5 ms·

Some perspective: https://www.noahpinion.blog/p/insurance-companies-arent-the-main https://www.noahpinion.blog/p/insurance-companies-arent-the-...

05 2y ago
The guy was charged with fraud and insider trading, his company denied 2x claims than industry average - in this case it wasn't the providers..
warner25 2y ago
This reminds me of two excellent back-to-back episodes of This American Life in 2009, when the debate leading up to the Affordable Care Act was at its peak: https://www.thisamericanlife.org/391/more-is-less https://www.thisamericanlife.org/391/more-is-less and https://www.thisamericanlife.org/392/someone-elses-money https://www.thisamericanlife.org/392/someone-elses-money It has been a while since I listened to these episodes, but my main recollection is the argument that insurers are the only entities in the system actually fighting to reduce costs (and, of course, high costs are what underlie most of the other problems with the US healthcare system). To be clear, I don't think insurers (and United Healthcare in particular) and their owners (all of us with index funds in our retirement accounts?) and boards and executives are blameless, but I do think this idea should be more central to the discussion and less contrarian.
- kbolino 2y ago
  I don't think modern health insurers want to lower costs. Middlemen benefit from an increase in costs because they operate by skimming off the cashflows passing through them. This has been codified with the 85-15 rule in the ACA but there were less formal incentives pointing broadly in the same direction even before then. If you take a fixed percentage of every dollar you get, you're going to want to get more dollars.
  - warner25 2y ago
    So one of the problems is indeed that insurers have conflicting incentives, as you correctly described one of them, and it's possible (although I don't know enough to argue either way) that ACA actually made this worse. I think one of the big arguments for a single-payer system, or at least the "public option," is that those middlemen could (ideally, in theory) embrace the position they're in to fight for lower costs without the conflicting incentives that come with being a for-profit entity. I guess that's basically what Noah Smith (author of the parent's linked article) is saying in his conclusion. There are, of course, other arguments for and against. Healthcare is a fascinatingly (and maddeningly) complex problem.
  - s1artibartfast 2y ago
    I agree this is a bad incentive, but a conflict of interest alone does automatically mean an ability to act on it. In the case of health insurance, driving up the costs requires a monopoly or collaboration of firms without defection. As a result, this means one firm cant act in isolation, and cost increases usually come from the industry not pushing back on outside changes that impact all the firms equally. Examples could be more training for healthcare workers, more expensive standards of care, more regulation and paperwork, ect. It is pretty telling that UHC prices are not that different than similar plans at Kaiser (which is a vertically integrated non-profit insurance, hospital, pharmacy, and PBM provider). About 15% different when I was picking between them during open enrollment this year.
  - nradov 2y ago
    The incentives go both ways. In the short term, the minimum medical loss ratio rule incentivizes payers to approve more claims and allow network providers to charge higher rates. But longer term payers can only maintain market share with their most important customers (the large self-funded employers) by lowering total medical expenses.
rozap 2y ago
Kind of a silly take in my opinion. While it's may be true that the majority of money in a medical transaction (which is inflated) doesn't go to the insurer, it goes to the provider, it doesn't change the fact that "insurers" absolutely add a layer of uncertainty to the process. In times of uncertainty (ie: getting sick) anything that adds uncertainty will rightfully be hated. In Canada, their system has a number of major shortcomings. But in college when my girlfriend got appendicitis, I just took her to the hospital without worry about in/out of network, and without worrying about if we'd get a claim rejected after the fact and have our small college student bank accounts drained. That is huge, and should not be underestimated. Here I do not have that luxury. Even though I have plenty of money saved up, it doesn't ever feel like enough. If one of us has a major illness, it can get wiped out due to a claim denial. And who makes the approve/deny choice? The author of that post does some bad thinking here by completely missing the source of the vitriol directed at insurers. While providers do charge out the ass, at least they are doing something useful, while in these times of great uncertainty and pain, insurers only rent seek, blood suck, and do not offer anything of value.
- 0xDEAFBEAD 2y ago
  >it doesn't change the fact that "insurers" absolutely add a layer of uncertainty to the process. Not relative to the case of having no insurance. You're implicitly blaming insurers for the fact that the US doesn't have universal public healthcare. Don't hate the player, hate the game.
  - acdha 2y ago
    Now, why doesn’t the United States have universal public healthcare? Because every time it’s been proposed since the 19th century there’s been stiff opposition from doctors, hospital owners, and private insurance companies. So while it’s true that they didn’t start the problem, it’s fair to blame all of them for the problems of a system they’ve poured enormous amounts of money into preserving.
    - fastball 2y ago
      The US doesn't have universal public healthcare because it is a country of 350M people and would probably be a disaster. Significantly smaller countries (UK/Canada) have major issues with their systems with a fraction of the population.
FpUser 2y ago
BS diatribe trying to tell that since asshole X does not do as much damage as asshole Y is not an asshole. Well they both are
A_D_E_P_T 2y ago
Additional perspective: https://www.propublica.org/article/unitedhealth-healthcare-insurance-denial-ulcerative-colitis https://www.propublica.org/article/unitedhealth-healthcare-i... The health insurance industry is effectively a maximally hostile middleman. It's hostile to service providers, and it's hostile to service users. (The most charitable thing you can say about it is that it creates enormous amounts of paperwork, thereby creating jobs and boosting GDP.) It's not difficult to see how it has become so widely hated.
