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That confirms my suspicion that the business of present-day medicine is milking insurance companies and patients for every dollar that can be billed. The incent

That confirms my suspicion that the business of present-day medicine is milking insurance companies and patients for every dollar that can be billed. The incentive is to keep patients sick, but alive, for as long as possible, hopefully managing to time the patient's death with the exhaustion of benefits/assets. I'm not saying that doctors have this goal. I am saying that this is what the system incentives are, and we all know how systems respond to incentives.

btilly 5y ago
Can I make it worse? Of course I can! Obamacare requires that at least 80% of money must go to medical costs. Profits and administration come out of the rest. So the only way to keep profits rising for insurance companies is to arrange for payments to rise at a predictable rate. And therefore insurance companies are happy to be complicit in rising medical costs, so long as it is predictable and other insurance companies wind up with comparable rates.
- lotsofpulp 5y ago
  Pretty much all businesses earn a percentage of revenue as profit, so the same condition of higher revenue resulting in higher profit (all else being equal) exists in all businesses, regardless of the Affordable Care Act regulations. As long as there are competing businesses, and/or sufficiently low barriers to entry, then this mechanism to earn ever increasing profits is mitigated by the fact that a competitor will come in and take your business. Managed care organizations (MCOs), i.e. health insurance, has many competitors, UNH/Anthem/Cigna/Humana/CVS/Molina/Centene, etc. Either they are all colluding to keep prices going up, or they actually are trying to negotiate the best prices they can with healthcare providers for their customers in order to offer the best value to continue to win business. Considering all of the above companies have many years of single digit profit margins, almost all 5% and below, I would say the business line is quite competitive, and barring evidence of collusion, it seems spurious to claim they are profiting off of regulations requiring minimum medical loss ratios.
  - AnthonyMouse 5y ago
    > Pretty much all businesses earn a percentage of revenue as profit Pretty much no businesses have that percentage fixed by legislation. If you make hammers and your customers are willing to pay $10 for a hammer and your costs are $9, your profit margin is 10%. If you can lower your costs to $8, you can still get $10, so now your profit margin is 20%. You have an incentive to reduce costs. And maybe even to reduce prices, because the higher number of hammers you sell at $9 might make up for the lower margin. The main exception are utility companies and government contractors and it leads to the same perverse incentives there as in heath insurance. > As long as there are competing businesses, and/or sufficiently low barriers to entry, then this mechanism to earn ever increasing profits is mitigated by the fact that a competitor will come in and take your business. The way this works is that the lower cost insurer denies coverage for medically unnecessary procedures and the higher cost one doesn't. Then medical providers find someone who got denied and bring the story to the press that Discount Medical Insurance Co is intentionally murdering people by denying their health insurance claims! They must be stopped! Then the bad PR loses them more customers than the lower price gained them, and the higher price makes them more money anyway. This continues until nobody is offering the lower price anymore.
    - lotsofpulp 5y ago
      >Pretty much no businesses have that percentage fixed by legislation. Setting a minimum medical loss ratio is not setting a minimum profit margin. >The way this works is that the lower cost insurer denies coverage for medically unnecessary procedures and the higher cost one doesn't. Then medical providers find someone who got denied and bring the story to the press that Discount Medical Insurance Co is intentionally murdering people by denying their health insurance claims! They must be stopped! >Then the bad PR loses them more customers than the lower price gained them, and the higher price makes them more money anyway. This continues until nobody is offering the lower price anymore. That is not how it works at all. MCOs do not have a team of doctors and pharmacists scheming to approve medically unnecessary procedures. The business is extremely competitive and much of the denial/approval criteria is in the hands of the payer, for example Medicaid/Medicare/Tricare/CMS.
