[toast0]

This is the real heart of the healthcare cost problem in the US. No party in the process knows how much anything costs, so it's unsurprising that costs go up so fast. This wouldn't be tenable in an individual pays environment, or in a government pays environment, but in the US environment where many people get coverage from employment we end up in this crazy system where there are so many parties involved in payment, that nobody knows what's going on.

In this case, the patient (A) may be getting the drug from a pharmacy (B), and the pharmacy bought the drug from the manufacturer (C), but the patient's insurance (D) is paying part of the cost of the drug, but so is the manufacturer, and insurance is paid for partially by the patient, and partially by the employer (E). There may also be direct government subsidies, and there are certainly indirect subsidies as well. Of course none of the 5 parties can really know how much anything costs, or how to reduce costs. Not to mention all the extra labor involved in administration of this complex system.

[elihu]

I didn't quite follow joshstrange's accounting so I don't know if this is what he's describing, but (unless it's been changed recently), in some states it's legal for manufacturer of an expensive medication to give coupons to customers to reimburse them for their copay.

This sounds like a nice, generous thing to do, but basically it means that the drug company is bribing the customer to force their insurance company to spend more money on their behalf.

So, imagine that a drug costs $1000 and the customer's copay is $200. The drug company can give the customer a $200 coupon to recover their copay and then raise the price of the drug to $1200. They've basically shifted the price from the customer (who decides whether or not to get the drug and is probably very sensitive to price) to the insurer. They make the same profit, but can probably sell to a lot more customers because it's "free". While they're at it, they could raise the price to $1500 or $2000, and it's still free to the customer.

I think this is a corrupt practice and it's crazy that it's even legal, but it's just one small part of the complexity and perverse incentives of our health care system.

[refurb]

and then raise the price of the drug to $1200

It doesn't work like that unless you're the only drug in class. If there are alternatives, then you'll get kicked off the formulary for a 20% price increase.

[jahnu]

Oh, wow... never even heard of that one. What a horror show.

[TimPC]

As a Canadian in the US to me this feels like a different kind of horror show. I play bridge and as a result I've been exposed to quite a lot of the elderly dying as a result of chronic conditions given the demographics of the game/sport. In Canada, it seemed we had a charity fundraiser 2-3 times a year for someone affected by some condition the government didn't want to cover due to cost. In the US, I deal with a level of convolution that might make the Byzantines envious but have a sense that the best plan on offer covers far far more than the rationed system in Canada. I think the Canadian system nets ahead on efficiency, but I'll quite readily admit that efficiency has some rather nasty tradeoffs.

[toast0]

There's certainly a discussion to be had on what level of care should be provided, how to pay for it, and what to do when the care required isn't provided.

I don't hear a lot of complaints about medicare not covering important things (but I only have limited exposure to that), and I assume a US single payer system would essentially be Medicare for all. I do hear complaints about Medicare not paying providers enough, and a lack of available providers.

A rational method of rationing care seems preferable to the current byzantine methods. My (likely naive) hope would be that spending the same amount of money on healthcare, but with fewer parties involved would provide more and better healthcare. At least we haven't reached the point where the government encourages smoking to decrease long term healthcare costs.

[makomk]

Remember how proponents of single payer like to point out that US government healthcare spending per capita is higher than many countries with single payer, even though it only covers part of the population? That's probably related.