Thoughtful Conversation About the US Healthcare System

[sengsational]

The problem is the payment system. By having insurance and government between the provider of care and the consumer, the system is not reactive to market forces. I would argue that situation is far more related to the problems we face versus their profit driven mentality.

I agree, and so do Attia and Sutaria. They commented at length on the dynamic of the third party payer. Basically that means you buy your policy, then make no effort to save money, because it makes no sense. You go for what you need/want and somebody else pays. It's not a free market, by far.

The interview didn't cover it, but the burr under my saddle is the squeeze that big organizations (profit and not-for-profit) plays on consumers. If you do what they want, it works. If something falls outside of their defined processes, you're doomed. You call and spend hours and can't get anyone that has any authority to do anything. You can't write a letter and expect a response. You can't shame them. There's no letters to the editor that mean anything any more. The best we have is our state AG's, but they're probably understaffed and might even be somewhat beholden.

So profit motive or CEO pay, isn't a big part of the problem. But, hey, we get to rate them on Yelp, LOL!

 

[sengsational]

Life expectancy isn't all about health care. US culture has some really bad aspects leading to very short lives. I don't want to get us off track on that issue.

The interview covered that. Although the average life expectancy of the US is horrible, there's a lot of infant mortality and street violence in the US that they don't have elsewhere.

If you bring it to the level of seniors, I think they mentioned in the podcast that if you make it to age 70, your life expectancy was higher than anywhere else in the world. I'm not sure if I believe that entirely, but it's probably directionally correct. It doesn't fit the "pay the most, get the least" sound bite, and won't generate a lot of clicks, but I think it's probably more accurate.

 

[MichaelB]

I agree, and so do Attia and Sutaria. They commented at length on the dynamic of the third party payer. Basically that means you buy your policy, then make no effort to save money, because it makes no sense. You go for what you need/want and somebody else pays. It's not a free market, by far.

This is a theoretical argument, but there’s clearly more to it. For example, dentists’ income has a much lower component share of insurance and even less comes from Medicare / Medicaid, yet dental work in the US still costs far more than anywhere else in the world, and dentists income is in the top 10 healthcare specializations.

I think the biggest factor in healthcare high costs and prices is simply providers charge more because they can. As consumers we don’t have the information needed to assess real need and cannot judge.

 

[sengsational]

DW and I are both on Medicare. Well, MA for her. We recently had outpatient procedures that resulted in hospital + doc bills exceeding $100k each. Medicare approved less than 25%. We were both surprised that a outpatient procedure could generate that high a bill and that the insurance negotiated payable amount was such a small percentage.

One of the things that is confusing, and gets amplified because it generates clicks, is using the fictional "charge master" rates. They talked about this on the podcast, and "everybody" agrees that nobody pays those prices. But they're on the bills you get, so they get quoted, just like in this post.

People might think "wow, the hospital had to eat $75K per person", from your example, but that's not accurate. Whatever Medicare paid for the two procedures was probably enough for the hospital to cover their costs and provide some profit. Or maybe they barely broke even. But they didn't "loose" $75K per person.

It would go a long way to calming the situation if we outlawed the eye-popping charge master rates, but apparently health service providers are required to have them, and it's in their best interest to have the "$16 gauze pad and the $4 Tylenol" (to quote Attia).

 

[marko]

I think the biggest factor in healthcare high costs and prices is simply providers charge more because they can. As consumers we don’t have the information needed to assess real need and cannot judge.

Please dissuade me but I see a lot of expensive extra tests and procedures solely in order to provide CYA against malpractice suits. Going through something right now, and it's pretty clear that there's a lot of risk aversion and a lot of getting additional data and documentation.

"Our phones are open 24/7...if you are injured because a doctor made a mistake, call us!"

 

[audreyh1]

Please dissuade me but I see a lot of expensive extra tests and procedures solely in order to provide CYA against malpractice suits. Going through something right now, and it's pretty clear that there's a lot of risk aversion and a lot of getting additional data and documentation.

"Our phones are open 24/7...if you are injured because a doctor made a mistake, call us!"

