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Mapping the US healthcare system’s financial flows
- Taikonerd 11mo agoIt's a truism that America's system was never designed -- it's a patchwork of different pieces that each pay for some people in some situations. But I've been reading about our system, since I fell down a rabbit hole a couple years ago. Things are bad, yes, but there are actually interesting ideas out there, and real efforts at reform that are being tried. For example, did you know Maryland has a different way of funding hospitals than most other states? [0] And that other states are interested in copying it? [0] https://www.vox.com/policy-and-politics/2020/1/22/21055118/maryland-health-care-global-hospital-budget https://www.vox.com/policy-and-politics/2020/1/22/21055118/m...
- bombcar 11mo agoA system built as a mish-mash patchwork is likely to be solved by a similar "ground-up" framework. Each state should be free to experiment (as Maryland has done here) and the federal levels should be restricted to providing funding and basic guidelines that have to be met. Part of the problem is that as you begin to delve in and see where the outflows are, you start to realize that fixing the fundamental problem involves making the people healthier in general, which will rumble the very foundations of Wall Street.
- jpalawaga 11mo agoOne of the great powers of federalism is not having to duplicate efforts for every state. It also reduces cost by allowing 'one-size-fits-all' and economies of scale, rather than each state having its own bespoke whatever. Many countries around the world enjoy the benefits of coordinated public health departments. Part of the United States' poor response to COVID was because there was no central public health department that could work closely with state agencies to e.g. provide data about what's going on, share best clinical practices, etc. Each state is an island. So no, I don't agree that the only goal of the federal government should be piggy bank. States should have a lot of latitude with their policies, but generally standardizing things across the nation would be a net positive.
- bombcar 11mo agoMany countries around the world are the size of US States. The UK and Germany are only twice the size of California, for example. The problem in the US isn't that we can't do things, it's that nobody can agree on what to do. And to solve that problem, let states do their own thing as much as we can, and it'll become obvious where the good systems are. Or in other words, an argument needs to be made why the EU "works" with individual "states" doing their own thing, but the US cannot "work" unless it's considered as one large country.
- rwj 11mo agoThis analogy is quite misleading, because, in addition to California, there is also Wyoming, with a population of less than <600k.
- emchammer 11mo agoScalia was right in saying that the checks and balances slowing things down is a feature, not a bug. The Framers were right about protections against faction. I’m not sure they understood how badly malicious schemers could deliberately manipulate the system. Things just aren’t getting done, and it is killing people.
- psunavy03 11mo agoHalf of the problem with American politics these days is people from blue and red states trying to force the entire country to become one giant blue state or one giant red state. It's too big for one-size-fits-all answers. Every state should be able to largely do its own thing as long as it isn't violating the Bill of Rights.
- matthewdgreen 11mo agoIf you look at some of the more controversial bills being passed in the states, they're also being more or less lifted out of national political action committees and think tanks. Extreme in-state gerrymandering (supported by national party organizations) has effectively nationalized big parts of state politics in those states.
- nneonneo 11mo agoCanada’s public healthcare system was started in Saskatchewan, one of the provinces, and rapidly copied to other provinces (and later to a federal level): https://www.cma.ca/healthcare-for-real/who-started-canadas-universal-health-care-system https://www.cma.ca/healthcare-for-real/who-started-canadas-u... If one state can manage to make it actually work, it might be enough.
- doctorpangloss 11mo agoThere are already numerous and simple policy levers that actually affect costs and cannot be gamed. Such as the age you become eligible for Medicare. You don't have to reach for anything innovative like global hospital budgets. I'm skeptical of your category of reforms - you really mean, "benign-looking administrative decisions," because if you're not making any hard choices, you're not making reforms. I would hardly call it "real efforts."
- almosthere 11mo agoSo it's a jobs program
- silisili 11mo agoNot all of it, but definitely the insurance part of it IMO. It's hard to get an actual number, but many say nearly 1 million people work in health insurance in the US. And I'm not sure that even counts the people whose job it is to interface with them. That's a ton of jobs(and salaries) that likely wouldn't even exist in a sane system.
