Am I right in reading that this guy's message is "this is a systemic problem", but primarily just complaining that spending is too high, and that somehow healthcare spending will collapse society? High healthcare spending that was effective would be great! A healthy population is a productive population, not to mention the moral benefits. The problem is not at all that we spend too much, it's that we toss the money at a loosely regulated market that captures the value rather than using it to deliver excellent results. This is the predictable outcome of any market that can push costs onto externalities or that defeats competition. Some markets are incompatible with competition, and the best you can do in those cases is nationalization with oversight. You can't meaningfully vote with your wallet when you're willing to pay anything for treatment, so at the cost of the optimizing force of markets we fall back to voting with our actual votes for the policy we want. This doesn't guarantee a perfect healthcare system, but it does give better outcomes than what we get by trying to force it into a marketplace.
> High healthcare spending that was effective would be great!
There's still obvious limits. Imagine everybody spending 80% of their income on healthcare, of which 100% goes to doctors performing effective and required procedures: Society would still collapse, since people do have needs other than healthcare.
My wife and I recently applied to receive a breast pump covered by insurance because why not? She is pregnant and while it is not certain she will need it, it’s better to be safe than sorry right?
We got the breast pump, some Chinese product that, on Amazon, retails for no more than 50$. Given the quality I was frankly surprised to see that the health insurance had been charged 300$. Not even the iPhone of breast pumps in the market would cost that much.
It was vendored to us by some organization that is no doubt making a living from selling cheap Chinese produced breast pumps and charging a 600% markup.
This is the exact same thing that is happening to Tylenol, a 50 cent drug that is marked up to 79$ when given at a hospital. To ambulance trips. To routine checkups. To medical exams. To X-rays and to cat scans.
Literally everything that is covered by insurance is enjoying exorbitant mark ups. Buyers can’t vote with their wallets because there is no choice. The illusion of choice is barely even there, as difference health insurance coverage covers the same things only at different price points.
As a buyer of health insurance you can’t not pay for the 300$ breast pump, or the 79$ Tylenol. There is no choice you can choose to avoid that.
And since I bought the $300 dollar breast pump, I contributed to the bloated premiums by causing the expenses for breast pumps to be much higher than it needs to be. So I should apologize to you all. But of course I have no option except to make premiums higher for all of you because I want my wife to have a breast pump.
There is no other way to fix any of this nonsense except to socialize healthcare completely.
This is the kind of thing that confuses me. When insurance companies deny claims I actually understand that; I'm honestly open to the idea that they might be doing it for good reasons. That there are some procedures which might be done and should not be.
The $300 breast pump and $79 Tylenol is harder to understand. Why can't insurance companies step in and say this is crazy we're not paying for it?
Is it like the $3000.00 hammer? i.e. we want the jet fighter to come in under a certain cost so there are bundled items that are ridiculously expensive. The hospitals or some other 3rd party somehow put the insurance company in a posistion where they can't say no even though they want to?
Or is there some perverse incentive? Insurance companies benefit from an expensive breast pump / Tylenol? If that's the case why do they ever deny claims?
Is the amount too small in grand scheme of things?
Do they get some kick back for some types of care that make eating this cost still worthwhile?
The article makes a claim that it is in the insurance companies best interest to make the overall cost of healthcare to go up so they can get a bigger profit.
While I somewhat agree with that claim, I suspect that there are many systemic policies designed into healthcare by policy makers that create these inefficiencies in the first place.
1) why can’t an insurance offer a lower cost option? It’s because of the policy of what they are required to provide.
2) why do hospitals charge so much markup for everything? It’s probably because there is a lot that they can’t charge you for, they can’t charge you by hour by doctor and nurse quantity. So they have to charge arbitrary markups on random items. This allows for hidden profits esp by savvy financial data people.
3) what incentives are there to give cost effective services in the medical field? There are none. Customers will pay regardless, and insurance will cover regardless. Game theory wise, it is in the best interest for insurance companies a to cooperate with with medical service companies to push larger and larger bills to consumers.
Some hospitals certainly engage in abusive billing and collections practices. But most of the stories you see about a $79 Tylenol are based on a misunderstanding of how institutional claims work. Those are typically billed based on DRG codes with negotiated rates so the line items have no relationship to the actual amount paid by insurers or patients.
The device itself probably cost $50 to manufacture, but it's a medical device which is strictly regulated. You're also paying for the additional quality control, the regulatory approval, the post-market surveillance studies etc. There is a lot of legally required overhead when you do business in regulated industries. Some of it necessary, other things maybe not so much. It will be interesting to see if DOGE/Musk/Trump will actually change any of this.
I sympathize with strict regulation but the market sells the exact same “medical device” at much lower cost and my point stands - there is no option to pay market price for a breast pump instead of the insurance hiked price, regardless of whether it is a 3rd party pocketing the margin or if the margin is the cost of additional regulation.
Why on Earth would reducing regulatory overhead decrease medical device/drug costs? That would only be the case if competition had already driven costs down as much as possible and margins were thin. If companies are currently able to charge high margins and their costs are lowered why would they choose to pass on any savings to buyers? Surely they would just maintain their prices and capture more profit.
To be honest I didn't think about the price changes. Having been in the medical devices industry I'm just curious if the regulations are actually going to change.
> I have no option except to make premiums higher for all of you because I want my wife to have a breast pump.
> There is no other way to fix any of this nonsense except to socialize healthcare completely.
No offense, but you also had the option to just buy a breast pump for $50. That option would have the cost of the goods just between the entity selling the pump and you. No one else need be involved, no one else needs to share in paying for your transaction.
Respectfully, I paid for my health insurance so I probably overpaid for the breast pump, all things considering.
Game theory wise, I’m forced to pay money to then be given the “choice” between spending 50$ or spending 0$ for the exact same outcome. Even if I was a values driven person and chose the 50$ option out of principles, the system is designed so that everyone would choose the 0$ option.
So it is a choice, in the sense that I could choose to give you the 50$ instead. But there is no logical reason to take that option.
Yes, you are paying your premium and you should take advantage of what that provides you, so it’s the obvious choice. I would have made the same choice too.
The deeper philosophical question here is not insurance paid vs socialized medicine…it’s why are we making a $50 breast pump a medical benefit at all?
Even under a socialized healthcare system if we are going to wrap a bureaucracy around an inexpensive anything …costs will inflate.
He pays insurance premiums to get health care. Why should he pay out of pocket for health care that is covered?
This does not change the point that the insurance company, physician, and medical device company are all complicit in a scam that jacks up the cost of healthcare for everyone.
> This does not change the point that the insurance company, physician, and medical device company are all complicit in a scam that jacks up the cost of healthcare for everyone.
You should probably describe how that works exactly…cause I don’t see collusion here.
- Insurance companies negotiate almost all of their costs upfront…they don’t want to pay more. It’s not in their best interest, there job is to not spend more than $.01 more than they have to on anything they do So if they are actually paying $300 for a $50 item, it’s because it’s probably costs an additional $250.01 for them to somehow fulfill that $50 item to you through another provider.
- The doctor generally (beyond occasional pharma dinners) has no kickback for prescribing any device or drug from the sale of that product.
- The pharma company or device manufacturer certainly wants to maximize their revenue, but will they try and soak the folks prescribing and paying? Probably not for long.
