6 ms·

tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill fr

tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.

aidenn0 7y ago
AFAICT, every part of the health care system is abnormally expensive in the US. Basically every article that says "The healthcare system in the US is expensive because of X" is partially right. X is part of what's driving costs up.
- Ididntdothis 7y ago
  It’s a common strategy when people point out that one area in US health care is too expensive/inefficient to immediately counter by saying “but area Y is even worse”. That way nothing ever gets done because there is not a single factor that’s messing up the system. In reality pretty much all sectors are f....ed and need reform. You can choose randomly any sector and start improving and get good results.
toomuchtodo 7y ago
When demand is inelastic, and you have no price controls, this is the result.
- darawk 7y ago
  That's not really true, though. Prices are set by the intersection of supply and demand. Oil demand is relatively inelastic, for instance, but the price is quite reasonable because there is tremendous competition in supply. Prices are high in healthcare in part due to inelastic demand, but much moreso due to supply constriction. For just one, particularly egregious example of this: https://en.wikipedia.org/wiki/Certificate_of_need https://en.wikipedia.org/wiki/Certificate_of_need If you want to open a new hospital in many states in the US, you need to acquire this "Certificate of Need". Who approves this certificate? Other hospitals in the area. It's as though Google required the permission of Yahoo to form a new search engine.
  - vkou 7y ago
    If I didn't know how much I had to pay for gas until two months after I left the pump, my gas would cost $25/gallon, and I would count myself lucky that I'm buying it from a station that has a reputation for not swindling me. That is, of course, after my 'gas insurer' comped the station anywhere between $0 and $25, that number being determined by the astrological position, and retrograde state of the planets.
    - darawk 7y ago
      Sure, non-transparent pricing is a problem too. My point is just that inelastic demand is not on its own an explanation for the problem.
  - cmiles74 7y ago
    While this is true and it's difficult to open a new hospital in the US, it strikes me as unlikely that this could be blamed for the high cost of care. In fact, US hospitals have been merging and this seems to be a trend that is continuing to this day.[0] I entirely agree that hospitals are part of the problem, but I think that casting this as a supply and demand issue is oversimplifying the issue. People who need health care very often cannot choose to "shop around" for their provider, the increase in mergers make it less likely there are any competitors in their area. Agreements between hospitals and insurance companies often place other health care providers "outside network", thus artificially increasing their costs. In the same way consumers do not choose their hospital, they also frequently cannot choose their insurance provider; often the health insurance comes along with their employment. In my opinion, the tangled co-dependency between hospitals, insurance companies, pharmaceutical companies and all of the lesser industries that depend on them are all factors in the rising costs. Every step of the way along the chain, profit is maximized at the expense of the patient. We will need large scale change in order to address the issue and I don't think it will be easy. I hope that some kind of "medicare for all" system will start moving things in the right direction. In my opinion, this system is failing everyone except the very wealthy. [0]: https://www.pwc.com/us/en/industries/health-industries/library/health-services-quarterly-deals-insights.html https://www.pwc.com/us/en/industries/health-industries/libra...
RcouF1uZ4gsC 7y ago
When you are designing a service, you can optimize for median latency or tail latency. Sometimes when you optimize for tail latency, median latency gets worse. It is similar to the health care systems. The US system is awesome at doing really crazy life saving stuff. For example US is probably the best in keeping premature babies alive. In addition it has a ton of resources. If you want an MRI scan, you can get one in the US pretty quickly and easily. Also, the profits in the US subsidize worldwide drug development. This is why, if you look where all the really rich rulers decide to go for surgery or other complicated care, it is the US. Canada and other countries optimize for the median case and rely on the US for their outliers. Look at the instances of Canadians coming to the US for surgery or MRI scans because they cannot get them in Canada in a timely manner.
- cmiles74 7y ago
  I do not believe that this is accurate, in my opinion this assertion requires some documentation. I looked up the survival rate of premature babies and the neonatal mortality rate (28 days after birth) is higher in the US than in Canada.[0] I'm having trouble finding numbers on other procedures, in my opinion it may be because because the US is falling behind on them as well. [0]: https://www.healthsystemtracker.org/chart-collection/infant-mortality-u-s-compare-countries/#item-neonatal-mortality-u-s-higher-comparable-countries https://www.healthsystemtracker.org/chart-collection/infant-...
  - RcouF1uZ4gsC 7y ago
    I am talking about premature infants. The one study I could find from 2000 that compares them showed >Relative risks for infant death from all causes among singletons born at 32 through 33 gestational weeks were 6.6 (95% confidence interval [CI], 6.1-7.0) in the United States in 1995 and 15.2 (95% CI, 13.2-17.5) in Canada in 1992-1994; https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&as_vis=1&q=preterm+infant+mortality+Canada&btnG=#d=gs_qabs&u=%23p%3Di6pCP5D8fvQJ https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&as_vis...
    - cmiles74 7y ago
epmaybe 7y ago
I urge everyone to read these two fantastic papers: It's The Prices, Stupid (2003): https://www.healthaffairs.org/doi/full/10.1377/hlthaff.22.3.89 https://www.healthaffairs.org/doi/full/10.1377/hlthaff.22.3.... It's Still The Prices, Stupid (2019): https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144 https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144
deleted 7y ago
[deleted]

tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.

aidenn0 7y ago

AFAICT, every part of the health care system is abnormally expensive in the US. Basically every article that says "The healthcare system in the US is expensive because of X" is partially right. X is part of what's driving costs up.

