Thoughtful Conversation About the US Healthcare System

[Midpack]

I would agree on postal, but they are also up against a bevy of free market competitors.

Not at all on the same playing field. The competitors handle packages exclusively, and USPS is very competitive in package shipping prices. USPS is the only provider that by law has to handle and deliver letter mail to almost every citizen in the United States 6 days/week - and online has dramatically decreased volume and revenue from that service with no reduction in mail delivery schedule. And USPS is not allowed to increase letter stamp/postage prices themselves, they'd be quite a bit more if they had some autonomy. FedEx, UPS and the others don't have those costs, restrictions, etc. ...

Just clarifying, not trying to hijack the thread.

 

[Flieger]

Not at all on the same playing field. The competitors handle packages exclusively, and USPS is very competitive in package shipping prices. USPS is the only provider that by law has to handle and deliver letter mail to almost every citizen in the United States 6 days/week - and online has dramatically decreased volume and revenue from that service with no reduction in mail delivery schedule. And USPS is not allowed to increase letter stamp/postage prices themselves, they'd be quite a bit more if they had some autonomy. FedEx, UPS and the others don't have those costs, restrictions, etc. ...

Just clarifying, not trying to hijack the thread.

All subsidized, so the cost is not "complete".

Flieger

 

[Flieger]

I worked for a mega-chemical company in the UK and when I moved to the USA on secondment and under their US subsidiary I noticed that the fringe benefits for the US company were 39% of the salary bill compared with 17% for their UK company.

Very interesting. i worked for a German company in Germany for a time and while I am not sure the fully burdened labor (I wasn't at that level while there), I can tell you the withholding from pay was much higher there than in the US. Maybe one is traded for the other?

Flieger

 

[Alan]

Very interesting. i worked for a German company in Germany for a time and while I am not sure the fully burdened labor (I wasn't at that level while there), I can tell you the withholding from pay was much higher there than in the US. Maybe one is traded for the other?

Flieger

I don’t know the German system at all but if employee health insurance was included in salary withholding I’m pretty sure it would be itemized on your pay check.

 

[Flieger]

I don’t know the German system at all but if employee health insurance was included in salary withholding I’m pretty sure it would be itemized on your pay check.

No, I meant the overall withholding (taxes, etc) were higher than US. I am assuming (pretty good assumption?) that the national HC coverage is included in both the pay withholding and the national sales taxes.

Luckily, my company had an "equalization" process that made my pay the same as if in the US.

Flieger

 

[Alan]

No, I meant the overall withholding (taxes, etc) were higher than US. I am assuming (pretty good assumption?) that the national HC coverage is included in both the pay withholding and the national sales taxes.

Flieger

It almost certainly is.

After we had moved back to England I continued to get options to sign up to my US employer retiree health insurance so I knew how much in premiums I would still be paying. Although the total withholdings here are higher than in the USA we still have to file a US tax return for our worldwide income every year as US citizens so I can see that UK total withholdings plus our private healthcare premiums is still less than our US taxes + health insurance premiums. Once I reached Medicare age I stopped being eligible for retiree insurance so I stopped being able to compare. (We didn’t sign up for Medicare)

As for national sales tax I only know that the cost of just about everything here is much cheaper (including VAT) than when we lived in the USA.

 

[Midpack]

All subsidized, so the cost is not "complete".

Flieger

Not sure I follow. If USPS is subsidized, that's a recent year by year development. Historically they have not been subsidized - you can see their income statements online.

 

[Flieger]

Not sure I follow. If USPS is subsidized, that's a recent year by year development. Historically they have not been subsidized - you can see their income statements online.

I mean that they are managed and funded by the Fed Gov't (taxes). FedEx, UPS, etc are not.

Flieger

 

[audreyh1]

I mean that they are managed and funded by the Fed Gov't (taxes). FedEx, UPS, etc are not.

Flieger

No, they are not funded by taxes.

 

[Flieger]

No, they are not funded by taxes.

I stand corrected, just part of FERS, although they have received help. Not sure how long it will take keep them afloat.

My deceased FIL retired from them and started before Fed Funding changed in 1970, and I have 2 uncles her retired from USPS. I hope they continue, but think they will have to improve costs/benefits to do so.

Flieger

 

[MichaelB]

The USPS was brought into the discussion as an example of why the profit model is needed in healthcare.