elliotec 2y ago
It's the healthcare industrial complex. Just like the military. You get back some percentage of what you charge. They're incentivized to charge more because they'll get more, and sometimes it's an all-or-nothing. I have doctor friends who quote they spend over 60% of their time dealing with insurance and it's intricacies. It's the fault of the system, with large foundations on insurance and perverse government policy to enrich the leaders therein, and the providers are simply making do with the system they must operate in. I'll never forget the story I heard about a military squadron that needed like one bolt to fix a relatively important piece of equipment, and it cost like $10 itself. But the only way they could get it was through a package deal of a million dollars of other insane amounts of equipment that was entirely superfluous and they ended up getting shitloads too many guns and threw away thousands of hardware bits just to get that one screw. Similar systems at play here.
doctorpangloss 2y ago
"I'm a Substack Author and Lemme Tell You How I'm Going to Make It About Me This Time."
sssilver 2y ago
> [United Healhcare] net profit margin is just 6.11% Is this before or after their CEO's 23.5 million compensation?
- kbelder 2y ago
  Both? If the guy worked for free, it would have increased margin by about 0.002%.
  - sssilver 2y ago
    He's not the only person being compensated at United Healthcare though. I've asked this in a different thread, but I'll repeat it here: how much of the remaining "operational expenses" actually add meaningful value to the patients' healthcare?
aprilthird2021 2y ago
As a counterpoint to many of the other commenters, it is 100% true that providers way overcharge for healthcare in the US. Specialized nurses and doctors have salaries that exceed nearly every other profession in the US. But they are not even the main employees! The healthcare industry in the US employs a substantial chunk of all of America, largely in bloated administrative jobs that aren't really necessary for patients. I'd say, it's also true that this specific company UHG, specifically had policies in place that led to people dying over denied claims. The author of this piece himself said 10-20% of claims are outright, flatly denied by health insurance. That leads to a world where people die unable to afford healthcare they already paid for. I think both parties are at fault here, and yeah insurance is easier to be mad at, that's an idea that makes sense to me.
arresin 2y ago
What a garbage milketoast read.
strken 2y ago
This is a bit ridiculous, because part of the reason that providers are overcharging you is that they need huge finance departments to get their cash back from you or your insurer, which wouldn't be necessary if you had a single government insurer. Also, the quote from the Courtney Barnett song about Australian healthcare only applies if you somehow end up in a private emergency department, which is extraordinary unlikely since they're often underprepared for critical emergencies and for non-critical stuff you can ask to be taken to a public hospital in the ambulance. You're likely to get charged a couple of thousand dollars for the ambulance ride (depends on state; in mine, membership of the ambulance org is $53 a year and automatically covers you for any ambulance trip Australia-wide, no denials; others are free), plus a few hundred for the consultation. I believe Medicare will pay for some private care in an emergency department. She's talking about calling 000 because of an asthma attack but also alludes to a panic attack, which means she's not rationally discussing how much it will cost. It's not a scenario where she will have actual crippling debt like it would be in the US. A non-artistic non-panic-attack analysis of the situation is that she'd pay literally nothing as a public patient in a public hospital, and would pay a few thousand in the unlikely possibility she got admitted to a private hospital. Which, yes, would suck, but her worst case is an order of magnitude or two away from the expected cost in the US.
dematz 2y ago
Imo, spherical cow economist take on a field they know little about. The graphic lumps all "Inpatient & outpatient care" together, which is insane. Is it saying all that money is going to physicians, nurses, etc? It seems to imply that, but my guess is much of it ends up in hospital administration costs. Also in this way the cost of UHC etc isn't just their own admin overhead; it also add the hospital's admin and billing costs of dealing with them. As for the author's claim that the doctor/nurse/admin assistant should know how much your treatment costs beforehand, lol. Yes, in an ideal world they absolutely would tell you. No, in reality they do not know. There's a whole apparatus of administrators and software spanning the hospital and insurance companies with bajillions of codes and negotiated rates. Noah Smith instead thinks doctors/nurses/admin assistants know ahead of time what each treatment costs but decline to inform consumers? A slightly dated but still relevant book is O'Reilly Hacking Healthcare. Iirc there are whole chapters on billing. It's just very complicated to figure out costs before treatment, and that's the fault of insurance/administration, not doctors/nurses/admin assistants. It at least implies 2 anti medical worker claims. 1) excess healthcare costs are driven by medical worker salaries 2) medical workers could clarify prices but do not in order to mislead patients. Both totally miss the real problems of healthcare cost: the complexity of admin/billing leads to not just increased costs in insurance companies but also in hospital administration, and obscures costs for patients.
- dematz 2y ago
  Btw, there are good ways of reducing physician costs. Allow straight to med school with no college, reduce med school requirements, maybe let residents change programs. If you make it much easier to become a physician without hurting care too much you then naturally pass savings on to patients. You can have legitimate criticisms of the AMA or hospital administration without jumping to ah greedy providers.

