4 ms·

Health Insurance companies do two things: (1) Negotiate price of services with hospitals and doctors, and drug companies. (2) Determine if the treatment is medi

Health Insurance companies do two things: (1) Negotiate price of services with hospitals and doctors, and drug companies. (2) Determine if the treatment is medically necessary. You are not hiring insurance companies to do the second part but they do it any way in order to increase their profits. They should be removed from this role via legislation. The first part is necessary, because hospitals and drug companies would charge even more if nobody tried to control the prices. But the consumer is the best person to keep prices in check. It is challenging because consumers of the knowledge asymmetry. Regardless, the consumer needs to feel the cost. One employer I know of has an excellent solution to the problem: Make employees pay 100% of their medical bills up to an out-of-pocket maximum, such as $6000. That's a large amount, but the employer then contributes a large amount to your Health Savings Account (HSA), such as $4000. This amount is for you to keep regardless of whether you have any medical bills or not. (This money can be used for medical expenses only, but can be used any time, including after retirement). So the maximum you will spend out of pocket per year is $2000. How does this encourage the consumer to scrutinize and control medical expenditure? Because the first $6000 of medical spending in a year is "your money". This is money you'd be able to keep in your HSA if you didn't have any medical expenses. This gives the consumer a strong incentive to reduce costs, question charges, avoid unnecessary services, and so on. When physicians and hospitals know that patients are scrutinizing care plans it will force a cultural change. That cultural change will subsume older practices.

ayewo 2y ago
> Because the first $6000 of medical spending in a year is "your money". Shouldn’t the your money figure be $2000, since the employer will only reimburse $4000 out of $6000?
- breadwinner 2y ago
  The employer provided $4000 and the $2000 are both "your money" because if you didn't have any medical expenses, you'd be able to keep $6000 in your HSA. As a consumer of healthcare you'll try to protect this money, which means you're more likely to question unnecessary services and overcharges.
moralestapia 2y ago
>(1) Negotiate price of services with hospitals and doctors, and drug companies. Sorry, but my understanding is that because of Health Insurance companies, the price of many treatments skyrocketed. Btw, your comment feels kind of GPT-ey but my apologies if you are a real human.
- breadwinner 2y ago
  Because the consumer is not in the loop when determining price. And that's what needs to change.
microtonal 2y ago
This gives the consumer a strong incentive to reduce costs, question charges, avoid unnecessary services, and so on. When physicians and hospitals know that patients are scrutinizing care plans it will force a cultural change. That cultural change will subsume older practices. This sounds great, until you are in a stressful or life-threatening health situation. Not only that, you are in a worse negotiation position if say, your leg is broken. Also it might encourage people to postpone needed medical attention (e.g. dentist visits, don’t know if they are covered by insurance in the US) because they are worried that they blow through 4000 that year and don’t have the means to cover the additional 2000.
- breadwinner 2y ago
  Pretty much all insurances today have copays and coinsurance.
  - marssaxman 2y ago
    I have never been left in worse financial straits in my life than the time I learned what "coinsurance" is, and now I consider any health plan with that limitation to be essentially worthless. If health insurance can't protect you from being bankrupted by an unexpected medical experience, what is the point of it?
bryanlarsen 2y ago
> But the consumer is the best person to keep prices in check. Monopsony means that single-payer health care systems enjoy significantly lower prices than market systems.
louwrentius 2y ago
Meanwhile I pay 1800 euros for insurance plus the first -400 euros you have to pay yourself: 2200. I also pay 4000 euros to the government (as a contractor) so around 6200 Euros and never ever face the risk of medical bankruptcy. Universal healthcare is so much better.
DHPersonal 2y ago
I somewhat understand the reasoning for #2, though. Hospitals are charging insane prices. Perhaps prices are high because hospitals aim to keep the price profitable when it's negotiated lower with the insurance agency, but I fear that it's more because they feel they can do it because people's lives are at stake. Having the insurance agency step in and prevent hospitals from fleecing customers may actually be a benefit, though perhaps agencies have become corrupted and just as profit-seeking as the hospitals. I'm just not convinced that removing insurance agencies would suddenly lower prices. Covid-19 pandemic supply chain issues caused prices to surge to meet the new costs, but when those issues were resolved, prices remained high because people absorbed the costs and the companies saw no reason to lower them after realizing incredible profit growth. I wonder if we would see the same problem if we removed insurance agencies without regulating the hospitals: with the powerful middle management of insurance agencies gone, hospitals would wield incredible billing power over individuals, who might end up seeing higher bills from their hospital visits. I don't mean to advocate for things to stay the same; I definitely think things need to be changed. I just don't see the insurance agencies as the problem in the system, in that their removal would repair the majority of our billing issues. I instead see them as potentially a target of a lot of our grievances without actually potentially being the cause of every one of them. A different person on the internet had some thoughts that seem compelling: Noahpinion — Insurance companies aren't the main villain of the U.S. health system — https://www.noahpinion.blog/p/insurance-companies-arent-the-main https://www.noahpinion.blog/p/insurance-companies-arent-the-...
- soco 2y ago
  I have sometimes the feeling neither Noah nor most of commenters here are aware that there are a few other countries outside the US, and most of them have a functioning health system - at least "functioning" compared to the US one. Otherwise we wouldn't need so many opinions and thoughts (and prayers) every time the malfunctions are uncovered.
- frumper 2y ago
  They've already negotiated price in #1.
notacoward 2y ago
Much like "perfect attendance" rewards in schools, I don't think this approach is very fair to people with chronic illness. Their condition is not their fault. These expenditures aren't really discretionary. And yet, under such a plan, they'll still be spending on health care while their peers get $4000 bonuses. To a large extent this also applies to people with kids, or even to older people. All that "scrutinizing and controlling medical expenditure" is a great deal for the young and childless and fully able, at the expense of every other demographic. It's almost anti-insurance, in a way. Instead of insulating people against catastrophic expenses for things beyond their control (the basic purpose of any insurance and the thing the current system fails at) it would force even more people into medical bankruptcy. That doesn't sound like an excellent solution to me. Maybe some variant of it could work - I do like the part about eliminating the "use it or lose it" aspect of current HSAs - but as stated it sounds pretty unfair. "This will force a cultural change" has rarely worked out that way in practice. IMX it usually leads to a worse culture where all pretense of collaboration is abandoned in favor of chasing loopholes and bogus metrics, and more often than not that's intentional.
- breadwinner 2y ago
  > they'll still be spending on health care while their peers get $4000 bonuses Life is inherently unfair to some extend. Some people are born beautiful and others are born ugly. Some are born intelligent and others are born dumb. You can't equalize everything.
  - notacoward 2y ago
    Yes, life is already unfair, but that's no excuse for advocating things that make it even less fair. After that response, I'll have to conclude that your "excellent solution" was just a money grab.
SilasX 2y ago
>(2) Determine if the treatment is medically necessary. >You are not hiring insurance companies to do the second part but they do it any way in order to increase their profits. They should be removed from this role via legislation. Okay, but in any system, even the beloved European ones, someone does this -- they can't just spend bottomless money on everyone, but draw a line based on the relative costs and benefits. US insurers are just unusually random, kafkaesque, and inconsistent about how they do it. There is never one platonically optimal "medically necessary" treatment; everything's a tradeoff, and the calculation will always depend on considerations other than "maximize this patient's health/lifespan as a much as physically possible".