I don’t think that is nearly as prevalent compared to 20-30 years ago. Insurance companies are very tightfisted about covering excessive testing and a lot of justification is required. Doctors are somewhat protected if they are offering the conventional “standard of care” for many common things.

 

[Toocold]

During the Attia podcast, they said employer insurance is keeping the whole thing afloat, so whatever goes in to replace it would probably be even more costly than Medicare.

This is true. On average, Medicare (the sickest population) pays 70% of what commercial and individuals pay. It's called cost-shifting. Now imagine if Medicare paid commercial rates. As a country, we'd be paying close to $1.1T a year, or about 20% of all total taxes collected by the federal government.

 

[jollystomper]

It is tough for me to complain much about something without having a solution, or willing to be part of a solution. The whole health care/insurance situation in the U.S. appears to me as an example of the classic "problem management triangle", trying to provide quality while balancing scope, time, and cost. Or, as the saying goes, "good, cheap, or fast. choose two" .

My major observation - much of this due to my career in IT where systems, platform, network, and enterprise manage management were major parts of most of my jobs - is that the system is geared and incentivized towards treating symptoms and not root causes. For example, in IT, signals (message, alert, performance threshold, etc.) occur that notify you that a problem is occurring or will occur very soon. One can have automation in place to respond to the signal to correct/bypass/delay the problem impact. However, in the long run, the better route is to also figure out how to prevent the signal(s) from occurring in the first place. This might me more effort/cost in the short run, but tends to pay off in the long run.

So I tend to have more questions that solutions in regards to health care/insurance. For example, why is more not being done to focus and address "root causes", in terms of providing incentives (and not just punishment) to do so? Of course, I realize part (or much) of the answer are "special interests" who profit more from the ways things are now ("follow the money" is something I find myself saying perhaps much too often these days ). But I look at issues like obesity, which everyone agrees is a problem, that everyone agrees contributes to health costs due to the health issues that one is exposed to, but very little is done in terms of "preventing this at the source", with the focus being on drugs to address this "after the fact" (and sometimes by those who really do not have the problem). How much are medical schools teaching and training doctors about nutrition and physical activity. What resources are being provided to support people in this manner that are not at a "premium" cost. One can certainly try to punish people towards addressing this (like laws limiting the sale of soda drinks larger than a certain size), But, in my view, people respond better, and are more likely to change, when there are incentives to encourage them, and provide them with some tangible benefit.

I just use that as one example, it is not the only item one can consider. If I had an easy solution for this, I would probably be rich . But the challenge in pursuing this is that it is a lot of work, that is likely to reduce - or stabilize - those currently profiting on the current situation, and thus would be met with a lot of resistance. It would be similar to the tax system - no one disagrees that we have a complicated tax system, but talk and efforts to simplify it immediately bring out the howls of "unfairness" and "loss of jobs" - things that I believe would be impacted in the short term, but would be overall better for the long term. But, greater minds than mine...

 

[Gremlin]

The interview covered that. Although the average life expectancy of the US is horrible, there's a lot of infant mortality and street violence in the US that they don't have elsewhere.

If you bring it to the level of seniors, I think they mentioned in the podcast that if you make it to age 70, your life expectancy was higher than anywhere else in the world. I'm not sure if I believe that entirely, but it's probably directionally correct. It doesn't fit the "pay the most, get the least" sound bite, and won't generate a lot of clicks, but I think it's probably more accurate.

Good examples. Also, the most recent noteworthy decrease in life expectancy was due to the opioid crisis.

 

[Toocold]

One of the things that is confusing, and gets amplified because it generates clicks, is using the fictional "charge master" rates. They talked about this on the podcast, and "everybody" agrees that nobody pays those prices. But they're on the bills you get, so they get quoted, just like in this post.

People might think "wow, the hospital had to eat $75K per person", from your example, but that's not accurate. Whatever Medicare paid for the two procedures was probably enough for the hospital to cover their costs and provide some profit. Or maybe they barely broke even. But they didn't "loose" $75K per person.

It would go a long way to calming the situation if we outlawed the eye-popping charge master rates, but apparently health service providers are required to have them, and it's in their best interest to have the "$16 gauze pad and the $4 Tylenol" (to quote Attia).

