5 ms·

A couple things, first off, if costs are higher in the US, they shouldn't be, we're not living in a radically different reality in the UK. Market forces should

by jbooth 15y ago

A couple things, first off, if costs are higher in the US, they shouldn't be, we're not living in a radically different reality in the UK. Market forces should be lowering those costs, but they're not, because the actual cost centers are completely insulated from any market whatsoever by the insurance system. RE: administrative inefficiency, from my limited experience (laying off teachers in local gov't back in 2004 because healthcare premiums were going up by 15-18% a year), the administrative overhead in actually managing the insurance is pretty small as a % of the costs paid to hospitals. But then you step back and think, well what the hell, why are the costs paid to the hospitals so high? Because the whole system's broken. So if you try to measure administrative overhead, it looks small, but the general administrative system is creating this environment where the costs themselves are through the roof. Some is unnecessary medicine, a lot seems to be the completely arbitrary price structure. In the linked article, one hospital charged 6 bucks for a treatment, another charged several thousand. That's not a market.

fauldsh 15y ago
One of the reasons it costs less in the UK is because the NHS bargains the costs of drugs (and machinery etc) it buys down. This works partially because they can and do refuse to buy the drugs deemed too expensive. I don't have any statistics to back this up, but because the US system ends up spending as much as the pharmaceutical companies can possibly charge meaning they pay more for the same drugs. Somewhat of a perpetuating system, as the US pays more the pharmaceutical companies can handle the NHS bargaining the prices down some more. It's vaguely analogous to how the lesser paying medicare is subsidized by private insurance.
- wisty 15y ago
  Note the theory of second best - 2 monopolies (i.e. a union and the owner of a company town; or a health service and the monopoly owner of a patented drug) can negotiate a better and fairer deal than 1 monopoly and a fragmented party. 2 fragmented parties is best (in theory), but that doesn't always happen. But most economists don't learn this in school. They just learn "monopoly = bad, government = monopoly".
caseysoftware 15y ago
I switched to an HSA in 2005 and it's been the best thing ever. Most doctors offices have given me anywhere from an immediate 20-50% discount for immediate payment. I even got a 66% discount last year for paying before the procedure. The reasoning behind it is simple.. If you did $100 of work and weren't going to get paid for 3-6 months, you would charge more than $100. There's the time value of money. If you have to spend a lot of time and effort to get that money, you would charge significantly more. If you knew that you would have to give up some of what you asked for, you would charge more. (When I worked in a hospital, we had one person that her only job was to call and argue with insurance companies.) Now.. on the flip side. If you did $100 of work and were used to Net-90 or even Net-30, what discount would you accept to get the money now? And not just now but with zero arguing, effort, etc? Oh.. and with an HSA, I have consistently gotten same day appointments when there's a "two week wait" for people paying with insurance. In that case, it's simple cash flow management.. if you have one slot open and you can take a customer that will pay 3-6 months later but only with lots of effort OR a guy who will pay less but before they leave the office, which would you take?

by jbooth 15y ago

fauldsh 15y ago

One of the reasons it costs less in the UK is because the NHS bargains the costs of drugs (and machinery etc) it buys down. This works partially because they can and do refuse to buy the drugs deemed too expensive. I don't have any statistics to back this up, but because the US system ends up spending as much as the pharmaceutical companies can possibly charge meaning they pay more for the same drugs. Somewhat of a perpetuating system, as the US pays more the pharmaceutical companies can handle the NHS bargaining the prices down some more. It's vaguely analogous to how the lesser paying medicare is subsidized by private insurance.

wisty 15y ago
Note the theory of second best - 2 monopolies (i.e. a union and the owner of a company town; or a health service and the monopoly owner of a patented drug) can negotiate a better and fairer deal than 1 monopoly and a fragmented party. 2 fragmented parties is best (in theory), but that doesn't always happen. But most economists don't learn this in school. They just learn "monopoly = bad, government = monopoly".

caseysoftware 15y ago

I switched to an HSA in 2005 and it's been the best thing ever. Most doctors offices have given me anywhere from an immediate 20-50% discount for immediate payment. I even got a 66% discount last year for paying before the procedure. The reasoning behind it is simple.. If you did $100 of work and weren't going to get paid for 3-6 months, you would charge more than $100. There's the time value of money. If you have to spend a lot of time and effort to get that money, you would charge significantly more. If you knew that you would have to give up some of what you asked for, you would charge more. (When I worked in a hospital, we had one person that her only job was to call and argue with insurance companies.) Now.. on the flip side. If you did $100 of work and were used to Net-90 or even Net-30, what discount would you accept to get the money now? And not just now but with zero arguing, effort, etc? Oh.. and with an HSA, I have consistently gotten same day appointments when there's a "two week wait" for people paying with insurance. In that case, it's simple cash flow management.. if you have one slot open and you can take a customer that will pay 3-6 months later but only with lots of effort OR a guy who will pay less but before they leave the office, which would you take?