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That line stood out to me also. Anyone who feels that the primary goal of healthcare in the US is to improve health outcomes is incredibly naive about how this

That line stood out to me also. Anyone who feels that the primary goal of healthcare in the US is to improve health outcomes is incredibly naive about how this industry (which is over 20% of the us economy) works. There is only one group in the entire industry which has an incentive to keep people healthy (insurance) and that is the most hated of the bunch!

rconti 7y ago
.. and the doctors he talked to felt they already had the knowledge they needed! If anything, they felt, perhaps, that this devalued their existing knowledge. And they don't make 10% more money for providing 10% better outcomes.
- larkost 7y ago
  This is probably the root of the problems in US medicine: there is no effective feedback. The ACA (Obamacare) did a little work on this with Medicare payments to hospitals, but that is an exception in the system. What could we do to make this the basis of the system? Without driving doctors away from patients who have bad prognocices?
  - ghayes 7y ago
    Take a look at HMOs, such as Kaiser Permanente. HMOs combine the function of insurers and medical providers in a way that aligns incentives (everyone pays about the same, but healthier people need less care and are thus more profitable customers). There are many problems that come with the HMO model (e.g. the potential for low quality care), but when it works, it directly solves the problem you addressed and exists in the US.
beat 7y ago
Perverse incentive structures are the fundamental reason US healthcare is so expensive and stupid. It's not "greed" in a simple sense, and it's not "regulation" in a simple sense. It's a system of interacting problems that needs treated in a systemic way. Blaming the insurance companies strikes me as the political equivalent of yelling at the cashier.
- chris_va 7y ago
  I mostly agree, but... Insurance is one of the oldest industries in the US, which means they have accumulated many (probably well meaning, but ultimately stupid) regulations over the years. For example, to be taxed as an insurance company (e.g. avoid paying tax on premiums that will partially be paid out in the future), most states assign a maximum profit margin. That means, in order to make more money as an insurance company, it's perversely in their best interests to increase the cost of medical care as much as possible. Medical care is not like cat bonds that might wipe out your risk pool, so it's just a cashflow game. That's not to say there isn't any downward pressure. On a day to day basis, individual claimants eat more into that margin than was budgeted, so a company might have to raise rates higher than their competitors (essentially they have some pressure to deny claims), but there is very little systematic pressure to reduce overall costs. Also, marketing budget does not count towards profit, which is why insurance companies are in this rat race of brand advertising to steal customers from each other. With auto insurance, for example, upwards of 40% of your premium is just going out the door as ad spend. Anyway, I would assign a lot of blame in this perverse incentive scheme to poor regulations.
  - beat 7y ago
    To put it in software terms, it's not a bug, it's an architecture flaw. The "poor regulations" aren't individual issues, but rather part of the fabric of a framework that causes perverse incentives. Therefore, the simpleminded conservative/rightwing solution to "reduce regulation" doesn't eliminate the perverse incentives - it just changes the flow, the way tossing a rock in a river does. If I were the one making the decision, I'd change American healthcare with one big thing, modeled on the Japanese system... price controls. Japan's system is more or less like ours, but with one key difference - a government panel sets the prices for all medical goods and services. Providers and insurers have to make their profits within that price structure. This incentivizes both to reduce costs, for the sake of their own profits. Of course, this would be called radical socialism or some such stupid in America, and Democrats aren't even talking about it (Republicans have no ideas at all on health care). But it's politically a much lower threshold than single-payer (throwing out the whole framework and starting over, basically). And it demonstrably works - Japan's system costs less than half what ours does per capita, with better outcomes.
