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It's always fascinating to see that even compared to prices you pay as a self-paying patient in Germany (which are already 1.5x - 2x higher than what the "publi

It's always fascinating to see that even compared to prices you pay as a self-paying patient in Germany (which are already 1.5x - 2x higher than what the "public" insurances, ie. 85% of the population, pay for the same procedures), the prices in the US are about 5x to 10x higher. The standard of care seems to be quite comparable if you look at outcomes, so there must be huge inefficiences in the American system (doctors in Germany are consistently ranked as the highest paid academics, so I guess it cant be doctors' salaries alone).

emteycz 6y ago
I don't believe any medical professional in Germany has wage exceeding 150k EUR yearly after taxes - doctors in the US sometimes have multiples of that, coincidentally 5x to 10x more is not unusual.
- Redoubts 6y ago
  I’m sure German doctors don’t have oodles of student debt too.
  - emteycz 6y ago
    Yeah, that for sure.
- travisp 6y ago
  It's true that US doctors are paid more (although the gap isn't as big as it used to be). However, pay for US doctors makes up a fairly small portion of overall US medical expenditures (less than 10%). So, you could ask every doctor to work for free and not significantly change costs.
  - tfehring 6y ago
    There’s a similar (but smaller) differential for other medical professionals too. But more generally, when I’ve done high-level comparisons of medical spending between the US and Western European countries, it seems like every single cost element is more or less proportionately higher in the US. It seems like basically everyone is spending money in roughly the same proportions, including on things like doctors’ salaries - everything is just scaled up by ~40% to ~100% in the US, depending on which country you compare it to.
    - aksss 6y ago
      And doing so more frequently in the US, so cost is higher but so is rate of consumption, particularly of services and products that make us feel like we have more mastery over outcomes but in fact do not result in better outcomes on the whole.
    - deleted 6y ago
      [deleted]
  - huitzitziltzin 6y ago
    >pay for US doctors makes up a fairly small portion of overall US medical expenditures (less than 10%) That is likely too low. The Centers for Medicare and Medicaid Services provides a National Health Expenditure estimate annually. [1] Physician and clinical services represented $772 billion out of about $3.8 trillion, so more like 20%. Hospital services are the other big one: about $1.2 trillion. US physicians are paid terrifically relative to their counterparts almost anywhere else, this is especially true for specialists. In fact, physicians represent about 15% - 16% of the top 1% of income earners in the US. See table 2 from this paper: https://web.williams.edu/Economics/wp/BakijaColeHeimJobsIncomeGrowthTopEarners.pdf https://web.williams.edu/Economics/wp/BakijaColeHeimJobsInco... which was written using tax return data, not, e.g., self-reported income data. [1] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...
    - travisp 6y ago
      "Physician and clinical services" includes far more than pay for US doctors -- it's the entire costs for "services provided in establishments operated by Doctors of Medicine (M.D.) and Doctors of Osteopathy (D.O.), outpatient care centers, plus the portion of medical laboratories services that are billed independently by the laboratories". Doctors do not get even close to all of that money paid to them. > In fact, physicians represent about 15% - 16% of the top 1% of income earners in the US. This may be accurate, I'm unsure, but it wouldn't change that if US doctors were paid the same as their European counterparts, it would not make a truly significant change in overall US medical spending (this would even be true if doctors did actually make up 20% of medical expenditures, like you assert earlier).
- dante_dev 6y ago
  Just throwing some data, average general practice doctor is 150k$ in US vs 61k$ in germany. https://www.payscale.com/research/DE/Job=Physician_%2F_Doctor%2C_General_Practice/Salary https://www.payscale.com/research/DE/Job=Physician_%2F_Docto... https://www.payscale.com/research/US/Job=Physician_%2F_Doctor%2C_General_Practice/Salary https://www.payscale.com/research/US/Job=Physician_%2F_Docto...
  - persedes 6y ago
    I believe that doctors in the US get paid more than in germany, but 60k seems very very low. Teachers have an income in that range.... Edit: Looking at some german articles, maybe they did not convert from eur to usd, ~80,000-100,000$ (depending on expertise etc) seems more likely for a dr working at a hospital (which is still low imho compared to US salaries...). https://www.arzt-wirtschaft.de/wie-hoch-ist-das-gehalt-bzw-das-einkommen-eines-arztes/ https://www.arzt-wirtschaft.de/wie-hoch-ist-das-gehalt-bzw-d...
    - dante_dev 6y ago
      I think the difference in wages narrows down with specializations. I linked just the "general practitioner" because I couldn't find an average including all the specializations.
    - amagasaki 6y ago
      And furthermore you have to differentiate between "assistance" doctors (~82k $) and "chef" doctors (~336k $). (I don't know the comparable titles in the US system) Both values are taken from the parent's article and converted using Google. Of course, mostly without serious student debt
