4 ms·

> So we say by shifting everything to a single-payer system, with the government being the Medicare equivalent for everybody, we’re going to get about 9 percent

by bko 8y ago

> So we say by shifting everything to a single-payer system, with the government being the Medicare equivalent for everybody, we’re going to get about 9 percent savings for the whole system. Then we say, well, in Europe, on average they pay 50 percent less for drugs than we do. And we say, OK, well, we’ll take a more conservative number. We’ll say 40 percent less as opposed to 50 percent less. Cutting reimbursements for drugs by 40% is going to have impacts on everything from R&D to what drugs are available. Drug companies median profit margin varies widely but its about on average 12-14% [0]. I don't think you can just wave a magic wand and say now you get 40% less and you'll just deal with it. It's also naive to believe you can just export some reimbursement model from another country to the US and just plug and play. > That gives us 6 percent total savings in the system. Then we say Medicare rates for all providers, all doctors, hospitals, dentists. Everybody gets the Medicare rate. And that saves about 7 percent savings for the system cost. Same problem here. Paying doctors and hospitals 7% less will have an impact. Prices aren't just some arbitrary number you can change on a whim and have no effect. > And then finally we have high levels of inefficiency with so-called doctor-induced demand, where there’s too many procedures using high tech when you don’t need it, because they can charge more. This is just a change from bottom up (doctor) to top down (some medicare committee). I agree that there is a problem with over-treatment but I'm skeptical that a rule based system would be the ideal way to address this problem. > And there’s fraud. And so there’s a lot of estimates at very high levels of fraud and excessive costs. We took that service delivery savings as modest, maybe 1 to 2 percent. Add them all up, you get 19 percent savings. Traditionally government services are more susceptible to fraud as there is less of an incentive to address fraud. I'm not sure why a single federal agency would be more effective at rooting out fraud than smaller private insurers. Overall I'm skeptical of a top down approach primarily because they mainly address the problem by lowering prices by fiat rather than addressing the systematic issues of high costs. [0] https://yourbusiness.azcentral.com/average-profit-margin-pharmaceuticals-20671.html https://yourbusiness.azcentral.com/average-profit-margin-pha...