05 2y ago

The guy was charged with fraud and insider trading, his company denied 2x claims than industry average - in this case it wasn't the providers..

warner25 2y ago

This reminds me of two excellent back-to-back episodes of This American Life in 2009, when the debate leading up to the Affordable Care Act was at its peak: https://www.thisamericanlife.org/391/more-is-less https://www.thisamericanlife.org/391/more-is-less and https://www.thisamericanlife.org/392/someone-elses-money https://www.thisamericanlife.org/392/someone-elses-money It has been a while since I listened to these episodes, but my main recollection is the argument that insurers are the only entities in the system actually fighting to reduce costs (and, of course, high costs are what underlie most of the other problems with the US healthcare system). To be clear, I don't think insurers (and United Healthcare in particular) and their owners (all of us with index funds in our retirement accounts?) and boards and executives are blameless, but I do think this idea should be more central to the discussion and less contrarian.

kbolino 2y ago
I don't think modern health insurers want to lower costs. Middlemen benefit from an increase in costs because they operate by skimming off the cashflows passing through them. This has been codified with the 85-15 rule in the ACA but there were less formal incentives pointing broadly in the same direction even before then. If you take a fixed percentage of every dollar you get, you're going to want to get more dollars.
- warner25 2y ago
  So one of the problems is indeed that insurers have conflicting incentives, as you correctly described one of them, and it's possible (although I don't know enough to argue either way) that ACA actually made this worse. I think one of the big arguments for a single-payer system, or at least the "public option," is that those middlemen could (ideally, in theory) embrace the position they're in to fight for lower costs without the conflicting incentives that come with being a for-profit entity. I guess that's basically what Noah Smith (author of the parent's linked article) is saying in his conclusion. There are, of course, other arguments for and against. Healthcare is a fascinatingly (and maddeningly) complex problem.
- s1artibartfast 2y ago
  I agree this is a bad incentive, but a conflict of interest alone does automatically mean an ability to act on it. In the case of health insurance, driving up the costs requires a monopoly or collaboration of firms without defection. As a result, this means one firm cant act in isolation, and cost increases usually come from the industry not pushing back on outside changes that impact all the firms equally. Examples could be more training for healthcare workers, more expensive standards of care, more regulation and paperwork, ect. It is pretty telling that UHC prices are not that different than similar plans at Kaiser (which is a vertically integrated non-profit insurance, hospital, pharmacy, and PBM provider). About 15% different when I was picking between them during open enrollment this year.
- nradov 2y ago
  The incentives go both ways. In the short term, the minimum medical loss ratio rule incentivizes payers to approve more claims and allow network providers to charge higher rates. But longer term payers can only maintain market share with their most important customers (the large self-funded employers) by lowering total medical expenses.

