Sometimes it is easier to just pay cash without insurance altogether. You need the medication today and dont have two weeks to fight it out with letters and forms, then it definitely doesnt count towards your deductible (and also, what is the purpose of the pharmacy coverage insurance?)

However, that isn't enough. US healthcare is wildly inefficient because the paying customer is different than the serves customer. This has been known for sixty years, since Arrow published his paper (he identified four reasons, three of which are not exclusive to healthcare and seem to be mitigated well in other industries). I'm surprised people posting can't quite see this: when you go to the doctor, would you call the experience efficient? You check in, then wait, then are called back, tell the nurse or PA why you're there, wait, see the provider who asks you again why you're there, has a short exam, wait, finally get all the paperwork and sign out.

If you have labs or tests, you then wait again. And of course if you need a specialist, you wait again, sometimes for months. If you need any sort of "specialty" medication or equipment, then you REALLY wait, as specialty pharmacies, DMEs and the like jump in.

The whole system is woefully inefficient, and overhead is only a part of the explanation. No one knows what anything costs, and the people who pay (insurance providers, the largest of which is the US Government) want to believe they're not getting scammed - they still are, but at an acceptable level.

The question we ought to ask is how we can buy better health outcomes for people. And I think part of the answer is that in most cases, individuals and families themselves must allocate resources they control to make this happen.

Last year this podcast said that nobody wants to solve this because solving it is going to eliminate (IIRC) hundreds of thousands of jobs. Which is a point to consider.

In 2021, the U.S. spent $1,055 per capita on healthcare administration, while the second-highest country — Germany — spent just $306 per capita, Japan is $82. https://www.pgpf.org/article/almost-25-percent-of-healthcare...

Administrative spending accounts for between 15% and 30% of total medical spending, with lower estimates covering only billing- and insurance-related expenses, and higher ones including general business overhead such as quality assurance, credentialing, and profits. https://www.healthaffairs.org/do/10.1377/hpb20220909.830296/

The Center for American Progress estimates that health care payers and providers in the United States spend about $496 billion annually on billing and insurance-related (BIR) costs alone. https://www.americanprogress.org/article/excess-administrati...

The time burden on physicians is staggering — estimated at $68,000 per physician per year spent dealing with billing-related administrative matters. https://www.pgpf.org/article/almost-25-percent-of-healthcare...

The difference in life expectancy will be influenced by multiple factors and may have more to do with diet and lifestyle than with healthcare.

Japan also spends less per capita than the UK, France or Germany. The US spends a lot more than any of those so the US system is bad value for money.

The problem, though, with going after pharma costs, and pharma benefit managers is that pharma is a relatively small component of overall spending; it's less than 10%. That is to say, you could make all pharmaceuticals entirely free, and we'd get at best a 10% discount on what we pay. I don't think any of us would be satisfied with that!

This is data from the most recent (as of last year) CMS NHE:

https://nationalhealthspending.org/

One underlying, perverse incentive behind many of the problems is that insurers are regulated based on percentages of spending rather than total costs.

The US passed laws meant to limit marketing and overhead that tied insurers economics to the size of the overall medical bill... which means as healthcare spending rises, the dollars they’re allowed to retain can rise too, which basically means they're incentivized to drive costs up rather than down.

Here's a link to the book: https://www.helmpublishing.com/products/an-american-sickness...

Healthcare providers try and combat all this by literally just making up pricing and trying to negotiate something while also having bloated administrative structures that raise costs for all.

Nothing about the current state of the healthcare system makes much sense to anyone that tries to peel back the onion.

There’s plenty of arguements about waste and executive compensation but when I was a healthcare CFO we had our financials separated where I could see individual hospital performance and all the executive/corporate stuff was separate and it still was an issue as basic capex was hard to keep up with in a hospital that had a low % of commercial patients.

Really opens my eyes to all the other politics posting accounts that have a similarly constructed profile description .. But of course, they'll never be banned and instead they get front page of HN and hundreds of upvotes.

A lot of the things that the original post shares has this characteristic. Sure, things in US healthcare are wildly inefficient, but that's how a lot of these companies make a lot of money. And they will lobby and fight to the death that cash flow.

Because of Obamacare requiring 80% of the money they collect to be spent, the insurance companies just get to keep 20%. So insurance companies spend more so they can collect higher premiums. That's how they make more money.

Several doctor friends have told me this as well.

The US spends ~$900 Billion a year on Medicaid [1] and ~$1.1 Trillion a year on Medicare [2]. If the US spent this money as efficiently as Japan (or UK [3], ...) it could pay for Universal Healthcare without increasing its budget.

[1] https://www.kff.org/medicaid/medicaid-financing-the-basics/#...

