Here’s one list of requirements for a perfectly competitive market:
Yeah, medical care doesn’t hit very many of those.
The pricing of HC is completely intertwined with insurance processing. Namely the “fee for service” business model. The origins of which go back to WW II. It was just one of many forms of reimbursement, but it’s the one that stuck. So that’s what we have. Importantly, no one ever thought it was designed to deliver the highest value for the HC dollar.
While prices are important, I am equally concerned with the financialization going on. Private equity funds are buying up practices (dentistry, optometry, etc.). They find willing sellers as boomers looking to retire have a way to monetize their sweat equity. Those PE firms load on some debt, cut costs, and raise prices whenever they can. They also levy “consulting fees” to take some cash flow off the top. In the end, it’s like shooting fish in a barrel. As long as patient care is no longer a primary objective, good money to be made taking advantage of a limited number of buyers amid an ocean of sellers.
Agree. Martin Shkreli became the poster child but he wasn’t doing anything new, he just went farther with it than most VC/PE firms were going.
My poster child example is always cyclophosphamide- used to treat a lot of cancer. It’s an old drug, first used in the late 1950s as I recall. But then around 2005 or 2010, one manufacturer stopped making it. So it was generic but just one supplier. Who raised the price about 15% per quarter. When I looked at it in 2016 or 2018, they’d done that for about ten years. Do the math on 15% per quarter for ten years.
Medicare is administered by private carriers. (I worked for two of them, in other roles.) They bid for the business based on how thin a margin they are willing to charge. They don’t have time or money to dispute claims.
That makes them really good at paying claims, even when they aren’t justified. It makes them really popular. But that invites - and gets - a ton of fraud.
Mark Cuban is trying to make a small difference on the pharma side by making common expensive generic drugs for cost*profit load + shipping. I think his company is starting to become more popular and hopefully once he is successful it could lead to other changes. (trying to be optimistic here)
You mean the MACs?
What percent of payments are fraudulent, and how does that stack up to MA? This is a rabbit hole I’ve not gone down.
My only experience is on the provider side, mostly oncology. My group worked pretty hard to stay above board with FFS Medicare, because the risk of getting the ban hammer by CMS.
That’s phrased in a bit of a misleading way.
All humans have 99.6%-99.9% identical DNA.
Human DNA vs chimpanzee DNA is ~95% the same.
Your sibling’s 50% difference? That’s 50% of the remaining 0.1-0.4%.
Fraud is real and a problem but often used to distract people from the main issues, those of monopolies, and transparency. Hospitals are effectively small monopolies in many areas. Capitalism works best when both sides have similar power (buyers and sellers). The only ones who have equivalent power to the hospitals is the government. (Large insurers are unfortunately not large enough, apparently - or maybe they are afraid of bad publicity or don’t have enough resources to bargain).
So the government needs to force hospitals to be more transparent. Not just lip service like posting “we will give you prices if you ask” and then they don’t really (I’ve tried, you have to call multiple people, or they give you the chargemaster price, not the insured price after deductible). Even posting prices on websites is not enough. But actually forcing hospitals to always give accurate pricing at point of sale. (Point of sale = time you make your appointment, or time when you’re still allowed to cancel it). After hospitals are all required to do this, (they can pay for system upgrades required), then doctors would naturally be able to do this too.
The only things that should be exempt from this is emergency care. Emergency care should be defined as care the hospital is required to give everyone. Hospitals know what they’re required to give and what they’re not. (For example, chemotherapy is not emergency care).
Government also needs to play the part of a buyer, and actively bargain down prescriptions. Kickbacks should be illegal - they are anticompetitive and obscure who’s paying what.
This is similar to how government works with other natural monopolies, like utilities. They are regulated so that they don’t abuse their positions.
Being able to say no is not really required. People need water and food to live. They can’t say no to it. But the market is competitive anyway.
Competitors artificially restricted? That’s more of a problem, but there are competitive markets where the number of competitors are restricted - think of lawyers, who must all pass the bar. Utilities, again, not always very expensive.
