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Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack pric

Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive. The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. Its a bit more complicated than that, I'd admit, but that's the TLDR version.

chimeracoder 9y ago
> Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive. To clarify: Medicare reimburses rates that are below COGS, so hospitals have to increase the amount they charge private insurers in order to make up the loss.
- dangerlibrary 9y ago
  If Medicare rates are actually below cogs, why do hospitals accept Medicare patients? I know some don't, but the vast majority do. Something about that explanation feels off.
  - Thriptic 9y ago
    Some private facilities don't, but in general it's cheaper and easier to provide preventive care than it is to try to collect from these patients after they admit to the ER with a complication (where you are mandated by law to treat them). One of the reasons hospitals accept discounted rates for insured patients in general is ease of reimbursement vs trying to chase the patient for money.
  - woolvalley 9y ago
    If you serve a certain rate of medicare patients, you get additional funding. It's set up this way for 'political' reasons. Like most of us politics, it's a mess.
    - chimeracoder 9y ago
      > If you serve a certain rate of medicare patients, you get additional funding. It's set up this way for 'political' reasons. Like most of us politics, it's a mess. That's not an incentive for hospitals to serve Medicare patients; it's compensation for the fact that the hospital sees so many Medicare patients (and therefore so few privately-insured patients, by portion) that it can't make up the difference solely from overcharging private insurers.
- ejstronge 9y ago
  The grandparent is describing a separate issue - note that not all hospitals will serve Medicare-receiving patients beyond their federal requirements. Insurers negotiate reimbursement rates with hospitals, with both parties being able to leverage their size/social cachet to extract favorable terms. This contributes to the availability of certain hospital chains in the preferred networks vs. the non-preferred networks of particular insurers.
  - chimeracoder 9y ago
    It's actually the same issue - the way the contracts are structured, insurers agree to pay X% of what Medicare charges, where X is typically something like 200% or 300%.
reaperducer 9y ago
> The insurance companies only pay x% of any given item, The hospitals negotiate those rates. If they're not happy with them, they need better negotiators.
- Thriptic 9y ago
  Depends on what the market conditions are. If there is a lot of competition from hospitals then the payer may just refuse to include the hospital in network if they aren't willing to play ball, meaning they lose all the prospective business.
mywittyname 9y ago
Health insurance companies have taken to denying almost every claim that hospitals file. This overtaxes the hospitals claims denial departments and costs hospitals millions in lost revenue because they don't have the staff to properly review and resubmit every claim (which has to be done by a clinical specialist). It's like taking your car to a mechanic, and once it's fixed, refusing to pay, claiming car didn't need THAT repair in the first place. Then getting away with it because you have an arbitration agreement in place with the shop. So the shop needs to employ an entire separate department of ASE certified mechanics that are dedicated to documenting that the repairs performed on customer cars were necessary. But the kicker is, YOU GET TO DECIDE IF YOU'RE CONVINCED THE REPAIR WAS NECESSARY. Hospitals used to have small (1 person per 10k beds) claims denial departments and use outsourcing firms if case loads increased. Now they are acquiring all the outsourcing firms and increasing their staff to like 100 people per 10k beds. It's insane. I like to retell a particularly awful denial my partner had to deal with, which was a patient had their open heart surgery claim denied by the insurance company because they determined that the patient's condition only warranted observational care (that's right, the insurance company determines what care you need/get). The hospital eventually won that claim, but they routinely lose $100k+ claims and have to eat the cost.
- garmaine 9y ago
  On the other hand, when I bring my car to an auto shop they give an estimate of cost before actually doing any work.
  - influx 9y ago
    Not only that but car insurance is for catastrophic events, not for tune ups, and oil changes.
  - vkou 9y ago
    Your car is unlikely to experience life-threatening complications with a nearly unbounded upper cost while it's being fixed. Your body is. A routine surgery can absolutely turn into a hundred-thousand-dollar nightmare. Never mind that a mechanic has a much better understanding of a car, then a doctor does of a human body.
maxxxxx 9y ago
"The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. " The surgeons I see through work have very nice houses and 100k+ cars so they are part of this.
- wlesieutre 9y ago
  You can thank the American Medical Association for their work on artificially limiting the number of doctors. I've read some accounts that they're now trying to fix this, but it's not something you can just fix in a year or two.
- cjalmeida 9y ago
  To add some data to your anecdote. Median surgeon salary in CA is $400K. In UK, a surgeon gets about $100K.
Thriptic 9y ago
