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This story is revealing an important point about the health care system, but it only tells half the story. The other part of how broken the system is, and why p

This story is revealing an important point about the health care system, but it only tells half the story. The other part of how broken the system is, and why pricing varies so wildly, is due to bad faith negotiations on the insurers' side. Many insurers negotiate with a hospital by saying: "We are only going to pay 25% any bill you send us." If the hospital doesn't play ball, the insurer kicks them out of their network, and effectively denies the hospital customers. The hospitals that can't afford to lose those customers is incentivized to quadruple their prices just to get the insurer to cover their costs. However, if a second insurer comes along and negotiates the same way, but says they'll only pay 50% of the hospital's stated cost, the hospital makes a tidy profit on the insurer's dime. (Remember: quoted price = 4 * cost. If insurer pays (quoted price * 0.5), then the hospital makes a 100% profit on that insurance transaction.) What's been created is effectively an endless positive feedback loop to negotiate prices upwards, fueled by rampant information asymmetry and profit motive. We desperately need some kind of government intervention against this in the US. I'm convinced that single payer would fix this in a fucking jiffy.

lotsofpulp 5y ago
>We desperately need some kind of government intervention against this in the US. I'm convinced that single payer would fix this in a fucking jiffy. The majority of healthcare spending in the US is by the government, and the government is the one negotiating the prices. https://crsreports.congress.gov/product/pdf/IF/IF10830 https://crsreports.congress.gov/product/pdf/IF/IF10830 The "insurers" (better referred to as managed care organizations - MCOs) are simply hired to implement the government's pricing and reimbursement policies, and to take the heat from vendors and the public.
- deleted 5y ago
  [deleted]
- DangitBobby 5y ago
  > and the government is the one negotiating the prices Where can I read about this? It runs counter to what you typically hear about how healthcare pricing works. The government also pays costs that I don't think private insurers need to worry about. For example, if you can't pay, you don't have private insurance, so private insurers don't really need to worry about paying for the long term care of people in nursing homes. I also imagine that the elderly and poor are more likely to require expensive care than the population covered by private insurers in general. Especially since private insurers will happily say "no!" to customers that are not profitable. So I'm not convinced that being "the majority of spending" is the same thing as being irresponsible with the money. I will also point out the private insurance on this document is a plurality of spending and makes up most of the administrative cost (complete waste, on other words).
  - lotsofpulp 5y ago
    https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Paymen... https://www.ama-assn.org/practice-management/medicare-medicaid/medicare-physician-payment-schedules https://www.ama-assn.org/practice-management/medicare-medica... https://www.ama-assn.org/about/rvs-update-committee-ruc/rbrvs-overview https://www.ama-assn.org/about/rvs-update-committee-ruc/rbrv... https://healthinformatics.uic.edu/blog/what-is-healthcare-reimbursement/ https://healthinformatics.uic.edu/blog/what-is-healthcare-re... https://www.mcknights.com/blogs/guest-columns/understanding-medicaid-reimbursement/ https://www.mcknights.com/blogs/guest-columns/understanding-... >The government also pays costs that I don't think private insurers need to worry about. For example, if you can't pay, you don't have private insurance, so private insurers don't really need to worry about paying for the long term care of people in nursing homes. I also imagine that the elderly and poor are more likely to require expensive care than the population covered by private insurers in general. This does not seem relevant to a discussion about government being a party in the price negotiations for healthcare services. >Especially since private insurers will happily say "no!" to customers that are not profitable. Health insurers have been forced to offer coverage to anyone under age 65 since ACA was passed in 2010. >So I'm not convinced that being "the majority of spending" is the same thing as being irresponsible with the money. I do not think anyone claimed this in this discussion. >I will also point out the private insurance on this document is a plurality of spending and makes up most of the administrative cost (complete waste, on other words). The insurance portion of the business (forecasting expenses, calculating premiums, other insurance business functions) are only a waste if you are starting with the assumption that the system should be completely taxpayer funded healthcare for everyone. The managed care portion where doctors/pharmacists double check claims and monitor for waste/fraud would have to happen in a taxpayer funded healthcare too. Although it being replicated across multiple managed care organizations could be classified as waste.
    - DangitBobby 5y ago
      > This does not seem relevant to a discussion about government being a party in the price negotiations for healthcare services. My apologies, I thought you were implying with a cost breakdown that the government was working with an advantage since they set prices and somehow end up paying more (meaning the government is doing a worse job than private insurers on cost metrics), especially since your cost breakdown was in response to a comment about how government intervention is needed to bring down costs. I was trying to explain how that doesn't mean government as a single payer would necessarily be more expensive. I'm glad that's not what you were trying to say. > Health insurers have been forced to offer coverage to anyone under age 65 since ACA was passed in 2010. And the government compensates them for the additional costs this incurs, yes? I will admit that the ACA has muddied the waters of this conversation. > are only a waste if you are starting with the assumption that the system should be completely taxpayer funded healthcare for everyone There's not really any other way to look at it? If it doesn't have to exist, it's waste. Both systems will generate waste, one will generate more. I think we disagree on which one, but now I'm not sure because apparently we disagree on what's even relevant to the discussion. Maybe let's take a step back. What is the takeaway you want people to have after reading the cost breakdown you shared?