    - the_monocle 6y ago
      You have to keep in mind that med school and the equivalent of premed in germany is completely free. Of course that does not make up for the pay difference completely but it changes the perspective quite a bit imo, since med school in the US is extremely expensive. Additionally I could totally see doctors being ok with less pay for the trade off of living in a more fair system. Coincidentally I know one expat here that specifically does not want to return to the US to become a doctor there for that very reason. She specifically does not want to move back because she feels the healthcare system in the US is unfair and she would be profiting off of that system.
- notsureaboutpg 6y ago
  Can confirm. $600k+ is normal in low cost of living areas in the US. Excessive pay for doctors is definitely part of the problem here. People don't like to hear it and don't like to admit it because the work they do is so important and because there are other, bigger costs, and I get that. But difficult situations have difficult answers, and doctor pay is huge in the US in a way it isn't in every other country and doctors themselves know this. It may not fix the problem overnight, but regular people would see instant savings if we fixed this issue.
- electriclove 6y ago
  Is this getting downvoted for saying German docs don't make more than 150k EUR or that US docs sometimes make multiples of that?
- u678u 6y ago
  Yeah surgeons make multiples https://www.physiciansweekly.com/2018-physician-compensation-report-released/ https://www.physiciansweekly.com/2018-physician-compensation.... That doesn't include profits from owning their own biz.
- sithlord 6y ago
  not 100% sure on this, but don't most doctors in other countries go to medical school for free? Whereas US doctors are going into 3-400k+ debt.
_jal 6y ago
Capitalists are expensive.
btbuildem 6y ago
I imagine it's on account of all the administration and intermediaries.
- marcinzm 6y ago
  Probably some of it but I suspect the lack of limitations on services rendered plays into it as well. If someone in the US wants to see specialists 50 times in a month due to munchausens then they'll just be charged their co-pay each time (in most insurance plans). In Germany I suspect they'd not be allowed to book appointments anymore or would require a gatekeeping referral. Same with expensive drugs that don't help outcomes but are advertised to patients and doctors.
  - moooo99 6y ago
    Thats not right. You can easily get an appointment in Germany, even multiple times. If you have a referral, you usually get an appointment earlier than people who directly went to the specialist. However, if you have acute pain you will quickly get an appointment on the same or the next day. Source: Me. just made the second appointment with a specialist within a week thanks to pain, appointment is tomorrow
    - marcinzm 6y ago
      In the US on self-referral plans (60% of health plans) you can get an appointment without any acute symptoms and with no delay versus a referral. I'd say that's a fairly large difference in ease of access without probably any impact on patient outcomes.
  - jgeada 6y ago
    > In Germany I suspect they'd not be allowed to book appointments anymore or would require a gatekeeping referral. This is the kind of comment that immediately classifies the commenter as never having lived outside the US and/or not reading anything but US news sources. And with the wilful blindness to how exactly those gatekeeping referrals are present in most every single healthcare plan in the US.
p00dles 6y ago
this podcast episode has an excellent breakdown of the healthcare pricing system in the U.S. https://econtalk.simplecast.com/episodes/keith-smith-on-free-market-health-care https://econtalk.simplecast.com/episodes/keith-smith-on-free...
dheera 6y ago
Everything is inflated the whole way in the American system. Universities overcharge in the US. The medical education costs upwards of $800K if you include the cost of lost opportunity had you gone into a different field and worked those years instead. So doctors need higher salaries. That, combined with idiotic market dynamics around medical supplies, means that all medical costs are higher. That in turn means everyone absolutely needs insurance or risk personal bankruptcy.
- mindslight 6y ago
  You can't waste money on the scale of the US system by simply paying doctors too much. Rather, you need to hire entire departments of nonproductive people - eg billing and administration. When you zoom in, most of these positions look like a necessary function, but systematically they don't need to exist. Take for instance a "nurse navigator", whose entire job is to deal with insurance company rigmaroles - as a patient you're extremely thankful to have them, but their position is actually only necessary due to a corresponding insurance company department (that you're also paying for!) trying to deny you care. The ultimate problem is this planned economy mandate of "full employment". It is in no individual's interest to declare that their own job is counterproductive, otherwise they'll starve. So they hang on performing in their own little niche, sucking resources out of the system so they personally can continue living a dignified life. We're stuck in a paperclip maximizer, and the healthcare industry is one of the best small-scale illustrations of this.
