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We have to let drug companies charge extravagant prices because of otherwise medical care costs would not be so high. Companies providing medical Care have to

We have to let drug companies charge extravagant prices because of otherwise medical care costs would not be so high. Companies providing medical Care have to spend 80% of their costs on actual medical care, not marketing and executive compensation. The only way to make the 20% that really matter to the decision makers larger is to make the medical costs larger. It is one reason people on United healthcare get $100 gift card to see their primary care provider each year. It's also the reason why there's no real pressure to reduce drug costs.

thfuran 2y ago
>Companies providing medical Care have to spend 80% of their costs on actual medical care, not marketing and executive compensation. That requirement was imposed on insurers in response to already-exorbitant medical costs. It does create a perverse incentive, but it cannot be the root cause of the issue.
- readthenotes1 2y ago
  Well, before that (and continuing), the largest customer of drugs in the United States is prohibited from negotiating price for most drugs. The exorbitant costs arose with the provision of private medical insurance in the 1940s but only really took off when Medicare and Medicaid came in the 1969s with, essentially, a blank check for cost. Things weren't improved in the 1980s when emergency rooms were required to provide care regardless on a patient's ability to pay, leading to another perversion that for a significant group of people the only way to get medical care was when it was too late and most expensive. ACA is just another example of the US government doing stupid.
  - JumpCrisscross 2y ago
    > the largest customer of drugs in the United States is prohibited from negotiating price for most drugs Note that this changed in 2022 for the most-bought drugs.
    - readthenotes1 2y ago
      The CMS negotiated for 10 drugs for 2026 fiscal year. Hooray. https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026 https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price...
  - epicureanideal 2y ago
    > leading to another perversion that for a significant group of people the only way to get medical care was when it was too late and most expensive Too bad the hospitals don’t figure out some way of providing preventive care to the uninsured to reduce these costs.
    - readthenotes1 2y ago
      If I understand the money flow properly, the government reimburses the ER in some way, removing incentive for the hospital to reduce costs.
Auracle 2y ago
I believe it’s 85% for group plans. I firmly believe that was a poison pill put in the ACA intended to drive prices up enough where people got so upset we end up with single payer. The alternative is that the people that penned the ACA have absolutely no understanding of economics, and I’m not sure which is worse. The sad thing is for medications all it would take would be a simple bill that says that medications in the US will cost the average of Canada, Japan, The UK, and Germany (or whatever).
- readthenotes1 2y ago
  ~50% of people in the USA are on government supplied medical insurance, up from ~33% in 2016 (when I first looked). That percentage will grow for the next few years as boomers migrate to Medicare

thfuran 2y ago

>Companies providing medical Care have to spend 80% of their costs on actual medical care, not marketing and executive compensation. That requirement was imposed on insurers in response to already-exorbitant medical costs. It does create a perverse incentive, but it cannot be the root cause of the issue.

readthenotes1 2y ago
Well, before that (and continuing), the largest customer of drugs in the United States is prohibited from negotiating price for most drugs. The exorbitant costs arose with the provision of private medical insurance in the 1940s but only really took off when Medicare and Medicaid came in the 1969s with, essentially, a blank check for cost. Things weren't improved in the 1980s when emergency rooms were required to provide care regardless on a patient's ability to pay, leading to another perversion that for a significant group of people the only way to get medical care was when it was too late and most expensive. ACA is just another example of the US government doing stupid.
- JumpCrisscross 2y ago
  > the largest customer of drugs in the United States is prohibited from negotiating price for most drugs Note that this changed in 2022 for the most-bought drugs.
  - readthenotes1 2y ago
    The CMS negotiated for 10 drugs for 2026 fiscal year. Hooray. https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026 https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price...
- epicureanideal 2y ago
  > leading to another perversion that for a significant group of people the only way to get medical care was when it was too late and most expensive Too bad the hospitals don’t figure out some way of providing preventive care to the uninsured to reduce these costs.
  - readthenotes1 2y ago
    If I understand the money flow properly, the government reimburses the ER in some way, removing incentive for the hospital to reduce costs.

Auracle 2y ago

I believe it’s 85% for group plans. I firmly believe that was a poison pill put in the ACA intended to drive prices up enough where people got so upset we end up with single payer. The alternative is that the people that penned the ACA have absolutely no understanding of economics, and I’m not sure which is worse. The sad thing is for medications all it would take would be a simple bill that says that medications in the US will cost the average of Canada, Japan, The UK, and Germany (or whatever).

readthenotes1 2y ago
~50% of people in the USA are on government supplied medical insurance, up from ~33% in 2016 (when I first looked). That percentage will grow for the next few years as boomers migrate to Medicare