[2] https://usafacts.org/answers/how-much-does-medicare-cost-the...

[3] https://www.bbc.com/news/articles/cwy7zvp5xrqo

Im sure big-pharma has an interest in over-medicating too, but that should be solved by transparent pricing.

It still blows my mind i cant window shop hospital procedures.

The opaque-ness of medical billing in the US only further favors the for-profit insurance company margins.

Burn it all down. Single-payer for all. I really have zero sympathy for insurance companies who pride themselves on denying their paying clients life-saving care in favor of shareholder returns. It's such a crazy moral hazard that really highlights a sickness in America.

Doctors and other providers bill for each individual thing they do. But that means that their incentive is to do as much as possible, so they can quickly rack up billable codes.

It's like if developers billed their employer per line of code they wrote: the incentive is for churn, when it should be for slowing down and thinking about quality.

Ethnic Japanese in the US live have about the same life expectancy as Japanese living in Japan do (within 1 year). US GDP per capita is about 2.4x Japan's. So the numbers don't look nearly as bad when you adjust for that. The higher drug prices in the US are definitely part of it, part of it is our population is less healthy in general (fatter, worse diet, more drug and alcohol abuse), but part of it is Baumol's cost disease[0]. Biggest barrier to lowering healthcare costs in the US is it probably requires paying doctors, nurses, etc. significantly less and most of them work hard and feel like they deserve to be paid as well as they do.

[0]: https://en.wikipedia.org/wiki/Baumol_effect

Edit: to some extent high US drug prices are a public good that subsidizes healthcare for the rest of the world. I don't know the data but I would guess the US is responsible for a disproportionate share of new drugs.

[1] https://www.managedhealthcareexecutive.com/view/health-syste...

Is Japan's life expectancy because of its healthcare or culture? I'm pretty sure Americans would not live to the same age as Japanese even with Japanese healthcare because of our low nutrition high sugar diets...

Health care providers carry immense blame. It's full of passionless people in it for the outsized paychecks, who once inside will just seek whatever local minimum to stay employed.

he manages to make it a fun and enjoyable topic to learn about which is quite a feat imo

Choosing US versus Japan, which Japan has the lowest cost and highest life expectancy in the OECD, it's cherry picking. I'd recommend showing the full distribution of OECD per-capita spending rather than just a single cherry picked comparison.

This also is troubled by McNamara Fallacy, we're looking at metrics that are qunatifiable but ignoring what can't be measured or overlooked, is speed of access being considered, how about innovation incentives, quality and outcomes variation across systems, patient choice and flexibility, in addition to workforce compensation (nurses and physicians in the US earn significantly more). Where are the trade-offs?

Summary Statistics can be dangerous. 254% of medicare is a single ratio summarizing enormous variation across thousands of hospitals and procedures. Median markup of 3.96x inherently hides the distribution, some hopsitals may be higher or lower, why is that?

I think the biggest one to me was the confirmation bias, the $3 trillion gap that represented 'fixable waste' was the conclusion. Every price difference is interpreted as waste rather than investigating the potential cost drivers, was there a null finding framework in place where US spending appears justified or is it all bad?

Overall, glad someone is looking into the data and pulling insights, please don't take this as discouragement just a comment from the peanut gallery.

https://en.wikipedia.org/wiki/Maryland_hospital_payment_syst...

Americans don't want cheaper healthcare.

We've collectively decided the nightmare of employer based health insurance is a good idea.

Single payer healthcare will never happen.

Imagine if you will an Apple farmer willing to supply an entire town for a set amount per person.

One town, call it NordicTown says this is a great idea. Everyone chips in.

Another town, Jamestown has lively debate on the issue, but half the population believes unworthy people will get apples.

Since it's the policy that if anyone who shows up at the apple market starving they'll always get an apple, the apple farmer figures out they can bill the town for whatever they want.

Jamestown then ends up implementing special taxes to pay for poorer people to have apples. They could actually extend this to cover everyone without raising taxes.

But this will never happen. Someone you consider lazy might get a free apple. So you gladly pay 3 times as much.

Everyone in America is a single expensive illness away from ruin. We like living in a dystopian nightmare where you have to pick between medicine, a car note and rent.

Did I mention Jamestown residents who relay on free apple programs regularly vote against free apples?

If you're less active, eat worse, throwing more money at fixing the symptoms will not fix the underlying problem.

Not saying that Americans aren't paying outrageous amounts compared to others, but when comparing these things, I think it makes more sense to look at countries with population more similar to US.

If what we defined as care was constant, it would get cheaper over time. But it doesn't stay constant.

