7 ms·

Investor-Owned Health Care: The Hidden Blight on America’s “System”

44 points by rustoo 5y ago

ccvannorman 5y ago
it's nice to see a comprehensive explanation as to why and how our healthcare system is so messed up. I hope we can make an equally lucid plan for how to fix it (by moving power in the healthcare system away from investors and toward the people.)
- deleted 5y ago
  [deleted]
- dboreham 5y ago
  There are very powerful forces that do not want it fixed.
  - throwaway0a5e 5y ago
    Those powerful forces are the sum of the tens of thousands of entities that have their hand in the "easy money" jar. Every group from doctors to hospitals to insurers to equipment suppliers to drug makers, etc, etc, will resist any change that has the potential to even marginally stem the flow of easy money. It's a very important lesson in how much wealth can be sapped from a country when you have "a little waste" in every portion of a major and necessary industry.
    - spaetzleesser 5y ago
      Very true. There are probably millions of people making a living off this craziness. It will be very hard to fix this without stepping on the toes of a lot of people.
- boringg 5y ago
  Fix it investor funded startups! Disrupt the system. Oh wait we are just replacing it with a slightly more efficient system but the same incentives are still there.
- wffurr 5y ago
  The article abstract calls out regulation and a public insurance option, i.e. Medicare for All, as paths forward.
11thEarlOfMar 5y ago
There is also the 3rd party payer problem[0]. The money flowing through the system starts with the wellspring of premium payments made by businesses. 3rd party payer is also implicated in rising college tuition, where the wellspring is student loans. [0] https://mises.org/library/how-third-party-payers-drive-medical-costs https://mises.org/library/how-third-party-payers-drive-medic...
mschuster91 5y ago
For those who think it's only the US that is plagued by rent-seeking investors: Germany has a similar problem, with investment funds getting 18% ROI out of care homes by ruthless cost cutting and exploitation (per https://www.boeckler.de/de/magazin-mitbestimmung-2744-monopoly-im-pflegeheim-4649.htm https://www.boeckler.de/de/magazin-mitbestimmung-2744-monopo...).
- chii 5y ago
  > 18% ROI that's not that high a return for the amount of capital required to be invested.
  - spaetzleesser 5y ago
    In what world is 18% ROI is not a high return?
    - chii 5y ago
      in a world where a tech company's ROI is in the mid 30%'s. How do you incentivize investment into care facilities, if these don't give high ROI? You'd end up with poor facilities. Or the alternative is socialized care - aka, a taxpayer funded system without a private system. I much prefer that, but it's just not reality in the US of A.
  - mschuster91 5y ago
    > that's not that high a return for the amount of capital required to be invested. It's double of what you can expect when putting your money into a S&P 500 ETF. Just how much more do useless rent seekers deserve?!
sleepysysadmin 5y ago
The reason the USA can't fathom going to single-payer system is because Americans are so unhealthy. Regardless of how you feel about obamacare, I think it's a great step 1, Obama talked at great length about the challenges of going to single payer. It would mean millions of jobs lost, what are those people going to go do? It would mean a budget so large that it can never be paid for. Defund the craziest, largest military in the world and you wouldn't pay for 10% of the single payer health system. The republican's move to eliminate obamacare is very short sighted but they are doing it for obvious other reasons. It's very expensive to the american people because afterall the private entities have done the math and know the costs. It's expensive. If your endgoal is single-payer healthcare in the USA. Step 1 is getting Americans healthy again and I think we have hit a roadblock. edit/ welp stepped in it. Highly downvoted. sorry everyone, guess not allowed to discuss this one.
- spaetzleesser 5y ago
  "edit/ welp stepped in it. Highly downvoted. sorry everyone, guess not allowed to discuss this one." You are downvoted not because it's not allowed to discuss this but because it doesn't make sense. You can't explain the regular overcharging of hospitals with an unhealthy population. Neither can you explain why an MRI costs ten times as much as in other countries.
- 0_____0 5y ago
  bit of a catch 22, USians are unhealthy in part because adequate healthcare is out of reach because of its cost
  - rubyist5eva 5y ago
    No, Americans are unhealthy because the vast majority of them eat like crap, are lazy, and are fat as hell as a consequence. That's not a healthcare issue.
    - trey-jones 5y ago
      If more of our doctors cared about people more than money, and kept nutritionists on staff, it might make a dent in things. So I find that it is a healthcare issue. Here, on HN, and in the industries that many of us work in, we have a lot of knowledge and understanding about our own bodies and the care of them. But a large portion of the populace lack that! For some people, nutritional advice would fall on deaf ears, but there are some people as well who, if told by a true expert, "Here is a diet plan. If you follow it closely you won't be so out of breath when you go upstairs. Your ankles and knees won't hurt constantly. You'll be able to keep up with your grandkids better. You'll live longer (on average!)." If told they would actually do it, and improvements would be made.
julesqs 5y ago