lotsofpulp 5y ago

>We desperately need some kind of government intervention against this in the US. I'm convinced that single payer would fix this in a fucking jiffy. The majority of healthcare spending in the US is by the government, and the government is the one negotiating the prices. https://crsreports.congress.gov/product/pdf/IF/IF10830 https://crsreports.congress.gov/product/pdf/IF/IF10830 The "insurers" (better referred to as managed care organizations - MCOs) are simply hired to implement the government's pricing and reimbursement policies, and to take the heat from vendors and the public.

deleted 5y ago
[deleted]
DangitBobby 5y ago
> and the government is the one negotiating the prices Where can I read about this? It runs counter to what you typically hear about how healthcare pricing works. The government also pays costs that I don't think private insurers need to worry about. For example, if you can't pay, you don't have private insurance, so private insurers don't really need to worry about paying for the long term care of people in nursing homes. I also imagine that the elderly and poor are more likely to require expensive care than the population covered by private insurers in general. Especially since private insurers will happily say "no!" to customers that are not profitable. So I'm not convinced that being "the majority of spending" is the same thing as being irresponsible with the money. I will also point out the private insurance on this document is a plurality of spending and makes up most of the administrative cost (complete waste, on other words).
- lotsofpulp 5y ago
  https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Paymen... https://www.ama-assn.org/practice-management/medicare-medicaid/medicare-physician-payment-schedules https://www.ama-assn.org/practice-management/medicare-medica... https://www.ama-assn.org/about/rvs-update-committee-ruc/rbrvs-overview https://www.ama-assn.org/about/rvs-update-committee-ruc/rbrv... https://healthinformatics.uic.edu/blog/what-is-healthcare-reimbursement/ https://healthinformatics.uic.edu/blog/what-is-healthcare-re... https://www.mcknights.com/blogs/guest-columns/understanding-medicaid-reimbursement/ https://www.mcknights.com/blogs/guest-columns/understanding-... >The government also pays costs that I don't think private insurers need to worry about. For example, if you can't pay, you don't have private insurance, so private insurers don't really need to worry about paying for the long term care of people in nursing homes. I also imagine that the elderly and poor are more likely to require expensive care than the population covered by private insurers in general. This does not seem relevant to a discussion about government being a party in the price negotiations for healthcare services. >Especially since private insurers will happily say "no!" to customers that are not profitable. Health insurers have been forced to offer coverage to anyone under age 65 since ACA was passed in 2010. >So I'm not convinced that being "the majority of spending" is the same thing as being irresponsible with the money. I do not think anyone claimed this in this discussion. >I will also point out the private insurance on this document is a plurality of spending and makes up most of the administrative cost (complete waste, on other words). The insurance portion of the business (forecasting expenses, calculating premiums, other insurance business functions) are only a waste if you are starting with the assumption that the system should be completely taxpayer funded healthcare for everyone. The managed care portion where doctors/pharmacists double check claims and monitor for waste/fraud would have to happen in a taxpayer funded healthcare too. Although it being replicated across multiple managed care organizations could be classified as waste.
  - DangitBobby 5y ago
    > This does not seem relevant to a discussion about government being a party in the price negotiations for healthcare services. My apologies, I thought you were implying with a cost breakdown that the government was working with an advantage since they set prices and somehow end up paying more (meaning the government is doing a worse job than private insurers on cost metrics), especially since your cost breakdown was in response to a comment about how government intervention is needed to bring down costs. I was trying to explain how that doesn't mean government as a single payer would necessarily be more expensive. I'm glad that's not what you were trying to say. > Health insurers have been forced to offer coverage to anyone under age 65 since ACA was passed in 2010. And the government compensates them for the additional costs this incurs, yes? I will admit that the ACA has muddied the waters of this conversation. > are only a waste if you are starting with the assumption that the system should be completely taxpayer funded healthcare for everyone There's not really any other way to look at it? If it doesn't have to exist, it's waste. Both systems will generate waste, one will generate more. I think we disagree on which one, but now I'm not sure because apparently we disagree on what's even relevant to the discussion. Maybe let's take a step back. What is the takeaway you want people to have after reading the cost breakdown you shared?