The real root problems with the system are that a tiny minority of very sick patients account for an overwhelming majority of treatment costs; that it's difficult to prevent this from happening; and that the current care structures make it hard to take early action to incentivize these patients to improve. It also is almost impossible to have a real discussion about this fact because it makes people uncomfortable.
- majormajor 9y ago
  There's a lot of moralizing in this, without numbers justifying it. Show me the evidence that an overwhelming majority of costs come from few recalcitrant bad actors vs things like cancers, expensive surgical or drug remedies of rare diseases, or just plain expensive end-of-life care (a somewhat separate discussion from the others, but a conversation that'll have to be had sometime). Without that... the costs will always be unevenly distributed due to the nature of illness, that's why the only sane first-step health policy is mandated universal insurance coverage, public or private, since the main question is who is going to get the bad news that they've got the unlucky genes/mutated cells/whatever. Everyone pays in, everyone gets covered if/when they need it. And if you pay in your whole life and never get seriously ill? That's not a reason to complain, that's a reason to thank your lucky stars you didn't have to deal with being seriously ill or injured! It's not fucking fun, like sick people are trying to get a free ride here.
  - adventured 9y ago
    The parent comment was correct when they said this: "The real root problems with the system are that a tiny minority of very sick patients account for an overwhelming majority of treatment costs" It's impossible to tell exactly what the parent comment meant any more precisely without clarification, whether they were talking about unnecessary over-consumption of resources (Americans have been over-healthcare'd for decades), or that eg cancer patients or elderly consume vast resources (as one would expect). However, it is of course the case that a tiny percentage of the population produces a very large share of the cost. The bottom 50% of healthcare consumers, are a mere 3% of the cost in the system. I don't know what the point of any of that is however, there are only ultimately two choices: go back to the old system that was far less expensive for the majority, but didn't properly cover about 1/3 of the population; or continue to shift toward universal healthcare with a fully distributed cost (which means significantly raising taxes on the middle class, as in every universal healthcare system). "When it comes to America's spiraling health care costs, the country's problems begin with the 5%. In 2008 and 2009, 5% of Americans were responsible for nearly half of the country's medical spending. ... In 2009, the top 1% of patients accounted for 21.8% of expenditures." https://www.theatlantic.com/business/archive/2012/01/5-of-americans-made-up-50-of-us-health-care-spending/251402/ https://www.theatlantic.com/business/archive/2012/01/5-of-am...
jjoonathan 9y ago
Hospitals are every bit as cynically abusive as the other players. They ratchet up prices as high as they can get away with while blaming insurance companies, the only party in the system with enough leverage to negotiate prices down, they demand huge kickbacks before giving drug companies access to patients (the #1 cost in drug development) and put gigantic markups on drugs they give to patients while pretending drug companies are the sole responsible party for high drug prices, they act like non-profits when asked to pay taxes but for-profits when they decide on executive compensation or location strategy (i.e. close hospitals in poor neighborhoods, open in rich neighborhoods), and they house a guild that has had such diabolical success in "managing" its training pipeline that it publicly condemns the policies it itself put in place to do so. In general: If you ask the insurance companies who the problem is, they point at hospitals and drug companies. If you ask hospitals who the problem is, they point at insurance companies and drug companies. If you ask drug companies who the problem is, they point at insurance companies and hospitals. If you look at patient costs in the three sectors compared to other countries, you see a remarkably even division of the spoils between the three heads of the beast.
ekianjo 9y ago
> The problem with our healthcare system is that too much money goes to drug companies, Erm no, actually you pay a lot more for pure hospital services all things considered than whatever is paid for the price of drugs. I totally agree that drugs should be cheaper for patients, but pretending drug manufacturers are the only/main problem is just far from the reality of the market. Every intermediate is inflating their prices as well.
cjalmeida 9y ago
Oh please. Doctors in the US get huge amounts of money, to the point they're the actual 1%. You don't see anything like this in OCDE countries. Doctor associations all across the country create enormous barriers to the opening of new medical schools to avoid competition. Don't get me wrong, medical doctors are generally good hard working people. But we need to acknowledge they're part of the problem.
- cjalmeida 9y ago
  To downvoted, some data. A surgeon in CA earns on average about $400k while its peer in UK makes $100. 4x the cost of labor should partially explain why a surgery can easily cost 6 figures.
  - jinglebells 9y ago
    Although, remember that surgeon won't need to pay for health insurance, so that saves some cash :D
- jrnichols 9y ago
  > Doctor associations all across the country create enormous barriers to the opening of new medical schools to avoid competition. similar to how nursing unions band together and squash efforts for community paramedicine (many of the same services at a way lower cost) to expand. "they'll be taking our jobs!" is what it boils down to.

