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I have some questions about American health care system. If patients are being charged this much for anything, the money must be going to someone? Who's making
by jsnk 9y ago
I have some questions about American health care system.
If patients are being charged this much for anything, the money must be going to someone? Who's making all the money? Drug companies? Hospitals? Health insurance? Doctors or nurses? Why don't people honestly follow where the money end up and actually solve the problem once and for all. Increase the supply of X or many other bottlenecks by deregulation and result in decreased price?
- md2be 9y agoIt’s a very labor intensive, capital intensive business. It’s why you can get open heart surgery at 3AM 365 days a year.
- deleted 9y ago[deleted]
- maxerickson 9y agoWho's making all the money? Drug companies? Hospitals? Health insurance? Doctors or nurses? Yes.
- cratermoon 9y agoNot the nurses. Definitely not the nurses.
- maxerickson 9y agohttps://www.bls.gov/oes/current/oes292061.htm https://www.bls.gov/oes/current/oes292061.htm https://www.bls.gov/oes/current/oes291141.htm https://www.bls.gov/oes/current/oes291141.htm The majority of nurses are RNs and make well above median wages. LPNs still make better than average money. They aren't getting incredibly wealthy, sure, but they aren't working for peanuts either.
- cratermoon 9y agoWhy is a nurse's services worth less than a computer programmer's?
- maxerickson 9y agoIn the US, literally because there are not people offering them larger salaries. It's anyway probably not a great argument if you are trying to make people making 5-10x the median wage some kind of baseline.
- Domenic_S 9y agoMy friend (programmer)'s wife (nurse) outearned him by a wide margin in the Bay Area. She had a 2-3 year head start on him, career-wise.
- adamlett 9y agoDon't confuse cost with value.
- maxxxxx 9y agoAt least in California they make very good money.
- com2kid 9y agoNurses in the Seattle Metro area make 6 figures. It is a master program, but I know more than one person who has decided to change careers into nursing. That said, a masters in nursing isn't easy, a good nurse earns their pay.
- dv_dt 9y agoIt's odd the you get a bunch of basically non-sequitor responses to this. Nurse wages are rising at slower than the rate of the overall rise of medical costs. Based on that I'd tend to agree with your statement. edit: forgot a "slower than"
- wehadfun 9y agowatched this movie a few years ago. Basically the drug companies, medical equipment manufacturers, the GPO's, Health Insurance Companies. Sure nurses and Doctors make money but if you know anything about that job any good one is probably underpaid. https://en.wikipedia.org/wiki/Puncture_(film) https://en.wikipedia.org/wiki/Puncture_(film)
- cortesoft 9y agoWe don't follow the money because the people who are getting that money have a very strong interest to stop that investigation.
- conanbatt 9y agoI disagree, the problem is with the public and the government above all. There is economic consensus on healthcare costs already. Pharma is one of the biggest by far. This is an interesting thing for me as non-american, because both Bernie Sanders and Rand Paul blame the limitation of pharma for very high expenses in the american economy. They are opposite spectrums for state action but both agree on the same issue, and neither has consensus to solve the problem. Why? Because it has to be politically unprofitable for everyone else in the middle to say "We are going to open up importations and lose a bunch of pharma jobs". That I put on the public.
- maxxxxx 9y agoDon't fall into the trap of finding the one player to blame. Insurances, doctors, hospitals, labs, pharma, they all make very good money off this insane system and have no interest in change.
- conanbatt 9y agoThey are not the ones that are supposed to change, it is the system that has to change. Do you go to your boss and ask for a pay reduction because you earn too much? Silly.
- conanbatt 9y agoEveryone, and not particularly insurance companies though they usually bear most of the blame in the public eye. The most noticeable one is pharma though. If the US allowed for free drug importation from overseas, you would slash healthcare costs in an unprecedented way. The only thing needed today to reduce the problem significantly is for the government stop doing something.
- chimeracoder 9y ago> If patients are being charged this much for anything, the money must be going to someone? Who's making all the money? Drug companies? Hospitals? Health insurance? Doctors or nurses? Why don't people honestly follow where the money end up and actually solve the problem once and for all. Increase the supply of X or many other bottlenecks by deregulation and result in decreased price? There are a lot of reasons for the inflated costs, but a big one is the way the billing system itself works. Legally, providers have to charge patients the same amount in an initial bill, regardless of insurance status. They can reduce it later, but they can't bill different amounts. Medicare and Medicaid reimburse less than COGS, which means that providers start off by losing money per patient on publicly-insured patients. To stay afloat, they increase the amount they bill, so that private insurers essentially cover the difference. Uninsured patients are collateral damage here - they end up paying the sticker price that's intended for insurers as a highball starting point for negotiation. The insurers end up paying something around 3-10 times what Medicare pays, but less than the sticker price. This system is unfortunately unlikely to change, because any efforts to increase price transparency would decrease Medicare's ability to pass on costs to private insurers, and they would oppose that heavily.