- analog31 6y ago
  I believe a reform of the healthcare system should include paying for medical school. Let's offer a deal: You go to med school for free, then you work for the government for a decent professional salary.
  - Sprbdg 6y ago
    You don't need the government to solve this problem, they helped create the problem in the first place. You need to reform your political system to actually make it work.
alisonkisk 6y ago
Those are "sticker prices", the opening for negotiation/haggling.
- Jackim 6y ago
  Do you think that is a good way to provide healthcare?
- 52-6F-62 6y ago
  There's a bit of a lopsided leverage situation there...
pc86 6y ago
Saying German doctors are "the highest paid academics" isn't really useful information. How much are they paid? Is it comparable to an American physician? German docs can be the highest paid academics in German by a factor of 10, but if American docs make 3x what any German doc makes it's kind of a moot point. To do a real analysis you'd need to see a breakdown of where the money goes. What percentage is to a physician's salary, hospital overhead, insurance premiums, etc. for both countries and see where the big disparities are. My guess is, everything is more expensive on the US side, including salaries, and adds up to the big difference in price.
Daniel_sk 6y ago
I think a lot of people are missing one key difference. Healthcare in EU is based on solidarity system where every citizen pays a percentage share of his monthly salary to the medical insurance. So if you earn more, then you will also pay more medical insurance - but you will get the same treatment as others (unless you have some fancy private insurance on top of the regular insurance). So basically any medical expense is subsided by every citizen in the country indirectly. I believe this is a completely different way of looking at things than in the US. The average EU citizen doesn't really think that the monthly medical deduction from his salary is just for his use or it's his own insurance, it's only a contribution to the whole system.
- ews 6y ago
  This is how progressive taxation works. For some reason, US people happily pay for police, firemen, infrastructure or the military as a necessity of a functioning society but have serious problems considering healthcare in the same group.
  - ep103 6y ago
    County level vs national level
    - kazen44 6y ago
      which in a lot of european countries, doesn't even exist as a differentiator.
      - msandford 6y ago
        Right but the biggest country in the EU isn't ~330 million people from about a half-dozen fairly distinct cultures. Remember that the US has cultural representation from many European countries and also quite a few non-European countries. I'm not suggesting that Italy or Greece or Germany are actually homogeneous culturally but with smaller populations and significantly less immigration than the US I suspect that the variances are smaller and perhaps more surmountable. Germany's population (83 million) is only about 1/4 of the US and as you go down the list the countries only get smaller.
Triv888 6y ago
There's some kind of monopoly going on too: https://www.cbsnews.com/video/why-it-costs-so-much-more-to-deliver-a-baby-in-sacramento/ https://www.cbsnews.com/video/why-it-costs-so-much-more-to-d...
dcolkitt 6y ago
Before coming to any conclusions on this topic, I highly suggest reading this extremely in-depth analysis on cross-country healthcare spending.[1] The simple answer is that Americans really do consume significantly more healthcare than Europeans. The most straightforward signature of this is the fact that a much higher proportion of Americans work in the healthcare industry than any other large country. The US also tends to consistently lead on the highest utilization of cutting-edge technology (such as ICDs, insulin infusion pumps, linear accelerators, and small bowel transplant) at any given time. Cost per inpatient discharge is exactly in line with a regression of European countries against average household disposable income. (The US having nearly double the household disposable income as Western Europe.) Rather than being some signature of American dysfunction, globally we observe hospital bills rising super-linearly with income levels. This strongly suggests that hospital costs primarily rise because of higher intensity of care per encounter. The strongest counterpoint to this is that despite America's high healthcare consumption, that health outcomes are significantly worse than Europe. In particular in terms of life expectancy. But healthcare economists have known for decades that medicine, on the margin, has virtually zero impact on health.[2] The US is an extremely unhealthy country, especially because of obesity. No level of healthcare would ever be able to counteract that. But again this disjointed relation between medicine and health is not an American-specific phenomenon. The ratio of healthcare spending between Norway and Spain is about the same as between the US and Norway. Yet Spaniards enjoys significantly longer life expectancies than their Norwegian counterparts. [1]https://randomcriticalanalysis.com/why-conventional-wisdom-on-health-care-is-wrong-a-primer/ https://randomcriticalanalysis.com/why-conventional-wisdom-o... [2]https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-medicine-half https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-med...
