[nums]

I studied this years ago for years. My summary:

- a mandated MLR of 85% means the insurance companies have zero incentive to reduce the cost of items. In fact, their toplines and real (non%) profits increase as healthcare gets more expensive.

- industry profitability for insurance companies is around 3%. So, their overhead is around 15%-3% = 12%. They have an incentive to do their job cheaper. This pales in comparison to the 85% cogs.

- the small company cfo (me) has negative incentive to get involved in my employees' healthcare decisions. In fact, even being aware of cancer, pregnancy, etc. can be used against management in an employee lawsuit. No thanks. We just accept the situation and pay the bill.

- huge companies that can afford to self-insure can do it as they can firewall healthcare information from employment decision makers.

So, who in this system is going for cheaper healthcare:

- employees ... no

- insurance companies .. no

- healthcare providers ... no

- business paying the bills ... no

This bullshit billing structure is the tip of the iceberg. We have no freemarket incentives to keep down the cost of healthcare (i.e., carveout for high deductible insurance plans). Why would we expect otherwise?

[flowerlad]

The solution is to make the consumer participate in driving costs down. One employer I know of has an excellent solution to the problem: Make employees pay 100% of the bill up to a certain amount, such as $6000. That's a large amount, but the employer then contributes a large amount to your Health Savings Account (HSA), such as $4000. This amount is for you to keep regardless of whether you have any health bills or not. (This money can be used for medical expenses only, but can be used any time, including after retirement). So the maximum you will spend out of pocket per year is $2000. How does this encourage the consumer to scrutinize and control medical expenditure? Because the first $6000 of medical spending in a year is "your money". This is money you'd be able to keep in your HSA if you didn't have any medical expenses. This gives the consumer a strong incentive to reduce costs, question charges, avoid unnecessary services, and so on.

[nums]

100% agree. It's a good start.

Also, I think emergency healthcare should be contemplated differently than ... I'll call it "premeditated healthcare". In one instance, the individual can make a deliberate shopping decision and weigh cost/benefit. That's fundamentally different than an ambulance taking you to the ER when you're bleeding out ... no price shopping then.

[noelsusman]

I've worked in healthcare my whole career and you hit the nail on the head. Costs keep going up because nobody involved in healthcare has an incentive to make it cheaper, including the patients. We've designed a system that is doomed to fail and nothing short of tearing it down will fix it.