- throw0101a 5y ago
  > Obamacare requires that at least 80% of money must go to medical costs. Profits and administration come out of the rest. So the only way to keep profits rising for insurance companies is to arrange for payments to rise at a predictable rate. IIRC, in Germany and Switzerland medical insurance is mandated non-profit, and can only meet the costs of running the company. The insurers could just give themselves high salaries, but to cover those premiums would need to be higher, which could cause the insured folks to seek out lower priced coverage.
  - bluGill 5y ago
    Some states have similar laws. It makes no difference in practice if insurance is non profit or not, the only difference is who gets the profits
- tzs 5y ago
  Is there any evidence for that? Graphs of US health costs over time show very little if any difference in the growth pattern from before the ACA and after the ACA. I think people conflate two separate issues when considering health care costs in the US. The first is high costs. The second is increasing costs. There is no doubt about it when it comes to high costs. We pay more than other first world countries for comparable levels of care. When it comes to increasing costs though there isn't much difference between the US and many other first world countries. The US rates rise just a little faster than the rates in the other G7 countries, for example. It's been this way for a long time. Here's how much various counties' costs went up from 2000 to 2018: US 2.3x, Germany 2.1x, France 1.8x, Canada 2.0x, Italy 1.7x, Japan 2.6x, and UK 2.6x. The US costs relative to 1980 were in 1990, 2000, 2010 2.6x, 4.4x, 7.7x, and 10.2x. For UK it was 2.0x, 4.1x, 7.5x, 10.6x. France did better: 2.2x, 4.1x, 6.1x, 7.5x. Much of the focus on health care cost reform is on the high cost compared to other countries, with the assumption that we are doing something wrong that the others are avoiding and this is what leads to our high costs. But our costs were about as much higher relative to the others 50 years ago as they are now. It is just that it wasn't as big a deal back then because costs were much lower as a percentage of GDP then both in the US and in the other first world countries. In a sense then the US isn't actually doing much worse than the rest of the world (see note below). We are just farther ahead on the same curve they are all following, so we've reached the point where it is painful first. This is not good. It means that fixing this is going to be a lot harder than most reform advocates think. Note: when I say we aren't doing much worse this is just on costs. We are way behind in access. Here are a couple of past comments with cites for the above numbers [1] [2]. [1] https://news.ycombinator.com/item?id=20923851 https://news.ycombinator.com/item?id=20923851 [2] https://news.ycombinator.com/item?id=22127566 https://news.ycombinator.com/item?id=22127566
AnthonyMouse 5y ago
> The incentive is to keep patients sick, but alive, for as long as possible, hopefully managing to time the patient's death with the exhaustion of benefits/assets. Hardly anybody is going to actually try to keep a patient sick, but there are many other ways to get the same result. Does this patient have good insurance? Run lots of tests. All the tests. Do expensive procedures that might help regardless of their cost benefit ratio. Spending a quarter of a million dollars for something that has a 2% better result than an alternative that costs $20 is perfect, because the incremental improvement is real. It's just not worth a quarter of a million bucks. But the patient doesn't care about that when it's the insurance paying.
- lotsofpulp 5y ago