The layering on of profit margins causes costs to grow exponentially

Ancient Chinese wisdom: "People praise doctors who delay the progression of incurable diseases but not those who prevent them".

Our imperfect system pays for the worlds medical R&D, so I would actually love to see per capita spending remain similar BUT have the market opened up, with a nice safety net at reasonable cost, and money pouring into curing aging and all disease.

Source: owned a medical practice for over 20 years, and was staff engineer at a company that processed medical bills.

If hospitals could be forced to publish price lists, it would be game changing, allowing patients to shop and compare quality/prices.

Trump vaguely mentioned he'd try to do something like this but it's not clear what he's attempting: https://www.youtube.com/watch?v=8PQ7l905aVM&t=10h57m30s

Maybe this? https://trumprx.gov/

Yearly physical exams are much more thorough in Japan. Unless you are optimally fit, you will be prescribed lifestyle changes to make and there is a strong expectation that you will work hard on these. Your employer will be involved. There is _tremendous_ social pressure if you are overweight.

Healthy food options are ubiquitous there with healthy and cheap meals available 24/7. Combini food certainly has bad options but nothing compared to American fast food or the American diet generally.

There are other health problems that are significantly overrepresented in Japan compared to the western world. Alcohol, smoking and stress-related illnesses. Liver & Kidney diseases. Peptic ulcers, GI problems in general.

- Doctors and hospitals don't compete on price

- Prices aren't just opaque, they are unknowable

- Shopping around is not possible

- Insurer incentive is to maximize billing (cost). They pass along cost as increased premiums to an employer. Employer passes along increased costs to employee as below-inflation wage increases

Removing some patent protections earlier and having a national healthcare system own the clinics and insure people would reduce the cost?

I'm curious to read that. I worked for a PBM back in the 90s/early-2000s. When I was hired, it was just a job; I had no idea what the business did to make money. After working there a few years and learning - well, I would've felt better about myself if I had become an actual drug dealer, selling cocaine and meth. That's not a huge exaggeration.

Japanese, as a whole, have a vastly different diet than the average USAian. As a whole, they are far less obese, eat far less diary products, over eat less, eat less meat, etc... Again, not saying that's the reason but it's a possibility. USA = 2500 calories a day. Japan = 2000 calories a day. Japan = 3% obese. USA = 33% obese.

Next up is exercise. Sure, lots of people in the country live in rural areas and drive a car. But some large portion of the population does the majority of their commuting and shopping by walk/bus/train/bicycle. That means that on average, Japanese get more far more exercise than the average USAian. Japan gets ~25% more exercise on average

I'd suspect these 2 (3)? are the major reason Japanes live longer. (1) they get more exercise (2a) they don't over eat (2b) they eat healther foods.

Anyway, the point is, the post should arguably not be putting such a specious statement at the top. It suggests the rest is probably just as specious

https://randomcriticalanalysis.com/why-conventional-wisdom-o...

TL;DR: As people/countries get richer, a larger share of their money goes towards consumption. It's not just that Americans pay more for the same procedures (sometimes they do, sometimes it's just sticker prices) but we consume more healthcare the more money we make. So it skews costs up disproportionally. That wealth also enables chronic health and lifestyle problems that are expensive in their own right.

I'm not sure I'd buy the theory entirely, but it's very well argued and as a null hypothesis it makes a lot of sense.

This is what pays for future drug research for the world.

Three reasons:

1. Medicare has quasi-monopolistic negotiation power that private insurers can only dream of -- Medicare spend two-thirds of all the private insurers combined. That's why private insurers would combine in a heartbeat if the FTC allowed it.

2. Moreover, that Medicare volume is concentrated in a specific segment of the market. If many providers dropped expensive United contracts, the insured people/companies might move to a new insurer. But Medicare's base will never leave.

3. Since Medicare covers older individuals, often on a fixed income, there is natural discriminatory pricing. (Think of the "senior discount" at your local entertainment venue.)

[1] https://www.kff.org/medicare/how-much-more-than-medicare-do-...

https://randomcriticalanalysis.com/2018/11/19/why-everything...

On the other side, if it were fully capitalist you would be able to see the price and walk away if you didn't like it. This is what makes capitalism work. Your margin is my opportunity. Instead, the upper middle class, who pays for everything already, and is unable to use Medicaid, is forced to use a certain "network" of providers and never, ever sees the price upfront. This is the cornerstone of capitalism. Does the buyer like the price? If so, transact. It's completely not there. Instead, it's actively discouraged and banned, and the price is maximized post-hoc by the same entities who negotiate directly with the employee's employer. Ie, a quantitative shakedown.

They have every incentive for the price to be as high as possible.

Such entity can't be left to utilize market forces for the same reason cancer can't be left to utilize human physiology.