5 ms·

Providers, not insurers, are responsible for excess U.S. health care cost (2024)

56 points by paulpauper 5mo ago

bell-cot 5mo ago
True. OTOH, this is a world where many people get yelling-and-cursing angry with a bottom-tier Post Office clerk in (say) Podunk, Montana over the latest increase in the price of 1st Class postage stamps. When that decision was made by a bunch of executives in Washington DC. Whose names the clerk doesn't even know.
- cindyllm 5mo ago
  [dead]
jayturley 5mo ago
Yep, for-profit healthcare is a bad idea. It's the main reason our USA healthcare costs so much.
- lopsotronic 5mo ago
  "Stay 'til 2300 codepounding or watch your child die of a medieval disease" seems to work really well for productivity, though. Oh, no, people stopped having children. Whatever could be the reason.
- jasonlotito 5mo ago
  > Yep, for-profit healthcare is a bad idea. It's the main reason our USA healthcare costs so much. And yet it still exists in the rest of the world. But people tend to think of it only as for rich people as opposed to covering things the rest of the world ignore. I'm not saying the US is perfect, but having lived under both kinds of healthcare, cost and quality are two reasons I'm in the US.
  - dgellow 5mo ago
    Because you wanted to pay more? Or are you saying it is cheaper in the US? If the latter, could you be more specific? I pay the maximum possible in Germany for my health insurance and from what I understand I still pay less for healthcare than I would in the US.
    - anon291 5mo ago
      Are you paying for the same thing? I can see a doctor or specialist usually within a week. Less if it's urgent. I think wait times in these countries are never mentioned. Paying for a service tomorrow vs paying for one a few months from now are entirely different classes of goods.
      - dgellow 5mo ago
        Depends on the urgency and the specialist, but generally yes, I can get an appointment in a week. Mental health is the only specialty where I’ve seen multiple months wait times. For a specialist you generally first go through a generalist who gives you a voucher for your insurance. But you can also go directly and pay yourself if you want to skip that step. Even if you have slightly more wait time, the cost is still way lower. Unless you have a US employer that pays the whole insurance for you (I don’t know if that’s possible)
        anon291 5mo ago
        I'm not familiar with the german system... is it private or public insurance? As for US employers paying for everything... yes it's common. It used to be that they'd just cover everything via a 'PPO' plan with minimal 'co-pays'. Usually you'd pay $5-15 for a GP, ~$50 for urgent care, and ~$100 for an ER visit. These days, many have switched to a 'High Deductible' plan, where the insurance comes with a 'max out-of-pocket'. After you've paid that amount, then everything is fully covered, but nothing is covered until you hit the deductible. My current company has this plan, but puts the entire 'max out of pocket' value in what's called an 'HSA' (healthcare savings account). This money grows tax free and will eventually turn into a retirement account. So, if you have no health issues, then this becomes a free income stream. If you do have health issues, then you just spend this money every year and then insurance takes over and pays for the rest. This is common in the tech world these days... not sure about other industries TBH.
  - FireBeyond 5mo ago
    I've lived for many years each in the UK, Australia and the US. I've worked as a healthcare provider for many years in the US. I would dearly love to know what "costs" of healthcare you are looking at when you say the US is preferable enough to actually move to/be in/stay in the US. Because when I can have higher end insurance from my employer, and still be out $9K for a kidney stone after insurance, I'm not seeing it. That is an outlier, for me, I'll acknowledge, but it's still nearly five digits that had to come out of my pocket after my employer paid thousands, I paid premiums, for insurance (that is insurance-in-name-only).
    - jasonlotito 5mo ago
      > I would dearly love to know what "costs" of healthcare you are looking at when you say the US is preferable enough to actually move to/be in/stay in the US. Autism care for children. I'm looking at $15-30k a year for a service such as speech therapy. Minimum of 6-month wait time. US? Free. Wait time? Immediate (not hyperbole). We routinely keep track of this. It has not improved at all.
      - FireBeyond 5mo ago
        As someone with friends who have children with autism and complex support needs, knowing their challenges, I would say that's a great thing - but definitely varies from region to region. Finding a speech therapist for one's largely non-verbal 14 year old son has been challenging - although I'm going to a party today to celebrate his older sister's graduation from university, now a speech therapist.
        jasonlotito 5mo ago
        "Region to region" Blue states > Red states 100% of the time. Though, even within those states, you have to move. But, that's not unexpected. In Canada, it didn't matter where you moved. We looked. And then I didn't even get into how horrible Quebec is specifically with regard to taking care of its children.
neilwilson 5mo ago
It’s not a matter of profit. It’s a matter of costs. From the graphic the insurers take in $371.6b and pay out $241.9b in medical services costs. That’s $130b on a pointless activity that uses up physical resources that would be better deployed elsewhere in the economy. Healthcare needs to be provided as a matter of course, and “competition” won’t improve it or control it because there is always a supply side shortage of provision. That’s a difficult problem to solve, but solving it by forcing a huge bill on expectant mothers and cancer victims, etc in a futile attempt to control demand is not the way. Which is why the rest of the world charts a different path.