One big issue with using the USPS as an example is they are mandated to provide services and coverage that are uneconomical. There are 2 specific mandates. One is they must deliver to every address in the US, and most addresses 6 days per week, no matter how remote. In addition, first class letter service must cost the same no matter the origin or destination, in the US. The private sector delivery services (UPS, FedEx, etc) have no such mandate and charge considerably more or just don’t deliver to some addressses.

An additional factor, not mandated but existing nonetheless, is the USPS can’t close unproductive offices

These factors impost significant cost on the USPS and really invalidate any comparison with private sector productivity, efficiency or profitability.

What many miss in this discussion about profit and healthcare is there are 2 profit seekers in healthcare, not 1, health service providers and insurance companies, and the objectives of both are in conflict. So, if people feel committed to the notion that profits are critical for healthcare providers to optimize their products and services and deliver the best care to the most, they also need to recognize that insurers stand in the way and impede that from happening.

 

[Closet_Gamer]

I think the healthcare system will wind up looking like education. A public option for everyone with various private options for people who want more/different. This is how K-12 works and modified version of this is how universities work.

The Brits sort of have this … you can buy private insurance to handle routine things and many types of non-life threatening surgeries. The really complicated and life threatening stuff falls back to the NHS. I mentioned above my experiences with the NHS. I also had private insurance and agree with the comments that it works well … but when the stuff hits the fan patients are immediately taken into the NHS.

Essentially, unprofitable work goes back to the govt and they handle routine stuff (badly IMO) for anyone who wants to use them. The discussion of USPS is on point in this regard as well.

It was amazing to me that my wife spent 40 days in and NHS ICU and I never got a bill or even any paperwork. Stunning. When I called to ask about it, the lady on the phone “She came in, she had an NHS number, we took care of her.” It was heart warming and if the story ended there I’d cheer for a British system.

Like public schools in the US, and the NHS, a lot of care quality will depend on where you live. I mentioned the NHS saved my wife’s life. Many people told me that if we lived a further 30 minutes outside of London, she would have died for sure.

As an aside, the NHS was shockingly up front that choosing to give my wife a life saving intervention was a statistical choice. She cleared a survival scoring mechanism and because we were near London a machine was available so she got it. They actually handed me a pamphlet that said “The NHS must consider the value it gets for its money when considering this intervention.”

Wow. Can you imagine UnitedHealthcare actually saying that? There would be hell and congressional investigations.

ACA subsidies + Medicaid + Medicare cover so many people that we are close to a public option anyways. I think that will be a next step. But I hope it doesn’t turn into the British system.

 

[Mr._Graybeard]

I think the healthcare system will wind up looking like education. A public option for everyone with various private options for people who want more/different. This is how K-12 works and modified version of this is how universities work.

The Brits sort of have this … you can buy private insurance to handle routine things and many types of non-life threatening surgeries. The really complicated and life threatening stuff falls back to the NHS. I mentioned above my experiences with the NHS. I also had private insurance and agree with the comments that it works well … but when the stuff hits the fan patients are immediately taken into the NHS.

Essentially, unprofitable work goes back to the govt and they handle routine stuff (badly IMO) for anyone who wants to use them. The discussion of USPS is on point in this regard as well.

It was amazing to me that my wife spent 40 days in and NHS ICU and I never got a bill or even any paperwork. Stunning. When I called to ask about it, the lady on the phone “She came in, she had an NHS number, we took care of her.” It was heart warming and if the story ended there I’d cheer for a British system.

Like public schools in the US, and the NHS, a lot of care quality will depend on where you live. I mentioned the NHS saved my wife’s life. Many people told me that if we lived a further 30 minutes outside of London, she would have died for sure.

As an aside, the NHS was shockingly up front that choosing to give my wife a life saving intervention was a statistical choice. She cleared a survival scoring mechanism and because we were near London a machine was available so she got it. They actually handed me a pamphlet that said “The NHS must consider the value it gets for its money when considering this intervention.”

Wow. Can you imagine UnitedHealthcare actually saying that? There would be hell and congressional investigations.

ACA subsidies + Medicaid + Medicare cover so many people that we are close to a public option anyways. I think that will be a next step. But I hope it doesn’t turn into the British system.

I don't want to try to predict the future, but the example of Medicare Advantage suggests to me how the private sector's alternative to public-sector health insurance could play out. That and the health care ministries that are out there.

When I was still w*rking, my employer health-care plan mirrored the Bronze HDHP offered under the ACA. I was OK with that, since we've been pretty healthy and only wanted catastrophic coverage. We moved to a Bronze HDHP when we retired.
I've been out of the employer umbrella for 11 years now. COBRA for the coverage we got under the ACA would have been $1500 a month back in 2014.

