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Medicare pricing is currently only possible because healthcare providers can cross-subsidize Medicare patients via raising prices on other patient pools. It's n

Medicare pricing is currently only possible because healthcare providers can cross-subsidize Medicare patients via raising prices on other patient pools. It's not going to work.

thereisnospork 8y ago
Maybe we pencil in a Medicare exemption then. But one service one price cuts out a lot of inefficiency and allows actual price shopping, making the system more efficient; everyone wins (on average).
ericd 8y ago
Keep in mind that 25-30% of current medical spending goes to administrative overhead, much of which is billing related. If that was eliminated or severely simplified, that would mean significantly more money for a given amount billed. It's extremely bloated in other ways too. This isn't a streamlined system with nothing to cut. So I think it's a bit premature to say Medicare pricing is only possible because they're allowed to gouge others, there are many other levers.
- nwah1 8y ago
  It's layers of markups and artificial scarcity stacked one on top of the other. Hospital associations that lock up their turf, and have geographic monopolies. Electronic medical record companies that create proprietary and incompatible standards. Medical device manufacturers that use regulatory capture at the FDA to ensure they have exclusive production rights. The American Medical Association restricting the supply of doctors and nurses, to keep their wages high. Pharmaceutical manufacturers making slight tweaks to existing drugs to extend their patents only to cease all production on the old generics... causing even simple things like insulin to be outrageously priced. Since insurance plans shield consumers from the costs, they have little or no incentive to price shop. So nobody notices these layers of markups, they just notice the big insurance premiums and assume it is all evil insurance companies charging too much when that is just the tip of the iceberg.
kromem 8y ago
Ehhh, not quite. Medicare reimbursement on a knee replacement is about $12,500. In the UK, the average price of a private knee replacement is £11,434. Those aren't exactly super duper far off from each other and in need of $45,000 price tags (avg US cost of knee replacement) to offset.
- vidarh 8y ago
  It's low enough in the UK, that if I lived in the US and found myself needing to pay privately for something non-urgent, I'd probably fly to the UK or elsewhere to do it. There are in fact several private London hospitals that market themselves to foreign patients.
- tomp 8y ago
  The doctor (and most other) salaries in the UK are much lower however.
vidarh 8y ago
If that is true, it just highlights how broken US healthcare pricing is, if even hospitals or hospital groups are unable to negotiate good enough supplier pricing to be able to make that work. For some perspective of this: The US government in recent years have often paid more per US citizen for all of Medicare and Medicaid than UK citizens pay for the NHS (1). The difference being that that per citizen cost in the UK provides universal coverage. Per eligible person, while Medicare is quite cheap by US standards, it's incredibly expensive by the standards of most other developed countries... So US tax payers pay more for healthcare than UK taxpayers before most of you even get any cover yourself. You might expect it to be higher than the UK given difference in salaries etc., but the per eligible person costs in Norway, Switzerland and Luxembourg, the three most expensive countries in the world for healthcare outside of the US, largely driven by high salaries, are lower than the Medicare per eligible person costs (2), and lower than the combined Medicare/Medicaid per eligible person costs for Norway and Luxembourg and just barely higher for Switzerland. But Medicare cover is also far more limited. So how in the world can it cost so much more? (1) https://www.theguardian.com/society/ng-interactive/2016/feb/08/how-much-have-i-cost-the-nhs https://www.theguardian.com/society/ng-interactive/2016/feb/... - UK cost per person in 2014/2015: 2069 GBP. 2069 GBP is ca. $2695 per person today. Medicare in 2017: $702 billion according to https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/ https://www.kff.org/medicare/issue-brief/the-facts-on-medica... Medicaid in 2016: $533 billion according to https://www.kff.org/medicaid/state-indicator/total-medicaid-spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D https://www.kff.org/medicaid/state-indicator/total-medicaid-... US population ca. 327m, gives $3770 per person. If looking at just Medicare you come out a bit lower at $2167, but of course that includes cover for far fewer people, only about 55 million, for costs per patient more comparable to the NHS of more than $12,700. The per-patient cost of Medicaid and Medicare combined is more than $9500/year. (2) https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...