- IAmBroom 11mo ago> It's hard to get an actual number It's tracked by the Dept of Labor.
- silisili 11mo agoIt is, but under "life, medical, and health" insurance, and only based on the employer not function. Any contractor like say, maintenance, janitorial, cafeteria, etc for the building would not be counted. People who work at hospitals doing nothing but insurance related work would also not be counted. That makes it hard to say definitively how many jobs would actually be affected, in my opinion.
- MarkusWandel 11mo agoAll the categories on the right side look perfectly reasonable. However what fraction of those big categories on the right, Hospitals and Physicians... that make up over half of the total, is siphoned off to pay for administratium or "shareholder value" and what fraction actually pays for medical care delivered?
- programmertote 11mo agoI'd really love to see the breakdown between how much we spend on physicians/doctors vs. caretakers (nurses, therapists, etc.) vs. how much on hospital admin and other stuff. At least in UK's chart, "GP & Primary Care", "Private GP Services" and "Administration" are separated. Same in Germany too.
- Retric 11mo agoIf by shareholder value you include insurance companies etc not just the institutions themselves, it’s well over half. Doctor time talking to an insurance company either directly or through paperwork is not actually providing any care during that time. Where things go vicious is because doctors are now so inefficient the time they are actually useful becomes increasingly valuable driving ever more paperwork to justify that time.
- nradov 11mo agoPhysicians spend very little time directly dealing with insurance companies. They (or their employers) hire back office administrative staff for that. This is somewhat wasteful and inefficient but it doesn't directly impact the time that clinicians have available for patient care. Usually the physicians only have to get directly involved in rare peer-to-peer consults with health plans for complex cases that fall outside of normal clinical practice guidelines.
- Retric 11mo agoIt’s the indirect time that’s most at issue here, a friend of mine is happy to take a significant pay cut and work at the VA to avoid the hassle. It’s a government institution and he still feels way more productive and less stressed. In private practice a physician now needs to handle extra employee(s), there’s often a range of software system issues etc. Even in a hospital setting where other people are handling most of this stuff that’s a long way from zero friction. The insidious issue is even a 1% drop on doctor efficiency gets magnified by everyone taking a cut of the transaction.
- velcrovan 11mo agoAmazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from? How do they even pay their executives' salaries? Boy have I been mistaken about how inefficient the American system is
- asmodeuslucifer 11mo agoBeat me to it. This chart is only 1/2 complete. It doesn't show where the money goes after hospital care, for instance.
- harvey9 11mo agoDo you mean the breakdown of staff wages, equipment and so on?
- asmodeuslucifer 11mo agoI'm more interested in what the equity owners get. edit: and the insurance companies
- deleted 11mo ago[deleted]
- gwbas1c 11mo ago> How do they even pay their executives' salaries? I suspect less goes to executives than you think. Most of it is going to pay employees in the insurance industry. The irony is that they are being paid to say "no." Perhaps if they instead went to work as service providers, we could get more services for what we spend.