Ididntdothis 7y ago
It’s a common strategy when people point out that one area in US health care is too expensive/inefficient to immediately counter by saying “but area Y is even worse”. That way nothing ever gets done because there is not a single factor that’s messing up the system. In reality pretty much all sectors are f....ed and need reform. You can choose randomly any sector and start improving and get good results.

toomuchtodo 7y ago

When demand is inelastic, and you have no price controls, this is the result.

darawk 7y ago
That's not really true, though. Prices are set by the intersection of supply and demand. Oil demand is relatively inelastic, for instance, but the price is quite reasonable because there is tremendous competition in supply. Prices are high in healthcare in part due to inelastic demand, but much moreso due to supply constriction. For just one, particularly egregious example of this: https://en.wikipedia.org/wiki/Certificate_of_need https://en.wikipedia.org/wiki/Certificate_of_need If you want to open a new hospital in many states in the US, you need to acquire this "Certificate of Need". Who approves this certificate? Other hospitals in the area. It's as though Google required the permission of Yahoo to form a new search engine.
- vkou 7y ago
  If I didn't know how much I had to pay for gas until two months after I left the pump, my gas would cost $25/gallon, and I would count myself lucky that I'm buying it from a station that has a reputation for not swindling me. That is, of course, after my 'gas insurer' comped the station anywhere between $0 and $25, that number being determined by the astrological position, and retrograde state of the planets.
  - darawk 7y ago
    Sure, non-transparent pricing is a problem too. My point is just that inelastic demand is not on its own an explanation for the problem.
- cmiles74 7y ago
  While this is true and it's difficult to open a new hospital in the US, it strikes me as unlikely that this could be blamed for the high cost of care. In fact, US hospitals have been merging and this seems to be a trend that is continuing to this day.[0] I entirely agree that hospitals are part of the problem, but I think that casting this as a supply and demand issue is oversimplifying the issue. People who need health care very often cannot choose to "shop around" for their provider, the increase in mergers make it less likely there are any competitors in their area. Agreements between hospitals and insurance companies often place other health care providers "outside network", thus artificially increasing their costs. In the same way consumers do not choose their hospital, they also frequently cannot choose their insurance provider; often the health insurance comes along with their employment. In my opinion, the tangled co-dependency between hospitals, insurance companies, pharmaceutical companies and all of the lesser industries that depend on them are all factors in the rising costs. Every step of the way along the chain, profit is maximized at the expense of the patient. We will need large scale change in order to address the issue and I don't think it will be easy. I hope that some kind of "medicare for all" system will start moving things in the right direction. In my opinion, this system is failing everyone except the very wealthy. [0]: https://www.pwc.com/us/en/industries/health-industries/library/health-services-quarterly-deals-insights.html https://www.pwc.com/us/en/industries/health-industries/libra...

RcouF1uZ4gsC 7y ago

When you are designing a service, you can optimize for median latency or tail latency. Sometimes when you optimize for tail latency, median latency gets worse. It is similar to the health care systems. The US system is awesome at doing really crazy life saving stuff. For example US is probably the best in keeping premature babies alive. In addition it has a ton of resources. If you want an MRI scan, you can get one in the US pretty quickly and easily. Also, the profits in the US subsidize worldwide drug development. This is why, if you look where all the really rich rulers decide to go for surgery or other complicated care, it is the US. Canada and other countries optimize for the median case and rely on the US for their outliers. Look at the instances of Canadians coming to the US for surgery or MRI scans because they cannot get them in Canada in a timely manner.

cmiles74 7y ago
I do not believe that this is accurate, in my opinion this assertion requires some documentation. I looked up the survival rate of premature babies and the neonatal mortality rate (28 days after birth) is higher in the US than in Canada.[0] I'm having trouble finding numbers on other procedures, in my opinion it may be because because the US is falling behind on them as well. [0]: https://www.healthsystemtracker.org/chart-collection/infant-mortality-u-s-compare-countries/#item-neonatal-mortality-u-s-higher-comparable-countries https://www.healthsystemtracker.org/chart-collection/infant-...
- RcouF1uZ4gsC 7y ago
  I am talking about premature infants. The one study I could find from 2000 that compares them showed >Relative risks for infant death from all causes among singletons born at 32 through 33 gestational weeks were 6.6 (95% confidence interval [CI], 6.1-7.0) in the United States in 1995 and 15.2 (95% CI, 13.2-17.5) in Canada in 1992-1994; https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&as_vis=1&q=preterm+infant+mortality+Canada&btnG=#d=gs_qabs&u=%23p%3Di6pCP5D8fvQJ https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&as_vis...
  - cmiles74 7y ago

epmaybe 7y ago

I urge everyone to read these two fantastic papers: It's The Prices, Stupid (2003): https://www.healthaffairs.org/doi/full/10.1377/hlthaff.22.3.89 https://www.healthaffairs.org/doi/full/10.1377/hlthaff.22.3.... It's Still The Prices, Stupid (2019): https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144 https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144

deleted 7y ago

[deleted]