chimeracoder 9y ago

> Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive. To clarify: Medicare reimburses rates that are below COGS, so hospitals have to increase the amount they charge private insurers in order to make up the loss.

dangerlibrary 9y ago
If Medicare rates are actually below cogs, why do hospitals accept Medicare patients? I know some don't, but the vast majority do. Something about that explanation feels off.
- Thriptic 9y ago
  Some private facilities don't, but in general it's cheaper and easier to provide preventive care than it is to try to collect from these patients after they admit to the ER with a complication (where you are mandated by law to treat them). One of the reasons hospitals accept discounted rates for insured patients in general is ease of reimbursement vs trying to chase the patient for money.
- woolvalley 9y ago
  If you serve a certain rate of medicare patients, you get additional funding. It's set up this way for 'political' reasons. Like most of us politics, it's a mess.
  - chimeracoder 9y ago
    > If you serve a certain rate of medicare patients, you get additional funding. It's set up this way for 'political' reasons. Like most of us politics, it's a mess. That's not an incentive for hospitals to serve Medicare patients; it's compensation for the fact that the hospital sees so many Medicare patients (and therefore so few privately-insured patients, by portion) that it can't make up the difference solely from overcharging private insurers.
ejstronge 9y ago
The grandparent is describing a separate issue - note that not all hospitals will serve Medicare-receiving patients beyond their federal requirements. Insurers negotiate reimbursement rates with hospitals, with both parties being able to leverage their size/social cachet to extract favorable terms. This contributes to the availability of certain hospital chains in the preferred networks vs. the non-preferred networks of particular insurers.
- chimeracoder 9y ago
  It's actually the same issue - the way the contracts are structured, insurers agree to pay X% of what Medicare charges, where X is typically something like 200% or 300%.

reaperducer 9y ago

> The insurance companies only pay x% of any given item, The hospitals negotiate those rates. If they're not happy with them, they need better negotiators.

Thriptic 9y ago
Depends on what the market conditions are. If there is a lot of competition from hospitals then the payer may just refuse to include the hospital in network if they aren't willing to play ball, meaning they lose all the prospective business.

mywittyname 9y ago

Health insurance companies have taken to denying almost every claim that hospitals file. This overtaxes the hospitals claims denial departments and costs hospitals millions in lost revenue because they don't have the staff to properly review and resubmit every claim (which has to be done by a clinical specialist). It's like taking your car to a mechanic, and once it's fixed, refusing to pay, claiming car didn't need THAT repair in the first place. Then getting away with it because you have an arbitration agreement in place with the shop. So the shop needs to employ an entire separate department of ASE certified mechanics that are dedicated to documenting that the repairs performed on customer cars were necessary. But the kicker is, YOU GET TO DECIDE IF YOU'RE CONVINCED THE REPAIR WAS NECESSARY. Hospitals used to have small (1 person per 10k beds) claims denial departments and use outsourcing firms if case loads increased. Now they are acquiring all the outsourcing firms and increasing their staff to like 100 people per 10k beds. It's insane. I like to retell a particularly awful denial my partner had to deal with, which was a patient had their open heart surgery claim denied by the insurance company because they determined that the patient's condition only warranted observational care (that's right, the insurance company determines what care you need/get). The hospital eventually won that claim, but they routinely lose $100k+ claims and have to eat the cost.

garmaine 9y ago
On the other hand, when I bring my car to an auto shop they give an estimate of cost before actually doing any work.
- influx 9y ago
  Not only that but car insurance is for catastrophic events, not for tune ups, and oil changes.
- vkou 9y ago
  Your car is unlikely to experience life-threatening complications with a nearly unbounded upper cost while it's being fixed. Your body is. A routine surgery can absolutely turn into a hundred-thousand-dollar nightmare. Never mind that a mechanic has a much better understanding of a car, then a doctor does of a human body.

maxxxxx 9y ago

"The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. " The surgeons I see through work have very nice houses and 100k+ cars so they are part of this.

wlesieutre 9y ago
You can thank the American Medical Association for their work on artificially limiting the number of doctors. I've read some accounts that they're now trying to fix this, but it's not something you can just fix in a year or two.
cjalmeida 9y ago
To add some data to your anecdote. Median surgeon salary in CA is $400K. In UK, a surgeon gets about $100K.