  Health insurers do not approve/deny claims based on what level (platinum/gold/silver/bronze) insurance you have. What might happen is a generous employer funded or government funded (such as Tricare) plan might offer more coverage for brand name drugs, or less requirements for pre authorizations. And a less generous plan such as Medicaid (state government) will try to minimize costs by only covering generics or requiring more pre authorizations. But the people reviewing the claims at the managed care organizations are not looking at what kind of coverage a patient has to decide if they do or do not need a medical procedure or a lab.
  - dredmorbius 5y ago
    Try booking a doctor's appointment in the US on a Medicare plan vs. under private insurance. You'll find that the former gets pushed out weeks and months, whilst the latter finds availability within days.
    - lotsofpulp 5y ago
      The claim I was responding to was that a healthcare provider would pursue expensive procedures (presumably not medically necessary) based on what kind of insurance a person has. To which I would say that is wrong because the person working at the MCO reviewing the claim would not be evaluating the expensive procedure based on if the insured has Medicare or Medicaid, they will approve or deny it the same if they deem it medically unnecessary. I agree that healthcare providers get paid differently based on the patient’s coverage, and that would influence the priority they give the patient. In fact, I would say the whole point of the convoluted MCO system (versus a simple taxpayer funded system like UK) is to give the government plausible deniability for segmenting the population into various groups of people getting different quality levels of healthcare.
MichaelBurge 5y ago
Insurance companies aren't stupid. Why do they put up with it? They could e.g. force hospitals to publish pricing information so that it becomes common knowledge and a market is created with accurate pricing. Or offer to replace overpriced medical supplies used by doctors on their own, which they acquire separately from the manufacturer and in bulk. Or - worst-case - start buying hospital stock at up to 2x market value so the profits accrue to them, and use investor pressure to start replacing hospital administrators with their own efficient bean counters. These are public companies, if they could get that 3% quarterly growth cutting costs from somebody "milking" them, why isn't that priority #1?
ChrisMarshallNY 5y ago
The most valuable person in a doctor’s office is the cranky oldtimer that handles the insurance. I’ve learned to seek this person out (around here, it tends to be mostly women, and usually in their late forties, or so). They can be acerbic and abrupt, but I’ve found that it’s well worth it to treat them respectfully. These are the “rainmakers.” They know how to make bills disappear by simply recoding a procedure, or will tell you how to approach your insurance company. They will probably be unhappy at the new law; mostly because it will force them to have to learn a new workflow. I have every confidence that they will learn it, inside and out, in time.
- healthcareOwnd 5y ago
refurb 5y ago
It absolutely is a revenue maximizing exercise by hospitals and physicians. SF General isn’t in network for any insurer. Let that sink in. Why? They mostly treat indigent, so shit, insurance has nothing to do with it most of the time. Otherwise it’s revenue maximizing. And this is a government run hospitals. Let that point sink in too. And I wouldn’t give physicians such an easy pass. I had conversations with a few community oncologist practices and they know the game very well. Ask them to take a 1% cut in revenue and you’d think you were throwing them in the poorhouse.
skeeter2020 5y ago
>> I'm not saying that doctors have this goal. Maybe not an explicit goal, but I think it's pretty easy for say an anesthesiologist who blows into the OR, talks to the patient (maybe) for 30 seconds, then powers through the surgery and on to the next one to lose touch with the core motivations for why they are there. In fact anyone who works with sick and hurt people needs to develop this dettachment as a survival mechanism. The administrators who create and operate these money machines are never connected with the patients in the first place. Not unlike a lot of software developers in this aspect!
healthcareOwnd 5y ago