- deleted 5mo ago
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- znnajdla 5mo ago
  It’s neither a matter of profits nor costs. It’s a matter of incentives. The basic principle of capitalism can’t work if the buyer doesn’t have a choice, if the buyer is not the one who usually pays, and if the payer has a way of avoiding responsibility to pay. The privatized health insurance system is truly and completely fucked up.
  - deleted 5mo ago
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  - xenadu02 5mo ago
    By definition a free market in healthcare requires forcing some people to die from a treatable injury or condition to discover the optimal price. That's part of the definition.
    - EvanAnderson 5mo ago
      Because the supply is constrained I feel like that's the case regardless of how the system is financed. (There are only so many providers, facilities, etc.) It seems like the core problems with US "system" come from having a "shadow" socialized system (by way of EMTALA[0]) that offloads costs onto the "free market" (read: patients or insurers who can pay) and a shocking inability to have a mature public conversation about how care will be rationed. (That conversation still happens but it's between providers and insurers and not subject to public scrutiny.) [0] https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_an...
tqi 5mo ago
They are not solely responsible, but of course they bear some responsibility. ACA has a Medical Loss Ratio that requires insurers to spend 80% or 85% of premium revenue on medical services "thereby limiting administrative costs and profits to the remaining 15-20 percent."[1] In other words the only way for them grow profits is to increase cost. This guy is way out of his depth. [1] https://www.rand.org/pubs/external_publications/EP71133.html https://www.rand.org/pubs/external_publications/EP71133.html
- esseph 5mo ago
  > This guy is way out of his depth. He does that a lot, tbf
- zephen 5mo ago
  > the only way for them grow profits is to increase cost. And, of course, things like spurious denials drive up costs for them and for the providers. More direct costs, more costs at the provider they have to cover... From the insurance company perspective, it's a win-win!
  - chongli 5mo ago
    > things like spurious denials drive up costs for them and for the providers Spurious denials? Or improperly filed claims?
    - zephen 5mo ago
      Spurious denials. It's easy to find documentation of this. For example: https://pmc.ncbi.nlm.nih.gov/articles/PMC10391242/ https://pmc.ncbi.nlm.nih.gov/articles/PMC10391242/ https://phrma.org/blog/70-denied-how-insurance-denials-are-delaying-and-preventing-care-for-millions-of-americans https://phrma.org/blog/70-denied-how-insurance-denials-are-d... https://www.forbes.com/sites/joshuacohen/2026/05/04/independent-evidence-reviews-overturn-insurer-denials-of-healthcare-coverage/ https://www.forbes.com/sites/joshuacohen/2026/05/04/independ... Anecdote is not the singular of data, but when my late wife was dying of cancer, the oncologist was attempting to follow standard care procedures. Preauthorizations were denied even after physician consultation with the insurance company. My research showed me that the insurance companies contract with other companies (who they may or may not own) to handle the dirty work. It was only after learning the magic incantations to directly contact the "third-party" company that I was able to get traction. "We do not believe this treatment is warranted." "Well, her doctor believes it, so she's going to get the treatment. The only question is whether you pay now, or after I file a small claims case." It was miraculously authorized at that point. It's the same fucking thing with car insurance. The poor people who can't fight really get screwed.
i_idiot 5mo ago
It has always been pretty clear to me. Same medical equipment, infrastructure, education elsewhere in the world is often 30-50 times cheaper. The providers just charge as they want because people will pay their fortune to live, just like lawyers.
jugg1es 5mo ago
I've worked in the healthcare space for a decade and I have asked some tough questions of my leadership and I got a response I'll never forget: "Everyone in healthcare is a little bit evil"
- deleted 5mo ago
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- pdxandi 5mo ago
  That's a an honestly upsetting statement. My wife is a pediatric critical care physician and there is not an evil bone in her body. She works her tail off, is (in my opinion) underpaid (like most pediatricians), and her job takes huge emotional toll. The same is true for all of her partners. Maybe I'm reading this wrong and you mean administrative or insurance or something else. But at least in my orbit, that statement is not true.
  - Legend2440 5mo ago
    Is she really underpaid? The average pediatric critical care physician in the US makes $262K-$440K a year according to Glassdoor. This is twice what the same role pays in most European countries. Unless she is well below that range for some reason, she is likely overpaid. Everybody in healthcare, from the nurses to the hospital CEOs, makes far far more in the US than they would in a country with socialized medicine.
    - pdxandi 5mo ago