- thatfrenchguy 6y ago
  > The strongest counterpoint to this is that despite America's high healthcare consumption, that health outcomes are significantly worse than Europe. In particular in terms of life expectancy. Just look at the life expectancy of France and Germany to disprove your theories. The big difference between the American healthcare system and the one in these countries is that people don’t have to worry about the bills, which means healthcare providers have a much bigger incentive to learn what cost benefit analysis means.
chaboud 6y ago
Chargemaster prices (the non-negotiated price) are ridiculously high in the US. They’re so high that some hospitals will give uninsured patients a break of “half off” without even negotiating. The reason for this is that chargemaster price is a fake dollar price resulting from a broken incentive structure and process. Here’s a setup: A hospital is working out a negotiated rate for aggregate services with an insurance company. The insurance company wants to pay less, and they’re willing to put the hospital “in network” and bring their block of customers with them by doing it. But the negotiators on both sides aren’t going to sit and figure out the “right” price of every procedure. That would take forever (and there’s dinner at a Michelin starred restaurant to go to after this deal is done), so they agree that they will just pay some percentage of the chargemaster price, say, 50%. Over time, the hospital administrators say “we need more money for this” and realize they have a lever. 95% of their customers are paying negotiated rates that are a percentage of the chargemaster price. The percentage is locked in stone, but the chargemaster rate? Yeah. They can change that. The insurance company cries foul at their Michelin two-star dinner the next month, and the hospital agrees to lower the percentage a little in the next contract. Now the insurer is feeling flush, and the hospital is making about what they were doing before from that 95%. The remaining 5% who were uninsured are hanging upside down and getting shaken for loose change. The cycle continues, and, eventually, the negotiated percentage drops to something comical, like 12%, but the chargemaster rates have soared. In the end, a pair of Advil “costs” $68 and uninsured patients have nosebleeds from being hung upside down for so long. But there’s a new restaurant to try out, and someone else’s personal bankruptcy is a small price to pay for no-fuss managed care... (Note: Marketing and administration accounts for more than a third of health care costs in the US, which is to say that health care bloat and weight due to a multi-player adversarial privatized system accounts for more than 5% of our GDP, so the chargemaster isn’t the only reason for sky high healthcare costs in America.)
- mynameismonkey 6y ago
  I have a go-to piece on chargemasters here https://jaz.co.uk/2015/10/15/hospital-retail-pricing-for-dummies/ https://jaz.co.uk/2015/10/15/hospital-retail-pricing-for-dum... (Worked on hospital pricing reports since 2001)
zoomablemind 6y ago
I wonder if the reported prices are the aggregated total price for treatment? Or is it just a price of an individual procedure, excluding whatever else that normally goes into the treatment, like diagnostics, admin and nurse time, room/facilities expense etc?
- mrnickel001 6y ago
  Generally, every hospital reported price is different. Many of the prices reported are "all in" service packages, but several also wouldn't include these ancillary charges. Forthcoming price transparency legislation puts more pressure on hospitals/insurance cos to quote these "all-in" bundles. On the Turquoise site, we'll be representing all inclusive bundles with a checkmark + explanation that the provider has verified with us the rate is inclusive of all professional/ancillary charges.
mc10 6y ago
I think this is a bit of an oversimplification; there are places where the out-of-pocket price ends up actually cheaper than the negotiated insurance price, which is mind-boggling to me.
- coredog64 6y ago
  A long time ago, when I was poor and underinsured, I had a medical situation that required imaging. The doctor’s office said they had the machines on prem, but they couldn’t give me any kind of price break. So he sent me to a specialist. Signing in to the specialist, they told me that the cash up front discount was 75%, and that even a hint of having to deal with insurance companies was going to mean a higher effective out of pocket. Practically any US medical practice is going to have huge staffing overhead for the people who maintain the accurate billing records and wrangle with insurance companies. I can directly compare with the French system: Doctor has a receptionist, you pay him cash right there on the spot, and he’s very limited in what he can do. E.g. he has to send you to the pharmacy to buy your shots, but he’ll administer them. When it’s all done, you fill out a crapload of forms, staple all the receipts to the stack, and your employer (via insurance) returns somewhere between 60-80% of it. I have long maintained that moderate reimbursement for outpatient care would be a huge improvement for the US. At the same time, there’s a fairly large entrenched interest that wouldn’t like this at all.
deleted 6y ago
[deleted]