Charge master is another red herring. Charge masters were originally created to document how much hospitals were going to charge patients for different procedures. Before insurance, it functioned very much like McDonalds, when most people paid for their procedures and they asked how much it was going to cost. Once insurance came along, they wanted to get a volume discount, very much like Groupon. Over time, insurance companies were incentivized to maximize this discount ("network discount"), so hospitals raised their charge master rates accordingly. As a result, you had high charges, high discounts, and high costs. To make it worse, every insurer negotiated different rates and (by law) they couldn't share those rates to each other. That is why there isn't any transparency in this system.

Just to add a bit more complexity, you also have the hospital ("facility") charge & rates, the professional charge & rates, the specialist charge & rates, the skill-nursing facility charge & rates, the ambulance charge & rates, etc. etc., each trying to manage their own budget.

Regarding the podcast, the hospitals are just mad because the government recently passed a requirement to show those rates to bring about "transparency" to bring some changes within the system.

 

[MichaelB]

Please dissuade me but I see a lot of expensive extra tests and procedures solely in order to provide CYA against malpractice suits. Going through something right now, and it's pretty clear that there's a lot of risk aversion and a lot of getting additional data and documentation.

"Our phones are open 24/7...if you are injured because a doctor made a mistake, call us!"

Here’s a study by McKinsey (here) titled “Accounting for the cost of US healthcare: A new look at why Americans spend more”. It was first published in ‘07 and updated a year later, and may have been updated since. It is dated, but the depth of research is like no other. It is thorough and comprehensive.

They compare spending with developed European countries and factor in many aspects commonly mentioned, such as needless testing, cost of malpractice and litigation, insurance company overhead. Their conclusion is the cost of physician and hospital services is higher because the providers in the US charge more relative to everything else.

Since the study was first published it’s only gotten worse. Hospitals are buying out medical practices and creating local and regional oligopolies, and hedge funds & private equity are buying health care practices and sharply increasing prices.

 

[Aerides]

I was enthusiastically on-board with this thought for my whole career. The company fires you, or you quit, you have TWO big problems: no money coming in and no more health insurance.

During the Attia podcast, they said employer insurance is keeping the whole thing afloat, so whatever goes in to replace it would probably be even more costly than Medicare.

Totally agree with this. "Benefits" became a huge selling point for employers, allowing them to lower actual wages in exchange. And yes, being anchored to your job as a result.

Especially when new employers often required a 90 gap in coverage for new hires, even if you left for a new job, you had a worry, at least a new annual deductible, etc. Too much burden if you had a family on your coverage as well.

 

[pjigar]

The problem is the payment system. By having insurance and government between the provider of care and the consumer, the system is not reactive to market forces. I would argue that situation is far more related to the problems we face versus their profit driven mentality.

I have seen first hand that when doctors are paid directly by patients, market forces do find a reasonable and realistic price that works for both doctors and patients. I have seen it work very efficiently for typical routine medical care (sickness, fever, infection, broken bones, cuts, outpatient care, etc.) But there is a dark side, the system fails when a true catastrophe strikes (stroke, heart attack, cancer, trauma event, etc.). Most poor and a lot of middle class people were put in a very tough spot. Lives were lost unless friends/family/employers chip in money (a version of crowd fund).

My experiences lead me to think that a better solution would be to have an open-market, pay-as-you-go system for routine medical care. There should be a separate insurance-like system for anything requiring overnight hospitalization, long-term hospital visits (cancer), time-critical emergencies, etc. But the devil is in the detail, how do you define which care belongs where "fairly"?

 

[Mr._Graybeard]

Here in Wisconsin, malpractice lawsuits are all but dead. Awards have been capped by state law.

From a Feb. 15, 2024, Milwaukee Journal story about an infant's death at a Milwaukee hospital: "Wisconsin law caps medical malpractice at $500,000 in the case of a death of a minor child, which makes it cost-prohibitive for many firms to accept these cases and argue them in court." https://www.jsonline.com/story/news...nts-lawyerless-after-babys-death/72039560007/

A number of years ago, a woman in Wisconsin lost both arms and both legs to sepsis while in hospital care. A jury awarded her millions, but the judge pared that back to $750,000. That's the maximum award state law allows.