      That was really not meant to be the focus of my comment, but that range definitely seems high, from all those that I know in the field. You have to also factor in the significant amount of debt they incur over the 14 years it takes to get through undergrad, medical school, residency training and then subspecialty fellowship training. Adult ICU doctors make twice as much as pediatric ICU doctors, that was really the thought behind the comment on being underpaid. That, and she works difficult hours (long shifts, nights, weekends, holidays, on-call, etc.) and the emotional toll of the work can't be understated.
readthenotes1 5mo ago
"But when we look at United Health Group’s operating costs in the diagram above, they’re only 22.6% of the actual cost of medical care." A 22% decrease and a return to providers having to consider the cost implications to their patients would be a good thing. ("Return" I know a 95 year old doctor who said he still carries some guilt from keeping a poor guy in the hospital an extra night back in 1955 days because he couldn't get some blood tests done quickly enough. $5. "We only need medical insurance because we have medical insurance" ain't too far wrong)
- akramachamarei 5mo ago
  Of course, it wouldn't be a 22% decrease, it might be an 11% decrease if we assume optimistically that operating costs are cut in half. I don't know if administrative efficiency is exactly a strength of the government, either.
  - antasvara 5mo ago
    The main cost benefits are that you don't have to pay for marketing, underwriting, plan administration for a bunch of different plan types, negotiating with thousands of employers on the premium they'll pay, etc. I think an 11% decrease is conservative if anything. None of our peer nations spend more than ~5% on administration as a share of overall healthcare spending.
tdb7893 5mo ago
When arguing that health insurance isn't that inneficient he talks about "But when we look at United Health Group’s operating costs in the diagram above, they’re only 22.6% of the actual cost of medical care.". 22.6% for a middleman is not insignificant! Also providers have to spend a lot dealing with insurance so it's certainly an undercount of their total cost. This makes the burden of insurance seem like a huge % of the total medical costs in the US, which seems like the opposite of what he's trying to argue. Overall, there are lots of nitpicks with this article but my personal takeaway is: if this is the best defense people can make for the US medical insurance system then that shows how bad it really is.
- collingreen 5mo ago
  Well said. If this is the steel man then it's worse than I thought.
- pfannkuchen 5mo ago
  I don’t like the current system at all, but is insurance really just a middleman? Like part of their function is being a middleman, but they also apply some kind of cost smoothing that is outside what a pure middleman would do.
  - tdb7893 5mo ago
    I don't think it's odd for a middleman to have some functions in a market (as long as they aren't actually producing anything) but also the definition of a middleman is unimportant to me. I am just highlighting how he glides over a lot in this article (some of which are actually common progressive critiques of the insurance system) and I don't come away from it sympathetic to medical insurance companies at all.
- polski-g 5mo ago
  22% isn't bad to remove the need for me, personally, to negotiate prices for services. I wouldn't know where to begin on how to price a bone marrow transplant, but UNH does.
tim-tday 5mo ago
Bullshit
ngriffiths 5mo ago
> It’s not hard to understand why people hate health insurers. When you interact with the U.S. health care system, the providers — the hospital staff, the doctor, the nurses, the technicians — all just take care of you. > Your interaction with the health insurer, on the other hand, feels like a struggle against an enemy who wants to destroy you. Exactly, the big factor driving healthcare costs is that people like expensive providers. They like the fancy plan that covers their doctor, that doesn't limit them to a community hospital. Any choice that involves retaining even the slightest market leverage is a deal breaker for many people. I think all the clever stuff we do to optimize costs and increase transparency is worth doing and helpful, but like, it will still be expensive. We want that! Meanwhile it is not really better to go to an expensive doctor, in terms of health outcomes. So the public health problem is to stop people (and employers) from voluntarily wasting their money on healthcare, so we can use it for better stuff.
- gopher_space 5mo ago
  > They like the fancy plan that covers their doctor The fancy plan.
  - ngriffiths 5mo ago
    Yeah, because it covers all the doctors. It is literally the same as saying you will pay any price. It is a luxury good.
insane_dreamer 5mo ago
Many problems with this article, but no time to pick them apart; needless to say, Noah's argument is thin. I will say this: profit margin % is not the yardstick by which we should measure whether insurance companies are responsible for high health care costs in the US.
- akramachamarei 5mo ago
  Seems like a pretty good yardstick to me. Ultimately, it shows (partially) how much money is going through an insurer vs to an insurer. The revenue flow graph is included for UnitedHealth Group, for example, and about 2/3 is going through the company to medical providers. Any good hacker is familiar with Amdahl's Law, and the same principle applies here. You can optimize the insurance providers all you want and maybe recover about 1/6 the total cost of care. At the very least, the first place we should be looking is the biggest expense, which is also clearly not the insurance.
  - supertrope 5mo ago
