibiotic (forget the name). I got a $1200 bill in the mail. I knew I had good insurance, so I called my Insurance company. They told me they paid the bill. It was $90 for the blood work, and $20 for the antibiotic. The kind lady told me how the system works. I paid 10% of that--$11.00 I thought about all the people who don't have collective bargaining rights, and think about that bill every time this is brought up. So insurance doesn't just pay. They pay as little as they can get away with, and make those huge profits. It's the guy who has lousy insurance, high deductibles, and no insurance; that gets reamed. I find it all sickening.
mistercow 10y ago
> Well, the insurance companies should care I'm not sure they "should", at least from a financial standpoint. The ACA basically put a cap on insurance company profits, as a percentage. It's not phrased quite that way, but it's the upshot (look up "medical loss ratio"). This is the worst provision I know of in the ACA, because it sounds like a nice idea, but if you think it through, it actually disincentivizes insurance companies from doing what they can to lower costs. It basically says that the maximum amount that insurance companies can keep is 20% of premiums (assuming no administrative cost or other overhead). Say the average cost per person is $4000 / year, so the average premium is $5000 / year; they're able to make a $1000 profit, or 20% of the premium. Now suppose the insurance company negotiates costs down to $3000 per year. Well, the maximum premium they can charge now is $3750, so they lose 25% of their profit. On the other hand, if they sit by and let costs skyrocket to $6000, they can raise premiums to $7500, and make $1500 in profit. Now, of course insurance companies also compete on their premiums, so in theory, they still have some incentive to negotiate lower costs. But it seems like that must be seriously mitigated by the profit cap. I'm not an expert on this by any means, so if someone who is wants to set me straight, I'd love to hear it. But I'm just very confused as to why this provision was thought to be a good idea.
- bobwaycott 10y ago
  I'd need to go digging through old talking points, but this always seemed obvious to me as a provision added for the sheer political calculus/motivation that it sounds good to people. It's just an easy sell—we're going to cap the percentage of profits focuses the attention away from the real cost side effects, and the ability to increase profits by not reducing costs exactly as you described.
credit_guy 10y ago
Insurance companies don't care, period. If they somehow lose money one year, they raise the premiums next year. They don't even need to lose money. If their payments go up, they show that to their regulators, who allow them to charge us higher prices. And since the regulators allow them to have a certain profit margin, actually the insurance companies have the economic incentive to pay more.

by ams6110 10y ago

mmjaa 10y ago

Who pays for insurance? (Hint: its you and me, buddy.)

cmdrfred 10y ago
A lot of those costs are taken indirectly via suppressed wages as many people get insurance via employment. It seems to me that a great deal of effort goes into hiding the costs of services and products from those who are paying them in this market.
zulln 10y ago
Yes, but the point is if regular people was faced directly with the cost people would be angry, when hidden by insurance cost it is not made as clear. You expect the masses to think one step further, which will not happen on enough scale.
therpe1 10y ago
Um, no, the tax payers pay for it through Medicaid. People seem to have very strange ideas about how the healthcare industry actually works. But it's not a secret, you can go look at their SEC filings and see the numbers in black and white. Most insurance companies are enjoying record profits because of ever-expanding government funded health programs like Medicare [1]. This is just a fact. Now combine the "limitless pockets" of the Federal government with the total lack of price controls and you get exactly what you would expect in the USA -- prices going straight to the moon. I very much expect this is not going to change any time soon. There is no political desire or will to limit Medicaid and/or institute price controls. This makes investing in health insurers very lucrative. The industry has been enjoying record profits since 2009 [2] and this will continue until the American public learns to do math... [1] https://www.healthinsurance.org/blog/2016/03/01/no-obamacare-isnt-killing-the-insurance-industry/ https://www.healthinsurance.org/blog/2016/03/01/no-obamacare... [2] https://www.consumeraffairs.com/news/health-insurance-industry-rakes-in-billions-while-blaming-obamacare-for-losses-110116.html https://www.consumeraffairs.com/news/health-insurance-indust...