emteycz 6y ago

I don't believe any medical professional in Germany has wage exceeding 150k EUR yearly after taxes - doctors in the US sometimes have multiples of that, coincidentally 5x to 10x more is not unusual.

Redoubts 6y ago
I’m sure German doctors don’t have oodles of student debt too.
- emteycz 6y ago
  Yeah, that for sure.
travisp 6y ago
It's true that US doctors are paid more (although the gap isn't as big as it used to be). However, pay for US doctors makes up a fairly small portion of overall US medical expenditures (less than 10%). So, you could ask every doctor to work for free and not significantly change costs.
- tfehring 6y ago
  There’s a similar (but smaller) differential for other medical professionals too. But more generally, when I’ve done high-level comparisons of medical spending between the US and Western European countries, it seems like every single cost element is more or less proportionately higher in the US. It seems like basically everyone is spending money in roughly the same proportions, including on things like doctors’ salaries - everything is just scaled up by ~40% to ~100% in the US, depending on which country you compare it to.
  - aksss 6y ago
    And doing so more frequently in the US, so cost is higher but so is rate of consumption, particularly of services and products that make us feel like we have more mastery over outcomes but in fact do not result in better outcomes on the whole.
  - deleted 6y ago
    [deleted]
- huitzitziltzin 6y ago
  >pay for US doctors makes up a fairly small portion of overall US medical expenditures (less than 10%) That is likely too low. The Centers for Medicare and Medicaid Services provides a National Health Expenditure estimate annually. [1] Physician and clinical services represented $772 billion out of about $3.8 trillion, so more like 20%. Hospital services are the other big one: about $1.2 trillion. US physicians are paid terrifically relative to their counterparts almost anywhere else, this is especially true for specialists. In fact, physicians represent about 15% - 16% of the top 1% of income earners in the US. See table 2 from this paper: https://web.williams.edu/Economics/wp/BakijaColeHeimJobsIncomeGrowthTopEarners.pdf https://web.williams.edu/Economics/wp/BakijaColeHeimJobsInco... which was written using tax return data, not, e.g., self-reported income data. [1] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...
  - travisp 6y ago
    "Physician and clinical services" includes far more than pay for US doctors -- it's the entire costs for "services provided in establishments operated by Doctors of Medicine (M.D.) and Doctors of Osteopathy (D.O.), outpatient care centers, plus the portion of medical laboratories services that are billed independently by the laboratories". Doctors do not get even close to all of that money paid to them. > In fact, physicians represent about 15% - 16% of the top 1% of income earners in the US. This may be accurate, I'm unsure, but it wouldn't change that if US doctors were paid the same as their European counterparts, it would not make a truly significant change in overall US medical spending (this would even be true if doctors did actually make up 20% of medical expenditures, like you assert earlier).
dante_dev 6y ago
Just throwing some data, average general practice doctor is 150k$ in US vs 61k$ in germany. https://www.payscale.com/research/DE/Job=Physician_%2F_Doctor%2C_General_Practice/Salary https://www.payscale.com/research/DE/Job=Physician_%2F_Docto... https://www.payscale.com/research/US/Job=Physician_%2F_Doctor%2C_General_Practice/Salary https://www.payscale.com/research/US/Job=Physician_%2F_Docto...
- persedes 6y ago
  I believe that doctors in the US get paid more than in germany, but 60k seems very very low. Teachers have an income in that range.... Edit: Looking at some german articles, maybe they did not convert from eur to usd, ~80,000-100,000$ (depending on expertise etc) seems more likely for a dr working at a hospital (which is still low imho compared to US salaries...). https://www.arzt-wirtschaft.de/wie-hoch-ist-das-gehalt-bzw-das-einkommen-eines-arztes/ https://www.arzt-wirtschaft.de/wie-hoch-ist-das-gehalt-bzw-d...
  - dante_dev 6y ago
    I think the difference in wages narrows down with specializations. I linked just the "general practitioner" because I couldn't find an average including all the specializations.
  - amagasaki 6y ago
    And furthermore you have to differentiate between "assistance" doctors (~82k $) and "chef" doctors (~336k $). (I don't know the comparable titles in the US system) Both values are taken from the parent's article and converted using Google. Of course, mostly without serious student debt
  - the_monocle 6y ago
    You have to keep in mind that med school and the equivalent of premed in germany is completely free. Of course that does not make up for the pay difference completely but it changes the perspective quite a bit imo, since med school in the US is extremely expensive. Additionally I could totally see doctors being ok with less pay for the trade off of living in a more fair system. Coincidentally I know one expat here that specifically does not want to return to the US to become a doctor there for that very reason. She specifically does not want to move back because she feels the healthcare system in the US is unfair and she would be profiting off of that system.
notsureaboutpg 6y ago
Can confirm. $600k+ is normal in low cost of living areas in the US. Excessive pay for doctors is definitely part of the problem here. People don't like to hear it and don't like to admit it because the work they do is so important and because there are other, bigger costs, and I get that. But difficult situations have difficult answers, and doctor pay is huge in the US in a way it isn't in every other country and doctors themselves know this. It may not fix the problem overnight, but regular people would see instant savings if we fixed this issue.
electriclove 6y ago
Is this getting downvoted for saying German docs don't make more than 150k EUR or that US docs sometimes make multiples of that?
u678u 6y ago
Yeah surgeons make multiples https://www.physiciansweekly.com/2018-physician-compensation-report-released/ https://www.physiciansweekly.com/2018-physician-compensation.... That doesn't include profits from owning their own biz.
sithlord 6y ago
not 100% sure on this, but don't most doctors in other countries go to medical school for free? Whereas US doctors are going into 3-400k+ debt.