The HDHP is a bigger money suck to the insurer than the bad Medicare Advantage model, where the insurer offers stuff like YMCA memberships as carrots while delaying big-ticket coverage to maximize profit. Since profit is the motivator in corporate America, I can see where this is headed.

Back to my employer: I haven't looked at those options in years, but the trend while I was w*rking was to scale back health insurance benefits as costs rose. We were able to choose a hospital group from several in our area. I wonder if that option is still available. The smart money would be to limit provider options to the cheapest available.

Again, I'm just speculating, but I would worry a lot more about my health-care choices under the private sector than I am about the public-sector option. I say that as a traditional Medicare customer with Medigap plan.

 

[pb4uski]

All subsidized, so the cost is not "complete".

Flieger

Please elaborate. Are you suggesting the USPS is subsidized by the federal government? If so, that is wrong... there is a subsidy but it is minor... less than 1% of USPS revenues.

 

[pb4uski]

.... So, if people feel committed to the notion that profits are critical for healthcare providers to optimize their products and services and deliver the best care to the most, they also need to recognize that insurers stand in the way and impede that from happening.

Au contraire. To some degree, health insurers could care what healthcare providers charge... their pricing starts with expected claims and then adds in provisions for administration, overhead and profit/return to shareholders. The second part, provisions in premium pricing for administration, overhead and profit/return to shareholders, is limited by the ACA to 25% of premium. Expected claims for the next year are pretty predictable for the large health insurers.

Health insurers do have an incentive to try to moderate growth in health care costs to keep premium increases stable and competitive with other health insurers, but at the end of the day any increases are just passed on to policyholders.

 

[Montecfo]

The USPS was brought into the discussion as an example of why the profit model is needed in healthcare.

One big issue with using the USPS as an example is they are mandated to provide services and coverage that are uneconomical. There are 2 specific mandates. One is they must deliver to every address in the US, and most addresses 6 days per week, no matter how remote. In addition, first class letter service must cost the same no matter the origin or destination, in the US. The private sector delivery services (UPS, FedEx, etc) have no such mandate and charge considerably more or just don’t deliver to some addressses.

An additional factor, not mandated but existing nonetheless, is the USPS can’t close unproductive offices

These factors impost significant cost on the USPS and really invalidate any comparison with private sector productivity, efficiency or profitability.

What many miss in this discussion about profit and healthcare is there are 2 profit seekers in healthcare, not 1, health service providers and insurance companies, and the objectives of both are in conflict. So, if people feel committed to the notion that profits are critical for healthcare providers to optimize their products and services and deliver the best care to the most, they also need to recognize that insurers stand in the way and impede that from happening.

Since I made the example, it is pretty clear that a government owned and operated business is not efficient or responsive to the customer. Some of the reasons are included above. The government also mandates politically driven uneconomic and unworkable practices. This is what governments do, because they can. It is inconsistent with a service being inexpensive and high quality which is the point I was making.

So while this has morphed into a larger sidebar than expected, the example does work in my view for the reasons stated.

Having more than one profit oriented business in the delivery chain is not by itself a problem as I see it. Most industries have many profit oriented middlemen.

The key difference? Neither the doctor nor the patient knows the price nor the quality of services to be provided at the point of purchase. I'm not sure any other service is delivered in this fashion.

 

[sengsational]

The key difference? Neither the doctor nor the patient knows the price nor the quality of services to be provided at the point of purchase. I'm not sure any other service is delivered in this fashion.

You can't have a market if nobody knows the price. Even if they know the price, there won't be a well behaved market if some other entity is paying. The patient pays their premium and gets services, then there's no incentive to shop price. Just the opposite, the incentive is to "get your money's worth." Whether profit is a motivator or not, isn't the big lever. It's the rules that have been defined. It's rent seeking by profit and non-profit alike.

 

[Midpack]

Finally made it all the way through after three sittings. Interesting, intelligent and some things I didn’t know. But few if any insights into improving our very expensive, substandard performing, messed up system. So I was disappointed at the end.

 

[sengsational]

I was disappointed at the start when the upshot of the interview was basically a shrug. Although the one take away from the interview that was a bright spot was that if you're going to be 70+, there's no better place to be than in the US. I'm not sure how far back that data goes and if there's correlation to being on traditional Medicare vs Medicare Advantage. I'm not a subscriber to the podcast, so I don't have an easy channel to get that answered.