A bit OT, but this post made me think: how do countries provide good health care? does it always have to be government sponsored, otherwise it would be not affordable? And how does the government pay for it, given that the money has to come from taxpayers?
Because otherwise I don't understand why the market can't provide good health insurance in the US? Isn't that a classic insurance problem, take a group of people and spread out the risk?
What is going on? Is medicine too expensive because of state subsidies, so private insurers can't compete? Or are there regulations preventing private insurers from entering the market?
I think that's how insurance works on a basic level, but when it is run as business you try to maximize the profit. Healthcare is one of the best businesses around because in the event your client gets very sick they are willing to pay pretty much everything to get better. You can design the insurance around these events and average customer does not really pay attention.
State run healthcare ruins the market by basing the cost of treatments to pretty much what they cost to perform rather than how much person is willing to pay for them. Of course it does not work quite so smoothly in the real world, but enough that countries with public healthcare seem to be cheaper.
In a "market" in which costs are unpredictable and not disclosed until AFTER care is complete, there is not truly competition.
Try asking a cardiologist or neurologist for a fixed price estimate before a test is run. If you press the issue you'll be labeled a "confrontational" or "hostile" patient and rejected from the practice.
This is what drives me crazy about US health care. Where I currently live the estimated costs are given to you in advance, even advertised on the websites of hospitals and clinics. But back in the US where I used to live it is just like you said - nobody will quote prices.
They will reject you as long as they have enough other patients who don't care about the price. Somewhere the systemic error is injected into the system. There has to be a way to fix it or improve it.
The inresting thing is that it is very easy to get a detailed quote for any medical procedure that is not covered by insurance and payed for out of pocket by the consumer directly.
Dentists are much easier to get estimates from, because they know most of their patients are paying out of pocket. My last visit they gave me an estimate for my checkup and cleaning without my even asking.
I am not yet convinced it is not amenable. For example who gets to serve a city with emergency services? I guess there could be bidders to the city council, offering services for a certain price. That would lead to competition.
Likewise, insurances would negotiate rates for certain procedures. Of course it is not the task of the patient during cardiac arrest to do so. But the patient would choose the insurance provider.
>I am not yet convinced it is not amenable. For example who gets to serve a city with emergency services? I guess there could be bidders to the city council, offering services for a certain price. That would lead to competition.
This sort of thing is usually fertile breeding ground for corruption and backhanders. The NHS has been dogged by scandals caused by this sort of pseudo-privatization.
It works for smaller and short term contracts, especially for things which the private sector also needs, but the larger the size of the contract the more likely it is that the price will be determined by backhanders and which ministers play golf with which chief execs.
For something the size of "supply a city with emergency services", you could practically guarantee that the city council leader's cushy post-political job would be determined by which company they picked.
It's not that hard provided the government is motivated to clamp down on it: keep the contract sizes small, keep the contract durations short, make the transparency absolute and the bidding process transparent, open and fair.
Most privatization efforts come about as an attempt to inject corruption, however, so arguing that it could be done in a fairer and cheaper way is something of a moot point: if it were going to be cheaper and fairer they wouldn't be pushing for it in the first place.
"Most privatization efforts come about as an attempt to inject corruption"
Huh - citation needed? I've never heard that claim before. Corruption pretty much needs governments, who else are you going to bribe?
To me competition seems the only surefire way to keep prices fair/low. Yes, motivated governments in theory could do everything. A supercomputer could theoretically compute the perfect prices and allocations for everything. But no such computer exists, and markets are the only approximation available. You can not rely on governments to be motivated to be selfless and good. Even if perhaps some individuals are, in the long run the incentives are just not aligned, and it takes just a few bad apples to ruin the system.
> who gets to serve a city with emergency services?
It's worth noticing that most of ambulance services in the world are run entirely or in a good part by volunteers and no-profit organizations to ensure honesty and quality of the service.
National health care systems are incredibly common outside the US, and they're often in countries with sliding scale income tax so it impacts the poorer much less than those well off. A lot of countries have hybrid systems where there is partial privatisation, but it's rare to see private insurance necessary for required treatments.