And regarding insulin, it seems scandalous that the market is restricted there when the guy who invented it gave it away for nothing. That makes no sense.
Exactly correct… Right track. Perhaps you can help me to debunk all this free will nonsense. Very little human behavior is anything like free will. Possibly none. Rather, we react in predictable ways to externalities.
What is all that genetic material there to do? Why is human extra stuff so like the chimp’s?
Overly simplified, but…They are the transmitters and transponders. They don’t recode for DNA. They are the signaling system. Kinda Like the thermostat in your home. Maintaining body temp is part of being mammalian. No surprise that the chimp and human rely on very similar mechanisms. And at its heart, we are now discussing how YOU will respond to external inputs. It’s not your rational thoughts. It’s hard wired. Sometimes you get to think it through, but mostly not.
Hence my distrust about “Free Will”.
I didn’t mention free will anyway, so I’m not sure how it came up. 
Water is deeply regulated, often supplied by the local government, and not even remotely a free market. Basic food is also far from a free market, with price floors on some goods and subsidies on many others. Optional foods, such as nice steaks or restaurant meals, are far more of a free market and more efficient.
Probably deserves a separate thread, but yes we have limited choices.
I want to defy gravity and fly whenever I want. Alas I can’t. Ergo, no free will.
That’s as stupid reading it as when I typed it. And yet, I chose to type it. I didn’t have to.
Again, better to have another thread to discuss biology.
And yet, you chose to post that here.
Water maybe, but food? No. Subsidization occurs in healthcare as much as in food. One’s a non-competitive market. One is.
How about coats in cold weather? That’s a human need, not a want. Still a competitive market.
It’s transparency and natural monopolies that are the issue here really. Government needs to bargain with natural monopolies and ensure transparency of pricing, because no one else can.
And water kind of makes my point too. Government needs to treat healthcare as a utility, just like we treat water as one. Water’s pretty affordable compared to its status as one of the most important human needs.
The above is all true but the structure of the US healthcare system naturally leads to a higher administration cost than would be the case in a single-payer system. Tweaking the US system will not significantly change its high administrative costs.
The article also states that the Canadian insurers have much lower administrative costs than their US counterparts. That relative advantage is probably due to the simpler administrative nature of the medical coverages that Canadian insurers can still provide.
What is admin cost as a percent of total cost in Canada? Understanding that since your denominator is smaller your admin % would look relatively inflated.
I agree. It’s not going to solve a big chunk of medical care costs, but I think it makes a dent.
I’d go further a]nd say that providers have to have one price list for all [edit: private] payers. Individuals get the same prices as the biggest insurers. (but, different providers can have different prices) And, the gov’t runs the database where we can find those prices.
When I needed an MRI on my foot, I could have gone to the gov’t website and seen prices that I can get at various providers in my area.
Insurers and providers no longer spend resources negotiating prices. Providers do not maintain extensive files of all the different deals they’ve negotiated. But, insurers could still have “preferred provider” lists. That would be providers who have good prices for acceptable quality.
I don’t think it’s practical to have a single price, at least for Medicaid vs Medicare vs private/commercial plans. Maybe there could be a law that mandates only 3 price levels at most, at those 3 levels, with individuals being part of the private/commercial plan tier.
Guessing you were referring just to the insurance industry portion? I don’t have better numbers than those in the article:
“When the researchers broke down the 2017 per-capita health administration costs in both countries, they found that insurer overhead accounted for $844 in the U.S. versus $146 in Canada”.
I thought the numbers in the article on Medicare Advantage versus traditional Medicare were interesting:
“Overhead of private Medicare Advantage plans, which now cover about a third of Medicare enrollees, is six-fold higher than traditional Medicare (12.3% versus 2%), they report. That 2% is comparable to the overhead in the Canadian system.”
I agree. I was too short with my post. I should have said “one price for all private payers”.