irq-1 7y ago
> There is only one group in the entire industry which has an incentive to keep people healthy (insurance) The motivation of insurance is to keep the cost of treatment less than the income from premiums -- it doesn't have anything to do with how healthy people are.
- n4r9 7y ago
  My thoughts exactly. In fact I would modify this to: > the motivation of insurance is to keep the cost of treatment that they cannot avoid liability for less than the income from premiums
- bduerst 7y ago
  Yep - the motivation of health insurance is to keep people out of hospitals and away from healthcare professionals as much as possible. Sometimes that aligns with keeping people healthy, but other times that aligns with women not getting routine prenatal screening and thus increasing the infant mortality rate.
gnopgnip 7y ago
This is changing. Medicare, medicaid and to an extent tricare are switching away from pay for service models, so there is a financial incentive for providers to improve health outcomes.
tlb 7y ago
OK, so build a site that takes a bunch of patient info (demographic, genetic) and generate 1000s of custom meta-surveys that estimate the most effective medication for that specific patient by weighting the data in various ways. Return only the one that suggests the highest-priced medication. Eventually, move to a bidding system where pharma companies can sponsor the custom reports that recommend their products. Give 5% of the profit to developing world vaccination projects and it'll save lots of lives overall.
nitwit005 7y ago
Imagine you have a chronic condition, and every month your insurance writes a substantial check for your care. A new treatment comes along that might fix your condition permanently. Surely they'll leap to pay for it? Unfortunately, they probably won't want to. People frequently change insurance, so the most likely outcome is they'll have to pay for an expensive treatment, but never see the savings. This is currently playing out for some new expensive new gene therapies.
- war1025 7y ago
  Shouldn't it still work out in the aggregate? Assuming people move both in and out of the provider?
  - nitwit005 7y ago
    Sure, but the decisions get made at the scale of a single company, not the industry as a whole. For the mentioned new gene therapy treatments, people have been asking congress to come up with a new model for how to pay for treatment. Here's a recent opinion piece by a Louisiana Senator where he lists off the proposals he's heard: https://www.statnews.com/2019/06/12/paying-for-coming-generation-gene-therapies/ https://www.statnews.com/2019/06/12/paying-for-coming-genera...
conanbatt 7y ago
> There is only one group in the entire industry which has an incentive to keep people healthy (insurance) and that is the most hated of the bunch! A testament that the demand for healthcare services is not only about health results. Albeit there are grave challenges about the way Kaiser or HMO's have supposedly better health results.
enjo 7y ago
At Healthify we’ve built a business by aligning positive health care outcomes with the incentives of people paying for healthcare. I think it’s incorrect to say that American healthcare isn’t interested in positive outcomes, it’s just that the systems in place have made it difficult to track and understand those outcomes in the first place. We just raised a series B and are hiring engineers (very remote friendly)!