    The blog post is too simplistic an analysis. It ignores the second order effects of medical care financing reform. Imagine if car engine oil changes had to go through car insurance. In such an inefficient equilibrium you might remark that only that insurer overhead is only 20% of a $300 oil change. Sellers always capture easy money that flows in from insurance money, credit, or government subsidies. The fewer layers between a buyer and the seller, the lower the cost. Compare buying a bottle of ibuprofen at $5 for 200 doses compared with going to an urgent care and having a registered nurse hand you five doses at $200. Professional labor often used in medical care is expensive. Legalizing over the counter medication like birth control helps. Ironically a lot of poorly run companies try to shift HR policing of employees onto the healthcare system by requiring doctor’s notes. An insurance company processing claims is expensive. Fee for service encourages more work ups and surgeries. The US caps physician residencies at a low count. Having the operations and financing as separate and adversarial companies adds a lot of friction. Hospitals charge 10x and the insurance brags they negotiated a 90% discount. No one health insurer has enough market power to push down outpatient, inpatient, or drug pricing. Without strong competition, automation, and price signals, healthcare spending is not going to get under control.
dlev_pika 5mo ago
The incentives are all fucked up all the way down
WarmWash 5mo ago
This has been an open secret for 15+ years now. The problem is that people knee-jerk blame the one who they are giving money to. People think the teams are "Me and doctor vs. greedy insurance" whereas the reality of the situation is much more "Me and insurance vs greedy doctor".
ecshafer 5mo ago
I am not sure providers are entirely blameless. My daughter had an annual checkup, when we were asked if there were other issues, we asked about a bug bite. They charged us for a second emergency visit, what the hell is the point of an annual visit if we can't ask about issues? Insurance company okayed it. So they are both at fault for this insanity. The most efficient medical experiences I have had have both been ones where there were no insurance involved: 1. A USCIS surgeon, that was like 80 years old, running his own office, everything via check, on paper. Guy put more patients through per day then the big hospital systems special immigrant medical services did. 2. A specialized Eye Surgeon who did my wife's ICL eye surgery (which insurance wont cover). Ended up being the most efficient practice I've seen, every follow up and pre-surgery meeting was not separately billed. Just the surgery was. Eye Doctors / Surgeon spent a ton of time with you. And they had massive amounts of flexibility. But even the out of pocket surgery was probably less than an insurance covered surgery at a hospital.
BrenBarn 5mo ago
It is certainly true that providers charge more in the US. However, it's hard to disentangle this from the insurance issue because of the way that providers and insurers are intertwined in a gordian knot of insanity. The article mentions one example of this, which is that part of "provider costs" is actually paying for the provider to wrangle with the insurer. But even apart from such direct costs, the care is distorted in various ways in order to comply with the insurer's whims. One you hear about a lot is doctors ordering tests that likely aren't really necessary, simply to avoid having the insurer deny something later because they didn't go through all the required motions. Another reason that "profit margin" is grossly inadequate as a measure of cost or inefficiency is that it doesn't count the actual "work" done by the companies, even though a lot of it simply doesn't need to be done. There are thousands of people with jobs in insurance companies that simply do not need to exist because most of what the industry does simply doesn't need to be done. The leeching is not just a matter of shareholder returns or executive salaries. All the salaries of everyone working for insurance companies are a form of waste. (Okay, probably not all, since even with a saner system some bookkeeping would need to be done, so if you look at the net difference it's not a total waste. But it's more than just shareholders and executives.)
qwertyuiop_ 5mo ago
Once you get rid of the made up term “provider” see the costs go down.
dkuntz2 5mo ago
whoever keeps posting this dweeb needs to stop he's never had a correct or novel thought in his life.
keernan 5mo ago
What I haven't seen mentioned is the identification of "providers". The days of your doctor being the 'provider' are long gone. Providers are now large corporations and, interestingly, the largest "providers" are health insurance companies. Point 4 of an article[1] about health delivery is quoted below: >>Perhaps the most underappreciated transformation of the past 40 years is the corporate consolidation and financialization of medicine. Care delivery—once local and community-based—is now dominated by corporations. >>Vertical consolidation is now a defining feature of American health care. UnitedHealth Group isn’t just the largest insurer; it’s also the largest employer of physicians and the largest operator of home health and hospice agencies. CVS Health, the largest pharmacy chain, also owns the biggest pharmacy benefit managers—and now giant insurer, Aetna. McKesson, a pharmaceutical distributor, now operates the nation’s largest chain of oncology practices and is rapidly expanding into other specialties. These combinations raise all the conflicts of interest you’d expect—higher prices, business steered away from independent providers and pharmacies, gaming regulations, and more. [1] https://yourlocalepidemiologist.substack.com/p/aca-health-care-insurance-us-jetelina https://yourlocalepidemiologist.substack.com/p/aca-health-ca...