I'm curious what people here think of all the healthcare startups that many of you likely get recruiter emails from regularly. Aside from the ethical questions of making money in the American healthcare system, a lot of them would likely have a vested interest in that healthcare status quo to an extent right? If something like Medicare for All happened, it would upend so much of the system (in a good way in my opinion) that a lot of these companies might have to pivot massively. It's enough to make me just not want to work in that sector. Not saying this applies to all healthcare startups. There's a lot of "luxury" healthcare companies that would likely be fine because their customers are high paying companies that would still want it as a recruiting tool.
readflaggedcomm 5y ago
>not a privilege based on ability to pay. Hospitals mostly negotiate with other investors in the form of insurance. Maybe insurance is the actual problem, and codifying it in various ways just makes it worse.
- lotsofpulp 5y ago
  I do not know what you mean by codifying, but the government actually sets all the rules and codes via Centers for Medicare and Medicaid Services (CMS) and uses the insurance companies (better referred to as managed care organizations) to implement all the rules.
plasma 5y ago
I feel sorry for my American friends living with their health care system :( I’m based in Australia, I can change jobs, be unemployed, and walk into a public hospital for important care without concern for a bill. I really hope you switch the system, but I don’t see it happening any time soon.
- boringg 5y ago
  The australian system is an interesting one. It has a public level of service and then once you reach a certain income level they push you into private health care and off the publics balance sheet. Ive always been curious if there exists to levels of care. Either way getting health care without paying the bill has its perks. I do think absolutely free health care allows for abuse of the system. Small copay might make sense (for people who can afford it). Not to dissimilar to tech companies charging a nominal fee for food at lunch to reduce waste.
  - spaetzleesser 5y ago
    " I do think absolutely free health care allows for abuse of the system" Americans are always concerned about people abusing the system but if you look at other countries this is simply not the case except maybe a few isolated cases. What are you going to do if health care is cheap or free? Get surgery for the fun of it? Or have a tooth pulled every few weeks? Right now the american system is abused big time by providers and insurers. that's what you should be concerned about. I don't see how patients would abuse a system.
    - boringg 5y ago
      I don't disagree with you about the American system and that the insurers and private investors have messed up the incentives. What you misunderstand on my comment is that there is value in adding some level of negligible cost to each transaction. A quick internal spot check if they really need to see a specialist/doctor etc. Don't equate my comment as proof that the American system works. And just because you can't see it doesn't mean it doesn't happen.
jleyank 5y ago
One could argue that having a system design to profit from people’s ill health isn’t in accord with most religious and philosophical systems. This suggests health care should be considered more of a regulated monopoly than a profit centre.
- text70 5y ago
  To some extent, health insurers, the health care corporations which make the payments, are non-profit, but the other half is still for profit. A step in the right direction would be to require all business in that area, to be non-profit, to lessen the shock of just taking away the industry altogether and federalizing it.
game_the0ry 5y ago
> More recently, private equity firms have accelerated this process, invariably with harmful impacts on access to affordable care, its quality, and profiteering, with little accountability Predictable. I am hardcore free market fundamentalist, but profit motive should not come anywhere near healthcare. The healthcare market has the unique characteristic of having inelastic consumer demand - which is to say that you do not have much time or optionality to "shop around" for lower prices when you appendix is about explode. Instead, you call 911 and hope that the anesthesioligist on the surgical staff takes the same insurance as the ambulance. So market participants on the supply side (hospitals, pharmaceutical companies, ambulance providers, medical device manufacturers, etc) have the ability to manipulate the supply side economics, where prices can be driven upwards in favor of the supply side participants, with little change from the demand side [1]. Read that to mean - healthcare costs are too high in America. In aggregate, the US has the highest healthcare costs and nowhere near the best healthcare outcomes - this is why. Wait, it gets worse. How Americans run the healthcare market is, in a way, a microcosm of American culture - short term profits, greed, self-interest above the long term common good of the community. IMO, the problems of healthcare are demonstration of American cultural values, and it permeates everywhere: * corporations buying back stock over capital expenditures * NIMBY-ism * Fed policy keeping asset prices above fair market value. * etc Government intervention in healthcare won't fix healthcare. Instead, it will give you Obamacare. Fix the cultural values, and the healthcare problem (along with other problems) will fix themselves. [1] There is a metric fuck-ton of data that supports this, OP's linked study is one.
- maxmamis 5y ago
  > I am hardcore free market fundamentalist, but profit motive should not come anywhere near healthcare. > Government intervention in healthcare won't fix healthcare. Instead, it will give you Obamacare. Fix the cultural values, and the healthcare problem (along with other problems) will fix themselves. so healthcare shouldn't be provided by private industry, but also not by the government... so, what? non-profit orgs only?
  - text70 5y ago
    >so healthcare shouldn't be provided by private industry, but also not by the government... so, what? non-profit orgs only? That would be a good start.