- dangus 11mo agoHealthcare executive pay is pretty darn high, more money than any family needs to live comfortably. Keep in mind this is just for Blue Shield California. There are executives of other health insurance systems in other states and regions who are making similar compensation. However, I'll go ahead and say right now that I support the idea of these executives being paid these salaries, but on one condition: that we first achieve the goal of 100% of Americans having affordable access to healthcare. Once that goal is achieved, then we can start paying executives big bonuses and incentives. Deal? (Yeah, right...) https://www.blueshieldca.com/content/dam/bsca/en/member/docs/2025/2024-Executive-Compensation-Summary-FINAL.pdf https://www.blueshieldca.com/content/dam/bsca/en/member/docs... Below is a summary of the compensation paid in 2024 to Blue Shield of California’s President and Chief Executive Officer (CEO), Chief Financial Officer (CFO), and top three highest paid executives (other than the CEO and CFO) who were employed by Blue Shield of California at year-end. Paul Markovich President and Chief Executive Officer $11,191,674 Sandra Clarke EVP, Chief Operating Officer $5,765,368 Peter Long EVP, Strategy and Health Solutions $4,360,245 Lisa Davis EVP, Chief Information Officer $2,873,613 Michael Stuart EVP, Chief Financial Officer $2,406,837 Some other CEOs: Cerner (EMR provider to the VA), $35 million pay package: https://kffhealthnews.org/morning-breakout/cerner-to-pay-new-ceo-35-million-pfizers-trillium-purchase-explained/ https://kffhealthnews.org/morning-breakout/cerner-to-pay-new... Pfizer, $24.6M pay package: https://www.fiercepharma.com/pharma/rebound-year-pfizer-ceo-bourla-gets-14-pay-hike-246m https://www.fiercepharma.com/pharma/rebound-year-pfizer-ceo-... Epic Systems is a private company, so there's no executive pay information, but the founder Judy Falkner's estimated net worth is $7.8 billion. Perhaps Epic could reduce the price of its very expensive software for providers to help ease healthcare costs and maybe Judy could give up some of those billions and not notice any difference in her quality of life?
- IAmBroom 11mo ago"A Fairytale Map of Every Dollar of America's $5T Healthcare System" is the complete, accurate title. Is this funded by an insurance company?
- Thrymr 11mo agoThe author calls himself a "Real Estate Novelist and recovering healthcare consultant" (https://substack.com/@andrewtsang https://substack.com/@andrewtsang).
- IAmBroom 11mo agoAh, so it's fiction?
- SoftTalker 11mo agoDid he ever have time for a wife?
- nycticorax 11mo agoIt would help if you would say what exactly you think is wrong with it.
- bombcar 11mo agoHere's an idea. If other countries can provide healthcare for much less per patient, why can't they sell that to Americans? In other words, allow US citizens to "opt out" of the US healthcare system and participate in the German one? You'd have to make some allowances for replacing taxes with costs, billing, and allow "German" healthcare to operate in the US ...
- watwut 11mo agoHealthcare insurance works when everyone including currently healthy people participate. What would happen is only Americans needing an expensive healthcare signing in.
- piva00 11mo agoThe systems are so different there's no product to sell, it's a whole system of healthcare that permeates through society... You can't sell a national-level system of healthcare as a product, it's done through policy.
- systemtest 11mo agoI don't think US doctors will want to work for German pay.
- bombcar 11mo agoThat's why you let German doctors work for German++ pay ;).
- conception 11mo agoResident salary: approx. € 60,000 - 75,000 Specialist salary: approx. 75,000 € - 98,000 Senior physician salary: approx. € 90,000 - € 150,000 Chief physician salary: approx. € 150,000 - € 370,000 Seems fine? Especially if you subtract a substantial amount of benefits fringe.
- sxg 11mo agoAre you comparing residents to specialists? They're not at all comparable. Residents in the US are typically within 3–7 years of graduating med school and are not able to practice independently. Specialists have typically finished 6–9 years of training after graduating medical school and are independent practitioners. Source: am a US physician.
- jimt1234 11mo agoThe healthcare system in the US is, indeed, the best...if you're rich. If you're not rich, you're gonna spend a lot of time on the phone, arguing with bureaucrats and getting treated like shit. A friend of mine is rich. We both have a health insurance plan from UnitedHealthcare. His experience is radically different from mine. He can make a phone call, and actually talk to his doctor within a few minutes. He can see his doctor the same day he asks to. He talks to one person who manages all the BS for him.
- systemtest 11mo ago> If you're not rich, you're gonna spend a lot of time on the phone, arguing with bureaucrats and getting treated like shit Sounds a lot like the Spanish healthcare system.
- IAmBroom 11mo ago> The healthcare system in the US is, indeed, the best...if you're rich. Actually, the data doesn't even support that notion for the rich. But then, they can opt to fly to a specialist...
- dbg31415 11mo agoWhere are salaries? Where are administration overhead? Where are insurance company profits and dividends coming from? This whole thing loses all credibility by not listing those things.
