I agree that health insurers are not the main culprit of the high cost of healthcare in the US. However, your arguments that’s it’s the “providers” knowingly charging the patient which leads to the high cost is in my opinion part right/part wrong and extremely oversimplistic.
I am an infectious diseases physician to get my bias out there first. In my view the reasons costs of high are many fold but some of the highlights
1: The way care is compensated. The AMA created a compendium of codes (CPT) and assigned value to each (RVU). Medicare then decides how much to pay for each RVU. This is used as a surrogate of productivity and the way physicians are both judged and paid. Procedures have long been given more “value” so physicians who practice procedures are paid more (surgeons, cardiologists, dermatologists). This incentivizes providers to do “things” to generate RVU and does not incentivize prevention of disease. For example: I am in the lowest paid field of medicine because I have perform zero procedures and much of my job is stopping antibiotics or switching them to cheaper ones. This leads to much more expensive treatment as opposed to prevention.
2. The system is fragmented and Byzantine. Most physicians have no idea how much each test costs or what will lead to the lowest cost for the patient. Your example - MRI - this cost wildly varies and is based purely on the cost insurance has negotiated with various operators of MRI. If I could give patients a flyer the cost of an MRI by location and point them to the cheapest I would! But I have no freaking clue. I think the fragmentation also leads to many other inefficiencies that raise the cost of care.
3. Litigation. The US is extremely litigious and the fear of a lawsuit leads to physicians to practice defensive medicine in ambiguous situations (which in medicine is common). Some physicians pay > 100K for insurance even those who have never been used.
These are just the three I could write down on my train ride home. The whole system is not great and was made by accident in the 1940s-1960s. Providers are part of the problem but I just don’t think we are the only problem and a solution needs to tackle it all not just blaming doctors and nurses for pulling a fast one on patients.
I think you're offering some reasons *why* providers charge so much.
My point in this post is much much simpler than that. My point here is that it's not the insurers causing the excess cost. It's the providers, not the insurers.
As for *why* providers charge so much, that's a deeper, more complicated question, and these are all interesting hypotheses.
As a doctor working in a sports medicine / orthopedic clinic, where imaging is frequently ordered, I have a list of how much our system charges for XRays, and I tell patients that the charge for a MRI is around $2000 if obtained through our healthcare system (in both instances, the charge varies based on body part). A few points on this. What the imaging actually costs the patient is based on their insurance and where the patient is at in their annual deductible. They have the option to obtain advanced imaging at outside facilities, but I advise checking with their insurance first. Some independent imaging centers will “charge” less ($600-$1000 range), but not accept insurance, such that the payment is out of pocket. So a $2000 “charge” for a MRI might actually cost the patient nothing, $100, or the full charge- depends on insurance. These images are ordered for a reason: to rule out or in ailments and injuries that can cause significant morbidity or mortality.
As a provider (doctor) in a large health system, I don’t financially benefit from the patient’s payment for the imaging. My financial gain is essentially tied to the number of patients I see, the services I perform during visits, and the “complexity” (billing term) of the visits.
A lot of the animosity in the comments seems to be oriented around the article lumping the actual “providers” (doctors, PAs, NPs) with your more generic use of the term “providers” (doctors, PAs, NPs, hospital system, lab, technicians, imaging center, pharmacies, or anyone other entity that may receive a portion of the insurance company and patient’s payment). The implication here being that doctors are misleading AND financially benefiting from not fully disclosing what the hospital system / practice / outside imaging center / pharmacy is going to bill / charge the insurance, which isn’t true.
It’s completely fair to think of healthcare spending as an escalating duel between health systems and insurance companies that financially harms patients. But it’s incorrect to lump the individual medical providers in with the health systems and organizations that actually set prices and directly financially benefit from the insurance payment or out of pocket payment.
If your outpatient doctor doesn’t tell you to check with your insurance about how much something could cost, then go ahead and be mad. I’ll exclude inpatient doctors from this since the care is more time-sensitive, and detailing every individual cost is not a great use of time when stabilizing a patient. Either way, I’m disappointed in the article’s representation of where doctors stand in the healthcare expenditure system.
"As a provider (doctor) in a large health system, I don’t financially benefit from the patient’s payment for the imaging. My financial gain is essentially tied to the number of patients I see, the services I perform during visits, and the “complexity” (billing term) of the visits."
I'd reflect a little harder on these two sentences to see if you can find the connection between your financial gain and the patient's payment, whether through insurance or out of pocket.
I assume you’re proposing that if the imaging I order leads to the patient paying the hospital, then I financially benefit, since the hospital pays me. But, there are specific inputs for medical complexity related to the injury / illness that go into each visit, and this is a fairly uniform process across health care systems. I code the visit for our billers - generally a 9920_ or 9921_ code. There are modifiers for other counseling or procedures performed during the visit. Yes, I am reimbursed for the things done and coded during the visit based on patient and insurance’s payment, if I’m in a collections system. If I’m in a RVU system, then it doesn’t matter what the insurance or patient pays, I’m reimbursed by my employer (the hospital) based on the RVUs for the visit, which is correlated with complexity / coding of the visit.
Either way, this isn't what I’m speaking to in the quoted comment. I was referring to lab payments, imaging payments, medication payments, etc. None of this affects my reimbursement, since I’m not in a private practice and not a stakeholder/owner of an imaging center, lab, or any other ancillary service.
