3 ms·

I'm surprised on the comments here that go: "I had to pay $$$$ for a medication when I could buy that same medication somewhere else for a fraction of it. There

I'm surprised on the comments here that go: "I had to pay $$$$ for a medication when I could buy that same medication somewhere else for a fraction of it. Therefore Big Pharma gouges America". That is not evidence that "Big Pharma gouges America". It is evidence that Americans pay a lot more than other countries. Only that. The conclusion doesn't necessarily follow from the premises. Want to understand why? Read the article's last paragraph: > The bulk of the rents is captured instead by providers of health-care services such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity. As always, no one reads anything.

tptacek 1y ago
Insurers make even less money than Pharma companies do. To a first approximation essentially all health care spending goes to companies that deliver health services directly.
- diego_moita 1y ago
  > Insurers make even less money than Pharma companies do. In the whole or in relative terms? Source, even if personal or anecdotal? I am willing to consider your point because, to be fair, the article doesn't show any data that indicts the insurers. They just blame them at the end without any evidence. > all health care spending goes to companies that deliver health services directly. Well, that wouldn't explain why medication alone is more expensive in America, right? But accepting your argument: is it because of greed and oligopolies, incompetence or excess of regulation?
  - tptacek 1y ago
    Hah, I wouldn't need "personal" or "anecdotal" evidence for this; it's right there in black and white in the NHE data; literally in the first row of the sheet. I posted about this across the thread.
  - mothballed 1y ago
    No, he's right. Insurance profits are legally capped, and this keeps them from representing an outsized fraction of spending even in cases when they might partially be the driver behind it. They have to spend N% of their income on actual health care benefits. They're not absurdly high, you could look them up, but I don't think it's possible to exceed something like 10% profit. This means the only way for insurance companies to increase profits is to increase the price of healthcare, and they have zero incentive to try and lower the amount of money they pay out for healthcare which might otherwise have been split between profits and lower premiums.
    - tptacek 1y ago
      My guess is that if you found NHE data from before the ACA cap insurance would remain a small component of overall health spending (the ACA was very important and I am in no way downplaying it). Mostly I'm saying: you don't have to axiomatically derive why this is. Medicare collects and synthesizes this data.
      - mothballed 1y ago
        How would you derive it from medicare? Isn't medicare supposed to be non-profit? They should occupy 0% of health care spending once you remove the pass-through transfer payments that go back into medical care, minus some administration overhead.
        tptacek 1y ago
        The CMS collects these statistics in the same way that the BLS collects labor statistics. It has nothing specifically to do with the part of CMS that directly administers Medicare. The point is that we have very high quality data on this stuff.
        mikeyouse 1y ago
        I’d like to see a deeper analysis here though. Insurers don’t make that much money on a percentage profit basis, but profit’s derived after expenses. Hypothetically, their sheer existence could be a huge burden to everyone involved, their costs to employ legions of make-work employees processing/rejecting/questioning claims could result in low profits even if the work isn’t necessary, they could take advantage of transfer pricing to hide profits in their wholly owned but separately reported PBMs…
- delfinom 1y ago
  Yea in fact the ACA law caps insurers to a maximum of 15% profit. Anything extra must be rebated back to the customers. The debatable part is the rebate is back to the employer who is allowed to simply pocket the money, though one could argue its returning the amount the employer is covering, often more than the employee. :shrug: Believe or not, I get yearly notices from UHC about rebates for the prior year.
  - tptacek 1y ago
    Whatever the reasons are, I don't need first principles to make this claim, because Medicare presents this particular data quite clearly.
  - rockercoaster 1y ago
    > Yea in fact the ACA law caps insurers to a maximum of 15% profit. These are plan-by-plan, not on the company overall, and notably this doesn't apply to: 1) Self-funded plans. Name-brand insurance companies manage these, but big companies fund them and take on the risk (with re-insurance and all that good stuff in the mix, of course). A large proportion of the US population is on these kinds of plans, and that limit does not apply to them. 2) New plans in their first (IIRC) two years. I've not looked into whether insurance companies are playing games with this such that a larger set of their plans are "new" ones than would be if this rule didn't exist, but if it's at all possible for them to do that, I guarantee they are.
gertlex 1y ago
>> The bulk of the rents is captured instead by providers of health-care services such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity. > As always, no one reads anything. The implication of the article was the "bulk of the rents" applies to healthcare costs in total, not just to drug costs. I.e. drug costs are not a huge part of the healthcare costs. That by itself doesn't guarantee an understanding of why specific medication costs are sometimes 10x or whatever of other 1st world countries. (but I didn't read the article; just the rest of the comments)

tptacek 1y ago

Insurers make even less money than Pharma companies do. To a first approximation essentially all health care spending goes to companies that deliver health services directly.