_jal 6y ago

Capitalists are expensive.

btbuildem 6y ago

I imagine it's on account of all the administration and intermediaries.

marcinzm 6y ago
Probably some of it but I suspect the lack of limitations on services rendered plays into it as well. If someone in the US wants to see specialists 50 times in a month due to munchausens then they'll just be charged their co-pay each time (in most insurance plans). In Germany I suspect they'd not be allowed to book appointments anymore or would require a gatekeeping referral. Same with expensive drugs that don't help outcomes but are advertised to patients and doctors.
- moooo99 6y ago
  Thats not right. You can easily get an appointment in Germany, even multiple times. If you have a referral, you usually get an appointment earlier than people who directly went to the specialist. However, if you have acute pain you will quickly get an appointment on the same or the next day. Source: Me. just made the second appointment with a specialist within a week thanks to pain, appointment is tomorrow
  - marcinzm 6y ago
    In the US on self-referral plans (60% of health plans) you can get an appointment without any acute symptoms and with no delay versus a referral. I'd say that's a fairly large difference in ease of access without probably any impact on patient outcomes.
- jgeada 6y ago
  > In Germany I suspect they'd not be allowed to book appointments anymore or would require a gatekeeping referral. This is the kind of comment that immediately classifies the commenter as never having lived outside the US and/or not reading anything but US news sources. And with the wilful blindness to how exactly those gatekeeping referrals are present in most every single healthcare plan in the US.

p00dles 6y ago

this podcast episode has an excellent breakdown of the healthcare pricing system in the U.S. https://econtalk.simplecast.com/episodes/keith-smith-on-free-market-health-care https://econtalk.simplecast.com/episodes/keith-smith-on-free...

dheera 6y ago

Everything is inflated the whole way in the American system. Universities overcharge in the US. The medical education costs upwards of $800K if you include the cost of lost opportunity had you gone into a different field and worked those years instead. So doctors need higher salaries. That, combined with idiotic market dynamics around medical supplies, means that all medical costs are higher. That in turn means everyone absolutely needs insurance or risk personal bankruptcy.

mindslight 6y ago
You can't waste money on the scale of the US system by simply paying doctors too much. Rather, you need to hire entire departments of nonproductive people - eg billing and administration. When you zoom in, most of these positions look like a necessary function, but systematically they don't need to exist. Take for instance a "nurse navigator", whose entire job is to deal with insurance company rigmaroles - as a patient you're extremely thankful to have them, but their position is actually only necessary due to a corresponding insurance company department (that you're also paying for!) trying to deny you care. The ultimate problem is this planned economy mandate of "full employment". It is in no individual's interest to declare that their own job is counterproductive, otherwise they'll starve. So they hang on performing in their own little niche, sucking resources out of the system so they personally can continue living a dignified life. We're stuck in a paperclip maximizer, and the healthcare industry is one of the best small-scale illustrations of this.
analog31 6y ago
I believe a reform of the healthcare system should include paying for medical school. Let's offer a deal: You go to med school for free, then you work for the government for a decent professional salary.
- Sprbdg 6y ago
  You don't need the government to solve this problem, they helped create the problem in the first place. You need to reform your political system to actually make it work.

alisonkisk 6y ago

Those are "sticker prices", the opening for negotiation/haggling.