Noah clarified in the podcast that he was upset about the cost of his MRI, and he felt he should’ve been made aware of other available options for imaging centers. He went on to note that he’s not sure of the incentivizing aspects for the doctors and staff to discuss how much imaging costs at different centers. He’s right- there isn’t a financially incentivizing aspect for the doctors to discuss the cost of the imaging… but they still can. The argument in the podcast portion gets muddled when he starts referring to the entire group of doctors and the hospital system as “providers,” as if the payments from the insurance and patients all go into a single bucket and then that is redistributed in set percentages to everyone who had contact with the patient. The reality is that patients and insurances pay into several different buckets, and some of those buckets are redistributed in set ways. The challenge presented is figuring out which buckets have bloat.
Happy to answer any specific questions you have on that.
I get the desire to fall back on "well I'm salaried, don't set MRI prices, and have no stake in other departments revenue", but their revenue is directly tied to your ability to provide the service for which you get paid, and vice versa. You benefit because you need the imaging in order to diagnose/treat and thus bill the patient, and the payment for the imaging also covers costs not covered by your own billing, but which are necessary components of your trade. Whether the payments are made to Acme Hospital Inc or its subsidiaries Acme Imaging LLC or Acme Ortho LLC (or even an independent practice paying rent/use fees to occupy a portion of the clinic), and whether the payments are made by John Doe or his insurer is sort of beside the point.
To be clear, I'm not saying you're a bad guy for participating in a broken system under its existing structure and incentives! I work in an unrelated but also broken system and that doesn't make me a bad guy either. What matters is looking honestly at our industries and trying to fix problems, even if doing so puts some downward pressure on our (much higher than average) wages.
I think Noah's point is that insurance functions as an abstraction layer to the process which prevents proper price discovery. This doesn't imply providers are directly incentivized to "milk" their patients for every RVU. It just means that patients have no real means for understanding the likely cost of the services they're about to receive. As a result, they can't weigh the benefits of proceeding with various procedures against the likely cost. They have to trust the provider to guide them. Unfortunately, the providers have different incentives: don't get sued for malpractice (or bad Yelp! reviews) and when in doubt provide services/procedures to reduce risk and increase RVU.
"the good news, Mr. Johnson, is that the $10k MRI confirmed that you don't have a herniated disc; your chronic back pain is probably just due to a muscle strain, so remember to lift with your legs! The bad news is that you've been financially ruined."
Doctors should have an honored and affluent place in the world. However, physician salaries in America are pretty high. The medical profession should be expanded and salaries should fall.
Doesn't point three mean that providers charge so much because the insurance system is so fragmented/byzantine - so it is structurally the fault of the private insurance system - and the private insurance system is what allows insurers to make profits regardless of the level of those profits.
As Arrow pointed out long ago the information symmetries are such that markets simply cannot work. Single-payer systems lead to much greater transparency/price information, and thus better management of costs at all levels.
A rhetorical ploy, "My point in this post is much much simpler than than that."? However, your rhetoric needs data. Here's a conclusion from a study with its URL that points to the law of supply and demand in a healthcare market as it exists in the US and the healthcare price differential between public and private insurers:
"In 2000 the US had fewer physicians per 1,000 population, physician visits per capita, and acute care beds per capita, as well as fewer hospital admissions per 1,000 population and acute care days per capita (data not shown), compared to the median OECD country. The US was still not devoting more real resources to health care than most other OECD countries in 2015 or 2016. At that time, the US had 26 percent fewer hospital beds per capita, 20 percent fewer practicing nurses, and 19 percent fewer practicing physicians per capita, compared to the OECD median country. Because the US is still not devoting more real resources to medical care than the typical OECD country, we believe that the conclusion that “it’s the prices, stupid,” remains valid.2 What is different between 2003 and 2016 is that the differential between what public and private insurers pay for health care services has become wider. Lowering prices in the US will need to start with private insurers and self-insured corporations."
"It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt"
I accept what Noah says that the generally higher amounts charged by providers is the main reason why US healthcare costs are roughly double the typical level for a developed economy.
That said, isn’t there still a case for much tighter regulation of insurers? I don’t know the finer details, but I understand some countries that deliver ‘universal’ coverage do so via a network of private insurers - as opposed to a ‘single payer’ government-run system like the NHS in Britain. If I recall, Germany and Switzerland may be in this category.
It is said that, where universal coverage is delivered this way, the insurers are tightly regulated by the government and are not permitted to do some of the arguably ‘piratical’ things that they routinely do in the US.
For example, I understand there are well-documented ‘practice guidelines’ for particular conditions. Why not make it harder for an insurer to deny reimbursement for a treatment within those guidelines?
Ok, this would probably add some additional cost to the system, but at least the users would have more certainty as to their coverage and fewer unpleasant surprises. Which, as an outside observer, seems to be what really pisses people off under the current US system.
I think a bit you might be missing is that, in many cases, provider charges are cyclically because of the insurance payment rates. Like college prices going up due to government backed student loans. Provider’s business offices do a ton of math to get payment outcome based on what insurance will with their bills.
I think Noah also is glossing over how much of the providers' own costs are associated with maintaining a bureaucracy for dealing with insurers. There's an administrative-cost Red Queen's Race between hospitals and insurers, with each side spending money in an attempt to shove costs onto the other. Ultimately both sides' expenditures come out of the hides of patients or taxpayers.
I agree. Everyone hospital I have worked at has a group that reviews our notes and billing and “suggest” how we should be billing. I have even gotten “suggestions” to change my documentation to better allow for more “accurate” billing.
Is this cost from bureaucratic overhead amount to 100% - 500% of what absolutely everything else - equipment, nurse/doctor salaries, real estate, power, consumables, vehicles, etc - costs?
Because if not then that doesn't seem like a compelling excuse.
It may well be death by a thousand cuts, but if so then every person here nitpicking about who exactly did what, in an effort to minimize the points Noah was making, is actively contributing to the problem by sloughing off responsibility onto someone else.