44 points by rustoo 5y ago

it's nice to see a comprehensive explanation as to why and how our healthcare system is so messed up. I hope we can make an equally lucid plan for how to fix it (by moving power in the healthcare system away from investors and toward the people.)

deleted 5y ago
[deleted]
dboreham 5y ago
There are very powerful forces that do not want it fixed.
- throwaway0a5e 5y ago
  Those powerful forces are the sum of the tens of thousands of entities that have their hand in the "easy money" jar. Every group from doctors to hospitals to insurers to equipment suppliers to drug makers, etc, etc, will resist any change that has the potential to even marginally stem the flow of easy money. It's a very important lesson in how much wealth can be sapped from a country when you have "a little waste" in every portion of a major and necessary industry.
  - spaetzleesser 5y ago
    Very true. There are probably millions of people making a living off this craziness. It will be very hard to fix this without stepping on the toes of a lot of people.
boringg 5y ago
Fix it investor funded startups! Disrupt the system. Oh wait we are just replacing it with a slightly more efficient system but the same incentives are still there.
wffurr 5y ago
The article abstract calls out regulation and a public insurance option, i.e. Medicare for All, as paths forward.

11thEarlOfMar 5y ago

There is also the 3rd party payer problem[0]. The money flowing through the system starts with the wellspring of premium payments made by businesses. 3rd party payer is also implicated in rising college tuition, where the wellspring is student loans. [0] https://mises.org/library/how-third-party-payers-drive-medical-costs https://mises.org/library/how-third-party-payers-drive-medic...

mschuster91 5y ago

For those who think it's only the US that is plagued by rent-seeking investors: Germany has a similar problem, with investment funds getting 18% ROI out of care homes by ruthless cost cutting and exploitation (per https://www.boeckler.de/de/magazin-mitbestimmung-2744-monopoly-im-pflegeheim-4649.htm https://www.boeckler.de/de/magazin-mitbestimmung-2744-monopo...).

