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The biggest problem is that most of the money in healthcare actually goes to pay salaries, mostly those of nurses and doctors, but administrators are up there t

by nickff 6y ago

The biggest problem is that most of the money in healthcare actually goes to pay salaries, mostly those of nurses and doctors, but administrators are up there too. Pharmaceutical companies are not as profitable as one might imagine, and drugs are a relatively small fraction of total healthcare costs.

Darmody 6y ago
Then why the same drugs are incredibly cheaper in other wealthy countries? They don't pay salaries there? Healthcare in the US is a scam. There's no other way to look at it.
- paulmd 6y ago
  Salaries are certainly a part of it - medical staff are paid much lower in other countries. Because they don't have to pay for their education. Governments there recognize that having lots of doctors is a public good and don't saddle them with hundreds of thousands of dollars of debt from medical school. Doctors aren't the ones who pay that medical school bill (if they get a job). It's their patients who pay the medical school bills. The problem of medical expenses in the US is a very complex one. It's essentially at the nexus of a whole bunch of problems with our society. Higher education is too expensive. We have too many middlemen. Strong intellectual property laws make drugs and devices expensive. Patent laws make evergreening more profitable than innovation. Intense regulatory requirements for approval make competition very limited for pharmaceuticals. The government doesn't maintain control of the products resulting from the blue-sky R&D it funds. etc etc.
  - munk-a 6y ago
    This will partially ignore your attribution that the US problem is a complex multi-faceted issue (I agree with that but wanted to focus in) - you mention that higher education is too expensive and suggest that there are many other societal factors that make the US noncompetitive. This can cause an effect like we're seeing with the US healthcare market but the US does well in a lot of the more transferable industries (like software development) and I'm not seeing how the factors you're highlighting for healthcare wouldn't equally apply to all of those transferable jobs.
    - supertrope 6y ago
      Software scales extremely well. Healthcare suffers the same baumol's cost disease as education and any other labor intensive industry including construction.
munk-a 6y ago
That is a pretty vague statement which I've not seen born out. I work in tech loosely associated with healthcare and I've needed to learn how the different companies involved in the charging process interact and it's super murky - there are a lot of "preferred rates" offered by HCPs to insurers. These "preferred rates" end up leading to the outrageous out-of-network charges some folks have been exposed to. These only seem to exist to justify the constant spending into marketing and sales on both sides to make it appear that negotiations are saving companies 80% of the "cost" in their partnership - while nobody ever ends up paying full price except really unlucky patients. Additionally the system of manufacturer rebates on prescriptions appears to exist solely to bump up the price to insurer - so a 80$ med sold for 160$ with an 80$ rebate might trigger the insurer to pay out 80$ as half the cost of the medication before the patient receives the medicine for free due to the additional rebate - this ends up squeezing the insurer who will squeeze the patient all that much harder when it comes time to settle the monthly fees. The US system is absolutely lousy with corruption and ends up diverting a large amount of money toward marketing which is rather baffling - whether a treatment is appropriate or not is a decision I'd rather my doctor made on the basis of efficacy - not because one of the companies had a catchy jingle or because one of them recently took him out to lunch. Hospital administration does cost a fair amount, but be careful here - it's like education - some of those administrators have moved up the seniority chain to positions where they essentially do nothing and get paid for having their ass in a chair - but a lot of that administration goes to fighting against the extremely aggressive tactics of insurers and manufacturers. While those administrators would ideally be unnecessary due to better regulations being in place they do provide justifiable savings for the hospital (it's cheaper than not having them in many cases) under the current system. It's all really complicated and murky.
pettusftw 6y ago
Pharmaceutical companies are actually far more profitable than I imagined. Pharma companies enjoy a profit margin averaging 26%, medical device companies 12%, and hospital groups (which includes non-profits) 8%. Insurance companies are closer to 3%. https://www.americanprogress.org/issues/healthcare/reports/2019/06/26/471464/high-price-hospital-care/ https://www.americanprogress.org/issues/healthcare/reports/2...
dboreham 6y ago
This is like saying that filet mignon from French laundry is expensive because he has to pay his wait staff top dollar. Fine. But.I can still go to costco and buy a great steak for a reasonable price and cook it myself. And if I want to I can buy a whole cow.

