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The flaw in this idea is that there's no good way to introduce more competition to the market. The market is only going to continue to optimize for profit. Th

The flaw in this idea is that there's no good way to introduce more competition to the market. The market is only going to continue to optimize for profit. The reason pricing isn't available is because that's negotiated between the provider and the insurance companies. Since most patients are using insurance, hospitals have to negotiate with some of the major insurance providers. Insurance companies do not want hospitals have transparent pricing, since they want people to buy insurance. Insurance companies also want uninsured people to pay a higher price, again, so people buy insurance. People can't choose their insurance providers because it's tied to their employment (in most cases). The market settled on this extremely convoluted system, which makes no sense to outsiders, specifically because it's so profitable. The only way out of it is through regulations that prohibit certain anti-competitive behavior, or for the establishment of competition in the insurance segment, which has no profit motive (and who would start a business with no profit motive?) Most parties kind of like the status quo. Insurance companies collect from employers, rather than individuals, so most people don't see the true cost of insurance. Hospitals get to charge insane amounts for certain procedures, since patients won't pay the entire bill, the insurance company will. And (upper-middle-class) patients are mostly happy, because healthcare feels cheap to them (since, again they never see the true cost they paid).

tyrfing 4y ago
> The market settled on this extremely convoluted system, which makes no sense to outsiders, specifically because it's so profitable Which exact parties are extracting excess profits?
- jessaustin 4y ago
  It's mostly health insurance firms. That's a much bigger sector in USA than it is anywhere else on earth.
  - tyrfing 4y ago
    Low single-digit operating margins aren't typically described as "so profitable" in any other context.
    - falcolas 4y ago
      An average of 5.5% margin against revenue in the *trillions of dollars* is astonishingly profitable.
      - lotsofpulp 4y ago
        What is the purpose of comparing a profit margin percentage to nominal revenue? Are you claiming that profit margin percentage should always go down in a competitive market as revenue goes up? Do you have sufficient knowledge about the scalability and marginal costs of a business to be able to make that claim? Also where you getting "trillions" of dollars of revenue from? UHC - $300B, Anthem - $145B, CVS - $300B, Cigna - $177B, Humana - $86B, Molina - $29B, Centene - $133B, Kaiser - $90B. Total is ~ $1.3T for the biggest managed care organizations. They get much smaller after that. The fact that all of these organizations are publicly traded with public financials and they all have many years of consistent 5% or less profit margins is very high quality evidence of a competitive market with not much juice left to squeeze.
        jessaustin 4y ago
        Thanks, you've just confirmed the original point that health insurance firms are a vastly larger part of our economy than they are of any other economy. The naive impression might be that they just impose a 5% rent on our health, because why not? That alone wouldn't account for our spending twice as much as any other nation for often inferior care. In fact, they distort the healthcare market in insidious ways, causing huge harms, just so they can extract their cut. Removing these firms from our economy, which we will do eventually because we'll have no choice, will restore far more than 5% to productive use. Visit any health clinic, hospital, or doctor's office. If you count, you'll find that the office staff devoted to handling insurance rival those devoted to patient care. (It isn't strange for the former to outnumber the latter.) They're not just sending in claims. They're dealing with claims rejected for ever more specious reasons, figuring out alternative "codes" to forestall those rejections, verifying that patients have insurance, explaining to patients that the insurance they bought from daytime TV commercials doesn't actually cover anything, collecting old debts inherent to the "bill insurance first then send the patient a bill six months later" model, etc. Obviously all of that is a giant waste that does nothing to make anyone healthier. But this is just the tip of the iceberg. With few exceptions, the costs of insured procedures are completely unknown at the time the procedures occur. It's no surprise that when consumers have no information whatsoever, the market doesn't properly allocate resources. (Sure, we can argue that healthcare shouldn't be provided via a market, but given that it is, that market should be somewhat functional.) Drug prices are also opaque, given the secret negotiations and kickbacks among drug marketers, insurers, healthcare executives, and regulators. The worst thing about USA healthcare, which causes most of the other problems, is the ferocious price inflation, and that is almost entirely caused by the way we use health insurance. All of the things that insurers do, besides just paying, harm patients and make healthcare worse. They distort the market more than they extract rents from it. It's as if they have a great bonfire burning cash, and we should compliment them because they only shove 5% of the money in their pockets while shoveling the rest into the fire.

tyrfing 4y ago

> The market settled on this extremely convoluted system, which makes no sense to outsiders, specifically because it's so profitable Which exact parties are extracting excess profits?

jessaustin 4y ago
It's mostly health insurance firms. That's a much bigger sector in USA than it is anywhere else on earth.
- tyrfing 4y ago
  Low single-digit operating margins aren't typically described as "so profitable" in any other context.
  - falcolas 4y ago
    An average of 5.5% margin against revenue in the *trillions of dollars* is astonishingly profitable.
    - lotsofpulp 4y ago
      What is the purpose of comparing a profit margin percentage to nominal revenue? Are you claiming that profit margin percentage should always go down in a competitive market as revenue goes up? Do you have sufficient knowledge about the scalability and marginal costs of a business to be able to make that claim? Also where you getting "trillions" of dollars of revenue from? UHC - $300B, Anthem - $145B, CVS - $300B, Cigna - $177B, Humana - $86B, Molina - $29B, Centene - $133B, Kaiser - $90B. Total is ~ $1.3T for the biggest managed care organizations. They get much smaller after that. The fact that all of these organizations are publicly traded with public financials and they all have many years of consistent 5% or less profit margins is very high quality evidence of a competitive market with not much juice left to squeeze.
      - jessaustin 4y ago
        Thanks, you've just confirmed the original point that health insurance firms are a vastly larger part of our economy than they are of any other economy. The naive impression might be that they just impose a 5% rent on our health, because why not? That alone wouldn't account for our spending twice as much as any other nation for often inferior care. In fact, they distort the healthcare market in insidious ways, causing huge harms, just so they can extract their cut. Removing these firms from our economy, which we will do eventually because we'll have no choice, will restore far more than 5% to productive use. Visit any health clinic, hospital, or doctor's office. If you count, you'll find that the office staff devoted to handling insurance rival those devoted to patient care. (It isn't strange for the former to outnumber the latter.) They're not just sending in claims. They're dealing with claims rejected for ever more specious reasons, figuring out alternative "codes" to forestall those rejections, verifying that patients have insurance, explaining to patients that the insurance they bought from daytime TV commercials doesn't actually cover anything, collecting old debts inherent to the "bill insurance first then send the patient a bill six months later" model, etc. Obviously all of that is a giant waste that does nothing to make anyone healthier. But this is just the tip of the iceberg. With few exceptions, the costs of insured procedures are completely unknown at the time the procedures occur. It's no surprise that when consumers have no information whatsoever, the market doesn't properly allocate resources. (Sure, we can argue that healthcare shouldn't be provided via a market, but given that it is, that market should be somewhat functional.) Drug prices are also opaque, given the secret negotiations and kickbacks among drug marketers, insurers, healthcare executives, and regulators. The worst thing about USA healthcare, which causes most of the other problems, is the ferocious price inflation, and that is almost entirely caused by the way we use health insurance. All of the things that insurers do, besides just paying, harm patients and make healthcare worse. They distort the market more than they extract rents from it. It's as if they have a great bonfire burning cash, and we should compliment them because they only shove 5% of the money in their pockets while shoveling the rest into the fire.