btilly 5y ago

Can I make it worse? Of course I can! Obamacare requires that at least 80% of money must go to medical costs. Profits and administration come out of the rest. So the only way to keep profits rising for insurance companies is to arrange for payments to rise at a predictable rate. And therefore insurance companies are happy to be complicit in rising medical costs, so long as it is predictable and other insurance companies wind up with comparable rates.

lotsofpulp 5y ago
Pretty much all businesses earn a percentage of revenue as profit, so the same condition of higher revenue resulting in higher profit (all else being equal) exists in all businesses, regardless of the Affordable Care Act regulations. As long as there are competing businesses, and/or sufficiently low barriers to entry, then this mechanism to earn ever increasing profits is mitigated by the fact that a competitor will come in and take your business. Managed care organizations (MCOs), i.e. health insurance, has many competitors, UNH/Anthem/Cigna/Humana/CVS/Molina/Centene, etc. Either they are all colluding to keep prices going up, or they actually are trying to negotiate the best prices they can with healthcare providers for their customers in order to offer the best value to continue to win business. Considering all of the above companies have many years of single digit profit margins, almost all 5% and below, I would say the business line is quite competitive, and barring evidence of collusion, it seems spurious to claim they are profiting off of regulations requiring minimum medical loss ratios.
- AnthonyMouse 5y ago
  > Pretty much all businesses earn a percentage of revenue as profit Pretty much no businesses have that percentage fixed by legislation. If you make hammers and your customers are willing to pay $10 for a hammer and your costs are $9, your profit margin is 10%. If you can lower your costs to $8, you can still get $10, so now your profit margin is 20%. You have an incentive to reduce costs. And maybe even to reduce prices, because the higher number of hammers you sell at $9 might make up for the lower margin. The main exception are utility companies and government contractors and it leads to the same perverse incentives there as in heath insurance. > As long as there are competing businesses, and/or sufficiently low barriers to entry, then this mechanism to earn ever increasing profits is mitigated by the fact that a competitor will come in and take your business. The way this works is that the lower cost insurer denies coverage for medically unnecessary procedures and the higher cost one doesn't. Then medical providers find someone who got denied and bring the story to the press that Discount Medical Insurance Co is intentionally murdering people by denying their health insurance claims! They must be stopped! Then the bad PR loses them more customers than the lower price gained them, and the higher price makes them more money anyway. This continues until nobody is offering the lower price anymore.
  - lotsofpulp 5y ago
    >Pretty much no businesses have that percentage fixed by legislation. Setting a minimum medical loss ratio is not setting a minimum profit margin. >The way this works is that the lower cost insurer denies coverage for medically unnecessary procedures and the higher cost one doesn't. Then medical providers find someone who got denied and bring the story to the press that Discount Medical Insurance Co is intentionally murdering people by denying their health insurance claims! They must be stopped! >Then the bad PR loses them more customers than the lower price gained them, and the higher price makes them more money anyway. This continues until nobody is offering the lower price anymore. That is not how it works at all. MCOs do not have a team of doctors and pharmacists scheming to approve medically unnecessary procedures. The business is extremely competitive and much of the denial/approval criteria is in the hands of the payer, for example Medicaid/Medicare/Tricare/CMS.
throw0101a 5y ago
> Obamacare requires that at least 80% of money must go to medical costs. Profits and administration come out of the rest. So the only way to keep profits rising for insurance companies is to arrange for payments to rise at a predictable rate. IIRC, in Germany and Switzerland medical insurance is mandated non-profit, and can only meet the costs of running the company. The insurers could just give themselves high salaries, but to cover those premiums would need to be higher, which could cause the insured folks to seek out lower priced coverage.
- bluGill 5y ago
  Some states have similar laws. It makes no difference in practice if insurance is non profit or not, the only difference is who gets the profits
tzs 5y ago
Is there any evidence for that? Graphs of US health costs over time show very little if any difference in the growth pattern from before the ACA and after the ACA. I think people conflate two separate issues when considering health care costs in the US. The first is high costs. The second is increasing costs. There is no doubt about it when it comes to high costs. We pay more than other first world countries for comparable levels of care. When it comes to increasing costs though there isn't much difference between the US and many other first world countries. The US rates rise just a little faster than the rates in the other G7 countries, for example. It's been this way for a long time. Here's how much various counties' costs went up from 2000 to 2018: US 2.3x, Germany 2.1x, France 1.8x, Canada 2.0x, Italy 1.7x, Japan 2.6x, and UK 2.6x. The US costs relative to 1980 were in 1990, 2000, 2010 2.6x, 4.4x, 7.7x, and 10.2x. For UK it was 2.0x, 4.1x, 7.5x, 10.6x. France did better: 2.2x, 4.1x, 6.1x, 7.5x. Much of the focus on health care cost reform is on the high cost compared to other countries, with the assumption that we are doing something wrong that the others are avoiding and this is what leads to our high costs. But our costs were about as much higher relative to the others 50 years ago as they are now. It is just that it wasn't as big a deal back then because costs were much lower as a percentage of GDP then both in the US and in the other first world countries. In a sense then the US isn't actually doing much worse than the rest of the world (see note below). We are just farther ahead on the same curve they are all following, so we've reached the point where it is painful first. This is not good. It means that fixing this is going to be a lot harder than most reform advocates think. Note: when I say we aren't doing much worse this is just on costs. We are way behind in access. Here are a couple of past comments with cites for the above numbers [1] [2]. [1] https://news.ycombinator.com/item?id=20923851 https://news.ycombinator.com/item?id=20923851 [2] https://news.ycombinator.com/item?id=22127566 https://news.ycombinator.com/item?id=22127566