Thriptic 9y ago

The real root problems with the system are that a tiny minority of very sick patients account for an overwhelming majority of treatment costs; that it's difficult to prevent this from happening; and that the current care structures make it hard to take early action to incentivize these patients to improve. It also is almost impossible to have a real discussion about this fact because it makes people uncomfortable.

majormajor 9y ago
There's a lot of moralizing in this, without numbers justifying it. Show me the evidence that an overwhelming majority of costs come from few recalcitrant bad actors vs things like cancers, expensive surgical or drug remedies of rare diseases, or just plain expensive end-of-life care (a somewhat separate discussion from the others, but a conversation that'll have to be had sometime). Without that... the costs will always be unevenly distributed due to the nature of illness, that's why the only sane first-step health policy is mandated universal insurance coverage, public or private, since the main question is who is going to get the bad news that they've got the unlucky genes/mutated cells/whatever. Everyone pays in, everyone gets covered if/when they need it. And if you pay in your whole life and never get seriously ill? That's not a reason to complain, that's a reason to thank your lucky stars you didn't have to deal with being seriously ill or injured! It's not fucking fun, like sick people are trying to get a free ride here.
- adventured 9y ago
  The parent comment was correct when they said this: "The real root problems with the system are that a tiny minority of very sick patients account for an overwhelming majority of treatment costs" It's impossible to tell exactly what the parent comment meant any more precisely without clarification, whether they were talking about unnecessary over-consumption of resources (Americans have been over-healthcare'd for decades), or that eg cancer patients or elderly consume vast resources (as one would expect). However, it is of course the case that a tiny percentage of the population produces a very large share of the cost. The bottom 50% of healthcare consumers, are a mere 3% of the cost in the system. I don't know what the point of any of that is however, there are only ultimately two choices: go back to the old system that was far less expensive for the majority, but didn't properly cover about 1/3 of the population; or continue to shift toward universal healthcare with a fully distributed cost (which means significantly raising taxes on the middle class, as in every universal healthcare system). "When it comes to America's spiraling health care costs, the country's problems begin with the 5%. In 2008 and 2009, 5% of Americans were responsible for nearly half of the country's medical spending. ... In 2009, the top 1% of patients accounted for 21.8% of expenditures." https://www.theatlantic.com/business/archive/2012/01/5-of-americans-made-up-50-of-us-health-care-spending/251402/ https://www.theatlantic.com/business/archive/2012/01/5-of-am...

jjoonathan 9y ago

Hospitals are every bit as cynically abusive as the other players. They ratchet up prices as high as they can get away with while blaming insurance companies, the only party in the system with enough leverage to negotiate prices down, they demand huge kickbacks before giving drug companies access to patients (the #1 cost in drug development) and put gigantic markups on drugs they give to patients while pretending drug companies are the sole responsible party for high drug prices, they act like non-profits when asked to pay taxes but for-profits when they decide on executive compensation or location strategy (i.e. close hospitals in poor neighborhoods, open in rich neighborhoods), and they house a guild that has had such diabolical success in "managing" its training pipeline that it publicly condemns the policies it itself put in place to do so. In general: If you ask the insurance companies who the problem is, they point at hospitals and drug companies. If you ask hospitals who the problem is, they point at insurance companies and drug companies. If you ask drug companies who the problem is, they point at insurance companies and hospitals. If you look at patient costs in the three sectors compared to other countries, you see a remarkably even division of the spoils between the three heads of the beast.

ekianjo 9y ago

> The problem with our healthcare system is that too much money goes to drug companies, Erm no, actually you pay a lot more for pure hospital services all things considered than whatever is paid for the price of drugs. I totally agree that drugs should be cheaper for patients, but pretending drug manufacturers are the only/main problem is just far from the reality of the market. Every intermediate is inflating their prices as well.

cjalmeida 9y ago

Oh please. Doctors in the US get huge amounts of money, to the point they're the actual 1%. You don't see anything like this in OCDE countries. Doctor associations all across the country create enormous barriers to the opening of new medical schools to avoid competition. Don't get me wrong, medical doctors are generally good hard working people. But we need to acknowledge they're part of the problem.

cjalmeida 9y ago
To downvoted, some data. A surgeon in CA earns on average about $400k while its peer in UK makes $100. 4x the cost of labor should partially explain why a surgery can easily cost 6 figures.
- jinglebells 9y ago
  Although, remember that surgeon won't need to pay for health insurance, so that saves some cash :D
jrnichols 9y ago
> Doctor associations all across the country create enormous barriers to the opening of new medical schools to avoid competition. similar to how nursing unions band together and squash efforts for community paramedicine (many of the same services at a way lower cost) to expand. "they'll be taking our jobs!" is what it boils down to.