Jackim 6y ago
Do you think that is a good way to provide healthcare?
52-6F-62 6y ago
There's a bit of a lopsided leverage situation there...

pc86 6y ago

Saying German doctors are "the highest paid academics" isn't really useful information. How much are they paid? Is it comparable to an American physician? German docs can be the highest paid academics in German by a factor of 10, but if American docs make 3x what any German doc makes it's kind of a moot point. To do a real analysis you'd need to see a breakdown of where the money goes. What percentage is to a physician's salary, hospital overhead, insurance premiums, etc. for both countries and see where the big disparities are. My guess is, everything is more expensive on the US side, including salaries, and adds up to the big difference in price.

Daniel_sk 6y ago

I think a lot of people are missing one key difference. Healthcare in EU is based on solidarity system where every citizen pays a percentage share of his monthly salary to the medical insurance. So if you earn more, then you will also pay more medical insurance - but you will get the same treatment as others (unless you have some fancy private insurance on top of the regular insurance). So basically any medical expense is subsided by every citizen in the country indirectly. I believe this is a completely different way of looking at things than in the US. The average EU citizen doesn't really think that the monthly medical deduction from his salary is just for his use or it's his own insurance, it's only a contribution to the whole system.

ews 6y ago
This is how progressive taxation works. For some reason, US people happily pay for police, firemen, infrastructure or the military as a necessity of a functioning society but have serious problems considering healthcare in the same group.
- ep103 6y ago
  County level vs national level
  - kazen44 6y ago
    which in a lot of european countries, doesn't even exist as a differentiator.
    - msandford 6y ago
      Right but the biggest country in the EU isn't ~330 million people from about a half-dozen fairly distinct cultures. Remember that the US has cultural representation from many European countries and also quite a few non-European countries. I'm not suggesting that Italy or Greece or Germany are actually homogeneous culturally but with smaller populations and significantly less immigration than the US I suspect that the variances are smaller and perhaps more surmountable. Germany's population (83 million) is only about 1/4 of the US and as you go down the list the countries only get smaller.

Triv888 6y ago

There's some kind of monopoly going on too: https://www.cbsnews.com/video/why-it-costs-so-much-more-to-deliver-a-baby-in-sacramento/ https://www.cbsnews.com/video/why-it-costs-so-much-more-to-d...

dcolkitt 6y ago

Before coming to any conclusions on this topic, I highly suggest reading this extremely in-depth analysis on cross-country healthcare spending.[1] The simple answer is that Americans really do consume significantly more healthcare than Europeans. The most straightforward signature of this is the fact that a much higher proportion of Americans work in the healthcare industry than any other large country. The US also tends to consistently lead on the highest utilization of cutting-edge technology (such as ICDs, insulin infusion pumps, linear accelerators, and small bowel transplant) at any given time. Cost per inpatient discharge is exactly in line with a regression of European countries against average household disposable income. (The US having nearly double the household disposable income as Western Europe.) Rather than being some signature of American dysfunction, globally we observe hospital bills rising super-linearly with income levels. This strongly suggests that hospital costs primarily rise because of higher intensity of care per encounter. The strongest counterpoint to this is that despite America's high healthcare consumption, that health outcomes are significantly worse than Europe. In particular in terms of life expectancy. But healthcare economists have known for decades that medicine, on the margin, has virtually zero impact on health.[2] The US is an extremely unhealthy country, especially because of obesity. No level of healthcare would ever be able to counteract that. But again this disjointed relation between medicine and health is not an American-specific phenomenon. The ratio of healthcare spending between Norway and Spain is about the same as between the US and Norway. Yet Spaniards enjoys significantly longer life expectancies than their Norwegian counterparts. [1]https://randomcriticalanalysis.com/why-conventional-wisdom-on-health-care-is-wrong-a-primer/ https://randomcriticalanalysis.com/why-conventional-wisdom-o... [2]https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-medicine-half https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-med...