56 points by paulpauper 5mo ago

True. OTOH, this is a world where many people get yelling-and-cursing angry with a bottom-tier Post Office clerk in (say) Podunk, Montana over the latest increase in the price of 1st Class postage stamps. When that decision was made by a bunch of executives in Washington DC. Whose names the clerk doesn't even know.

cindyllm 5mo ago
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jayturley 5mo ago

Yep, for-profit healthcare is a bad idea. It's the main reason our USA healthcare costs so much.

lopsotronic 5mo ago
"Stay 'til 2300 codepounding or watch your child die of a medieval disease" seems to work really well for productivity, though. Oh, no, people stopped having children. Whatever could be the reason.
jasonlotito 5mo ago
> Yep, for-profit healthcare is a bad idea. It's the main reason our USA healthcare costs so much. And yet it still exists in the rest of the world. But people tend to think of it only as for rich people as opposed to covering things the rest of the world ignore. I'm not saying the US is perfect, but having lived under both kinds of healthcare, cost and quality are two reasons I'm in the US.
- dgellow 5mo ago
  Because you wanted to pay more? Or are you saying it is cheaper in the US? If the latter, could you be more specific? I pay the maximum possible in Germany for my health insurance and from what I understand I still pay less for healthcare than I would in the US.
  - anon291 5mo ago
    Are you paying for the same thing? I can see a doctor or specialist usually within a week. Less if it's urgent. I think wait times in these countries are never mentioned. Paying for a service tomorrow vs paying for one a few months from now are entirely different classes of goods.
    - dgellow 5mo ago
      Depends on the urgency and the specialist, but generally yes, I can get an appointment in a week. Mental health is the only specialty where I’ve seen multiple months wait times. For a specialist you generally first go through a generalist who gives you a voucher for your insurance. But you can also go directly and pay yourself if you want to skip that step. Even if you have slightly more wait time, the cost is still way lower. Unless you have a US employer that pays the whole insurance for you (I don’t know if that’s possible)
      - anon291 5mo ago
        I'm not familiar with the german system... is it private or public insurance? As for US employers paying for everything... yes it's common. It used to be that they'd just cover everything via a 'PPO' plan with minimal 'co-pays'. Usually you'd pay $5-15 for a GP, ~$50 for urgent care, and ~$100 for an ER visit. These days, many have switched to a 'High Deductible' plan, where the insurance comes with a 'max out-of-pocket'. After you've paid that amount, then everything is fully covered, but nothing is covered until you hit the deductible. My current company has this plan, but puts the entire 'max out of pocket' value in what's called an 'HSA' (healthcare savings account). This money grows tax free and will eventually turn into a retirement account. So, if you have no health issues, then this becomes a free income stream. If you do have health issues, then you just spend this money every year and then insurance takes over and pays for the rest. This is common in the tech world these days... not sure about other industries TBH.
- FireBeyond 5mo ago
  I've lived for many years each in the UK, Australia and the US. I've worked as a healthcare provider for many years in the US. I would dearly love to know what "costs" of healthcare you are looking at when you say the US is preferable enough to actually move to/be in/stay in the US. Because when I can have higher end insurance from my employer, and still be out $9K for a kidney stone after insurance, I'm not seeing it. That is an outlier, for me, I'll acknowledge, but it's still nearly five digits that had to come out of my pocket after my employer paid thousands, I paid premiums, for insurance (that is insurance-in-name-only).
  - jasonlotito 5mo ago
    > I would dearly love to know what "costs" of healthcare you are looking at when you say the US is preferable enough to actually move to/be in/stay in the US. Autism care for children. I'm looking at $15-30k a year for a service such as speech therapy. Minimum of 6-month wait time. US? Free. Wait time? Immediate (not hyperbole). We routinely keep track of this. It has not improved at all.
    - FireBeyond 5mo ago
      As someone with friends who have children with autism and complex support needs, knowing their challenges, I would say that's a great thing - but definitely varies from region to region. Finding a speech therapist for one's largely non-verbal 14 year old son has been challenging - although I'm going to a party today to celebrate his older sister's graduation from university, now a speech therapist.
      - jasonlotito 5mo ago
        "Region to region" Blue states > Red states 100% of the time. Though, even within those states, you have to move. But, that's not unexpected. In Canada, it didn't matter where you moved. We looked. And then I didn't even get into how horrible Quebec is specifically with regard to taking care of its children.

