[qserpent]

I don't know anything about the details of this situation. But maybe someone else here does.

How is the US so inefficient at healthcare? We spend more per person (or per GDP?) than many (most?) other countries and we get less in return.

Where is this money going?

[rogerbinns]

No one has an incentive to fix it. Tour round the various entities that money is spent on, and try to find a single one that is campaigning to reduce their income. (eg doctors, practises, drug makers, equipment manufacturers, health "insurance" companies, hospitals). Any reduced spending is coming out of their pockets - turkeys don't campaign for xmas!

So you have a bright idea. You'll open up an excellent well run hospital, using best practises, big picture approaches, and due to all that you'll save everyone money. Of course opening that hospital will take patients away from existing more expensive providers. But it is a free country, and in other commercial sectors that seems like progress. In many states you can't do this by law. You have to show there is unserved "need" and get a certificate of need, including that existing providers are not harmed. https://en.wikipedia.org/wiki/Certificate_of_need

[glenra]

Price competition is mostly illegal due to the way the health industry has been successfully cartelized over the years. The usual benefit of free-market competition is that inefficient providers are allowed to go broke while better ones expand, but the field is so over-regulated that we simply don't allow that to happen. So lots of ridiculous inefficiencies persist.

In a more free market, insurance wouldn't be tied to specific states - you could buy insurance from any firm in the nation willing to provide it. Hospitals would be allowed to expand and compete and go out of business like restaurants are - there wouldn't be any "Certificate of Need" process preventing that. Doctors wouldn't be tied to specific states or nations and medical schools wouldn't have their enrollment limited via licensing rules.

In short, we have an artificial shortage of both doctors and hospitals which makes healthcare inherently expensive and low-quality compared to what it might otherwise be.

[HillRat]

>In a more free market, insurance wouldn't be tied to specific states - you could buy insurance from any firm in the nation willing to provide it.

That's an idea that sounds good but turns out to be a nightmare in practice. You would end up with a classic "race to the bottom" scenario of the sort seen in credit card regulations, corporate tax rates, and employee disability reimbursements -- eventually you would end up with a state that allows such egregiously poor insurance practices that every company would flock there to avoid more onerous regulations.

The current system is byzantine and a nightmare to deal with -- I still wake up in the middle of the night with implementation guides scrolling behind my eyelids -- but it's an improvement over a policy that would, in effect, let the payers pick and choose the least-protective regulatory structure.

[snuxoll]

Administrative fees, paying too many MD's to do work that PA's and NPP's could accomplish if they were allowed to, as well as paying high salaries because our education costs have skyrocketed so we have people leaving school with tens to hundreds of thousands of dollars of debt to enter the medical field. People abusing the emergency room (especially Medicaid members) for the sniffles instead of going to an urgent care or a family practice.

Oh, and let's not neglect that hospitals have no choice but to jack up prices to insane rates because insurance companies will just negotiate them down heavily.

The whole system is messed up.

[pravda]

>paying high salaries because our education costs have skyrocketed

This whole thread is chockablock with fallacies, but let's limit ourselves to this one for now.

Education costs are sunk costs. Doctor's salaries have nothing to do with education cost.

Doctor's salaries are high because the government restricts the number of doctors. That leads to high salaries for doctors. Supply and demand, not sunk costs.

Hint: you've got a bunch more fallacies in your post!

[jjnoakes]

If the insurance companies are successfully negotiating the prices down so low, shouldn't they have more money?

[snuxoll]

This part only affects the underinsured.

Let's say you have some crazy medical test, like an MRI. It costs roughly $2,000 to run the test (totally random number out of my hat). If a hospital is negotiating a contract with an insurance company, and says "An MRI costs $2,000 here" the insurance company will say "We will pay you $500".

So, to make sure they can be correctly compensated by insurance carriers they instead say "An MRI costs $8,000", the insurance company will then say "Okay, we will pay you $3,000". It's total luck to get the correct amount, so you will usually WAY over compensate and end up getting more than you NEED to be reimbursed in return, just to provide a safety net for insurance carriers messing around with you.

Under most cases people with amazing low-deductible plans are fine, they pay their $500 deductible for the year plus 20% of the remaining and make off quite well for the procedure. People with high deductible plans (like mine) get screwed, I would end up having to meet my $2,500 deductible and then pay 20% after that (up to my annual out of pocket max, which is $5000).

Because hospitals have to play this stupid game with insurance companies, it's rare that you can get charged the "real" price of any procedure or lab time. People without insurance can negotiate extremely discounted rates based on financial need, but if you are underinsured you are stuck with whatever contracted rate the facility has with your insurance company.

[toomuchtodo]

Why don't insurance companies own the vertical and purchase healthcare providers, in order to control costs?

It seems like cost controls are the root of the problem.

[snuxoll]

Some do, they're called HMO's (Health Management Organizations), Kaiser Permanente being a prominent one. A lot of people don't like having to see a doctor not part of the organization without going through headaches, however, which lead to the prevalence of modern PPO's.

[dragonwriter]

> Some do, they're called HMO's (Health Management Organizations), Kaiser Permanente being a prominent one.

KP is an HMO, and does own its provider network rather than contracting with providers (for most things, at least), but that's not a defining characteristic of HMOs. Many HMOs have contracted, rather than insurer-owned, provider networks.

[etendue]

It's of course very complex, but three things not always mentioned: Dealing with the insurance companies and their Byzantine billing practices requires hiring additional staff to specifically deal with billing issues, with that cost passed to the patient. Electronic medical records slow down physicians, (fewer patients seen requires billing more for those you do see) and at least the ones I've experienced end up being more expensive than paper records. The insurance companies also are very slow in reimbursements to physicians (sometimes several months behind) which requires billing more to help compensate for the uncertainty.

Also, insurance frequently doesn't reimburse enough to cover the actual cost of a procedure, e.g., vaccines.