rozap 2y ago

Kind of a silly take in my opinion. While it's may be true that the majority of money in a medical transaction (which is inflated) doesn't go to the insurer, it goes to the provider, it doesn't change the fact that "insurers" absolutely add a layer of uncertainty to the process. In times of uncertainty (ie: getting sick) anything that adds uncertainty will rightfully be hated. In Canada, their system has a number of major shortcomings. But in college when my girlfriend got appendicitis, I just took her to the hospital without worry about in/out of network, and without worrying about if we'd get a claim rejected after the fact and have our small college student bank accounts drained. That is huge, and should not be underestimated. Here I do not have that luxury. Even though I have plenty of money saved up, it doesn't ever feel like enough. If one of us has a major illness, it can get wiped out due to a claim denial. And who makes the approve/deny choice? The author of that post does some bad thinking here by completely missing the source of the vitriol directed at insurers. While providers do charge out the ass, at least they are doing something useful, while in these times of great uncertainty and pain, insurers only rent seek, blood suck, and do not offer anything of value.

0xDEAFBEAD 2y ago
>it doesn't change the fact that "insurers" absolutely add a layer of uncertainty to the process. Not relative to the case of having no insurance. You're implicitly blaming insurers for the fact that the US doesn't have universal public healthcare. Don't hate the player, hate the game.
- acdha 2y ago
  Now, why doesn’t the United States have universal public healthcare? Because every time it’s been proposed since the 19th century there’s been stiff opposition from doctors, hospital owners, and private insurance companies. So while it’s true that they didn’t start the problem, it’s fair to blame all of them for the problems of a system they’ve poured enormous amounts of money into preserving.
  - fastball 2y ago
    The US doesn't have universal public healthcare because it is a country of 350M people and would probably be a disaster. Significantly smaller countries (UK/Canada) have major issues with their systems with a fraction of the population.

FpUser 2y ago

BS diatribe trying to tell that since asshole X does not do as much damage as asshole Y is not an asshole. Well they both are

A_D_E_P_T 2y ago

Additional perspective: https://www.propublica.org/article/unitedhealth-healthcare-insurance-denial-ulcerative-colitis https://www.propublica.org/article/unitedhealth-healthcare-i... The health insurance industry is effectively a maximally hostile middleman. It's hostile to service providers, and it's hostile to service users. (The most charitable thing you can say about it is that it creates enormous amounts of paperwork, thereby creating jobs and boosting GDP.) It's not difficult to see how it has become so widely hated.

elliotec 2y ago

It's the healthcare industrial complex. Just like the military. You get back some percentage of what you charge. They're incentivized to charge more because they'll get more, and sometimes it's an all-or-nothing. I have doctor friends who quote they spend over 60% of their time dealing with insurance and it's intricacies. It's the fault of the system, with large foundations on insurance and perverse government policy to enrich the leaders therein, and the providers are simply making do with the system they must operate in. I'll never forget the story I heard about a military squadron that needed like one bolt to fix a relatively important piece of equipment, and it cost like $10 itself. But the only way they could get it was through a package deal of a million dollars of other insane amounts of equipment that was entirely superfluous and they ended up getting shitloads too many guns and threw away thousands of hardware bits just to get that one screw. Similar systems at play here.

doctorpangloss 2y ago

"I'm a Substack Author and Lemme Tell You How I'm Going to Make It About Me This Time."