- LeifCarrotson 9y ago> they would oppose that heavily. Who is 'they'?
- chimeracoder 9y agoMuch as people don't like to think of Medicare that way, Medicare itself is an institution with an enormous degree of influence. Medicare is arguably even more powerful than private insurers, because it's both the single largest and also one that receives a lot of special protections in law that private insurers don't. Currently, Medicare is able to balance its own books regardless of any increases or decreases to its tax revenue, because they can set the prices they pay unilaterally, with no mandate to cover their own costs (which is why they already don't cover their own costs). Any decreases in revenue purchasing power, whether due to tax cuts, budget cuts, or inflation, they simply lower their own reimbursement rates, and eventually private insurers will be forced to cover that difference. Medicare - and those who benefit from posturing themselves as supporters of Medicare politically[0] - would frame price transparency as cuts to Medicare. It's not really a cut to Medidcare's revenue; it'd be a reduction in their ability to reduce costs by extracting money from private insurers, but the latter doesn't really roll off the tongue, so they'd be pretty successful in messaging it as "cuts to Medicare". [0] which is not the same as people who actually benefit from Medicare or supporting Medicare, as we already know.
- deleted 9y ago[deleted]
- aidenn0 9y agoAll of those things are sucking up a bit of the excess money, and most of the rest of it is that the sticker price is largely fiction, since either your insurance company will negotiate a lower price, or you will be bankrupted and end up settling for a smaller amount. You can probably find articles for "X is driving the cost of health care up" for at least 6 different values of X, and the more I've personally dug, the more I found that all of those contribute and there's not obviously a single X that contributes to more than say 20% of the difference between the US and other wealthy countries.
- conanbatt 9y agoIm pretty sure pharma is one of them. The US consumes more meds than any other country per capita, its insane. It has an aderall and opium epidemic. Pharma can pay for 30-1m ads constantly on TV: the margins have to be ridicolous to market drugs that require prescriptions to patients. "Ask your doctor to prescribe you this"? what the hell.
- aidenn0 9y agoSure it is, the US spends almost double per-capita on meds compared to western european countries. On the other hand meds is only 12% of US healthcare expenditures, so if we were to reset to e.g. Germany's per-capita medication costs, it would cut US costs by less than 6%. This is a great example of what my comment is saying. There is no obvious silver bullet because everything in the US costs more than in other countries. [edit] Also, per-capita government expenditures on health care in the US are actually higher than in Germany[1] 1: https://data.oecd.org/healthres/health-spending.htm#indicator-chart https://data.oecd.org/healthres/health-spending.htm#indicato...
- philipkglass 9y agoDrugs that get advertised are ones still on patent that have high profit margins. Opioids and amphetamines are cheap to manufacture, long off-patent, and available as generics. They're not the drugs that get advertised on TV. The pharma business used to have spectacular margins, 20 years ago. The ROI of new chemical entities has been falling since the 1990s. Pharma companies have been shedding personnel and facilities and merging for a long time to keep stock prices up. They're having a hell of a time coming up with new patented products that are broadly useful and better than generics, so direct-to-consumer advertising is one of the few avenues left to boost revenue. It's funny how corporate arrogance and desperation can look so similar.
- dsfyu404ed 9y ago>Why don't people honestly follow where the money end up and actually solve the problem once and for all. Increase the supply of X or many other bottlenecks by deregulation and result in decreased price? Those are very good questions. Unfortunately the people and groups the money can be followed to have a very strong monetary incentive to not change things
- sdfasdasf 9y agoThe billing infrastructure is a huge source of cost that is often unmentioned. Getting anything done in the US is so damn hard and time consuming as a patient wrt to anywhere else I've lived (six counties) I have a game I play when I go to the Dr.: Estimate the ratio of Dr.s to administrative staff. In the US there are offices where I've seen with two admins per Dr. In Canada (where I'm from) I usually see two Dr.s per admin. There are other costs. Too few Dr. having too high a salary Another fun game to play. Find a recent list of Drs per capita for the various countries and go throught the sorted list. English speaking countries fare really bad, but the US does very well among English speaking ones. Why? It's a lot easier for an English speaking Dr. to move to the US than an non English speaking one. ObamaCare was mostly a failure. I had it in between jobs for a few months, it's gotten worse since. It really doesn't make sense for a young person to buy it unless you have a per-existing condition. Bush also made it worse by prohibiting drug re-imports (and letting pharmas charge medicaid whatever they want??) Ultimately too many too powerful people have interests in keeping the US health care in the state its in, so it'll continue like this until it collapses.