ayewo 2y ago

> Because the first $6000 of medical spending in a year is "your money". Shouldn’t the your money figure be $2000, since the employer will only reimburse $4000 out of $6000?

breadwinner 2y ago
The employer provided $4000 and the $2000 are both "your money" because if you didn't have any medical expenses, you'd be able to keep $6000 in your HSA. As a consumer of healthcare you'll try to protect this money, which means you're more likely to question unnecessary services and overcharges.

moralestapia 2y ago

>(1) Negotiate price of services with hospitals and doctors, and drug companies. Sorry, but my understanding is that because of Health Insurance companies, the price of many treatments skyrocketed. Btw, your comment feels kind of GPT-ey but my apologies if you are a real human.

breadwinner 2y ago
Because the consumer is not in the loop when determining price. And that's what needs to change.

microtonal 2y ago

This gives the consumer a strong incentive to reduce costs, question charges, avoid unnecessary services, and so on. When physicians and hospitals know that patients are scrutinizing care plans it will force a cultural change. That cultural change will subsume older practices. This sounds great, until you are in a stressful or life-threatening health situation. Not only that, you are in a worse negotiation position if say, your leg is broken. Also it might encourage people to postpone needed medical attention (e.g. dentist visits, don’t know if they are covered by insurance in the US) because they are worried that they blow through 4000 that year and don’t have the means to cover the additional 2000.

breadwinner 2y ago
Pretty much all insurances today have copays and coinsurance.
- marssaxman 2y ago
  I have never been left in worse financial straits in my life than the time I learned what "coinsurance" is, and now I consider any health plan with that limitation to be essentially worthless. If health insurance can't protect you from being bankrupted by an unexpected medical experience, what is the point of it?

bryanlarsen 2y ago

> But the consumer is the best person to keep prices in check. Monopsony means that single-payer health care systems enjoy significantly lower prices than market systems.

louwrentius 2y ago

Meanwhile I pay 1800 euros for insurance plus the first -400 euros you have to pay yourself: 2200. I also pay 4000 euros to the government (as a contractor) so around 6200 Euros and never ever face the risk of medical bankruptcy. Universal healthcare is so much better.