Medicare pricing is currently only possible because healthcare providers can cross-subsidize Medicare patients via raising prices on other patient pools. It's not going to work.

thereisnospork 8y ago

Maybe we pencil in a Medicare exemption then. But one service one price cuts out a lot of inefficiency and allows actual price shopping, making the system more efficient; everyone wins (on average).

ericd 8y ago

Keep in mind that 25-30% of current medical spending goes to administrative overhead, much of which is billing related. If that was eliminated or severely simplified, that would mean significantly more money for a given amount billed. It's extremely bloated in other ways too. This isn't a streamlined system with nothing to cut. So I think it's a bit premature to say Medicare pricing is only possible because they're allowed to gouge others, there are many other levers.

nwah1 8y ago
It's layers of markups and artificial scarcity stacked one on top of the other. Hospital associations that lock up their turf, and have geographic monopolies. Electronic medical record companies that create proprietary and incompatible standards. Medical device manufacturers that use regulatory capture at the FDA to ensure they have exclusive production rights. The American Medical Association restricting the supply of doctors and nurses, to keep their wages high. Pharmaceutical manufacturers making slight tweaks to existing drugs to extend their patents only to cease all production on the old generics... causing even simple things like insulin to be outrageously priced. Since insurance plans shield consumers from the costs, they have little or no incentive to price shop. So nobody notices these layers of markups, they just notice the big insurance premiums and assume it is all evil insurance companies charging too much when that is just the tip of the iceberg.

kromem 8y ago

Ehhh, not quite. Medicare reimbursement on a knee replacement is about $12,500. In the UK, the average price of a private knee replacement is £11,434. Those aren't exactly super duper far off from each other and in need of $45,000 price tags (avg US cost of knee replacement) to offset.

vidarh 8y ago
It's low enough in the UK, that if I lived in the US and found myself needing to pay privately for something non-urgent, I'd probably fly to the UK or elsewhere to do it. There are in fact several private London hospitals that market themselves to foreign patients.
tomp 8y ago
The doctor (and most other) salaries in the UK are much lower however.

vidarh 8y ago

If that is true, it just highlights how broken US healthcare pricing is, if even hospitals or hospital groups are unable to negotiate good enough supplier pricing to be able to make that work. For some perspective of this: The US government in recent years have often paid more per US citizen for all of Medicare and Medicaid than UK citizens pay for the NHS (1). The difference being that that per citizen cost in the UK provides universal coverage. Per eligible person, while Medicare is quite cheap by US standards, it's incredibly expensive by the standards of most other developed countries... So US tax payers pay more for healthcare than UK taxpayers before most of you even get any cover yourself. You might expect it to be higher than the UK given difference in salaries etc., but the per eligible person costs in Norway, Switzerland and Luxembourg, the three most expensive countries in the world for healthcare outside of the US, largely driven by high salaries, are lower than the Medicare per eligible person costs (2), and lower than the combined Medicare/Medicaid per eligible person costs for Norway and Luxembourg and just barely higher for Switzerland. But Medicare cover is also far more limited. So how in the world can it cost so much more? (1) https://www.theguardian.com/society/ng-interactive/2016/feb/08/how-much-have-i-cost-the-nhs https://www.theguardian.com/society/ng-interactive/2016/feb/... - UK cost per person in 2014/2015: 2069 GBP. 2069 GBP is ca. $2695 per person today. Medicare in 2017: $702 billion according to https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/ https://www.kff.org/medicare/issue-brief/the-facts-on-medica... Medicaid in 2016: $533 billion according to https://www.kff.org/medicaid/state-indicator/total-medicaid-spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D https://www.kff.org/medicaid/state-indicator/total-medicaid-... US population ca. 327m, gives $3770 per person. If looking at just Medicare you come out a bit lower at $2167, but of course that includes cover for far fewer people, only about 55 million, for costs per patient more comparable to the NHS of more than $12,700. The per-patient cost of Medicaid and Medicare combined is more than $9500/year. (2) https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...