I don't mean for this to be antagonistic so please don't take it that way, but it seems so many outside the US see the US as almost a form of extreme capitalism, where an almost dogmatic belief in the ideal has resulted in sub-optimal infrastructure and services.
But why - I still don't understand what is causing the problem in the US? Even in the non-US systems, somebody has to pay, so how can they afford it, given that all other countries are poorer than the US?
In my view, insurance is completely compatible with capitalism. It is simply a business, based on statistics. So why should the US have a special problem with insurance?
"Insurance" and "healthcare" are two completely different things. To understand why this is, observe that the military run their own state-run medical system rather than requiring individual soldiers to have private medical insurance for any battlefield injuries.
Non-US manage costs by some combination of state price control, aggressive triage, reduction of bureaucracy compared to complex insurance systems, and lower labour costs.
Also, in re "other countries are poorer than the US": that may be due to the US having a few extremely rich people, it may be possible that the average or modal American is poorer than the average European. Especially if you account for healthcare.
The one which has "US Tax rate 20.3%" and "UK Tax rate 18.9%"?
Even if we did pay more tax, how are you accounting for healthcare and other benefits? US state taxes? UK council tax, and the situations where you can have "negative income tax" in the UK (WFTC)?
And, as discussed, you're free of worries about whether or not you'll get healthcare in the UK. (You may experience a delay for non-urgent conditions, I'll give you that)
> But why - I still don't understand what is causing the problem in the US? Even in the non-US systems, somebody has to pay, so how can they afford it, given that all other countries are poorer than the US?
Perhaps the issue isn't that the US as a whole can't afford it, but more that medical treatments are expensive and the rich aren't willing to subsidise for the others.
In countries where it's funded essentially via sliding scale income tax, the rich don't have a choice but to subsidise it.
There are economic interests that have made sure that the information you are talking about isn't available. Its hard to get this across, because it sounds a little crazy.
There are economic forces in American life that actively misinform the public. Medical care is made to be expensive to protect those interests.
If all the money comes from one pocket - the government - the system is incentivized to concentrate on economically optimal treatment. In the US scenario hospitals are financially incentivized to fleece insurance companies for all they can. This is an exaggearation of course, but if a viable treatment can be done with a one doctors visit or two, the US system incentivies for two doctors visits and so on.
why would the money coming from one pocket incentivize economic optimal treatment? By what mechanism? Why wouldn't hospitals try to fleece the government (spoiler: they do, in the countries with public health care)?
Compare the actual figures spent per capita on healthcare spend in single payer vs the us system and the outcomes and you'll find your assumptions are badly wrong.
Single payer works better, that's why almost all countries use it for basic healthcare.
Single payer may work better overall but I can confirm that in Canada they do fleece the single payer in exactly this way.
"Only one issue per visit" so they can charge for two visits. Making me visit to hear the negative results of a standard STD panel, again, just so they can charge for two visits. They charge for an extra visit just to renew prescriptions with no additional examination. Etc.
There are other reasons for one issue one visit - it helps them avoid long sessions which inconvenience everyone else though as soon as insurance companies are involved there are perverse incentives.
Also there are different structures for payment, insurance and pay per visit are simply not necessary with single payer though some systems use an amalgam of public/private.
Same thing in the USA. Trying getting a problem looked at during a physical; they want a separate appointment. Though since my insurance pays for physicals, I can see why they do it. Probably required by insurance company since my deductible is $5000.
A) For example Germany (where I live).
B) Why do the billing practices have to be opaque? In Germany, patients often don't even see the bills. It all goes directly to the insurance company. For public insurance, that is. For private insurance, the patient pays and then asks the insurance company for their money back.
Regarding your last question: because the government gets to say how much its willing to pay for any procedure. It's the government that has leverage on what the price will be in a single payer system.
Insurance is compatible with capitalism. I don't think anyone is implying that it isn't.
What we are trying to say is that in the US, insurance provides very little benefit while constantly driving up cost. They actually have every incentive to shield consumers and producers from having good levels of information about value and cost. If making money from the actuarial spread were the only thing that they did, they might not be so toxic. Instead, they partition information into silo's to further create arbitrage points. Every point where they serve as gatekeeper for information is a place in the system that extra profit can be made.