HarryHirsch 10y ago

In normal countries they have price controls. That approach works extremely well, in fact so well that price controls on pharmaceuticals in America are politically unworkable.

ikeboy 10y ago
http://slatestarcodex.com/2016/09/07/reverse-voxsplaining-brand-name-drugs/ http://slatestarcodex.com/2016/09/07/reverse-voxsplaining-br...
- HarryHirsch 10y ago
  The vultures that trade in small-volume generics do innovation now? Turing and Valeant do R&D?! The bigger issue is the financing model that causes innovation to happen in all the wrong fields, but that is a different question and very complex.
- deleted 10y ago
  [deleted]
- therpe1 10y ago
  That article is long and completely without substance. I don't know why I didn't turn back sooner but lesson learned. Anybody who thinks the drug industry charges so much for "innovation" is just dumb. Like all sellers the drug industry charges exactly what buyers are willing to pay. When the buyer is the federal government (and make no mistake, the federal government is indeed the biggest purchaser of healthcare and healthcare has been thoroughly "medicalized" [1][2]) then there's absolutely no limit to what you can charge. This situation thoroughly accounts for the high drug prices unique to the US and there is no need to crap out a bunch of words about innovation. [1] http://www.commonwealthfund.org/publications/newsletters/washington-health-policy-in-review/2016/dec/december-5-2016/federal-government-emerges-as-top-health-buyer http://www.commonwealthfund.org/publications/newsletters/was... [2] https://en.wikipedia.org/wiki/Health_care_finance_in_the_United_States#Role_of_government_in_health_care_market https://en.wikipedia.org/wiki/Health_care_finance_in_the_Uni...
JumpCrisscross 10y ago

icantdrive55 10y ago

Through collective bargaining Insurance companies tells big pharma what they will pay for a particuliar drug. They tell all aspects of medicine what they will pay. I once had a blood test, and a newer antibiotic (forget the name). I got a $1200 bill in the mail. I knew I had good insurance, so I called my Insurance company. They told me they paid the bill. It was $90 for the blood work, and $20 for the antibiotic. The kind lady told me how the system works. I paid 10% of that--$11.00 I thought about all the people who don't have collective bargaining rights, and think about that bill every time this is brought up. So insurance doesn't just pay. They pay as little as they can get away with, and make those huge profits. It's the guy who has lousy insurance, high deductibles, and no insurance; that gets reamed. I find it all sickening.

mistercow 10y ago

> Well, the insurance companies should care I'm not sure they "should", at least from a financial standpoint. The ACA basically put a cap on insurance company profits, as a percentage. It's not phrased quite that way, but it's the upshot (look up "medical loss ratio"). This is the worst provision I know of in the ACA, because it sounds like a nice idea, but if you think it through, it actually disincentivizes insurance companies from doing what they can to lower costs. It basically says that the maximum amount that insurance companies can keep is 20% of premiums (assuming no administrative cost or other overhead). Say the average cost per person is $4000 / year, so the average premium is $5000 / year; they're able to make a $1000 profit, or 20% of the premium. Now suppose the insurance company negotiates costs down to $3000 per year. Well, the maximum premium they can charge now is $3750, so they lose 25% of their profit. On the other hand, if they sit by and let costs skyrocket to $6000, they can raise premiums to $7500, and make $1500 in profit. Now, of course insurance companies also compete on their premiums, so in theory, they still have some incentive to negotiate lower costs. But it seems like that must be seriously mitigated by the profit cap. I'm not an expert on this by any means, so if someone who is wants to set me straight, I'd love to hear it. But I'm just very confused as to why this provision was thought to be a good idea.

bobwaycott 10y ago
I'd need to go digging through old talking points, but this always seemed obvious to me as a provision added for the sheer political calculus/motivation that it sounds good to people. It's just an easy sell—we're going to cap the percentage of profits focuses the attention away from the real cost side effects, and the ability to increase profits by not reducing costs exactly as you described.

credit_guy 10y ago

Insurance companies don't care, period. If they somehow lose money one year, they raise the premiums next year. They don't even need to lose money. If their payments go up, they show that to their regulators, who allow them to charge us higher prices. And since the regulators allow them to have a certain profit margin, actually the insurance companies have the economic incentive to pay more.