Admin overhead is about 25% on the provider side. Some brief googling showed a few different studies in that range. Noah's point stands, but cutting admin costs by half seems like it would be a great thing - costs dropping by 10% is nothing to sneeze at.
But there is one other major factor being ignored. New treatments costs a bunch! If you only could get the care known about 50 years ago, there would still be an increase for salaries, yet everything else would be much cheaper. It genuinely costs a bunch to get the miracle treatments we have today. For example the likelihood a woman will die of breast cancer has dropped 20% since the 90s. But that involves a lot more expensive testing, a bunch more chemo and other treatments and potentially multiple treatments over decades with reoccurrence.
Completely agree. The fact that it's more expensive to discover or invent something than to copy it or buy it off the shelf isn't talked about enough when comparing the US to the rest of the world.
But that care is happening throughout the OECD - so doesn't really explain the disparity. But yes, quite happy that science and medicine have made progress.
The USA has a system where big government and private bureaucracies "negotiate" with each other. The result is a constant escalation of bureaucracy and regulation.
The system is trying to substitute for transparent free-floating prices in ways that more resemble the Soviet Union than market capitalism.
I believe the only solution is radical reform:
1) State legislatures or Congress require providers to advertise set prices at the front desk and on the internet and require them to accept cash/debit payments for services.
2) State legislatures or Congress require employer insurance to be voluntary and employees can have monetary equivalent added to the salaries.
3) State legislatures enable qualified nurses to function as primary care physicians. This will dramatically lower the cost of preventative medical care.
4) Medicare, Medicaid, and VA to pay for much cheaper medical procedures overseas and let patients keep a significant portion of the price savings. This will dramatically lower the cost of treatment.
Healthcare dosen't function like other markets. Would price transparency help? Yes, but how would that impact patient care? If patients have a cardiovascular condition, and the cardiologist charges $500 per visit, patients either have to pay that, or forego care. Doctors aren't subjected to competition, in the same way a nurse or janitor is, because of the onerous educational requirements to become a doctor, and the years required(4 yrs of undergraduate, 4 yrs of medical school, 2-4 yrs of residency. They charge whatever they think people will pay. At that point, medical care becomes a luxury good, and life becomes worse for everyone else. Having NP's take over primary care isn't a bad idea though.
Yes, health care does not act like other markets. That is exactly the problem. We need to make it much closer to what works in other sectors.
There would definitely be a transition period where we might have decline in quality, but afterwards, there is no reason to believe that it will be that way forever.
And customers should be able to choose between cost and quality, just like in all other sectors of the economy. The current system forces "quality" over cost, and it is not actually that clear that the quality is so high.
In your example, patients could search on the internet for any cardiologist and they could choose between price and quality based on results. Many doctors will have incentive to lower their price to get more patients.
My reform #3 opens up nurses to preventative care. They can easily charge lower prices than doctors.
My reform #4 opens up competition for treatment to far cheaper providers in Asia. American doctors will be forced to lower their prices to compete.
I am not interested in making American doctors profitable because they have a long education.
Medical care will never become a luxury good. Humans have an enormous self-interest in getting it (assuming that it delivers results).
After my proposed reforms, all providers with too high prices will be forced to lower them to what people can afford or they will go out of business. That is how the market works, and that is how the health care system should work.
I would add state legislatures or congress should allow limited diagnoses and prescribing from AI / CDS medical services. It's already the case that they're better at a number of diagnoses and treatments, why not get them people of the loop?
The point is that nurses and doctors, barring some kind of brain disorder, know full well that healthcare is very expensive and that not everyone and everything will be covered at all times by insurance. They're not complete idiots, right? They understand that care can be expensive. That they get to wash their hands of it and feign complete ignorance and surprise was the point Noah was making.
I'm a pretty healthy person, but I've been in an ER a couple times, and I've had a couple friends who were in hospitals with serious issues. Myriad times just within this sample set there have been doctors who casually suggest a procedure or test that's non-critical, as a "nice to have," and leave it to the patient to decide whether it's a good idea or not. Nevermind that it's supposed to be, you know, the doctors job to give you clear guidance rather than saying "if you wanna do it we can," it's not credible or believable that none of them have any clue that some of these things might be expensive.
Does this supplemental blood panel cost five cents, or five thousand dollars? Gosh there's just no way to ever be sure! How could healthcare practitioners who have been working for decades POSSIBLY ever be expected to have any clue whatsoever?
The doctor doesn't tell you how much it costs because he has no earthly idea. Furthermore, he has no reasonable way of finding out even if he wanted to. Here's the issue. The doctor could easily tell you how much he gets paid for that procedure, but it won't tell you anything about how much you will pay. Let's say you get the procedure. There will be 3 providers (at least).
1. the doctor
2. the anesthesiologist
3. the facility where the procedure is performed
The doctor knows how much he gets paid, but he is part of a practice. He doesn't know how much they bill for it, only how much they pay him. So for all 3 providers you could find out how much they will bill for the procedure and add that up. But it still doesn't help you.
Turns out that the amount that those providers bill the insurance company isn't the amount the insurance company pays. Each provider will have negotiated a contract with your insurance company about how much they will pay for the procedure. When the insurance company is billed, a "contractual adjustment" is applied and the insurance company pays that reduced amount. This adjustment will almost certainly be different for each of the 3 providers. And not only that, it will be different for each line item that each provider bills you for.
So the sticker price is entirely a work of fiction. And even if you could go through all that, and find out the total that the insurance company will pay, that doesn't get you to what you will pay. Now you will need to take what the insurance company will pay and figure out what your copay is based off of the terms of your individual plan are and how much of your deductible you have used in the current calendar year is.