- alistairSH 9y agoGenerally not the insurance companies. While they might have large profits in gross terms, their margins are somewhat constrained by the combination of competition and Medical Loss Ratio (MLR, the amount of revenue spent on care). MLR for large group policies is 85% (of every $100 in premiums paid, they must pay out at least $85 in care). None of which should be construed that they don't contribute to the problem. They just aren't the primary villain.
- exelius 9y agoIt’s opaque by design; but ultimately a wide range of medical device manufacturers, suppliers, distributors, etc who are able to push products that are more and more expensive into the system. Because there is not much systemic incentive to push back against high prices caused by astronomical R&D costs (these drugs are very complex and the process of testing a drug in the US is very expensive). The US market basically pays R&D costs for the medical care for the rest of the world because we can’t get our act together around coordinated buying. Basically, treatments / devices are developed without market demand, priced at a premium, and adopted because they are incrementally more effective than the previous version — but the people paying for them ultimately just pass the costs on to another middleman in the form of insurance companies. Patients often have little / no choice in the treatments they receive, but they’re the ones ultimately paying for it. This causes people to avoid the medical system until they’re deathly ill, which ends up costing the whole system more. Edit: also, the laws don’t help. For example, health insurance companies are required to spend 85% of revenue on direct medical expenses, which means they get 15% to fund operations and take a profit. How do you get more profit with the same operations spend? Just increase medical spend, and increase premiums / copays (revenue) accordingly. They actually have a disincentive to keep costs down. Things are starting to change but I suspect Amazon Health is going to be revolutionary for this reason alone.
- ptero 9y agoIt is a very inefficient system with a lot of unnecessary couplings and vested interests and it does not allow for a major improvement via a sequence of local optimizations. Any change is likely to hurt someone and vested interests scream: see what you do to some_choosen_groop. IMO a rebuild is needed to fix it. For example, if $X gets billed it is seldom the price that gets paid. Usually insurance has negotiated rates of 0.1-0.2X and pays that. Different insurances pay different amounts for the same procedure. Hospitals know this and internally amortize expectations (to, say, 0.15X) pretty well. Now for the stinky part: someone without an insurance gets a strong push and occasionally a threat to pay the full bill. The patient might push back, but success varies and poverty is the only high probability way to successfully lower the bill. It is a BIG pain for both sides, as it usually takes years to collect even a part of this and any money will likely be shared between hospital and any organizations that help collect. Many hospitals would gladly take say, 0.2X upfront (their amortized expectation is $.15X). But they must bill same amount to everyone; thus they bill an outrageous amount and the few without insurance lose BIG.
- deleted 9y ago[deleted]
- kylehotchkiss 9y agoI've heard Malpractice insurance is very expensive too. Courts must side in the patients sides in malpractice cases somewhat often.
- savanaly 9y agoI found this post (not by an economist, mind you, but by a psychiatrist who also writes about economics and politics a lot) helpful in thinking about this "cost disease" that afflicts healthcare and many other industries. http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
- psyc 9y agoWhen I have tried to follow the money, it mostly leads to private management companies, which in turn stop at private equity firms and investors. It ought to be well understood by now that in the US, most profit flows to wealthy property owners.
- tmnvix 9y ago> Who's making all the money? An example of where it goes: "On June 24, 2013, The Wall Street Journal reported that McKesson Chairman and CEO John Hammergren's pension benefits of $159 million had set a record for "the largest pension on file for a current executive of a public company, and almost certainly the largest ever in corporate America." A study in 2012 by GMI Ratings, which tracks executive pay, found that 60% of CEOs at S&P 500 companies have pensions, and their value averages $11.5 million."[1] > Increase the supply of X or many other bottlenecks by deregulation and result in decreased price? Unfortunately, I suspect that increasing the supply of CEO's would somehow be totally ineffective. They seem to exist outside of the usual supply and demand dynamic. [1] https://en.wikipedia.org/wiki/McKesson_Corporation https://en.wikipedia.org/wiki/McKesson_Corporation