hnmonkey 8y ago
If you're the only customer for their businesses, yes you can waive a magic wand and say now you'll get 40% less and deal with it. Especially if you're the government and it's a law. It's like Walmart with their suppliers. If you're the biggest baddest around you can kinda do what you want. Certainly it will have impacts on R&D but are you suggesting that new drugs won't get created anymore? Don't drugs get created all throughout the EU?
- maxerickson 8y ago
  Big drug makers sell internationally so you can't just segment the research like that, EU manufacturers are taking the US market into account when they make investment decisions. Of course it would be easy to fund drug research publicly, I'm pointing out a flaw in your argument rather than arguing either way on the issue.
- krupan 8y ago
  Yes, we'll have the Walmart of healthcare. Very inspiring.
  - toufiqbarhamov 8y ago
    We already have that, we’re just paying Whole Foods prices to get it.
    - hnmonkey 8y ago
      Exactly. We're controlled by a handful of pharma/healthcare companies currently. I'd put more faith in the government being on the other side than those companies.
skh 8y ago
I believe drugs cost significantly less in other countries. I see no reason why research would fall. Companies are not the only ones capable of doing drug research. The Jonas Salk’s of the world mostly do research because it interests them and not because they are looking for millions of dollars in recompense. I’m not a health care economist and have no expertise in the area but I do know that the following two facts suggests that we can implement a universal single payer healthcare system that is cheaper than our current system. 1. Per capital spending on healthcare in the U.S. far exceeds that of any other nation. 2. We currently have a national healthcare system for members of the military and the elderly. Is it really hard to imagine that we can implement of a single payer healthcare system that is government run?
- danielvf 8y ago
  > "We currently have a national healthcare system for members of the military..." I know quite a few veterans of all ages. it's amazing how utterly screwed up in bureaucracy the VA can be. Hiring a lawyer to get treatment isn't uncommon, and I think two acquaintances have have ended up bringing their US congressman in. While healthcare in the US is way too expensive, I don't think I'd trade my current setup for the VA.
  - skh 8y ago
    The VA is not military. I specifically said military to avoid talking about the VA. Government sponsored healthcare can certainly be bad but it doesn’t have to be. People on Medicare like it for the most part. They certainly don’t want to be taken off of it.
    - JshWright 8y ago
      They like Medicare a lot, actually. More than people with private insurance like their provider.
      - krupan 8y ago
        Yes, but doctors hate Medicare. They have to charge non-Medicare patients more in order to subsidize their low paying Medicare patients. What happens when all patients are Medicare patients?
toufiqbarhamov 8y ago
Cutting reimbursements for drugs by 40% is going to have impacts on everything from R&D to what drugs are available. Drug companies median profit margin varies widely but its about on average 12-14% [0]. I don't think you can just wave a magic wand and say now you get 40% less and you'll just deal with it. It's also naive to believe you can just export some reimbursement model from another country to the US and just plug and play. Are we still all supposed to pretend that giant pharmaceutical companies aren’t raking in money hand over fist? Is this like how we have to pretend that if game publishers don’t batter us with always-online, microtransaction-laden cash-grabs, games wouldn’t get made? R&D happens in other countries which don’t run a pump and dump scheme on their citizenry for the benefit of oligarchs. Maybe they’re just more efficient? Or maybe they don’t have the marketing budget American pharma does. Maybe they depend on America subsidizing global R&D? Maybe it’s time for China to take a turn, if they’re so intent on being top dog.
- candiodari 8y ago
  I think the point is that we can in fact quantify what "money hand over fist" is, exactly. It is a 12% cost increase over zero profit, according to GP. Not the sort of cost savings anyone's looking for. It's like the oil companies. With the exceptions like Aramco and other national oil companies all have margins something like 6% to 8%. That's the maximum price drop outlawing all that "hand over first money" can bring. > Maybe it’s time for China to take a turn, if they’re so intent on being top dog. 1) if there's one great example of a closed and fully regulated market, it's the drugs market. 2) They're doing it illegally already (which also means they're poisoning thousands of Americans to death, of course mostly with full permission of said Americans). Also when it comes to widely known drugs people really want ... it's not ibuprofen we're talking about, it's strong pain meds and illegal drugs. > Maybe they’re just more efficient? How about you answer a question of mine: your solution to the problems in the most regulated market on earth failing to perform is just-a-little-more regulation. Wanna bet it won't work ? Second: save money on healthcare ? Easy ! Here's your choices: 1) don't cover really old age and/or exceptional problems (let's call this -for unspecified reasons- the European approach). Sucks for quite a few patients in total, but not that many, really, let's say 2% or so. Outlawed in the US. Generally speaking, this sucks pretty bad if you've got an uncommon cancer, and if you get to 80 years old or so, this becomes more and more likely to happen to you. Also you could consider outlawing a few your-own-damn-fault treatments (like lung cancer for chainsmokers). 2) don't cover everyone, and by not everyone at the very least include everyone who won't take care of themselves very well (effectively more or less the poor). Also we don't mean 1%, we mean like 20-40%. You can cover them for trivial problems without issue, but not in general. 3) don't take responsibility for patient outcomes. This one is more complex, but it is another great and costly difference between US and European health systems. Essentially a doctor fucks you over in the EU ? You've got zero recourse, unless the doctor was actively trying to kill you (and even then). Medication solves your headache but kills your liver ? You don't get treatment for that paid, again EU rules. 4) there are many things you can do to make healthcare cheaper. Starting with making becoming a doctor cheaper. Fix the education problem the healthcare system has. (e.g. https://news.ycombinator.com/item?id=18831524 https://news.ycombinator.com/item?id=18831524 on this very site seems to indicate there's a problem here) Without a combination of the above (with 1) the clear champion of cost savings), there's nothing to do. So which do you want to do ? Simplifying this to yet another communism/capitalism discussion ... I mean sure ... everybody does for everything these days ... but not going to get us anywhere. Those are organizing systems, they direct which of the above cost saving measures we take. By themselves they mean nothing. Capitalist systems can be much cheaper than communist systems as well as the other way around. It depends on the market they operate in. I mean to say, this is not the problem. Everything-covered unlimited healthcare for all is not something we can do. Sucks, but it just isn't.

by bko 8y ago

hnmonkey 8y ago

If you're the only customer for their businesses, yes you can waive a magic wand and say now you'll get 40% less and deal with it. Especially if you're the government and it's a law. It's like Walmart with their suppliers. If you're the biggest baddest around you can kinda do what you want. Certainly it will have impacts on R&D but are you suggesting that new drugs won't get created anymore? Don't drugs get created all throughout the EU?

maxerickson 8y ago
Big drug makers sell internationally so you can't just segment the research like that, EU manufacturers are taking the US market into account when they make investment decisions. Of course it would be easy to fund drug research publicly, I'm pointing out a flaw in your argument rather than arguing either way on the issue.
krupan 8y ago
Yes, we'll have the Walmart of healthcare. Very inspiring.
- toufiqbarhamov 8y ago
  We already have that, we’re just paying Whole Foods prices to get it.
  - hnmonkey 8y ago
    Exactly. We're controlled by a handful of pharma/healthcare companies currently. I'd put more faith in the government being on the other side than those companies.

skh 8y ago

I believe drugs cost significantly less in other countries. I see no reason why research would fall. Companies are not the only ones capable of doing drug research. The Jonas Salk’s of the world mostly do research because it interests them and not because they are looking for millions of dollars in recompense. I’m not a health care economist and have no expertise in the area but I do know that the following two facts suggests that we can implement a universal single payer healthcare system that is cheaper than our current system. 1. Per capital spending on healthcare in the U.S. far exceeds that of any other nation. 2. We currently have a national healthcare system for members of the military and the elderly. Is it really hard to imagine that we can implement of a single payer healthcare system that is government run?