I think one of the things that you are assuming is that they have a single function in the market. They don't. As is often the case, simple capitalist models for ideal markets just don't match reality. They are also able to use their gains to game the system in their favor from a regulatory perspective.
But why can't they be disrupted? For example some people could be pissed off that they don't get information, and companies providing information could win them over as customers.
Obviously, things are not working out in the US. I am just not yet convinced that the market/capitalism is to blame, or if it is essentially corruption (including lobbyists bribing politicians to set up a system that allows the bad insurers to stay in operation).
Consumers don't choose their health insurance companies in the US. Their employers choose them. And when the user != the purchaser, you don't get a good user experience, you get corruption and a race to the bottom.
I think in the industries and positions where employees have bargaining power you do tend to see excellent healthcare plans. But that's a minority of the workforce.
The corruption that you're talking about is just some parties reinvesting their gains in protection of future gains. I'm not anti-capitalism but I think that we need some way to talk about the failures of markets where power keeps being accumulated by parties like these.
In the U.S., insurers cannot be prosecuted for anti-trust violations under McCarran-Ferguson. care providers and suppliers tend to engage in anti-competitive practices, and the state does not provide price controls.
Also, EMTALA prevents hospitals from denying treatment for ER visits. People without insurance use these frequently as they have no other alternatives for care. ER visits are incredibly expensive and its a partial reason for price spikes.
Basically the US healthcare system is a patchwork of system tied to employment (which stemmed from wage controls during WW2). No one's been able to rework the system since there are too many entrenched players making too much money
>In my view, insurance is completely compatible with capitalism. It is simply a business, based on statistics.
Insurance that is based upon a normal distribution is compatible. Insurance based upon a non-normal distribution is not compatible because you basically can't price it. You therefore usually get a few scenarios:
* The insurer prints money during the good years and goes bankrupt in the bad years.
* The insurer prints money during the good years and somehow caps their liability in the bad years (this is why homeowners' insurance typically doesn't cover flood damage).
Sometimes the government covers the difference (e.g. the government coughing up the money AIG owed to Goldman Sachs, the nuclear liability cap or NFIP), sometimes it doesn't.
You get non-normal distributions in a lot of situations - nuclear insurance, flood, earthquake, healthcare and insuring against default risk.
tl;dr capitalism is compatible only with high school statistics.
But lots of insurance companies operate on the risks you mention, floods, earthquakes. There are insurance companies that insure other insurance companies against outliers, for example.
Sure, there is no guarantee that the whole network can not go broke. But that goes for governments, too.
Also I think health care will always have to be capped at some point, because with arbitrarily high investments, you could presumably keep people alive indefinitely (heart fails - attach heart machine. Lung fails - attach lung machine...). That is why in the UK afaik they don't pay for dialysis once you reach a certain age.
"But lots of insurance companies operate on the risks you mention, floods, earthquakes. "
Where this does happen there's usually a fairly low liability cap, some sort of hybrid private/public partnership or a combination.
"Also I think health care will always have to be capped at some point, because with arbitrarily high investments, you could presumably keep people alive indefinitely (heart fails - attach heart machine. Lung fails - attach lung machine...). That is why in the UK afaik they don't pay for dialysis once you reach a certain age."
The UK is almost entirely communist (this is a description, not a slur) in the way funds are allocated. They base funding decisions on something called QALYs - quality adjusted life years.
The practical upshot is that expensive operations that will add 6 months of painful life for an elderly patient are not prioritized under the NHS whereas operations that could save a newborn child's life have virtually no funding limits.
There are all sorts of structural limits on providers entering the marketplace. Not just doctors, but hospitals and the like. In many states, opening up many types of medical facilities requires a certificate of need from the state regulator (exactly what sorts of facilities vary by state and some states don't require them).
Another factor is that many people don't shop for their insurance, they take whatever their employer offers (and if they have much leverage, they demand that their employer offer something with broad coverage and minimal copays and deductibles).
I am no doctor, but I guess when you run health care as a for profit adventure you will try to extract more money from your patient. Maybe not the direct way, but you might buy a lot of very expensive equipment and send your patients there even when there is another way of diagnosis that is cheaper. Or you might be even doing a lot of additional screenings just to be sure (you really want to be covered in case of some lawsuit).