chii 5y ago
> 18% ROI that's not that high a return for the amount of capital required to be invested.
- spaetzleesser 5y ago
  In what world is 18% ROI is not a high return?
  - chii 5y ago
    in a world where a tech company's ROI is in the mid 30%'s. How do you incentivize investment into care facilities, if these don't give high ROI? You'd end up with poor facilities. Or the alternative is socialized care - aka, a taxpayer funded system without a private system. I much prefer that, but it's just not reality in the US of A.
- mschuster91 5y ago
  > that's not that high a return for the amount of capital required to be invested. It's double of what you can expect when putting your money into a S&P 500 ETF. Just how much more do useless rent seekers deserve?!

sleepysysadmin 5y ago

The reason the USA can't fathom going to single-payer system is because Americans are so unhealthy. Regardless of how you feel about obamacare, I think it's a great step 1, Obama talked at great length about the challenges of going to single payer. It would mean millions of jobs lost, what are those people going to go do? It would mean a budget so large that it can never be paid for. Defund the craziest, largest military in the world and you wouldn't pay for 10% of the single payer health system. The republican's move to eliminate obamacare is very short sighted but they are doing it for obvious other reasons. It's very expensive to the american people because afterall the private entities have done the math and know the costs. It's expensive. If your endgoal is single-payer healthcare in the USA. Step 1 is getting Americans healthy again and I think we have hit a roadblock. edit/ welp stepped in it. Highly downvoted. sorry everyone, guess not allowed to discuss this one.

spaetzleesser 5y ago
"edit/ welp stepped in it. Highly downvoted. sorry everyone, guess not allowed to discuss this one." You are downvoted not because it's not allowed to discuss this but because it doesn't make sense. You can't explain the regular overcharging of hospitals with an unhealthy population. Neither can you explain why an MRI costs ten times as much as in other countries.
0_____0 5y ago
bit of a catch 22, USians are unhealthy in part because adequate healthcare is out of reach because of its cost
- rubyist5eva 5y ago
  No, Americans are unhealthy because the vast majority of them eat like crap, are lazy, and are fat as hell as a consequence. That's not a healthcare issue.
  - trey-jones 5y ago
    If more of our doctors cared about people more than money, and kept nutritionists on staff, it might make a dent in things. So I find that it is a healthcare issue. Here, on HN, and in the industries that many of us work in, we have a lot of knowledge and understanding about our own bodies and the care of them. But a large portion of the populace lack that! For some people, nutritional advice would fall on deaf ears, but there are some people as well who, if told by a true expert, "Here is a diet plan. If you follow it closely you won't be so out of breath when you go upstairs. Your ankles and knees won't hurt constantly. You'll be able to keep up with your grandkids better. You'll live longer (on average!)." If told they would actually do it, and improvements would be made.

julesqs 5y ago

I'm curious what people here think of all the healthcare startups that many of you likely get recruiter emails from regularly. Aside from the ethical questions of making money in the American healthcare system, a lot of them would likely have a vested interest in that healthcare status quo to an extent right? If something like Medicare for All happened, it would upend so much of the system (in a good way in my opinion) that a lot of these companies might have to pivot massively. It's enough to make me just not want to work in that sector. Not saying this applies to all healthcare startups. There's a lot of "luxury" healthcare companies that would likely be fine because their customers are high paying companies that would still want it as a recruiting tool.

readflaggedcomm 5y ago

>not a privilege based on ability to pay. Hospitals mostly negotiate with other investors in the form of insurance. Maybe insurance is the actual problem, and codifying it in various ways just makes it worse.

lotsofpulp 5y ago
I do not know what you mean by codifying, but the government actually sets all the rules and codes via Centers for Medicare and Medicaid Services (CMS) and uses the insurance companies (better referred to as managed care organizations) to implement all the rules.