neilwilson 5mo ago

It’s not a matter of profit. It’s a matter of costs. From the graphic the insurers take in $371.6b and pay out $241.9b in medical services costs. That’s $130b on a pointless activity that uses up physical resources that would be better deployed elsewhere in the economy. Healthcare needs to be provided as a matter of course, and “competition” won’t improve it or control it because there is always a supply side shortage of provision. That’s a difficult problem to solve, but solving it by forcing a huge bill on expectant mothers and cancer victims, etc in a futile attempt to control demand is not the way. Which is why the rest of the world charts a different path.

deleted 5mo ago
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znnajdla 5mo ago
It’s neither a matter of profits nor costs. It’s a matter of incentives. The basic principle of capitalism can’t work if the buyer doesn’t have a choice, if the buyer is not the one who usually pays, and if the payer has a way of avoiding responsibility to pay. The privatized health insurance system is truly and completely fucked up.
- deleted 5mo ago
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- xenadu02 5mo ago
  By definition a free market in healthcare requires forcing some people to die from a treatable injury or condition to discover the optimal price. That's part of the definition.
  - EvanAnderson 5mo ago
    Because the supply is constrained I feel like that's the case regardless of how the system is financed. (There are only so many providers, facilities, etc.) It seems like the core problems with US "system" come from having a "shadow" socialized system (by way of EMTALA[0]) that offloads costs onto the "free market" (read: patients or insurers who can pay) and a shocking inability to have a mature public conversation about how care will be rationed. (That conversation still happens but it's between providers and insurers and not subject to public scrutiny.) [0] https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_an...

tqi 5mo ago

They are not solely responsible, but of course they bear some responsibility. ACA has a Medical Loss Ratio that requires insurers to spend 80% or 85% of premium revenue on medical services "thereby limiting administrative costs and profits to the remaining 15-20 percent."[1] In other words the only way for them grow profits is to increase cost. This guy is way out of his depth. [1] https://www.rand.org/pubs/external_publications/EP71133.html https://www.rand.org/pubs/external_publications/EP71133.html

esseph 5mo ago
> This guy is way out of his depth. He does that a lot, tbf
zephen 5mo ago
> the only way for them grow profits is to increase cost. And, of course, things like spurious denials drive up costs for them and for the providers. More direct costs, more costs at the provider they have to cover... From the insurance company perspective, it's a win-win!
- chongli 5mo ago
  > things like spurious denials drive up costs for them and for the providers Spurious denials? Or improperly filed claims?
  - zephen 5mo ago
    Spurious denials. It's easy to find documentation of this. For example: https://pmc.ncbi.nlm.nih.gov/articles/PMC10391242/ https://pmc.ncbi.nlm.nih.gov/articles/PMC10391242/ https://phrma.org/blog/70-denied-how-insurance-denials-are-delaying-and-preventing-care-for-millions-of-americans https://phrma.org/blog/70-denied-how-insurance-denials-are-d... https://www.forbes.com/sites/joshuacohen/2026/05/04/independent-evidence-reviews-overturn-insurer-denials-of-healthcare-coverage/ https://www.forbes.com/sites/joshuacohen/2026/05/04/independ... Anecdote is not the singular of data, but when my late wife was dying of cancer, the oncologist was attempting to follow standard care procedures. Preauthorizations were denied even after physician consultation with the insurance company. My research showed me that the insurance companies contract with other companies (who they may or may not own) to handle the dirty work. It was only after learning the magic incantations to directly contact the "third-party" company that I was able to get traction. "We do not believe this treatment is warranted." "Well, her doctor believes it, so she's going to get the treatment. The only question is whether you pay now, or after I file a small claims case." It was miraculously authorized at that point. It's the same fucking thing with car insurance. The poor people who can't fight really get screwed.

i_idiot 5mo ago

It has always been pretty clear to me. Same medical equipment, infrastructure, education elsewhere in the world is often 30-50 times cheaper. The providers just charge as they want because people will pay their fortune to live, just like lawyers.

jugg1es 5mo ago

I've worked in the healthcare space for a decade and I have asked some tough questions of my leadership and I got a response I'll never forget: "Everyone in healthcare is a little bit evil"

deleted 5mo ago
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pdxandi 5mo ago
That's a an honestly upsetting statement. My wife is a pediatric critical care physician and there is not an evil bone in her body. She works her tail off, is (in my opinion) underpaid (like most pediatricians), and her job takes huge emotional toll. The same is true for all of her partners. Maybe I'm reading this wrong and you mean administrative or insurance or something else. But at least in my orbit, that statement is not true.
- Legend2440 5mo ago
  Is she really underpaid? The average pediatric critical care physician in the US makes $262K-$440K a year according to Glassdoor. This is twice what the same role pays in most European countries. Unless she is well below that range for some reason, she is likely overpaid. Everybody in healthcare, from the nurses to the hospital CEOs, makes far far more in the US than they would in a country with socialized medicine.
  - pdxandi 5mo ago
    That was really not meant to be the focus of my comment, but that range definitely seems high, from all those that I know in the field. You have to also factor in the significant amount of debt they incur over the 14 years it takes to get through undergrad, medical school, residency training and then subspecialty fellowship training. Adult ICU doctors make twice as much as pediatric ICU doctors, that was really the thought behind the comment on being underpaid. That, and she works difficult hours (long shifts, nights, weekends, holidays, on-call, etc.) and the emotional toll of the work can't be understated.