I think many people also get unintentionally screwed by the insurance pricing model that demands to only pay at most 25% (an oversimplification) of the stated cost and doesn't allow discounts to insured individuals.
For instance: a hospital charges patients $300 for an X-ray if they pay directly in cash. However, insurer "X" has a policy that they only pay 25% of standard rate for all procedures. So the hospital states their standard rate is $1200 for an X-ray.
So now I (as an insurer "X" policyholder) get billed $1200, but my insurer decides it's a non-covered expense. Does the hospital adjust my bill down to their cash rate of $300?
No.
That would violate their agreement with the insurer and potentially mean that the insurer would only pay them $75 per x-ray moving forward on ALL of insurer "X"'s policyholders.
So now I hypothetically am stuck with a bill four times as large as it would have been if I were entirely uninsured.
This is a product of the impersonal transformation of medicine caused by corporate ownership (and accounting) of local care facilities combined with the legal/profit seeking power of large insurance firms.
You can go to their accounting department and tell them you're unable to pay the full amount of the bill due to hard-ship. They will in turn probably reduce the bill down to $300 dollars. Either that or you walk out the front door and they get paid for nothing, and they have sell the outstanding amount for penny's to the dollar to a debt collector.
This seems to be more of a problem with insurance - there often is little transparency and doctors simply charge all sorts of things to the insurer that the patient has no idea about.
I think that is one of the main challenges of health insurance.
In my country (Germany) I have actually shied away from switching to private insurance, because they pay doctors more, and doctors are known to do as many tests and procedures as possible (not always a good thing, but in the end it is a gamble - too many examinations/procedures or too few?).
The "public" health insurance is quite regulated as to what gets paid and how much. The downside is that doctors have to waste a lot of time on bureaucracy (every examination has to be entered into the computer to determine the costs), and transparency is still missing (patients typically don't even know how much their treatments cost). And some committee decides what procedures get paid. I don't trust committees. I trust the market (I mean I trust "in" markets, not necessarily any given market as markets can be broken by regulations, lack of transparency, all sorts of things). I have also spent a lot of money on things that weren't covered by public insurance.
One story I heard is that for example in the UK they won't pay for dialysis after a certain age. So public health insurance is not an automatic solution to every problem.
I think it is actually unavoidable that insurance will have to make a cut at some point, because medical procedures can become arbitrarily expensive. Perhaps even now for the right money, people could be kept alive indefinitely.
I would have no problem with a doctor trying to be profitable - just as with other businesses. I guess the classic assumption is that to be profitable, businesses have to provide good service.
> [I]n the UK they won't pay for dialysis after a certain age
This is completely WRONG, there are NO age-related limits for treatment like this in the UK. Dialysis is a life-saving procedure for those with kidney failure, and is available to everyone in the UK who requires it regardless of age. The same goes for heart surgery, bypass operations, stents etc. which are also sometimes claimed to be age restricted.
The fact that people actually believe that a cruel system like this (one that would cause people to die by withholding treatment just because of their age) might really exist probably says much more about the way US health care works and the perceptions surrounding it.
I am actually from Germany and heard the story about NHS dialysis many years ago, so it has nothing to do with US right wing propaganda or whatever. My apologies, though, if it isn't correct.
Nevertheless I think there will always be procedures that won't be paid for, in any health care system, because it would always be possible to incur arbitrarily high costs. As an extreme example, you could assemble a team of 1000 scientists to try to cure one person.
That's interesting, I assumed it was a solely US belief, and certainly there have been plenty of scare-story emails circulating there regarding NHS and ACA. Obviously NICE [0]
(National Institute for Health and Care Excellence) does make calculations about when and what treatment should be given or withheld, using a system called QALYs [1] (Quality Adjusted Life Years) to attempt to ethically and deterministically decide this, which will always cause some people to be unhappy, unfortunately.
> One story I heard is that for example in the UK they won't pay for dialysis after a certain age. So public health insurance is not an automatic solution to every problem.
A quick Google search reveals this claim is spurious, so maybe don't believe everything you hear.