We understand that care is expensive. I think most of us acknowledge that and try to practice high value and evidenced based care. There is a lot we don’t know and medicine is challenging. I’m not arguing that physicians feign ignorance but that the incentives of the system and its complex lend to increased costs. There are of course bad actors and those out to abuse the system for personal gain.
In regard to your second comment. In medicine is there is a ton of uncertainty. In those cases, we engage in shared decision making with the patient. Obviously, we can all be better at it and it seems that you have had bad experiences with it.
I don't quite get #2. In the case of an MRI, it may be that the doctor suggesting the MRI doesn't know how much it will cost, but the MRI provider does, right? And so, once again, it is the provider who is asking for a lot of money, getting it, and spending it on a nice car. Or is the word "provider" understood to only mean doctors?
I guess the issue is then the nuance of what you define as a “provider” which I don’t think Noah really defined. I am using it to mean doctors/nurse practitioners/physician assistants. My point was that you could get while the doctor knows an MRI is expensive, they don’t know how much it will be for you. A lot is dependent on where you get it done. There was a study in California about how the cost of the same MRI cost between like $400 and $2000 depending on where you go. On top of that insurance negotiates with various entities that provide care (they changes yearly btw) so the final cost the insurance pays and what the patient sees is also dependent upon that.
Most doctors have no idea how much an mri costs. The radiologists usually get the Referell and they barely know what’s being charged for it bc it’s the facility that makes money on imaging like a hospital or imaging center, not the doctors
The obliviousness and indifference to costs on the part of health care providers can be appreciated by the universal use of the term”reimbursement” for payment. “Reimbursement” means being repaid for something you pay for; many years ago patients were reimbursed by insurers after they paid their doctors but for decades now that isn’t the case. Insurers pay providers directly. The providers like to say they are “reimbursed” rather than paid to portray themselves as above it all and unsullied by filthy lucre.
The malpractice excuse is narcissistic wound bullshit. Every time I hear this from a fellow physician, I propose a thought experiment: I will give you an arbitrarily large sum of money, say $10 million, on the condition that every time you do something to avoid litigation you pay for it out of that $10 million. How long and how much would you expect the average physician to pay before they generated a whole new list of excuses to do the same things that they formerly blamed on litigation?
I don’t think malpractice alone (or any reason) explains why costs are so high. I meant only to highlight a few of them. If you are a physician than at least you understand the fear of being wrong which I also believe leads to defensive medicine. If we are wrong, it can lead to harm or even the death of our patients. Every bad outcome leaves a scar on us and can even change the way we practice for better and worse. It’s human nature.
Instead of calling part of my comment “narcissistic bullshit”, if you disagree that this is a factor in physician decision making, I encourage you instead to offer arguments to the counter point. Prove me wrong.
I made the argument with my thought experiment. Whining about being sued is playing the victim to rationalize poor decision-making as well as often justifying being paid more for doing things that are unnecessary. You have insurance in the remote likelihood you are sued. Treating as a major threat rather than just part of doing business is where the wounded narcissism comes in. Most suits that aren’t about grievous errors are the result of poor communication- patients don’t feel heard- not failure to take questionable actions.
“it’s mostly the providers overcharging you” - i think i know what you’re trying to say (that healthcare is expensive in usa), but this isn’t up to the doctors or nurses you mention (and we don’t secretly know costs as you say, this is negotiated btwn insurance plans and hospitals) and little of it is going to the physician and nurse as your statement seems to imply. physician services are something like 15% of healthcare expenditures in usa.
They don't know the exact costs, but they have a general idea, they know the costs are very high, and they typically don't talk to patients about those costs when prescribing services to them. This is understandable, given that talking about costs would make patients less comfortable while receiving care, and one of doctors' main jobs is to make patients feel comfortable. But there's basically no point in the process of receiving care at which patients could make a decision based on cost.
I can assure you that it would be the rare MD has any idea of what the patient will be charged since each patient's insurance differs. The idea that MD's "should know" is another unreasonable expectation placed on health care providers. I doubt such as system could even be created based on the way we pay for health care.
They may not know what portion the patient will be forced to pay for after insurance, but they do know how much they are going to bill for. What we're being asked to do here is to stop thinking of these charges as some fact of the universe that providers have no ability to influence. They can tell patients "this is how much this costs, some of which your insurer may cover" -- at least that's how I interpret this article.
No the Dr. or Nurse doesn't know how much they are billing you. The Dr. enters codes for the services performed and the reimbursement is set by the insurance company. The provider has no role in this. I gave the example of my father decades ago (this would be mid 1970's), it was $30 in his office to get stitches after hours, but if the patient insisted on going to the ER, he was reimbursed $80 by the insurance company because that was the rate they had set for a Dr. meeting patients in the ER. Because the patients chose to meet in the ER the total medical cost was over $340, vs. $30.
Dentists usually have their rates posted on the walls, and if not, they'll tell you their rates when asked.
With Drs and Nurses, whenever I'm going to be billed, they discuss the amount first. Always. Except for drugs, it's typically a small, fixed amount. But they even have a good grip on common drug costs too.
I consider that disclosure to be proper ethical behaviour for the profession.
But that's Canada, where more complex billing like hospital procedures are 100% covered by insurance.
When I'm in the States, health providers can rarely tell me what it's going to cost me, for even the simplest of services. It's no wonder health services cost more!
Okay, I interpreted this as being about patient responsibility, but it's actually about the total reimbursement itself. Fair enough.
Still, I find it odd the way people here casually say that the reimbursement rate is set by the insurance company. If I were an insurance company, I would simply "set" the reimbursement rate to five cents. The provider is charging an amount that they might not have memorized but was the result of a negotiation in which they tried to get a higher number, while the insurer wanted a lower number, right?
Your doctor might not be able to say "This will cost $550", but they typically have a good understanding of the cheapest path, probably from experience of payers forcing patients down that cheapest path.