AnthonyMouse 5y ago

> The incentive is to keep patients sick, but alive, for as long as possible, hopefully managing to time the patient's death with the exhaustion of benefits/assets. Hardly anybody is going to actually try to keep a patient sick, but there are many other ways to get the same result. Does this patient have good insurance? Run lots of tests. All the tests. Do expensive procedures that might help regardless of their cost benefit ratio. Spending a quarter of a million dollars for something that has a 2% better result than an alternative that costs $20 is perfect, because the incremental improvement is real. It's just not worth a quarter of a million bucks. But the patient doesn't care about that when it's the insurance paying.

lotsofpulp 5y ago
Health insurers do not approve/deny claims based on what level (platinum/gold/silver/bronze) insurance you have. What might happen is a generous employer funded or government funded (such as Tricare) plan might offer more coverage for brand name drugs, or less requirements for pre authorizations. And a less generous plan such as Medicaid (state government) will try to minimize costs by only covering generics or requiring more pre authorizations. But the people reviewing the claims at the managed care organizations are not looking at what kind of coverage a patient has to decide if they do or do not need a medical procedure or a lab.
- dredmorbius 5y ago
  Try booking a doctor's appointment in the US on a Medicare plan vs. under private insurance. You'll find that the former gets pushed out weeks and months, whilst the latter finds availability within days.
  - lotsofpulp 5y ago
    The claim I was responding to was that a healthcare provider would pursue expensive procedures (presumably not medically necessary) based on what kind of insurance a person has. To which I would say that is wrong because the person working at the MCO reviewing the claim would not be evaluating the expensive procedure based on if the insured has Medicare or Medicaid, they will approve or deny it the same if they deem it medically unnecessary. I agree that healthcare providers get paid differently based on the patient’s coverage, and that would influence the priority they give the patient. In fact, I would say the whole point of the convoluted MCO system (versus a simple taxpayer funded system like UK) is to give the government plausible deniability for segmenting the population into various groups of people getting different quality levels of healthcare.

MichaelBurge 5y ago

Insurance companies aren't stupid. Why do they put up with it? They could e.g. force hospitals to publish pricing information so that it becomes common knowledge and a market is created with accurate pricing. Or offer to replace overpriced medical supplies used by doctors on their own, which they acquire separately from the manufacturer and in bulk. Or - worst-case - start buying hospital stock at up to 2x market value so the profits accrue to them, and use investor pressure to start replacing hospital administrators with their own efficient bean counters. These are public companies, if they could get that 3% quarterly growth cutting costs from somebody "milking" them, why isn't that priority #1?

ChrisMarshallNY 5y ago

The most valuable person in a doctor’s office is the cranky oldtimer that handles the insurance. I’ve learned to seek this person out (around here, it tends to be mostly women, and usually in their late forties, or so). They can be acerbic and abrupt, but I’ve found that it’s well worth it to treat them respectfully. These are the “rainmakers.” They know how to make bills disappear by simply recoding a procedure, or will tell you how to approach your insurance company. They will probably be unhappy at the new law; mostly because it will force them to have to learn a new workflow. I have every confidence that they will learn it, inside and out, in time.

healthcareOwnd 5y ago

refurb 5y ago

It absolutely is a revenue maximizing exercise by hospitals and physicians. SF General isn’t in network for any insurer. Let that sink in. Why? They mostly treat indigent, so shit, insurance has nothing to do with it most of the time. Otherwise it’s revenue maximizing. And this is a government run hospitals. Let that point sink in too. And I wouldn’t give physicians such an easy pass. I had conversations with a few community oncologist practices and they know the game very well. Ask them to take a 1% cut in revenue and you’d think you were throwing them in the poorhouse.

skeeter2020 5y ago

>> I'm not saying that doctors have this goal. Maybe not an explicit goal, but I think it's pretty easy for say an anesthesiologist who blows into the OR, talks to the patient (maybe) for 30 seconds, then powers through the surgery and on to the next one to lose touch with the core motivations for why they are there. In fact anyone who works with sick and hurt people needs to develop this dettachment as a survival mechanism. The administrators who create and operate these money machines are never connected with the patients in the first place. Not unlike a lot of software developers in this aspect!

healthcareOwnd 5y ago