danielvf 8y ago
> "We currently have a national healthcare system for members of the military..." I know quite a few veterans of all ages. it's amazing how utterly screwed up in bureaucracy the VA can be. Hiring a lawyer to get treatment isn't uncommon, and I think two acquaintances have have ended up bringing their US congressman in. While healthcare in the US is way too expensive, I don't think I'd trade my current setup for the VA.
- skh 8y ago
  The VA is not military. I specifically said military to avoid talking about the VA. Government sponsored healthcare can certainly be bad but it doesn’t have to be. People on Medicare like it for the most part. They certainly don’t want to be taken off of it.
  - JshWright 8y ago
    They like Medicare a lot, actually. More than people with private insurance like their provider.
    - krupan 8y ago
      Yes, but doctors hate Medicare. They have to charge non-Medicare patients more in order to subsidize their low paying Medicare patients. What happens when all patients are Medicare patients?

toufiqbarhamov 8y ago

Cutting reimbursements for drugs by 40% is going to have impacts on everything from R&D to what drugs are available. Drug companies median profit margin varies widely but its about on average 12-14% [0]. I don't think you can just wave a magic wand and say now you get 40% less and you'll just deal with it. It's also naive to believe you can just export some reimbursement model from another country to the US and just plug and play. Are we still all supposed to pretend that giant pharmaceutical companies aren’t raking in money hand over fist? Is this like how we have to pretend that if game publishers don’t batter us with always-online, microtransaction-laden cash-grabs, games wouldn’t get made? R&D happens in other countries which don’t run a pump and dump scheme on their citizenry for the benefit of oligarchs. Maybe they’re just more efficient? Or maybe they don’t have the marketing budget American pharma does. Maybe they depend on America subsidizing global R&D? Maybe it’s time for China to take a turn, if they’re so intent on being top dog.

candiodari 8y ago
I think the point is that we can in fact quantify what "money hand over fist" is, exactly. It is a 12% cost increase over zero profit, according to GP. Not the sort of cost savings anyone's looking for. It's like the oil companies. With the exceptions like Aramco and other national oil companies all have margins something like 6% to 8%. That's the maximum price drop outlawing all that "hand over first money" can bring. > Maybe it’s time for China to take a turn, if they’re so intent on being top dog. 1) if there's one great example of a closed and fully regulated market, it's the drugs market. 2) They're doing it illegally already (which also means they're poisoning thousands of Americans to death, of course mostly with full permission of said Americans). Also when it comes to widely known drugs people really want ... it's not ibuprofen we're talking about, it's strong pain meds and illegal drugs. > Maybe they’re just more efficient? How about you answer a question of mine: your solution to the problems in the most regulated market on earth failing to perform is just-a-little-more regulation. Wanna bet it won't work ? Second: save money on healthcare ? Easy ! Here's your choices: 1) don't cover really old age and/or exceptional problems (let's call this -for unspecified reasons- the European approach). Sucks for quite a few patients in total, but not that many, really, let's say 2% or so. Outlawed in the US. Generally speaking, this sucks pretty bad if you've got an uncommon cancer, and if you get to 80 years old or so, this becomes more and more likely to happen to you. Also you could consider outlawing a few your-own-damn-fault treatments (like lung cancer for chainsmokers). 2) don't cover everyone, and by not everyone at the very least include everyone who won't take care of themselves very well (effectively more or less the poor). Also we don't mean 1%, we mean like 20-40%. You can cover them for trivial problems without issue, but not in general. 3) don't take responsibility for patient outcomes. This one is more complex, but it is another great and costly difference between US and European health systems. Essentially a doctor fucks you over in the EU ? You've got zero recourse, unless the doctor was actively trying to kill you (and even then). Medication solves your headache but kills your liver ? You don't get treatment for that paid, again EU rules. 4) there are many things you can do to make healthcare cheaper. Starting with making becoming a doctor cheaper. Fix the education problem the healthcare system has. (e.g. https://news.ycombinator.com/item?id=18831524 https://news.ycombinator.com/item?id=18831524 on this very site seems to indicate there's a problem here) Without a combination of the above (with 1) the clear champion of cost savings), there's nothing to do. So which do you want to do ? Simplifying this to yet another communism/capitalism discussion ... I mean sure ... everybody does for everything these days ... but not going to get us anywhere. Those are organizing systems, they direct which of the above cost saving measures we take. By themselves they mean nothing. Capitalist systems can be much cheaper than communist systems as well as the other way around. It depends on the market they operate in. I mean to say, this is not the problem. Everything-covered unlimited healthcare for all is not something we can do. Sucks, but it just isn't.