Sorry about that - I heard it a long time ago. Nevertheless, health insurance will always be capped at some point, you can not guarantee arbitrarily high expenses for everybody.
What happens is: treatments are evaluated and declared either cost effective or not. They don't refuse people treatment because they've used more than their 'fair share' of some allowance.
> Kidney disease is more common as we get older, and although people of all ages can need to start dialysis, it most commonly affects people aged between 65 and 84 years. Figure 2 shows the number of people starting dialysis or going straight to transplantation in each age group and it can be seen that the age group with the most people was 65–74 for both haemodialysis and peritoneal dialysis. In 2013, the average age of people starting treatment was 65 years and this has changed little over the last six years. The average age at start was 67 years for people starting on haemodialysis, 60 for people starting on peritoneal dialysis and 50 for those having a transplant before they start dialysis. In 2013, more men started treatment than women (63% male versus 37% female). Diabetes was the single most common cause of kidney failure (25%).
> The NHS provides a comprehensive service, available to all
> It is available to all irrespective of gender, race, disability, age, sexual orientation, religion, belief, gender reassignment, pregnancy and maternity or marital or civil partnership status. The service is designed to improve, prevent, diagnose and treat both physical and mental health problems with equal regard. It has a duty to each and every individual that it serves and must respect their human rights. At the same time, it has a wider social duty to promote equality through the services it provides and to pay particular attention to groups or sections of society where improvements in health and life expectancy are not keeping pace with the rest of the population.
Sorry, I heard it many years ago and didn't double check. Nevertheless for sure there are caps on health care expenses.
Speaking of kidneys - don't they prioritize recipients of organs somehow? If age based discrimination is forbidden, an 85 year old person would be as eligible as an 8 year old to receive a new kidney?
> Because otherwise, I don't understand why the market can't provide good health insurance in the US? Isn't that a classic insurance problem, take a group of people and spread out the risk?
No, your mistake is in assuming that insurance companies exist to spread risk and reduce costs. Insurance companies like most publicly traded companies exist to transfer wealth from customers to executives and shareholders. As a result, they will do whatever they legally can to raise revenue (increasing premiums) and reduce costs (deny coverage, push the burden to the consumer).
The other aspect is that healthcare in the United States does not lend itself to a free market solution. There's no transparency in prices, so you can't exactly shop around when you need a procedure done. In addition, you also have times when a person needs treatment due to a life-threatening condition. He is not interested in looking at alternatives, he's interested in staying alive, so he's going to take whatever provider is around. Well, if that provider is not "in-network", he's going to get hit with a massive bill. The United States is literally the only developed* nation that has the concept of medical bankruptcy.
* The United States is not truly developed. From an economic standpoint, we are, from a social standpoint, we're not.
This is the main problem. American health industry (doctors, pharmaceuticals, etc) cost a vast amount more than in other countries, thus insurance is also high to compensate for this.
I've heard that a big part of this cost is due to the highly litigious culture in America that requires doctors to carry very high malpractice insurance, which they must then pass on in their patient costs. Americans love to sue, and this drives prices up.
I don't know if this is true, but its the one argument I've heard over the years that makes the most sense to me.
I once had a worldwide health insurance plan while living in Asia, and it covered all countries EXCEPT the USA, because of the absurd costs there.
Strangely enough my primary income is writing software for the healthcare industry. A significant portion of my firm's income goes to insurance and lawyers to ensure compliance/protection in the event of a lawsuit.
One reason it costs more: people with serious conditions may delay presenting because they fear the cost of healthcare.
And unfortunately, many serious conditions are dramatically more expensive, and potentially more lethal, when presenting late. It's a nasty piece of positive cost feedback inherent to the current US system, and one that disproportionately affects patients from lower income brackets.
Other reasons include the massive costs of running and staffing the billing infrastructure, cost of compliance & provider insurance, and uncontrolled drug pricing.
These factors are not present in most other first-world healthcare systems, or are present but minimised by effective regulation.
Because otherwise I don't understand why the market can't provide good health insurance in the US? Isn't that a classic insurance problem, take a group of people and spread out the risk?
What is going on? Is medicine too expensive because of state subsidies, so private insurers can't compete? Or are there regulations preventing private insurers from entering the market?