 

[rembrandt]

Totally agree with this. "Benefits" became a huge selling point for employers, allowing them to lower actual wages in exchange. And yes, being anchored to your job as a result.

Especially when new employers often required a 90 gap in coverage for new hires, even if you left for a new job, you had a worry, at least a new annual deductible, etc. Too much burden if you had a family on your coverage as well.

In most other countries, health insurance is not tied to employment. Instead, these countries typically have universal health care systems or government-provided health insurance. Here are a few examples:

• Canada: Health care is publicly funded and administered on a provincial basis, ensuring that all residents have access to necessary medical services without direct charges at the point of care.
• United Kingdom: The National Health Service (NHS) provides comprehensive health care that is free at the point of use for residents.
• Germany: Health insurance is mandatory, and it is provided through a mix of statutory health insurance (public) and private health insurance.
• Japan: Health insurance is mandatory for all residents, with options for public health insurance and private insurance.
• Australia: The government provides universal health care through Medicare, which covers a range of medical services.

These systems ensure that individuals maintain their health coverage regardless of their employment status, which can provide greater security and stability compared to the U.S. model.

 

[Montecfo]

As long as the US healthcare system is profit-driven, costs and quality of care will not improve. It's no more complex than that.

I would need a lot more analysis to reach the same conclusion. Things that are not "profit driven" in the US are not characterized by being inexpensive and high quality.

Look at public schools for example. How about the US postal service?

I do think a more transparent and market-driven system could improve costs and quality. More transparency on price and quality of services offered by different providers for example.

 

[Montecfo]

About 2 years ago we had Cobra for a month or 2. One month cost almost that much. Total ripoff.

Apples to oranges. The PCP is a small part of the total cost. The PCP is one doctor. Your insurance covers a network of doctors and facilities.

 

[MichaelB]

Looks like we’re getting some AI generated content in the thread, Attribution is important.

 

[Chuckanut]

A neighbor gets a shot of a very expensive drug every 6 months. If she gets the shot so much as one day earlier than the 6 months waiting period, the insurance company will not pay for it. To prevent this, the doctor’s office has now contracted with a special scheduling service that does nothing but monitor and arrange the shot appointments to ensure that at least 6 months and a day have past. <—- extra cost.

 

[Letj]

I have seen first hand that when doctors are paid directly by patients, market forces do find a reasonable and realistic price that works for both doctors and patients. I have seen it work very efficiently for typical routine medical care (sickness, fever, infection, broken bones, cuts, outpatient care, etc.) But there is a dark side, the system fails when a true catastrophe strikes (stroke, heart attack, cancer, trauma event, etc.). Most poor and a lot of middle class people were put in a very tough spot. Lives were lost unless friends/family/employers chip in money (a version of crowd fund).

My experiences lead me to think that a better solution would be to have an open-market, pay-as-you-go system for routine medical care. There should be a separate insurance-like system for anything requiring overnight hospitalization, long-term hospital visits (cancer), time-critical emergencies, etc. But the devil is in the detail, how do you define which care belongs where "fairly"?

I really like your idea of paying as you and obtaining separate critical care insurance. However, the problem is many people won’t be able to afford to do so.

 

[audreyh1]

I really like your idea of paying as you and obtaining separate critical care insurance. However, the problem is many people won’t be able to afford to do so.

Once upon a time in the US things worked like this. People could buy “Major Medical” insurance for serious illnesses, injuries, and hospitalizations and took care of the smaller and routine things themselves. Doctors also made house calls, sigh!

 

[Rianne]

So I tend to have more questions that solutions in regards to health care/insurance. For example, why is more not being done to focus and address "root causes", in terms of providing incentives (and not just punishment) to do so? Of course, I realize part (or much) of the answer are "special interests" who profit more from the ways things are now ("follow the money" is something I find myself saying perhaps much too often these days ). But I look at issues like obesity, which everyone agrees is a problem, that everyone agrees contributes to health costs due to the health issues that one is exposed to, but very little is done in terms of "preventing this at the source", with the focus being on drugs to address this "after the fact" (and sometimes by those who really do not have the problem). How much are medical schools teaching and training doctors about nutrition and physical activity. What resources are being provided to support people in this manner that are not at a "premium" cost. One can certainly try to punish people towards addressing this (like laws limiting the sale of soda drinks larger than a certain size), But, in my view, people respond better, and are more likely to change, when there are incentives to encourage them, and provide them with some tangible benefit.

