[kethinov]

While I am very enthusiastic about reforming our system to a single payer system, one fact about the US that is unique that a lot of people on my side of the issue need to understand better is that making our healthcare system more socialized will almost certainly not bring down the costs. It may even go up.

One of the big factors driving the lower costs of healthcare in other countries isn't the cost savings from socializing it, it's the fact that the US essentially subsidizes the entire drug research industry and the rest of the world doesn't have to pay for that like we do.

So even with single payer healthcare, we're still gonna have to be the nation that shovels all the money into the drug industry. I don't personally see a problem with that per se. We are a rich country. We should pay the lion's share. But the cost shouldn't be so directly passed on to consumers in the form of insane drug prices. Switch to a prize system in exchange for taking stuff off patent or something, e.g. the federal government buying the patent whenever something new comes out for an extremely high one time price, then let the generics market go nuts with it. That would bring down consumer prices without eviscerating drug company profit margins and destroying their incentive to innovate.

[daviddavis]

> the US essentially subsidizes the entire drug research industry

This isn’t entirely true. The US does pay more for drugs but a lot of this money isn’t spent on research. In fact pharmaceutical companies spend far more on advertising than research:

https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

[jasonjayr]

It's true that the US pours a lot more money into drug R&D, and I understand that a lot of push for more global + stronger patent law comes from pharmaceuticals. However, when medicines change owners, and then get 10x price hikes years after being developed (like EpiPens, or Generics that get a tweak + a new patent), the problem is not just repaying for the R&D.

The more serious problem, is that reforming the machine that is the US health care industry is going to cost a LOT of jobs. That is going to make any kind of meaningful reform very difficult.

[kethinov]

The small tweak = new patent loophole is easy to solve with patent abuse reform. The sting of the reduced profit margin by stopping patent abuse can be offset by making prizes for making stuff generic bigger than the profits they would get from patent abuse.

The job loss from transition to single payer is a tougher problem, but I would rather just rip that bandaid off than keep a lot of unnecessary insurance jobs around.

[troupo]

No. The largest cost of healthcare in the US is all the admin associated with it.

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OECD Health Statistics data show the U.S. spent $1,055 per person on “governance and health system financing administration” in 2020, compared with the OECD12 average of $193 per person.

A 2021 study by McKinsey estimates hospital administrative costs at $250 billion and clinical services administrative costs at $205 billion, representing 21 percent and 27 percent respectively of 2019 NHE spending in these settings.16 A 2014 study by Himmelstein and colleagues comparing hospital administrative costs for the U.S. and five comparator countries found that the other countries spent 42 percent less than the U.S. on hospital administration.

---

https://www.commonwealthfund.org/publications/issue-briefs/2....

[ejb999]

the per capita health care cost is estimated to be around $11,590 in 2019, per the CDC for the USA.

Your $1,055 in administrative costs is not even close to "The largest cost of healthcare in the US is all the admin associated with it.", in fact it is less than 10%.

[troupo]

I mean, you could try and read the full article.

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Administrative Costs [total] : About 30 Percent

Salary and Wages for Physicians and Nurses: About 15 Percent

Prescription Drugs: About 10 Percent

Medical Machinery and Equipment: Less Than 5 Percent

-

Administrative Costs of Insurance: $1,055 per person on “governance and health system financing administration” in 2020, compared with the OECD12 average of $193 per person.

Administrative Costs to Providers: A 2021 study by McKinsey estimates hospital administrative costs at $250 billion and clinical services administrative costs at $205 billion, representing 21 percent and 27 percent respectively of 2019 NHE spending in these settings [aka 48% in sum, troupo]

---

[ejb999]

and you can try (and fail again) to explain how 10% of medical care cost for admin (your number) is bigger than the other 90%.

The math is not that hard.

[troupo]

Literally in the article: Administrative Costs [total] : About 30 Percent, Administrative Cost yo providers: 48%.

You: no, it's 10%, math is not hard

I see it's hard for you. Good bye

[KptMarchewa]

US essentially subsidizes the entire drug research industry _profits_.

Fixed that for ya.

[kethinov]

Profits are a strong incentive to innovate. We should subsidize those profits but not do it the stupidest possible way by making consumers pay insane drug prices.

[keithnz]

all you need to do is look at the profits (and running costs) of the health insurance industry to see where a lot of Americans health spend is leaking to, completely ignoring the fact the government is already spending more! Not to mention Americans still have to pay out of pocket costs over and above what insurance is paying for as well. You could still fund the drug industry out of the spend and make massive savings. Better yet, you can make it so no ones incentivized to push drugs other than what is evidentially effective (given a non perfect world where you can't 100% guarantee such things).