- jimt1234 11mo agoIf we're gonna stick with private insurance in the US, we should detach it from employment. The current system has created a society of indentured servants, not for money, but for "health insurance". The current system is expensive for employers that are often mandated to provide health insurance plans. And it forces people to work for something they have little or no control over. When you work for money, you can do whatever you want with the money once you've earned it. But being compensated with "health insurance", you've got almost no control over it; you get what the company gives you - and btw, you can't purchase the same thing on your own, with your own money (way too expensive for most middle-class folks). Detach health insurance from employment. Open "health insurance plans" to the free market, just like auto insurance. Free employers from all the administrative overhead of managing health insurance for employees (the stock market will love it!) And let health insurance companies work for their actual customers (health care patients!) Or, just open Medicare to all.
- srameshc 11mo agoOne of the best explanations I have ever read about American Healthcare. Even after such good infographic it is still hard to comprehend such complexity. > The $441B in prescription drugs - the story of incentivizing American innovation over price controls. This itself speaks for how messedup the entire design is.
- lvl155 11mo agoIt actually doesn’t incentivize innovation. That’s the biggest scam in healthcare. If it actually led to innovations and notable uptick in quality, other countries would have done the same. The whole argument is so flawed it makes my brain hurt.
- daft_pink 11mo agoI wish they had this per capita in each country, so we could compare them.
- jmpman 11mo agoI’m concerned with anyone proposing “Medicare for all” in America, because they all state - for doctors who want to stay out of the system, they can be paid directly… that immediately causes a slightly different 2 tier system. Right now our 2 tier system is the 90% with health insurance and the 10% without health insurance. In the new Medicare for all, it will be the 99.9% on government insurance, and the 0.1% - the ultra wealthy - who dominate tax policy and are heavily financially incentivized to reduce their tax contributions to the public system. They will influence politicians to spend less on healthcare, with no impact to their health outcomes. The only system which will work in the US is one in which the ultra wealthy have an incentive to provide funding to the public system, and that seems like you’d need to force them to be on the public system too.
- PieTime 11mo agoThis is precisely what allows for the NHS to be cannibalized. They underfunded one of the best systems of healthcare and replaced it with private care for ultra wealthy while reducing quality of care for vast majority of people.
- harvey9 11mo agoPrivate care has been available in Britain throughout the history of the NHS and is available to people far below the 'ultra wealthy' strata. Don't ruin a valid point with hyperbole.
- cj 11mo ago> The only system which will work in the US is one in which the ultra wealthy have an incentive to provide funding to the public system, and that seems like you’d need to force them to be on the public system too. In my state, I pay $15k/year in school taxes, yet I have no children. I pay $1000/year in property taxes to support my city's library, yet I don't have a library card. People are taxed for lots of things they don't actually benefit from. I don't think we would need to force rich people to use the plans. If they want to buy medical services from private doctors, sure we can let them. The issue then becomes more about allocation of resources (how many doctors are available to be seen on the public system vs. only available to self-pay customers) rather than the issue being about how to collect taxes.
- notepad0x90 11mo agoInsurance == Social Disease There is a healthy concept of insurance where people pay to hedge against potential risk, and that's all fine and good. But one of the most insidious social diseases is mandatory insurance, or industries expecting individuals to insure themselves in any capacity whatsoever. It is never ok for a business (or government) to offer a service that comes with risks, but then ask their customers/subjects to insure themselves for the risk to the business/government. If I am charging people $100 for a service, then I ask them to insure themselves and everyone reliably insures themselves (the majority at least), they can still afford to pay my me $100, so why don't i just raise the cost to $100+$10000 where $10000 is the maximum the insurance will pay? You see the problem right, all the insurance achieved is the increase in prices, people still pay the same, you just now have a middle-man economy sucking up all the wealth/value people are generating. If we could all agree on one thing, I wish it would be this. No more mandatory insurance in any context. Not fire, not flood, not health, not cars. Optional is fine, people who can afford it can hedge against the risk. But a bank shouldn't require fire insurance on mortgaged homes. Businesses must eat the cost of doing business, in the end the price increase they impose will be less than the price increase of insurance mandates. That, or greed should be a felony (not happening). For health insurance, it should be a simple subsidy for those who can't pay out of pocket. Some industries must be regulated, even in a capitalist free-market country. Health care, prisons, law enforcement, defense contractors, banks to name a few. Regulated as in centrally price-controlled. For uninsured people that get sick, house burns down, car accident,etc... the government (for health care) or businesses convert the cost to debt. Same as when someone takes out a mortgage and refuses to pay at some point, or refuses to pay their car notes. It's like we have had this 50+ year running experiment, it's failing really badly and everyone is coming up with ideas that don't involve scraping the experiment, just modifying it and waiting a bit longer to see if it works out.