MDs enter every treatment into an electronic system; there is no reason, from a system design perspective, that when they enter in the code for the service that it couldn't display the price.
That price could very easily be determined by multiple factors like what insurance the patient has.
This is a willful choice, not a system limitation.
They don't usually enter the code, at least for inpatient procedures. They enter data about the encounter into an EHR system, and later a professional medical coder adds procedure and diagnosis codes. It is a highly intricate skill set with certifications that are separate from being a Dr.
This doesn't really feel like a defense of the system. "The doctor who provided the service doesn't know what it is called, a special person who wasn't there actually knows."
This is a layer of complexity added purposely to remove the patient a step further from the costs.
And that is one reason why the American system is so much more expensive. Some other countries have coders too, but there are fewer codes in general, and it's possible for providers to actually know them themselves. Noah's appreciation of 'administrative costs' is too simplistic. The true administrative cost is created by the processes that are separating the patients from the providers and the insurers.
No one is defending the system. It's terrible and doctors hate practicing in it. This is just how it works (outside of the rare boutique practices that have sprung up in opposition).
How come everyone involved in running a hospital has a bachelor's degrees but apparently they are too stupid to understand the concept of a database that contains pricing information? It would be trivial to give each Dr. A device that could access this database on patient request.
Let me return the favor. While current law requires transparency, historically Insurance reimbursements were considered trade secrets and were kept confidential. Data still largely not available. Hard make a db of those.
The doctor won’t know about it seems feasible to create solution via regulation where providers are required to patients provide CPT codes and insurance companies are required to provide the insured with an easy way to get their portion for a set of CPT codes.
But they also generally CAN'T make informed decisions based on costs. Patients just generally have no clue how to evaluate the care that they receive. Studies have shown that patient reviews of providers correlate strongly with bedside manner and correlate not at all with outcomes. We've understood why this happens for a long time (I think Kenneth Arrow's seminal paper was published in 1962?). All of which just makes healthcare an inherently poorly functioning market, even with the best-designed interventions.
Nope. The doctors I and friends have spoken to have no general idea. They don't know at all. At hospitals at least there's a pretty big wall between doctors and the billing/insurance reimbursement department. Some have been staggered by the costs.
I often ask providers for cost estimates because we have a high-deductible insurance plan which in practice means we as patients actually pay most of our care. Most of the time they have no idea. If they ask their office people to research for me, they often come back with huge ranges for something as simple as a blood test ($25 to $250!) or an ultrasound ($150-$600, and it’s unclear if that is just the facility fee or if it includes the radiologist who reads the results!)
It’s insane.
We do not have a healthcare market system at all—there are NO price signals to steer decision making by anyone, or to impose market and competitive discipline on providers.
Heike, this is absolutely correct. Self-pay has set costs, but cannot be paid by traditional insurance. Traditional insurance costs are set by negotiation, and negotiations could be happening as you are speaking with the front desk, making the information you were given immediately obsolete...add to that the insurance company can change the formulary between the time you are quoted a price for a medication and when you go to pick up the prescription. No price signals and no leverage in the hands of the "end-user" per se.
Recently took a healthcare economics class, and we talked a lot about information asymmetry, in that providers have more information than patients, and may recommend treatments that have marginal benefits, but the patient is unaware of that. Another problem is prices are simply not readily available at the point of service, unlike buying any other good or service.
It would require reforming the entire payment structure. The way medical billing works is as follows- Let's say you need an MRI or blood drawn for bloodwork, and your physician deems this clinically necessary to provide the best quality care they can as a doctor. You'd get an order for this from the doctor, and then have to go to the local MRI clinic in, outpatient lab or hospital phlebotomy clinic to get this done. At that point, the hospital or clinic sends the full cost of the procedure that was done to the insurance company, and the insurer decides how much, depending upon their policies, they're willing to cover. Then, they send you a bill, which is referred to as a co-pay, that you're expected to pick up some of the cost, which again varies depending upon the insurance. There's no price transparency at all. If you eliminated the insurance companies altogether, patients could pay directly, but I think they'd be shocked how much some of these tests cost. An MRI could easily run $6,000 out of pocket. Is that excessive?? I don't know! Nobody does! I don't have access to the hospital or MRI clinic's accounting books, so I honestly don't know. What's an acceptable profit margin to make off people's health??? There's no substitute good for Life, so the whole idea of economic competition that works so well, so people can buy Pepsi, if Coca-Cola becomes too expensive, breaks down in healthcare. Back in the day with less treatment options, cancer was a death sentence. An arthritic hip, that we'd today perform a hip replacement for a patient, was instead a lifetime of chronic pain, and immobility. Other countries have decided to share the costs, through universal healthcare/socialized systems, so patients aren't forced to choose between going into poverty, or dying from lack of treatment.
I can assure you we have absolutely no fucking clue what the hospital bills for my time. I can see from public sources that Medicare pays about $20/unit, MediCalabout $14. The most recent survey of anesthesia groups suggests it's about $70/unit for private insurers but that's just a median. And last I was told is that I collect about 23% of what my services are billed, whatever that number is. So the hospital has to subsidize my salary via some other pot of money (maybe the facility fee).
I'd need an econ degree to even make a ballpark guess. And I'm someone who gets to look deeper into the finances than the average physician.
Patients are also huge drivers of unnecessary tests. Not only is there information asymmetry on costs but also on value of tests. Many patients want "everything done" even if there's little benefit often because they never have to pay. If I try to talk somebody out of a test in the ER, people feel like they're getting shafted out of a service owed to them. Moving to New Zealand is very popular amongst ER docs in spite of the huge pay cut because patients there accept and trust your expertise so you can practice medicine the way it's supposed to be instead of "having it your way" like a Burger King. Yes doctors have a culture of over-ordering but that is in large part due to the demands of the patients they are serving.
