[tptacek]

Providers determine your rates. Insurers are companies providers recruit to collect their bills. In the entire US health care system, the providers are the only ones whose cash flows are capped by statute. A provider can charge whatever it wants; over 80% of an insurers cash flows have to go to the provider by statute.

(The health care industry is a mess, I agree!)

[duk3luk3]

You seem to be implying that the providers set the prices, but isn't it true that insurers can pick and choose which providers they cover, and because of the large amount of patients they insure, they have a huge amount of negotiation power to exert downward pressure on what providers charge?

[tptacek]

No, that's not true. All the market power is with the providers, which is why they're responsible for something like 9x total health care spend in the US than all health insurers combined.

Medicare is better than private insurers at regulating prices (to wit: when Anthem tried to adopt Medicare's rules for anesthesiology comp, they were excoriated, and the governor of New York proposed a statute preventing them from doing it). But they still wildly overpay for services; in fact, what they pay is not really materially different from what private insurers do (it's less, but not by that much).

[inferiorhuman]

  to wit: when Anthem tried to adopt Medicare's rules for anesthesiology
  comp, they were excoriated

For everyone in the back: that's not what happened. BCBS tried to place arbitrary limits on anesthesia payment. Medicare does not do this. Physician complaints with Medicare payments revolve around the hourly rate. Physician complaints with BCBS revolve around arbitrarily setting a hard limit for the amount of time a procedure is allowed to take. One is limiting cost, the other is limiting care.

[tptacek]

No, that's precisely what they didn't do. Medicare has a schedule of anesthesia compensation rates broken down by procedure; the last time this came up on a thread, the schedule was literally posted. Anthem announced they were using it.

[inferiorhuman]

Yeah the last time this came up I posted the CMS handbook. If Medicare operated the way you falsely claim there would be an outcry similar to that over BCBS's behavior. BCBS was proposing something entirely different from how Medicare operates.

[tptacek]

Clearly not, because this is how Medicare operates. In fact, it's the whole premise for why Medicare is meant to bring prices down!

[duk3luk3]

> All the market power is with the providers

How does that work? Do the providers have cartels that set prices?

[tptacek]

Yes. I don't know if that's the primary factor that gives them their market power; it might be even simpler than that. But yes, they absolutely do.

Unless you're Kaiser, in which case you're the insurer and most of the providers, which is the whole idea behind Kaiser. But every other insurer --- and overwhelmingly, Americans aren't on Kaiser --- is beholden to providers. And of course, Kaiser competes with providers for service providers and vendors.

[doctorpangloss]

Then why isn’t everyone on Kaiser? Because they’re stupid?

Providers is also kind of vague. You show up at a hospital, does the nurse practitioner who does your intake set the price of your ER service? Who specifically sets the prices?

[inferiorhuman]

UnitedHealthcare operates in DC and all fifty states and has north of 26 million customers. Kaiser operates in eight states and DC and has around 12 million customers. It's safe to say plenty of folks use Kaiser when it's available.

The downside is that because Kaiser operates as an HMO, any specialists you need to see must be approved by your primary care physician (typically GP, ob-gyn, or uro). They have an abysmal record with mental health, and folks who need chronic non-routine care often struggle to get that care. If all you need are routine checkups, cheap prescriptions, routine immunizations, etc. they're quite competent.

  Who specifically sets the prices?

Kaiser is a vertically integrated HMO. Like other HMOs, to get coverage (with a few exceptions) you need to see a provider within the (Kaiser) network. As a vertically integrated HMO the providers in the Kaiser network are all employed directly by Kaiser. So Kaiser sets the its own employee compensation.

It's worth noting that all insurance companies are required to emergency care at any provider as if it were in network. If a Kaiser member were to go to a non-Kaiser ER they would see the same cost as if they'd gone to a Kaiser ER. Whatever Kaiser pays to the out of network hospital/staff is almost certainly negotiated beforehand.

[pilotneko]

I acknowledge there are issues on the provider side, but it is disingenuous to say that providers set the prices alone. Payers introduce a ton of inefficiencies in billing and also remove money from the system, which negatively impacts care. They implicitly affect care patterns and pricing through denials.

HMOs, for all their problems, have many advantages as well, such as the aligned incentives you allude to.

[tptacek]

So, I don't disagree that there are inefficiencies with private payers, but I do disagree that they're significant, or the reason US costs are so high, or that insurers deny so many services. You can see this for yourself with Medicare's admin overhead. Admin overhead is, roughly, the ratio of money spent by insurers to money insurers pay to providers. Medicare has "low" admin overhead --- but that's in large part because they serve the most demanding segment of the market. If Medicare covered 30 year olds, their admin overhead would mathematically be significantly higher: same money in, much less money out.

I agree with you about the efficiency of HMOs, but customers hate HMOs.

A useful Google search: "National Health Expenditures by Type of Expenditure and Program: Calendar Year 2022". It's a single spreadsheet, and it's really something. It covers insurers (public and private), providers (hospitals and outpatient), facilities, state health care programs, even dental, all on one sheet. The numbers are hard to get around.