plasma 5y ago

I feel sorry for my American friends living with their health care system :( I’m based in Australia, I can change jobs, be unemployed, and walk into a public hospital for important care without concern for a bill. I really hope you switch the system, but I don’t see it happening any time soon.

boringg 5y ago
The australian system is an interesting one. It has a public level of service and then once you reach a certain income level they push you into private health care and off the publics balance sheet. Ive always been curious if there exists to levels of care. Either way getting health care without paying the bill has its perks. I do think absolutely free health care allows for abuse of the system. Small copay might make sense (for people who can afford it). Not to dissimilar to tech companies charging a nominal fee for food at lunch to reduce waste.
- spaetzleesser 5y ago
  " I do think absolutely free health care allows for abuse of the system" Americans are always concerned about people abusing the system but if you look at other countries this is simply not the case except maybe a few isolated cases. What are you going to do if health care is cheap or free? Get surgery for the fun of it? Or have a tooth pulled every few weeks? Right now the american system is abused big time by providers and insurers. that's what you should be concerned about. I don't see how patients would abuse a system.
  - boringg 5y ago
    I don't disagree with you about the American system and that the insurers and private investors have messed up the incentives. What you misunderstand on my comment is that there is value in adding some level of negligible cost to each transaction. A quick internal spot check if they really need to see a specialist/doctor etc. Don't equate my comment as proof that the American system works. And just because you can't see it doesn't mean it doesn't happen.

jleyank 5y ago

One could argue that having a system design to profit from people’s ill health isn’t in accord with most religious and philosophical systems. This suggests health care should be considered more of a regulated monopoly than a profit centre.

text70 5y ago
To some extent, health insurers, the health care corporations which make the payments, are non-profit, but the other half is still for profit. A step in the right direction would be to require all business in that area, to be non-profit, to lessen the shock of just taking away the industry altogether and federalizing it.

game_the0ry 5y ago

> More recently, private equity firms have accelerated this process, invariably with harmful impacts on access to affordable care, its quality, and profiteering, with little accountability Predictable. I am hardcore free market fundamentalist, but profit motive should not come anywhere near healthcare. The healthcare market has the unique characteristic of having inelastic consumer demand - which is to say that you do not have much time or optionality to "shop around" for lower prices when you appendix is about explode. Instead, you call 911 and hope that the anesthesioligist on the surgical staff takes the same insurance as the ambulance. So market participants on the supply side (hospitals, pharmaceutical companies, ambulance providers, medical device manufacturers, etc) have the ability to manipulate the supply side economics, where prices can be driven upwards in favor of the supply side participants, with little change from the demand side [1]. Read that to mean - healthcare costs are too high in America. In aggregate, the US has the highest healthcare costs and nowhere near the best healthcare outcomes - this is why. Wait, it gets worse. How Americans run the healthcare market is, in a way, a microcosm of American culture - short term profits, greed, self-interest above the long term common good of the community. IMO, the problems of healthcare are demonstration of American cultural values, and it permeates everywhere: * corporations buying back stock over capital expenditures * NIMBY-ism * Fed policy keeping asset prices above fair market value. * etc Government intervention in healthcare won't fix healthcare. Instead, it will give you Obamacare. Fix the cultural values, and the healthcare problem (along with other problems) will fix themselves. [1] There is a metric fuck-ton of data that supports this, OP's linked study is one.

maxmamis 5y ago
> I am hardcore free market fundamentalist, but profit motive should not come anywhere near healthcare. > Government intervention in healthcare won't fix healthcare. Instead, it will give you Obamacare. Fix the cultural values, and the healthcare problem (along with other problems) will fix themselves. so healthcare shouldn't be provided by private industry, but also not by the government... so, what? non-profit orgs only?
- text70 5y ago
  >so healthcare shouldn't be provided by private industry, but also not by the government... so, what? non-profit orgs only? That would be a good start.