readthenotes1 5mo ago

"But when we look at United Health Group’s operating costs in the diagram above, they’re only 22.6% of the actual cost of medical care." A 22% decrease and a return to providers having to consider the cost implications to their patients would be a good thing. ("Return" I know a 95 year old doctor who said he still carries some guilt from keeping a poor guy in the hospital an extra night back in 1955 days because he couldn't get some blood tests done quickly enough. $5. "We only need medical insurance because we have medical insurance" ain't too far wrong)

akramachamarei 5mo ago
Of course, it wouldn't be a 22% decrease, it might be an 11% decrease if we assume optimistically that operating costs are cut in half. I don't know if administrative efficiency is exactly a strength of the government, either.
- antasvara 5mo ago
  The main cost benefits are that you don't have to pay for marketing, underwriting, plan administration for a bunch of different plan types, negotiating with thousands of employers on the premium they'll pay, etc. I think an 11% decrease is conservative if anything. None of our peer nations spend more than ~5% on administration as a share of overall healthcare spending.

tdb7893 5mo ago

When arguing that health insurance isn't that inneficient he talks about "But when we look at United Health Group’s operating costs in the diagram above, they’re only 22.6% of the actual cost of medical care.". 22.6% for a middleman is not insignificant! Also providers have to spend a lot dealing with insurance so it's certainly an undercount of their total cost. This makes the burden of insurance seem like a huge % of the total medical costs in the US, which seems like the opposite of what he's trying to argue. Overall, there are lots of nitpicks with this article but my personal takeaway is: if this is the best defense people can make for the US medical insurance system then that shows how bad it really is.

collingreen 5mo ago
Well said. If this is the steel man then it's worse than I thought.
pfannkuchen 5mo ago
I don’t like the current system at all, but is insurance really just a middleman? Like part of their function is being a middleman, but they also apply some kind of cost smoothing that is outside what a pure middleman would do.
- tdb7893 5mo ago
  I don't think it's odd for a middleman to have some functions in a market (as long as they aren't actually producing anything) but also the definition of a middleman is unimportant to me. I am just highlighting how he glides over a lot in this article (some of which are actually common progressive critiques of the insurance system) and I don't come away from it sympathetic to medical insurance companies at all.
polski-g 5mo ago
22% isn't bad to remove the need for me, personally, to negotiate prices for services. I wouldn't know where to begin on how to price a bone marrow transplant, but UNH does.

tim-tday 5mo ago

Bullshit

ngriffiths 5mo ago

> It’s not hard to understand why people hate health insurers. When you interact with the U.S. health care system, the providers — the hospital staff, the doctor, the nurses, the technicians — all just take care of you. > Your interaction with the health insurer, on the other hand, feels like a struggle against an enemy who wants to destroy you. Exactly, the big factor driving healthcare costs is that people like expensive providers. They like the fancy plan that covers their doctor, that doesn't limit them to a community hospital. Any choice that involves retaining even the slightest market leverage is a deal breaker for many people. I think all the clever stuff we do to optimize costs and increase transparency is worth doing and helpful, but like, it will still be expensive. We want that! Meanwhile it is not really better to go to an expensive doctor, in terms of health outcomes. So the public health problem is to stop people (and employers) from voluntarily wasting their money on healthcare, so we can use it for better stuff.

gopher_space 5mo ago
> They like the fancy plan that covers their doctor The fancy plan.
- ngriffiths 5mo ago
  Yeah, because it covers all the doctors. It is literally the same as saying you will pay any price. It is a luxury good.

insane_dreamer 5mo ago

Many problems with this article, but no time to pick them apart; needless to say, Noah's argument is thin. I will say this: profit margin % is not the yardstick by which we should measure whether insurance companies are responsible for high health care costs in the US.