My bold. IMO this is the issue in U.S. healthcare. We are competing with corporate interests. Commercials, processed foods, the salt, sugar, fat mania in tasty foods visually and the pocket book. BOGO in cheap fast food and in grocery stores brings obesity and other disease. The healthcare system reacts and designs systems, drugs, specialties, to address these needs. The best thing for our health system is cooking shows with natural ingredients and creative recipes. Nutrition is the last thing taught in med school but the first thing for a healthy person.

 

[audreyh1]

My bold. IMO this is the issue in U.S. healthcare. We are competing with corporate interests. Commercials, processed foods, the salt, sugar, fat mania in tasty foods visually and the pocket book. BOGO in cheap fast food and in grocery stores brings obesity and other disease. The healthcare system reacts and designs systems, drugs, specialties, to address these needs. The best thing for our health system is cooking shows with natural ingredients and creative recipes. Nutrition is the last thing taught in med school but the first thing for a healthy person.

Correct. USDA, Big Food, and Pharmaceutical Industry have teamed up and sponsor medical and nutrition associations and the Pharmaceutical Industry funds medical schools. So we have a very unhealthy food environment, and training and focus on treatment with drugs which are usually focused on treating symptoms ignoring the root cause. Nutrition is generally ignored by medical schools (not a drug), and nutritional advice given by trained dietitians often horribly wrong - a long history of that. It’s such a mess.

 

[Toocold]

Likely last comment. Just for reference, before I joined this merry group of RE members, healthcare was my focus and perhaps my life's passion, and I have worked with some of best minds in healthcare, including some mentioned in this thread and worked on papers (from an industry point of view) that advised the administration during the original ACA debate. My personal focus has always been, how do you fix our awful healthcare system before it bankrupts our country?

I'm convinced that there are two models that can work in the US, plus two fixes:

- German Model: Everybody is required to get base health insurance and it is administered and streamlined, so that all contracts are uniform. Think Medicare but expanded to everybody using uniform codes, like APR-DRGs or even more innovative things like bundled payments, and rates. This will be a base level of care and there will be guidance on things like length of stay. In addition, there will be a parallel private healthcare system that people can opt-in, but there is a premium. This will address patient access and more importantly setting patient expectation that you can't always get cadillac care.

- Integrated Delivery Model (Kaiser model): Healthcare systems are required to take on all medical risk for a given population through a risk-adjusted PMPM model. Everybody is required to get healthcare membership, similar to Medicare Advantage, but is paid for by the government / taxes. The providers (e.g. primary, specialists, hospital, lab, post-acute, pharmacy) are housed under one system. All diagnosis and treatment are done by the same entity that is responsible for your care, but are at risk, so if they consistently over treat, they will lose money. This will get rid of independent ambulatory surgery centers, emergency clinics, skilled nursing facility, retail clinics, urgent care, infusion centers, pharmacies, etc. that are now proliferating our strip malls.

Both or a combination will reduce administrative costs, tier care, better tie medical decisions to financial risks, and reduce administrative and medical complexity.

The two fixes are: capping medical malpractice awards and drug negotiations -- the US pays a huge premium for drugs, and essentially subsidizes discovery for the world.

Now, how do you go from our current system to those future models? I honestly can't see a path -- too many cheese to move.

 

[starry night]

This is true. On average, Medicare (the sickest population) pays 70% of what commercial and individuals pay. It's called cost-shifting. Now imagine if Medicare paid commercial rates. As a country, we'd be paying close to $1.1T a year, or about 20% of in total taxes collected by the federal government.

Let it not be forgotten that all through our working years we are effectively pre-paying for our Medicare benefits through our FICA payroll deductions and the employer match. I don’t think we seniors are underfunding our share.