DHPersonal 2y ago

I somewhat understand the reasoning for #2, though. Hospitals are charging insane prices. Perhaps prices are high because hospitals aim to keep the price profitable when it's negotiated lower with the insurance agency, but I fear that it's more because they feel they can do it because people's lives are at stake. Having the insurance agency step in and prevent hospitals from fleecing customers may actually be a benefit, though perhaps agencies have become corrupted and just as profit-seeking as the hospitals. I'm just not convinced that removing insurance agencies would suddenly lower prices. Covid-19 pandemic supply chain issues caused prices to surge to meet the new costs, but when those issues were resolved, prices remained high because people absorbed the costs and the companies saw no reason to lower them after realizing incredible profit growth. I wonder if we would see the same problem if we removed insurance agencies without regulating the hospitals: with the powerful middle management of insurance agencies gone, hospitals would wield incredible billing power over individuals, who might end up seeing higher bills from their hospital visits. I don't mean to advocate for things to stay the same; I definitely think things need to be changed. I just don't see the insurance agencies as the problem in the system, in that their removal would repair the majority of our billing issues. I instead see them as potentially a target of a lot of our grievances without actually potentially being the cause of every one of them. A different person on the internet had some thoughts that seem compelling: Noahpinion — Insurance companies aren't the main villain of the U.S. health system — https://www.noahpinion.blog/p/insurance-companies-arent-the-main https://www.noahpinion.blog/p/insurance-companies-arent-the-...

soco 2y ago
I have sometimes the feeling neither Noah nor most of commenters here are aware that there are a few other countries outside the US, and most of them have a functioning health system - at least "functioning" compared to the US one. Otherwise we wouldn't need so many opinions and thoughts (and prayers) every time the malfunctions are uncovered.
frumper 2y ago
They've already negotiated price in #1.

notacoward 2y ago

Much like "perfect attendance" rewards in schools, I don't think this approach is very fair to people with chronic illness. Their condition is not their fault. These expenditures aren't really discretionary. And yet, under such a plan, they'll still be spending on health care while their peers get $4000 bonuses. To a large extent this also applies to people with kids, or even to older people. All that "scrutinizing and controlling medical expenditure" is a great deal for the young and childless and fully able, at the expense of every other demographic. It's almost anti-insurance, in a way. Instead of insulating people against catastrophic expenses for things beyond their control (the basic purpose of any insurance and the thing the current system fails at) it would force even more people into medical bankruptcy. That doesn't sound like an excellent solution to me. Maybe some variant of it could work - I do like the part about eliminating the "use it or lose it" aspect of current HSAs - but as stated it sounds pretty unfair. "This will force a cultural change" has rarely worked out that way in practice. IMX it usually leads to a worse culture where all pretense of collaboration is abandoned in favor of chasing loopholes and bogus metrics, and more often than not that's intentional.

breadwinner 2y ago
> they'll still be spending on health care while their peers get $4000 bonuses Life is inherently unfair to some extend. Some people are born beautiful and others are born ugly. Some are born intelligent and others are born dumb. You can't equalize everything.
- notacoward 2y ago
  Yes, life is already unfair, but that's no excuse for advocating things that make it even less fair. After that response, I'll have to conclude that your "excellent solution" was just a money grab.

SilasX 2y ago

>(2) Determine if the treatment is medically necessary. >You are not hiring insurance companies to do the second part but they do it any way in order to increase their profits. They should be removed from this role via legislation. Okay, but in any system, even the beloved European ones, someone does this -- they can't just spend bottomless money on everyone, but draw a line based on the relative costs and benefits. US insurers are just unusually random, kafkaesque, and inconsistent about how they do it. There is never one platonically optimal "medically necessary" treatment; everything's a tradeoff, and the calculation will always depend on considerations other than "maximize this patient's health/lifespan as a much as physically possible".