It’s more complicated, the insurers essentially tell providers how to practice (ie prescribe this generic not the name brand, don’t prescribe 30 day Rx prescribe 90 day and don’t see/treat them in the meantime, etc...) and if the providers don’t listen the provider gets dropped from the network and either the patients are forced to new providers who the insurers control behind the scenes, or more and more the patients are forced to providers the insurers actually own.
Ok, but Americans overconsume health care and are prescribed more procedures than other countries --- that's a dominant factor in our health care costs, unlike prescription drugs and admin costs. How do insurers, which have a direct financial incentive not to fund care, own that problem?
The upward pressure on prices is also from the insurers. Insurers have an "80/20 rule" from Obamacare that only 20% of their revenue can be spent on non-medical expenses (ie. profit, insurance administrative overhead, etc.). They pretty quickly hit the caps, and now only by increasing medical expenditures (the other 80%) can the pie slice that contains their profit grow year after year.
This issue existed before Obamacare 80/20 rule. In a free market the way for a profitable insurer to grow is by growing marketshare -- whether 80/20 rule exists or not. And the way to grow marketshare is to offer cheaper insurance. To offer cheaper insurance insurers have to push service prices down. Somehow this is not happening.
Hey, wait a minute, that's true. The McKinsey study predates the ACA and establishes the overconsumption narrative. The 80/20 ACA thing can't be the problem.
What's the financial incentive they had to keep costs high in 2010? You're making an extraordinary claim: health insurance companies are deliberately making themselves liable for provider costs in order to somehow benefit on the backend. You should have some kind of evidence?
What's the trend line since 2010? Since the 80/20 rule went into effect, has the rate of provider costs increased or decreased or stayed the same? If it hasn't increased, does your hypothesis actually explain any empirical observations?
If not, are you concerned this might be a just-so story?
Only because of a non functioning market due to federal and state laws.
If there was one health insurance marketplace and set of rules, and everyone, young, old, poor, rich, healthy, infirm, we’re forced to buy from it, then it would actually be possible for insurance companies to compete.
Right now, it’s basically a game of hot potato to try and not get stuck with the million dollar hemophiliacs in each state. A lot of the healthy are separated out into employer based insurance plans, and there’s not sufficient possibility of business to have more than one or two insurance offerings on healthcare.gov.
The upward pressure on prices is also from the insurers. Insurers have an "80/20 rule" from Obamacare that only 20% of their revenue can be spent on non-medical expenses (ie. profit, insurance administrative overhead, etc.). They pretty quickly hit the caps, and now only by increasing medical expenditures (the other 80%) can the pie slice that contains their profit grow year after year.
Insurers are really controlling care to improve their “star rating”. Insurers are given a star rating by many things outside their control and in the domain of providers and pharmacists. That’s why they are dropping docs and pharmacies from their networks and otherwise buying them to consolidate the market and their control.
Next time you go to your primary doctor ask them how many faxes they get from the pharmacist instructing doctors to change prescriptions. Then ask the pharmacists where they get those instructions from to fax to the docs....the insurers.
I’ll admit the star ratings are related to costs, but short term costs. All this watered down care and cookie cutter treatment will lead to higher costs long term (ie hospitializations, waiting until health problems escalate instead of preventative care or proper management).
It’s also why the big groups have reinvented HMO, now called ACO, bc even they don’t want outcomes based payment, so with ACO they can get paid $x/patient per year and make the care fit. HMO failed from a cost and care perspective, again not in the short term but in the long term, and it’s literally being rebranded as ACO by the insurer/provider groups.
Yes but the Medicare plans are private insurance, the same insurers for the “commercial market” as you call it. You can’t separate the insurers dropping providers from networks and buying practices/hospitals from Medicare plans to non Medicare plans.
In other words if you aren’t a Medicare patient and are insured by UnitedHealth for example, you will be subject to the same networks of doctors/hospitals as their Medicare plans, so private is driven my the Medicare plans, because Medicare rules are driving the consolidation of the market.
And yes everyone will tell you star ratings are about “outcomes” not price, but if you knew/know anything about the star rating metrics it’s obvious “outcomes” is marketing/PR for cost cutting. Otherwise I’d ask to point out any metrics that increase star ratings that don’t lower costs, whereas it’s easy to point out the metrics that result in better “patient outcomes”/higher star ratings but lower quality of care.