sssilver 2y ago

> [United Healhcare] net profit margin is just 6.11% Is this before or after their CEO's 23.5 million compensation?

kbelder 2y ago
Both? If the guy worked for free, it would have increased margin by about 0.002%.
- sssilver 2y ago
  He's not the only person being compensated at United Healthcare though. I've asked this in a different thread, but I'll repeat it here: how much of the remaining "operational expenses" actually add meaningful value to the patients' healthcare?

aprilthird2021 2y ago

As a counterpoint to many of the other commenters, it is 100% true that providers way overcharge for healthcare in the US. Specialized nurses and doctors have salaries that exceed nearly every other profession in the US. But they are not even the main employees! The healthcare industry in the US employs a substantial chunk of all of America, largely in bloated administrative jobs that aren't really necessary for patients. I'd say, it's also true that this specific company UHG, specifically had policies in place that led to people dying over denied claims. The author of this piece himself said 10-20% of claims are outright, flatly denied by health insurance. That leads to a world where people die unable to afford healthcare they already paid for. I think both parties are at fault here, and yeah insurance is easier to be mad at, that's an idea that makes sense to me.

arresin 2y ago

What a garbage milketoast read.

strken 2y ago

This is a bit ridiculous, because part of the reason that providers are overcharging you is that they need huge finance departments to get their cash back from you or your insurer, which wouldn't be necessary if you had a single government insurer. Also, the quote from the Courtney Barnett song about Australian healthcare only applies if you somehow end up in a private emergency department, which is extraordinary unlikely since they're often underprepared for critical emergencies and for non-critical stuff you can ask to be taken to a public hospital in the ambulance. You're likely to get charged a couple of thousand dollars for the ambulance ride (depends on state; in mine, membership of the ambulance org is $53 a year and automatically covers you for any ambulance trip Australia-wide, no denials; others are free), plus a few hundred for the consultation. I believe Medicare will pay for some private care in an emergency department. She's talking about calling 000 because of an asthma attack but also alludes to a panic attack, which means she's not rationally discussing how much it will cost. It's not a scenario where she will have actual crippling debt like it would be in the US. A non-artistic non-panic-attack analysis of the situation is that she'd pay literally nothing as a public patient in a public hospital, and would pay a few thousand in the unlikely possibility she got admitted to a private hospital. Which, yes, would suck, but her worst case is an order of magnitude or two away from the expected cost in the US.

dematz 2y ago

Imo, spherical cow economist take on a field they know little about. The graphic lumps all "Inpatient & outpatient care" together, which is insane. Is it saying all that money is going to physicians, nurses, etc? It seems to imply that, but my guess is much of it ends up in hospital administration costs. Also in this way the cost of UHC etc isn't just their own admin overhead; it also add the hospital's admin and billing costs of dealing with them. As for the author's claim that the doctor/nurse/admin assistant should know how much your treatment costs beforehand, lol. Yes, in an ideal world they absolutely would tell you. No, in reality they do not know. There's a whole apparatus of administrators and software spanning the hospital and insurance companies with bajillions of codes and negotiated rates. Noah Smith instead thinks doctors/nurses/admin assistants know ahead of time what each treatment costs but decline to inform consumers? A slightly dated but still relevant book is O'Reilly Hacking Healthcare. Iirc there are whole chapters on billing. It's just very complicated to figure out costs before treatment, and that's the fault of insurance/administration, not doctors/nurses/admin assistants. It at least implies 2 anti medical worker claims. 1) excess healthcare costs are driven by medical worker salaries 2) medical workers could clarify prices but do not in order to mislead patients. Both totally miss the real problems of healthcare cost: the complexity of admin/billing leads to not just increased costs in insurance companies but also in hospital administration, and obscures costs for patients.

dematz 2y ago
Btw, there are good ways of reducing physician costs. Allow straight to med school with no college, reduce med school requirements, maybe let residents change programs. If you make it much easier to become a physician without hurting care too much you then naturally pass savings on to patients. You can have legitimate criticisms of the AMA or hospital administration without jumping to ah greedy providers.