- coredog64 11mo ago> For health insurance, it should be a simple subsidy for those who can't pay out of pocket. Some industries must be regulated, even in a capitalist free-market country. Health care, prisons, law enforcement, defense contractors, banks to name a few. Regulated as in centrally price-controlled. Maybe not now, but 10-ish years ago that was the French system. Very poor people get outpatient care that is free at the point of service. Everyone else gets highly regulated private insurance with a strong market component. Emergent/inpatient care is provided by hospitals that aren't part of the insurance system. There are definitely some trade-offs there, but I wouldn't be opposed to such a system in the US.
- lvl155 11mo agoYou can go one step further and make this a time-series. Costs skyrocketing. Quality of care actually going down across the country but especially in rural settings. Provider satisfaction plummeting. No one is happy…except greedy executives and shareholders.
- warkdarrior 11mo ago> No one is happy…except greedy executives and shareholders. It is a fairly effective system to extract money from customers (patients) while also ensuring that patients do not use too many services (afaik, US population has shorter life spans than rest of Western world).
- lenerdenator 11mo agoI'd be more interested in how much of that $5 trillion finds its way to shareholders. Most people generally don't have a problem with the idea of being charged a fee for a healthcare service. They have a problem with a system that grossly inflates that fee so that people who had nothing to do with the service get paid at the expense of people who are ill or injured. And of course, with the people in the system who are heavily incentivized to make sure that those dead-weight actors get as much money as possible.
- gwbas1c 11mo ago> So what does the US value? Every time we (the US) try to fix / change anything, a bunch of wonks with irrational arguments whine and complain until they get their way. The initiative fails, and we don't fix / change anything. In short, we value letting irrational sabotage any form policy making; because we don't exclude people who negotiate in bad faith.
- 7952 11mo agoOr people are acting in good faith (generally) but want to avoid being accountable for something deeply serious. You end up with a web that neatly prevents anyone really being held responsible for anything. In an industry that was supposed to be vocational and treat its duty as sacred.
- phkahler 11mo agoOne large thing missing. Where is the flow to insurance company profit, and provider profit?
- EcommerceFlow 11mo agoThe more free market an industry/service, the more efficient the outcome. Why do people readily accept this for everything else, but don't see the reality in regards to healthcare?
- postflopclarity 11mo agothe more competitive, orderly, and fair market, the more efficient the outcome that is _not_ synonymous with "absent of regulation." market failures exist, believe it or not.
- michael_michael 11mo agoAssuming we take the statement "more free market equals more efficient outcome" as always and absolutely true, it raises the question: Are the healthcare-related needs of a society aligned with the most efficient outcome that a free market can deliver? I don't think they necessarily are.
- paddleon 11mo agoCould you please define "efficient"? and also "free market"? oh, and just for fun, also define "outcome"
- LorenPechtel 11mo ago1) Some people have more expensive problems than others. The average person can't realistically budget for big things. 2) The "efficient" option is to let the big problems die.
- siliconc0w 11mo agoThe problems and solutions are all well documented. Like the article mentions, there are many existence proofs of cheaper more effective systems. The real problem is the legalized bribery that prevents any action and the current media environment that pushes people to consume partisan rage slop so we don't hold mediocre politicians accountable.