[kethinov]

I have looked and I don't buy it. I think any realistic transition to a single payer healthcare system in the United States is going to result in us still being the most expensive health care system in the world for lots of complex downstream consequences reasons. But that doesn't mean we shouldn't do it. It means we should just embrace paying the most to get the highest quality product instead of pretending that the goal should be to somehow be less expensive than everyone else while still getting the best care. It's unrealistic. You get what you pay for.

[asimpletune]

I didn't know anything about the USA subsidizing the drug industry. Can you explain this?

[hef19898]

IMHO that's almost a meme: The US spending is paying for all the research other countries benefit of. Usually used to defend the US system against criticism. The arguement, by the way, isn't true.

Kind of like the argument Europe is benegiting of US military spending and would be overrun by the Russians if it weren't for the US...

[efitz]

> Kind of like the argument Europe is benegiting of US military spending

They are. The US should pull out of NATO and save a bunch of money; the EU is wealthy enough to provide for its own defense.

[hef19898]

And give up membership in the most powerful military alliance in human history, reduce US international influence and give up the most lucrative defence market in the world. This idea is so spund, even the Congress GOP voted for a law preventing the POTUS from pulling the US out of NATO on his own.

I agree so, that Europe should be less dependant on the US, we sure shoupd have a very solid and competitive defence sector supplying the various European armed forces.

[efitz]

You mock the idea, but then support it? I do not understand.

I agree that the US defense industry likes the status quo, and lobbies congress to keep the money flowing.

I agree that the US gains considerable influence over Europe via the current arrangement.

I don’t think it is a great idea for European countries to be US client states.

Why is this a bad point of view?

[hef19898]

Being a NATO member is not being a client state... And the thing I support is a stronger EU defence industry, not the US leaving NATO or whatever you read into my comment.

And yes, the idea of the US leaving NATO is so bad it is only loughable, the only ones happy about that would be Russia and China. US influence is not limited to Europe so, NATO activities stretch to Afghanistan (past tense), Iraq (same), Ukraine, Africa, the Balcans...

As bad as NATO intervention was during the war on terror period, and boy was it bad, tue alternative would be either Chinese or Russian dominance in those regions. And that would be even worse. NATO, human rights and all that is a different topic so.

[jampekka]

US military dominance (in the form of NATO in Europe) isn't so much about defending the counties per se but to defend its interests in the countries by low key taking over their armies. You have a country quite well by the balls if their defence depends on you.

[efitz]

It takes a lot of money to bring a drug to market. Those costs have to be recovered and there has to be a net profit or no one would do it.

Pharma companies charge different prices for drugs in different markets. Markets with single payer systems usually restrict expensive drugs (either not permitting them or restricting their use to fewer cases) and/or cap prices. Some countries don’t honor pharma patents. Together these controls may make the drug unprofitable in many markets. Someone has to pay full price to make the drug research net profitable, or the pharma companies reduce research into stuff they lose money on.

It happens that the US market is favorable for pharma companies to recoup R&D costs by charging more than most anywhere else. This is possible because of the US regulatory environment and heavy lobbying by pharma.

This is what is meant when someone says that the US “subsidizes” drug costs for the rest of the world.

Note that I am not saying this is a good system; I’m just attempting to describe it.

[beej71]

[Not disagreeing with your post, for the record.]

> It takes a lot of money to bring a drug to market. Those costs have to be recovered and there has to be a net profit

A friend of mine who works in this industry explained how they come up with drug pricing and whether they decided to bring a drug to market. It's pure capitalism, of course--and why shouldn't it be?

It's a bummer, though, to think of the drugs that could have really, really helped some people but weren't lucrative enough to bother selling. Oh well!

> or no one would do it.

On the other hand, that's sort of like saying "There has to be a net profit in going to the moon or no one would do it" or "there has to be a net profit in selling flood insurance or no one would do it". Neither of those net a profit, but sometimes does it all the same.

[jasonjayr]

There's a non-trivial amount of R&D being done with public funds (universities, and/or grants) that go to medicines that end up being locked up with patents and privately owned.

[pxmpxm]

https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act

Federal research grants that end up as patents held by US universities and pharma companies.

[TuringNYC]

I lived overseas for work. I once went to the pharmacy and they said "4" -- and I was like "4 hundred?"

No, they meant 4. The same medicine I'd pay $25 copay (with insurance kicking in another $70 or $100) cost $4 out of pocket overseas.

This is because single payer systems overseas negotiate down prices. The US does. not. This effectively means that the US is subsidizing the drug industry.