rconti 7y ago

.. and the doctors he talked to felt they already had the knowledge they needed! If anything, they felt, perhaps, that this devalued their existing knowledge. And they don't make 10% more money for providing 10% better outcomes.

larkost 7y ago
This is probably the root of the problems in US medicine: there is no effective feedback. The ACA (Obamacare) did a little work on this with Medicare payments to hospitals, but that is an exception in the system. What could we do to make this the basis of the system? Without driving doctors away from patients who have bad prognocices?
- ghayes 7y ago
  Take a look at HMOs, such as Kaiser Permanente. HMOs combine the function of insurers and medical providers in a way that aligns incentives (everyone pays about the same, but healthier people need less care and are thus more profitable customers). There are many problems that come with the HMO model (e.g. the potential for low quality care), but when it works, it directly solves the problem you addressed and exists in the US.

beat 7y ago

Perverse incentive structures are the fundamental reason US healthcare is so expensive and stupid. It's not "greed" in a simple sense, and it's not "regulation" in a simple sense. It's a system of interacting problems that needs treated in a systemic way. Blaming the insurance companies strikes me as the political equivalent of yelling at the cashier.

chris_va 7y ago
I mostly agree, but... Insurance is one of the oldest industries in the US, which means they have accumulated many (probably well meaning, but ultimately stupid) regulations over the years. For example, to be taxed as an insurance company (e.g. avoid paying tax on premiums that will partially be paid out in the future), most states assign a maximum profit margin. That means, in order to make more money as an insurance company, it's perversely in their best interests to increase the cost of medical care as much as possible. Medical care is not like cat bonds that might wipe out your risk pool, so it's just a cashflow game. That's not to say there isn't any downward pressure. On a day to day basis, individual claimants eat more into that margin than was budgeted, so a company might have to raise rates higher than their competitors (essentially they have some pressure to deny claims), but there is very little systematic pressure to reduce overall costs. Also, marketing budget does not count towards profit, which is why insurance companies are in this rat race of brand advertising to steal customers from each other. With auto insurance, for example, upwards of 40% of your premium is just going out the door as ad spend. Anyway, I would assign a lot of blame in this perverse incentive scheme to poor regulations.
- beat 7y ago
  To put it in software terms, it's not a bug, it's an architecture flaw. The "poor regulations" aren't individual issues, but rather part of the fabric of a framework that causes perverse incentives. Therefore, the simpleminded conservative/rightwing solution to "reduce regulation" doesn't eliminate the perverse incentives - it just changes the flow, the way tossing a rock in a river does. If I were the one making the decision, I'd change American healthcare with one big thing, modeled on the Japanese system... price controls. Japan's system is more or less like ours, but with one key difference - a government panel sets the prices for all medical goods and services. Providers and insurers have to make their profits within that price structure. This incentivizes both to reduce costs, for the sake of their own profits. Of course, this would be called radical socialism or some such stupid in America, and Democrats aren't even talking about it (Republicans have no ideas at all on health care). But it's politically a much lower threshold than single-payer (throwing out the whole framework and starting over, basically). And it demonstrably works - Japan's system costs less than half what ours does per capita, with better outcomes.

irq-1 7y ago

> There is only one group in the entire industry which has an incentive to keep people healthy (insurance) The motivation of insurance is to keep the cost of treatment less than the income from premiums -- it doesn't have anything to do with how healthy people are.

n4r9 7y ago
My thoughts exactly. In fact I would modify this to: > the motivation of insurance is to keep the cost of treatment that they cannot avoid liability for less than the income from premiums
bduerst 7y ago
Yep - the motivation of health insurance is to keep people out of hospitals and away from healthcare professionals as much as possible. Sometimes that aligns with keeping people healthy, but other times that aligns with women not getting routine prenatal screening and thus increasing the infant mortality rate.

gnopgnip 7y ago

This is changing. Medicare, medicaid and to an extent tricare are switching away from pay for service models, so there is a financial incentive for providers to improve health outcomes.

tlb 7y ago

OK, so build a site that takes a bunch of patient info (demographic, genetic) and generate 1000s of custom meta-surveys that estimate the most effective medication for that specific patient by weighting the data in various ways. Return only the one that suggests the highest-priced medication. Eventually, move to a bidding system where pharma companies can sponsor the custom reports that recommend their products. Give 5% of the profit to developing world vaccination projects and it'll save lots of lives overall.

nitwit005 7y ago

Imagine you have a chronic condition, and every month your insurance writes a substantial check for your care. A new treatment comes along that might fix your condition permanently. Surely they'll leap to pay for it? Unfortunately, they probably won't want to. People frequently change insurance, so the most likely outcome is they'll have to pay for an expensive treatment, but never see the savings. This is currently playing out for some new expensive new gene therapies.

war1025 7y ago
Shouldn't it still work out in the aggregate? Assuming people move both in and out of the provider?
- nitwit005 7y ago
  Sure, but the decisions get made at the scale of a single company, not the industry as a whole. For the mentioned new gene therapy treatments, people have been asking congress to come up with a new model for how to pay for treatment. Here's a recent opinion piece by a Louisiana Senator where he lists off the proposals he's heard: https://www.statnews.com/2019/06/12/paying-for-coming-generation-gene-therapies/ https://www.statnews.com/2019/06/12/paying-for-coming-genera...

conanbatt 7y ago

> There is only one group in the entire industry which has an incentive to keep people healthy (insurance) and that is the most hated of the bunch! A testament that the demand for healthcare services is not only about health results. Albeit there are grave challenges about the way Kaiser or HMO's have supposedly better health results.

enjo 7y ago

At Healthify we’ve built a business by aligning positive health care outcomes with the incentives of people paying for healthcare. I think it’s incorrect to say that American healthcare isn’t interested in positive outcomes, it’s just that the systems in place have made it difficult to track and understand those outcomes in the first place. We just raised a series B and are hiring engineers (very remote friendly)!