I second this an an ER doc. I also cannot use "price pressure" to recommend against wasteful tests. I can tell someone the evidence recommends against getting additional testing, or that admission will increase their risk of a poor outcome...they look at you like you shot their dog. If I could say "Look, this test has been proven to be unneccessary AND it'll cost you an extra $50, $100, X dollar amount," they could make an informed decision with a slight amount of skin in the game. As it is, they possess only unbridled fear and incentive to ask for "everything" in order to deal with that fear. The bill comes later, and they wonder why it cost so much. It cost so much because I used my $200,000 education and many lost years of income to tell you that you did not need more testing and you argued until I acquiesced just so that I could step out of your room to go take care of other, sicker patients.
this seems a lot different than the idea that doctors and nurses are overcharging patients and obscuring the known cost from them (we don’t and aren’t). which perhaps isn’t what you meant but it’s how i understood what you wrote.
I think blaming doctors and nurses is completely misguided by and large they don’t know how much things cost and are mostly focused on whether a patient needs them. It’s perhaps more gray area with elective medical decisions but even there they don’t set the prices.
Most of the time, patients should not care about costs. Why would we want that system?
Noah, do you want kids in public schools making decisions about which classes to attend based on the cost?
I understand that in extreme cases and that when it comes to experimental / novel therapies, we need to make cost-benefit trade-offs… but that is more of a “system” concern than something people in difficult health circumstances should be faced with imho.
Doctors and providers are not subject to cost competition, do not care to have financial tradeoff conversations with patients and are generally morally against admitting that their behavior is the main driver of cost in the system.
Most of the costs are provider bloat. Extra tests, over-investment in facility buildout, proscribing high cost, low benefit services.
Nobody is there to tell you the MRI isn’t going to help, they just order one anyway.
If you actually try to ask a doctor "so how much is this going to cost me?", from what i hear, they generally won't or can't tell you.
Certainly, if you ask them to put a number on "how likely is this to fix my disease/save my life/etc" they can't answer, though part of that is that it's a hard question and it's not considered professionally responsible to guess.
I know lots of doctors who try to be mindful about not requesting medically unnecessary procedures and tests. Doctors know better that anyone that unnecessary medical care adds health risk. But even so, the tendency will always be to overprescribe somewhat relative to the *economic* optimum, because the doctor isn't the one on the hook for costs (it's the insurer, the HMO, the taxpayer, or the patient.)
What's interesting is the provider is SUPPOSED to tell you how much your services will cost, per this law passed by CMS in 2022: https://www.cms.gov/nosurprises
100%. There just are no price signals. At point of care patients and doctors often act as though care was free. Of course it’s not—but if people decide in the absence of prices then they are likely to over consume and over charge.
It's often not the doctor - though I wish Drs. were better about knowing what things costs and talking to you about the costs, some are - but ultimately whoever is getting the insurance reimbursement is responsible. You aren't going to fix the cost of healthcare without lowering reimbursements and the doctors professional orgs are always at the front of the angry mob, handing out pitchforks, whenever anyone suggests doing so (see the recent BCBS thing).
What is causing the inpatient and outpatient spending in the KFF chart to be more than twice has high in the US as the comparable country average? It's not physician services if that 15% number is accurate, and administration is already in another category. And while some hospitals are making a good profit, hospital bankruptcies are at a 5 year high. It's puzzling, but I guess the best explanation I have so far, though it doesn't seem adequate, is from the KFF article: "Patients in the U.S. have shorter average hospital stays and fewer physician visits per capita, while many hospital procedures have been shown to have higher prices in the U.S. This category also includes prescription drugs administered in inpatient and outpatient settings, which may lead to higher cost in countries, such as the U.S., where these drugs have higher prices."
I would guess it’s just that *everything* costs too much. There’s not much pressure anywhere in the system to control costs, so no one does.
The drugs cost too much, the devices cost too much, the doctors are paid too much, executive salaries are too high, there’s overtreatment and quantities are also excessive…
But generic drugs (which represent 90% of all drugs administered in the US) are cheaper in the US than in the rest of the world because we have such a competitive market. So, it isn't all drugs are more expensive, it's only the branded drugs.
So then who does that leave who DOES know what these costs are?
All these comments nitpicking seems to be missing the point and offering no actual rebuttal, which is that it's not insurance companies cackling and pulling the strings to make healthcare cost more. The only argument for that I could see would be because they can make more profit with a fixed profit margin if the base cost for services goes up. But like...that's incredibly dumb as a plan, and also nobody is enforcing a specific profit margin.
Ok so the doctors and nurses also are just totally utterly absolutely clueless. Does this IV bag of saline cost five cents or five thousand dollars? Argh who could possibly know? Do these 12 EKG electrodes cost ten bucks or $1,000? Well that's just like, a matter of your opinion, man.
But yes, of course it makes sense that nurses and doctors aren't spending their time researching how much every consumable and piece of equipment costs. But SOMEONE is doing that. So who?
Actually the ACA (or some similar law) does enforce a maximum profit margin. If an insurance company spends less than a certain percentage of the amount of money they collect in premiums (I think 80%) on payments for care, they have to refund the difference to customers - and I actually have gotten refund checks for this exact reason!
My wife had a serious illness that eventually resulted in her death this past March. I have had to "explain" a few things to my insurance company on the phone to get certain bills paid - as a sitcom housewife once declared, my time is worth nothing - but overall, my experience was a lot better than the horror stories that I've read online. So as far as health insurance companies go, Amerihealth NJ hasn't been that bad.
