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> I'm convinced that it's the cost structure, implemented by many-to-many negotiation between providers and insurers, that drives the uniquely high cost of the

> I'm convinced that it's the cost structure, implemented by many-to-many negotiation between providers and insurers, that drives the uniquely high cost of the US health care system. (Unique as in twice as much per capita as the rest of the industrialized world.) Japan's system is structurally very similar to ours - employer-provided private insurance - with one key difference. In Japan, pricing for all medical goods/services are set by a government agency, with an eye to keeping the industry functional/profitable while keeping costs under control. There are no "networks". Everyone knows what it's going to cost, everywhere. In the US, Medicare pays for 40% of the market, and they set prices unilaterally. In addition to providers are legally required to charge private insurers more, Medicare has no mandate to keep the industry profitable, and in fact their reimbursement rates are about 7% lower than COGS. In other words, providers are (in the aggregate) losing money on Medicare patients on a per-patient basis, even before they account for overhead (building maintenance, staff wages, etc.). Medicare knows this and admits as much - not just in their annual reports, but because they actually have a number of different stipend programs that provide extra money to providers who see a lot of Medicare patients, because otherwise they would literally go bankrupt and close their practices (ie, if they don't see enough privately-insured patients to be able to make up the gap, they will go out of business). Medicare is, actually, the biggest beneficiary of price opacity in the American healthcare system today, but that opacity is not going anywhere.

beat 8y ago
So is Medicare paying more than similar systems in other countries, or less, or about the same? And if Medicare is paying more than, say, Japan, but it's still not enough to cover the costs in America, what is going on structurally with the other 60% of the medical system? Because there's something structurally broken here. It's not mere profiteering - it's more like a feedback loop. For-profit medicine works effectively and affordably in at least one other country with a cost of living otherwise on par with ours.
- chimeracoder 8y ago
  > So is Medicare paying more than similar systems in other countries, or less, or about the same? You can't compare the raw dollar values because the economies aren't the same - $5 in New York doesn't mean the same as $5 in Tulsa, OK or $5 in London. That's why things like PPP comparisons exist (except you can't use a PPP comparison in a specific vertical like this to answer your question, because that is the very question you're asking in the first place; it'd be a tautology). But there is an easy answer to the question, because Medicare is paying less than what would be necessary to sustain a medical practice, if you assumed that all doctors, nurses, secretaries, and janitors worked for free, and if you assumed that building and office space were free and required zero maintenance. We know that because we know they reimburse less than COGS, which is why we know their rates are nowhere near sustainable by any standards, let alone compared to other countries. > It's not mere profiteering - it's more like a feedback loop. Yes, that's exactly what's happening. It's a positive feedback look (in the literal sense; it's not a positive outcome for us). The positive feedback loop comes from the fact that Medicare has neither a mandate nor an incentive to reimburse rates that are remotely sustainable, so it sets rates that are arbitrarily low. Providers are forced to accept these, and then pass them on to private health insurers. Private health insurers ultimately pass these costs on to patients in the form of higher premiums, but patients have no choice in the matter, because they can't choose providers based on how much the provider will overcharge their health insurer[0]. They can't choose providers based on price at all, because there's no price transparency in the system. And there's no price transparency in the system because that opacity is essentially mandated by law[1], and it's necessary for this system in which Medicare uses private insurers to essentially pad its own budget (by reducing its costs far below what would otherwise be sustainable if they were truly the only payer in the market). > For-profit medicine works effectively and affordably in at least one other country with a cost of living otherwise on par with ours Which country are you referring to? Truthfully speaking, every country has a for-profit system in that their healthcare systems are still subject to a profit motive (yes, that includes government-run systems like the IHS and NHS). Most other countries with comparable development levels to the US use privately-run systems anyway, so I'm not sure I understand which one country would be relevant to single out. [0] Which is a different question from how much they (the patient) will be charged [1] Not directly, of course, but indirectly - that opacity is the natural outcome of this setup

beat 8y ago

So is Medicare paying more than similar systems in other countries, or less, or about the same? And if Medicare is paying more than, say, Japan, but it's still not enough to cover the costs in America, what is going on structurally with the other 60% of the medical system? Because there's something structurally broken here. It's not mere profiteering - it's more like a feedback loop. For-profit medicine works effectively and affordably in at least one other country with a cost of living otherwise on par with ours.

chimeracoder 8y ago
> So is Medicare paying more than similar systems in other countries, or less, or about the same? You can't compare the raw dollar values because the economies aren't the same - $5 in New York doesn't mean the same as $5 in Tulsa, OK or $5 in London. That's why things like PPP comparisons exist (except you can't use a PPP comparison in a specific vertical like this to answer your question, because that is the very question you're asking in the first place; it'd be a tautology). But there is an easy answer to the question, because Medicare is paying less than what would be necessary to sustain a medical practice, if you assumed that all doctors, nurses, secretaries, and janitors worked for free, and if you assumed that building and office space were free and required zero maintenance. We know that because we know they reimburse less than COGS, which is why we know their rates are nowhere near sustainable by any standards, let alone compared to other countries. > It's not mere profiteering - it's more like a feedback loop. Yes, that's exactly what's happening. It's a positive feedback look (in the literal sense; it's not a positive outcome for us). The positive feedback loop comes from the fact that Medicare has neither a mandate nor an incentive to reimburse rates that are remotely sustainable, so it sets rates that are arbitrarily low. Providers are forced to accept these, and then pass them on to private health insurers. Private health insurers ultimately pass these costs on to patients in the form of higher premiums, but patients have no choice in the matter, because they can't choose providers based on how much the provider will overcharge their health insurer[0]. They can't choose providers based on price at all, because there's no price transparency in the system. And there's no price transparency in the system because that opacity is essentially mandated by law[1], and it's necessary for this system in which Medicare uses private insurers to essentially pad its own budget (by reducing its costs far below what would otherwise be sustainable if they were truly the only payer in the market). > For-profit medicine works effectively and affordably in at least one other country with a cost of living otherwise on par with ours Which country are you referring to? Truthfully speaking, every country has a for-profit system in that their healthcare systems are still subject to a profit motive (yes, that includes government-run systems like the IHS and NHS). Most other countries with comparable development levels to the US use privately-run systems anyway, so I'm not sure I understand which one country would be relevant to single out. [0] Which is a different question from how much they (the patient) will be charged [1] Not directly, of course, but indirectly - that opacity is the natural outcome of this setup