- waffletower 11mo agoTaken together, as Andrew Tsang (too) beautifully depicts, the United States Healthcare system is arguably the largest bureaucracy on planet Earth. Larger in employees and collective spending than any effective bureaucracies in India or China.
- deleted 11mo ago[deleted]
- LorenPechtel 11mo agoThis chart breaks it down by spending, it does nothing about determining the effectiveness of said spending. How much actual care per $ spent? I've been on a mock jury for a personal injury lawsuit--and it was obvious to a couple of us that the smoking gun presented by the defense clearly showed she was running up the bill on something minor. We were pointing out the problem--did that sway the majority? No. The general opinion seemed to be she was owed something for what had happened--and they had failed on the voir dire, they asked about my background, didn't ask anything about family. Oops--I knew it would end up all going to the lawyer and doctors, nothing to her (the proposed amount was less than the bills she had run up.) I played it fair and didn't speak up about what would happen. And all the national systems have a fox guarding the henhouse problem. Provide proper treatment for the expensive stuff or lower the standards? So long as you make a sufficient portion of the electorate think you're doing a good job the reality is the standards get lowered. And cook the books in pretending it's fair. (Two examples that come to mind: Including "fairness" in the measure of health system quality--automatic selection for UHC, and comparing infant mortality (they admitted the comparison was not valid, did it anyway.) The reality is the biggest "cause" of infant mortality in the developed world is how the medical world falls on the stillbirth/infant mortality line. Even elsewhere--Cuba gets it's good infant mortality numbers by setting a minimum birth weight. The ones that were born too early and never had a chance get classed as stillbirths.)
- HDThoreaun 11mo agoOver litigation of medical malpractice is a huge problem in this country and is a large contributor to why our system is so expensive. Medical malpractice juries should not be made up of people who have no idea how medicine works.
- LorenPechtel 11mo agoYeah. Jury of your peers is fine for non-technical matters, but an awful lot of cases are technical. I would like to see a profession "juror" that requires a broad science education--enough that it doesn't come down to whose "expert" is better at making it believable. And for cases involving licenses make some of it people qualified to hold the license. (And the lawyers would hate that. They go ape over supposed lack of liability with vaccines--no, it goes before medically trained people. And locally there used to be a malpractice review board--three? doctors, three? lawyers. All malpractice cases must be presented to it first--non-binding but your chances in court were pretty slim if you did get a majority from the review board. The lawyers really loved destroying that.)
- purplezooey 11mo agoThe author says, "The operational resistance alone would be too much." True. But we need to continue reforms that clearly will improve the system. That effort seems to be stuck as we instead pause to relitigate the advances of the second half of the twentieth century. These would go a long way: mandate price transparancy, decouple insurance from employment, let Medicare negotiate prices broadly, and ban PBMs.
- robocat 11mo ago> Another choice we made without admitting it: we socialize the costs of aging, but only after families go broke first. We effectively do the same in New Zealand even though our healthcare system is very similar to the NHS. Once you go into state funded nursing, then you can keep NZ$284,636 of assets (if unmarried) and NZ$56 per week of any income. Median house price is NZ$770,000 so individuals often are forced to sell their home. So effectively bankrupted although not quite $0.
- kalap_ur 11mo agoI think this analysis has little to say. What would be important to know how those $ are being spent, not where they are collected from. We do not know how those $ are being spent. 1. Doctors, Nurses, Administration (management and field administration), other. We need to know total employment and total salaries (including private practices). 2. OTC, prescription and hospital administered drugs (separated for acute, such as ER, and chronic, such as inpatient and elective surgery). We need to know how much is being spent on these, which is _potentially_ one of the culprits of large discrepancy between US healthcare vs European healthcare. What would be great to have these by large cohorts of population (<20; 20-65; 66-85; 85<) and maybe the top 5 buckets (i am guessing: cardiovascular - chronic; diabetes; accidents; hospice; dialysis) 3. Facility expenses (rent, maintenance, utilities, other contractor) 4. Other Without these, very hard to opine reasonably on the state of affairs. And to be fair, I suspect there is a reason why proper expense breakdowns are not available.