akramachamarei 5mo ago
Seems like a pretty good yardstick to me. Ultimately, it shows (partially) how much money is going through an insurer vs to an insurer. The revenue flow graph is included for UnitedHealth Group, for example, and about 2/3 is going through the company to medical providers. Any good hacker is familiar with Amdahl's Law, and the same principle applies here. You can optimize the insurance providers all you want and maybe recover about 1/6 the total cost of care. At the very least, the first place we should be looking is the biggest expense, which is also clearly not the insurance.
- supertrope 5mo ago
  The blog post is too simplistic an analysis. It ignores the second order effects of medical care financing reform. Imagine if car engine oil changes had to go through car insurance. In such an inefficient equilibrium you might remark that only that insurer overhead is only 20% of a $300 oil change. Sellers always capture easy money that flows in from insurance money, credit, or government subsidies. The fewer layers between a buyer and the seller, the lower the cost. Compare buying a bottle of ibuprofen at $5 for 200 doses compared with going to an urgent care and having a registered nurse hand you five doses at $200. Professional labor often used in medical care is expensive. Legalizing over the counter medication like birth control helps. Ironically a lot of poorly run companies try to shift HR policing of employees onto the healthcare system by requiring doctor’s notes. An insurance company processing claims is expensive. Fee for service encourages more work ups and surgeries. The US caps physician residencies at a low count. Having the operations and financing as separate and adversarial companies adds a lot of friction. Hospitals charge 10x and the insurance brags they negotiated a 90% discount. No one health insurer has enough market power to push down outpatient, inpatient, or drug pricing. Without strong competition, automation, and price signals, healthcare spending is not going to get under control.

dlev_pika 5mo ago

The incentives are all fucked up all the way down

WarmWash 5mo ago

This has been an open secret for 15+ years now. The problem is that people knee-jerk blame the one who they are giving money to. People think the teams are "Me and doctor vs. greedy insurance" whereas the reality of the situation is much more "Me and insurance vs greedy doctor".

ecshafer 5mo ago

I am not sure providers are entirely blameless. My daughter had an annual checkup, when we were asked if there were other issues, we asked about a bug bite. They charged us for a second emergency visit, what the hell is the point of an annual visit if we can't ask about issues? Insurance company okayed it. So they are both at fault for this insanity. The most efficient medical experiences I have had have both been ones where there were no insurance involved: 1. A USCIS surgeon, that was like 80 years old, running his own office, everything via check, on paper. Guy put more patients through per day then the big hospital systems special immigrant medical services did. 2. A specialized Eye Surgeon who did my wife's ICL eye surgery (which insurance wont cover). Ended up being the most efficient practice I've seen, every follow up and pre-surgery meeting was not separately billed. Just the surgery was. Eye Doctors / Surgeon spent a ton of time with you. And they had massive amounts of flexibility. But even the out of pocket surgery was probably less than an insurance covered surgery at a hospital.

BrenBarn 5mo ago

It is certainly true that providers charge more in the US. However, it's hard to disentangle this from the insurance issue because of the way that providers and insurers are intertwined in a gordian knot of insanity. The article mentions one example of this, which is that part of "provider costs" is actually paying for the provider to wrangle with the insurer. But even apart from such direct costs, the care is distorted in various ways in order to comply with the insurer's whims. One you hear about a lot is doctors ordering tests that likely aren't really necessary, simply to avoid having the insurer deny something later because they didn't go through all the required motions. Another reason that "profit margin" is grossly inadequate as a measure of cost or inefficiency is that it doesn't count the actual "work" done by the companies, even though a lot of it simply doesn't need to be done. There are thousands of people with jobs in insurance companies that simply do not need to exist because most of what the industry does simply doesn't need to be done. The leeching is not just a matter of shareholder returns or executive salaries. All the salaries of everyone working for insurance companies are a form of waste. (Okay, probably not all, since even with a saner system some bookkeeping would need to be done, so if you look at the net difference it's not a total waste. But it's more than just shareholders and executives.)

qwertyuiop_ 5mo ago

Once you get rid of the made up term “provider” see the costs go down.

dkuntz2 5mo ago

whoever keeps posting this dweeb needs to stop he's never had a correct or novel thought in his life.

keernan 5mo ago

What I haven't seen mentioned is the identification of "providers". The days of your doctor being the 'provider' are long gone. Providers are now large corporations and, interestingly, the largest "providers" are health insurance companies. Point 4 of an article[1] about health delivery is quoted below: >>Perhaps the most underappreciated transformation of the past 40 years is the corporate consolidation and financialization of medicine. Care delivery—once local and community-based—is now dominated by corporations. >>Vertical consolidation is now a defining feature of American health care. UnitedHealth Group isn’t just the largest insurer; it’s also the largest employer of physicians and the largest operator of home health and hospice agencies. CVS Health, the largest pharmacy chain, also owns the biggest pharmacy benefit managers—and now giant insurer, Aetna. McKesson, a pharmaceutical distributor, now operates the nation’s largest chain of oncology practices and is rapidly expanding into other specialties. These combinations raise all the conflicts of interest you’d expect—higher prices, business steered away from independent providers and pharmacies, gaming regulations, and more. [1] https://yourlocalepidemiologist.substack.com/p/aca-health-care-insurance-us-jetelina https://yourlocalepidemiologist.substack.com/p/aca-health-ca...