I usually like your articles but this is misinformed. The United States, especially in the democratic states, are setup for doctors to have to refer for tests that are not always optimally necessary otherwise one can be sued as lawyer lobbies are very cozy with the Democratic Party. Doctors come into practice hundreds of thousands in debt from school. Doctors never set the rates they charge. That is determined to them by Medicare and private insurance companies. You fail to talk about the impact of pbms which the big insurance companies make most of their profit from. There are a number of other corrupt layers of the medical industry not discussed In this article. To see the amount of profit that health insurance companies make and to see their monopolistic power and using AI to deny claims instead of actual doctors bc of questions of clinical necessity and to blame doctors feels short sighted. Hospitals also play a large role in this situation which has nothing to do with what the doctors want such as charging double for outpatient services performed in a hospital clinic instead of a private clinic due to legal technicalities that allow it.
"Doctors never set the rates they charge. That is determined to them by Medicare and private insurance companies."
That's not really true. Even in the screwy US health insurance industry, supply and demand still apply. If insurance companies set reimbursement rates too low, hospitals won't contract with them. If hospitals agree on low reimbursements and try to pay doctors less, the doctors will go elsewhere or just stop working. No, doctors aren't literally setting their rates, but they are negotiating salaries and responding to financial incentives.
There’s nowhere to shop around bc there’s only a few insurance companies that set rates. This is a free country. Why should a doctor have to work for less money than is worth it to them after all that training and hard work? Should they get payed minimum wage? Ridiculous
How do you reconcile this with the fact that doctors are first in line to protest anyone suggests that we increase the cap on medical degrees handed out? Or that we let nurse practitioners cover more patient areas, or operate with less supervision?
I think it is beyond disingenuous to claim that doctors, alone among all of humanity, do not respond to financial incentives.
The cap isn't on medical degrees, it's on residency slots. The government subsidizes a certain number of residency slots in hospitals each year, and hospitals don't offer any additional ones beyond that.
People are all looking for a villain. There is no villain.
Our healthcare is expensive because we can't balance innovation and care delivery. For all the talk about inequality at the low end, it's very hard to buy a premium level of healthcare above a basic level of insurance. So we just pay for everything.
If an insurance company denies care, they're greedy. If healthcare workers respond to market demand, they're greedy. Hospitals bring in consultants like McKinsey to help control costs, which, in turn, adds to bureaucratic costs. And, yet, we get paid extra to take care of patients on weekends because demand is still far above supply and people don't want to have NHS-like waits for a joint replacement.
This is the system that evolved in response to consumer and voter demand. It's absolutely terrible but maybe there's a reason it's been extremely difficult to blow up? I'm one of those heretic doctors that would absolutely LOVE some sort of single-payer system, who also favors expanded scope for mid-levels. And my own patients would apparently fight me from doing any of that.
The AMA of 20 YEARS AGO did advocate for that but a lot of things have changed since then. Yes, there are major repercussions from that today even though those decision-makers have long since retired. IDGAF if anyone likes the AMA but people need to really update their priors from the pre-ACA days. It's a VERY different landscape after major legislation, a large recession, a pandemic, and the retirement of Boomer physicians.
Sorry, that's not how it works. Every organization that does something bad deserves to be defined by it forever. It's not like the KKK could just start complaining that everyone still judges them for being racist. "We've changed, trust us". Once evil always evil.
If you want care from unqualified providers, then go for it. What’s the point of doctors going through training if you prefer to have a pa with two years of school? It seems there has to be a bad guy and Noah is trying to make it the doctors and make the insurance companies seem like charities. I’m not sure if he payed him to write this or if this is actually a shared delusion not based on actual data or reality
My wife and I use PAs as our primary "doctors" for annual check-ups and other routine stuff. But, not to get a colonoscopy or "real" surgical procedure, although my PA loves to use his nitrous tank to burn things off my face and arms. In fact, he loves it a bit too much. One thing I've learned is that Hawaii of all states is the only state that does not allow PA signed prescriptions (even for non-dangerous drugs) to be filled. Has to be an MD.
I've never understood this - what force makes hospitals or providers (outside emergencies) do money-losing procedures? Surely if Medicare reimburses below cost for, say, knee replacement, the hospital can just not do knee replacements for Medicare patients.
(Also health policy research never finds evidence for the cost shifting to private insurers that is supposed to ensure)
There are some providers that don’t take Medicare or Medicaid. It’s harder for hospitals to not take it because of the enormous fixed costs of operating a hospital. Getting some reimbursement is better financially than a bunch of beds sitting empty.
In rural areas, it is common for people to investigate the cost of certain procedures (such as hernia repairs, knee replacements, etc.) at different hospitals/clinics before choosing one to get it done. The prices can be dramatically (e.g., 3-4x) different between hospitals that are not that far from each other. It pays to shop around in situations where you can.
I’ve now seen two commentators, one on each side of the political divide, advance the argument that healthcare insurance companies are not villains. And you’re both just downright wrong.
Noah’s characterization of how we interact with insurance companies is also so incomplete as to be wrong. For example, on two separate occasions this year, I have been denied prior authorization for something ordered and deemed medically necessary by my PCP as well as a specialist to whom I was referred, and that my plan (PPO through Anthem Blue Cross) supposedly covered. The evil of insurance companies often happens well before we see a medical provider.
Noah, did any of the quips quoted at the opening of your article mention cost of services rendered? No, the focus was on how these companies operate. It isn’t the high cost that is outright evil, it’s the way these companies are incented to behave based on their obligation to return value to shareholders. It doesn't matter that their profit margins are low, what matters is how they improve those margins. When plans are chosen an annual basis and companies are already operating efficiently, the primary mechanism by which these companies create incremental return for shareholders is through denying policy holders access to the medical care we are entitled to. Make no mistake, it is a fucking evil industry and, until we take steps to address it, more health insurance CEOs will be targeted by lunatics.