by nickff 6y ago

Darmody 6y ago

Then why the same drugs are incredibly cheaper in other wealthy countries? They don't pay salaries there? Healthcare in the US is a scam. There's no other way to look at it.

paulmd 6y ago
Salaries are certainly a part of it - medical staff are paid much lower in other countries. Because they don't have to pay for their education. Governments there recognize that having lots of doctors is a public good and don't saddle them with hundreds of thousands of dollars of debt from medical school. Doctors aren't the ones who pay that medical school bill (if they get a job). It's their patients who pay the medical school bills. The problem of medical expenses in the US is a very complex one. It's essentially at the nexus of a whole bunch of problems with our society. Higher education is too expensive. We have too many middlemen. Strong intellectual property laws make drugs and devices expensive. Patent laws make evergreening more profitable than innovation. Intense regulatory requirements for approval make competition very limited for pharmaceuticals. The government doesn't maintain control of the products resulting from the blue-sky R&D it funds. etc etc.
- munk-a 6y ago
  This will partially ignore your attribution that the US problem is a complex multi-faceted issue (I agree with that but wanted to focus in) - you mention that higher education is too expensive and suggest that there are many other societal factors that make the US noncompetitive. This can cause an effect like we're seeing with the US healthcare market but the US does well in a lot of the more transferable industries (like software development) and I'm not seeing how the factors you're highlighting for healthcare wouldn't equally apply to all of those transferable jobs.
  - supertrope 6y ago
    Software scales extremely well. Healthcare suffers the same baumol's cost disease as education and any other labor intensive industry including construction.

munk-a 6y ago

That is a pretty vague statement which I've not seen born out. I work in tech loosely associated with healthcare and I've needed to learn how the different companies involved in the charging process interact and it's super murky - there are a lot of "preferred rates" offered by HCPs to insurers. These "preferred rates" end up leading to the outrageous out-of-network charges some folks have been exposed to. These only seem to exist to justify the constant spending into marketing and sales on both sides to make it appear that negotiations are saving companies 80% of the "cost" in their partnership - while nobody ever ends up paying full price except really unlucky patients. Additionally the system of manufacturer rebates on prescriptions appears to exist solely to bump up the price to insurer - so a 80$ med sold for 160$ with an 80$ rebate might trigger the insurer to pay out 80$ as half the cost of the medication before the patient receives the medicine for free due to the additional rebate - this ends up squeezing the insurer who will squeeze the patient all that much harder when it comes time to settle the monthly fees. The US system is absolutely lousy with corruption and ends up diverting a large amount of money toward marketing which is rather baffling - whether a treatment is appropriate or not is a decision I'd rather my doctor made on the basis of efficacy - not because one of the companies had a catchy jingle or because one of them recently took him out to lunch. Hospital administration does cost a fair amount, but be careful here - it's like education - some of those administrators have moved up the seniority chain to positions where they essentially do nothing and get paid for having their ass in a chair - but a lot of that administration goes to fighting against the extremely aggressive tactics of insurers and manufacturers. While those administrators would ideally be unnecessary due to better regulations being in place they do provide justifiable savings for the hospital (it's cheaper than not having them in many cases) under the current system. It's all really complicated and murky.

pettusftw 6y ago

Pharmaceutical companies are actually far more profitable than I imagined. Pharma companies enjoy a profit margin averaging 26%, medical device companies 12%, and hospital groups (which includes non-profits) 8%. Insurance companies are closer to 3%. https://www.americanprogress.org/issues/healthcare/reports/2019/06/26/471464/high-price-hospital-care/ https://www.americanprogress.org/issues/healthcare/reports/2...

dboreham 6y ago

This is like saying that filet mignon from French laundry is expensive because he has to pay his wait staff top dollar. Fine. But.I can still go to costco and buy a great steak for a reasonable price and cook it myself. And if I want to I can buy a whole cow.