thatfrenchguy 6y ago
> The strongest counterpoint to this is that despite America's high healthcare consumption, that health outcomes are significantly worse than Europe. In particular in terms of life expectancy. Just look at the life expectancy of France and Germany to disprove your theories. The big difference between the American healthcare system and the one in these countries is that people don’t have to worry about the bills, which means healthcare providers have a much bigger incentive to learn what cost benefit analysis means.

chaboud 6y ago

Chargemaster prices (the non-negotiated price) are ridiculously high in the US. They’re so high that some hospitals will give uninsured patients a break of “half off” without even negotiating. The reason for this is that chargemaster price is a fake dollar price resulting from a broken incentive structure and process. Here’s a setup: A hospital is working out a negotiated rate for aggregate services with an insurance company. The insurance company wants to pay less, and they’re willing to put the hospital “in network” and bring their block of customers with them by doing it. But the negotiators on both sides aren’t going to sit and figure out the “right” price of every procedure. That would take forever (and there’s dinner at a Michelin starred restaurant to go to after this deal is done), so they agree that they will just pay some percentage of the chargemaster price, say, 50%. Over time, the hospital administrators say “we need more money for this” and realize they have a lever. 95% of their customers are paying negotiated rates that are a percentage of the chargemaster price. The percentage is locked in stone, but the chargemaster rate? Yeah. They can change that. The insurance company cries foul at their Michelin two-star dinner the next month, and the hospital agrees to lower the percentage a little in the next contract. Now the insurer is feeling flush, and the hospital is making about what they were doing before from that 95%. The remaining 5% who were uninsured are hanging upside down and getting shaken for loose change. The cycle continues, and, eventually, the negotiated percentage drops to something comical, like 12%, but the chargemaster rates have soared. In the end, a pair of Advil “costs” $68 and uninsured patients have nosebleeds from being hung upside down for so long. But there’s a new restaurant to try out, and someone else’s personal bankruptcy is a small price to pay for no-fuss managed care... (Note: Marketing and administration accounts for more than a third of health care costs in the US, which is to say that health care bloat and weight due to a multi-player adversarial privatized system accounts for more than 5% of our GDP, so the chargemaster isn’t the only reason for sky high healthcare costs in America.)

mynameismonkey 6y ago
I have a go-to piece on chargemasters here https://jaz.co.uk/2015/10/15/hospital-retail-pricing-for-dummies/ https://jaz.co.uk/2015/10/15/hospital-retail-pricing-for-dum... (Worked on hospital pricing reports since 2001)

zoomablemind 6y ago

I wonder if the reported prices are the aggregated total price for treatment? Or is it just a price of an individual procedure, excluding whatever else that normally goes into the treatment, like diagnostics, admin and nurse time, room/facilities expense etc?

mrnickel001 6y ago
Generally, every hospital reported price is different. Many of the prices reported are "all in" service packages, but several also wouldn't include these ancillary charges. Forthcoming price transparency legislation puts more pressure on hospitals/insurance cos to quote these "all-in" bundles. On the Turquoise site, we'll be representing all inclusive bundles with a checkmark + explanation that the provider has verified with us the rate is inclusive of all professional/ancillary charges.

mc10 6y ago

I think this is a bit of an oversimplification; there are places where the out-of-pocket price ends up actually cheaper than the negotiated insurance price, which is mind-boggling to me.

coredog64 6y ago
A long time ago, when I was poor and underinsured, I had a medical situation that required imaging. The doctor’s office said they had the machines on prem, but they couldn’t give me any kind of price break. So he sent me to a specialist. Signing in to the specialist, they told me that the cash up front discount was 75%, and that even a hint of having to deal with insurance companies was going to mean a higher effective out of pocket. Practically any US medical practice is going to have huge staffing overhead for the people who maintain the accurate billing records and wrangle with insurance companies. I can directly compare with the French system: Doctor has a receptionist, you pay him cash right there on the spot, and he’s very limited in what he can do. E.g. he has to send you to the pharmacy to buy your shots, but he’ll administer them. When it’s all done, you fill out a crapload of forms, staple all the receipts to the stack, and your employer (via insurance) returns somewhere between 60-80% of it. I have long maintained that moderate reimbursement for outpatient care would be a huge improvement for the US. At the same time, there’s a fairly large entrenched interest that wouldn’t like this at all.

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