diego_moita 1y ago
> Insurers make even less money than Pharma companies do. In the whole or in relative terms? Source, even if personal or anecdotal? I am willing to consider your point because, to be fair, the article doesn't show any data that indicts the insurers. They just blame them at the end without any evidence. > all health care spending goes to companies that deliver health services directly. Well, that wouldn't explain why medication alone is more expensive in America, right? But accepting your argument: is it because of greed and oligopolies, incompetence or excess of regulation?
- tptacek 1y ago
  Hah, I wouldn't need "personal" or "anecdotal" evidence for this; it's right there in black and white in the NHE data; literally in the first row of the sheet. I posted about this across the thread.
- mothballed 1y ago
  No, he's right. Insurance profits are legally capped, and this keeps them from representing an outsized fraction of spending even in cases when they might partially be the driver behind it. They have to spend N% of their income on actual health care benefits. They're not absurdly high, you could look them up, but I don't think it's possible to exceed something like 10% profit. This means the only way for insurance companies to increase profits is to increase the price of healthcare, and they have zero incentive to try and lower the amount of money they pay out for healthcare which might otherwise have been split between profits and lower premiums.
  - tptacek 1y ago
    My guess is that if you found NHE data from before the ACA cap insurance would remain a small component of overall health spending (the ACA was very important and I am in no way downplaying it). Mostly I'm saying: you don't have to axiomatically derive why this is. Medicare collects and synthesizes this data.
    - mothballed 1y ago
      How would you derive it from medicare? Isn't medicare supposed to be non-profit? They should occupy 0% of health care spending once you remove the pass-through transfer payments that go back into medical care, minus some administration overhead.
      - tptacek 1y ago
        The CMS collects these statistics in the same way that the BLS collects labor statistics. It has nothing specifically to do with the part of CMS that directly administers Medicare. The point is that we have very high quality data on this stuff.
        mikeyouse 1y ago
        I’d like to see a deeper analysis here though. Insurers don’t make that much money on a percentage profit basis, but profit’s derived after expenses. Hypothetically, their sheer existence could be a huge burden to everyone involved, their costs to employ legions of make-work employees processing/rejecting/questioning claims could result in low profits even if the work isn’t necessary, they could take advantage of transfer pricing to hide profits in their wholly owned but separately reported PBMs…
delfinom 1y ago
Yea in fact the ACA law caps insurers to a maximum of 15% profit. Anything extra must be rebated back to the customers. The debatable part is the rebate is back to the employer who is allowed to simply pocket the money, though one could argue its returning the amount the employer is covering, often more than the employee. :shrug: Believe or not, I get yearly notices from UHC about rebates for the prior year.
- tptacek 1y ago
  Whatever the reasons are, I don't need first principles to make this claim, because Medicare presents this particular data quite clearly.
- rockercoaster 1y ago
  > Yea in fact the ACA law caps insurers to a maximum of 15% profit. These are plan-by-plan, not on the company overall, and notably this doesn't apply to: 1) Self-funded plans. Name-brand insurance companies manage these, but big companies fund them and take on the risk (with re-insurance and all that good stuff in the mix, of course). A large proportion of the US population is on these kinds of plans, and that limit does not apply to them. 2) New plans in their first (IIRC) two years. I've not looked into whether insurance companies are playing games with this such that a larger set of their plans are "new" ones than would be if this rule didn't exist, but if it's at all possible for them to do that, I guarantee they are.

gertlex 1y ago

>> The bulk of the rents is captured instead by providers of health-care services such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity. > As always, no one reads anything. The implication of the article was the "bulk of the rents" applies to healthcare costs in total, not just to drug costs. I.e. drug costs are not a huge part of the healthcare costs. That by itself doesn't guarantee an understanding of why specific medication costs are sometimes 10x or whatever of other 1st world countries. (but I didn't read the article; just the rest of the comments)