"My personal experience proves my random feelings equal truth, and health insurance companies are villains."
They’re commonly demonized by populists, but Noah’s point is that they aren’t the root cause of high healthcare costs, nor do they have a direct incentive to inflate them. Every attempt to make this distinction is always immediately drowned out by emotional anecdotes, as if personal hardship itself is proof of systemic failure. That doesn’t solve anything.
Shouting “They’re EVIL!” changes nothing. Complaining that they must enrich shareholders doesn’t automatically explain runaway costs. Nevermind that at this point "shareholder" is synonymous with "bogeyman" as used by idiots who think "Corporate profits maaaan!" are the only thing you need to say to be an expert on everything. You literally brush off the cost of healthcare as a problem because hey, the REAL problem is REALLY those EVIL incentives that those dastardly SHAREHOLDERS have! Why, they could make healthcare free but it will still be EEEEEVIIIILLLLL if you don't zero out every single shareholder - including, you know, the overwhelming majority of shareholds who are regular people and not billionaires. But nevermind any of those boring details, I wanna rabble!
Yes, very fine people, etc.
Healthcare costs matter, and no company can pay every claim at a loss indefinitely. Driving them out of business wouldn’t fix the system; it would only create other problems.
In short, your argument is weak. Enjoy being one more voice on the internet screaming “Insurance companies are evil!” without understanding the bigger picture. Drowning out anybody who dares to try having a productive conversation in lieu of impotent bitching is certainly working wonders so far, keep at it!
Anecdotal evidence matters a bit more when everyone has the same anecdote.
But I will attempt to elaborate on my argument and explain why costs, whatever they are, are incidental to the villainy of health insurance companies. Let's just assume that the prices set by providers represent an equilibrium determined by supply and demand.
From there, insurance companies set premiums that actuarial tables project will cover costs and yield modest profit. The thing is, they're incented to lowball premiums somewhat because the more accounts you cover, the more revenue you generate, and when you can deny coverage to target a "modest" return, the more profit you have to show your shareholders. The profit motive in health insurance, independent of the costs providers charge, makes these companies operate in objectively villainous ways.
Everyone doesn't have the same anecdote. I have never had a health insurance claim denied. Stupid bureaucracy over prior authorization, yes. BS about insurance companies fighting over which is responsible when I had two policies, yes. Doctor ordering expensive tests that they admitted to me were not medically necessary, but served only to jump through the hoops insurance requires for a diagnosis, yes. But a claim denied, never. If you want to say that insurance companies are out there denying valid claims let and right, then you need to come with proof.
I've had to call my insurance company a number of times to "explain" that claims that were denied as out-of-network should have been allowed as "inadvertent out-of-network use" (because the bill was for services performed inside a covered hospital, or similar reasons) and get the denial overturned.
The one major thing that they actually wouldn't allow was when the local hospital wanted to transfer her to a long-term acute care hospital instead of keeping her for several more months, but the insurance company said that their policy was that patients should stay in regular hospitals instead of LTAC facilities. So I gave a metaphorical shrug and decided that if they wanted to keep paying the hospital instead of letting her go to what was probably a less expensive facility, that was their problem.
Imagine for a moment your perfect health insurance company. No "well there wouldn't be any in my ideal healthcare system" copouts.
What would it look like? How would it operate? How would that affect healthcare costs overall? How would they disincentivize overcharging or overtesting or whatever else on the part of healthcare providers?
We can call various companies evil all day long. Present a better alternative, and one that's actually feasible for a well run and ethical insurance company operating today to implement.
In case anyone has misconstrued my criticism of the system as a tacit endorsement of these events, let me start by doing something I didn’t do in any prior comment: unequivocally condemning the cold-blooded murder of Brian Thompson. Full stop.
I’m not claiming that there’s a simple and obvious solution here. But at the same time, I’ve always disliked the attitude of, "Don't bring up problems if you have no solution". That is idiotic in the most obvious of ways, for it is usually by getting enough smart people to agree there’s a problem that a better solution can emerge. The, “if you’re so smart, how would you fix it” attitude is always unhelpful and produces status quo bias. And I truly believe that the perceived intractability of the problem is a major factor in providing cover for the malfeasance of health insurance companies. In my opinion, we're letting them off the hook by saying it’s a tough nut to crack.
What I know is that people and companies respond to incentives. And you don’t need to be an expert in game theory to understand how the incentives at work in health insurance give rise to a system that promotes predatory behavior. And to the point many other commenters made, predatory behavior is particularly sadistic when you’re literally talking about what are, at least in some cases, life and death decisions. Context matters.
I am generally a free-market proponent, but it’s my observation that it’s been a long time since any objective good has come from “innovation” where financial instruments are concerned. The timing of the financialization of everything in our society and the immiseration of seemingly everyone in our society is more than just coincidence in my opinion. I believe Noah has posts to this effect as well. Innovation in the financial services context always means finding more ways to make your money their money. Simply put, I do not believe for-profit health insurance should exist in the private sector.
Taking on obligations that are many times a matter of life and death and then committing enormous amount of resources to facefuck people over every and all possible channels to try to weasel out of said obligations, to have such an adversarial way of "upholding their end of the bargain", to organize wilfully and knowingly the "fulfilment" of said obligations in such an incredibly negligent way is morally wrong. It's many many times the exploitation of desperate people at the absolute end of their financial, emotional and realistically cognitive limits.
There's a reason we don't let those in a position of power get drunk on it and just go around scamming blind R-tards ... oh wait.
If you can't fulfill the obligations then negotiate to cancel it, worst case declare bankruptcy. Not the other way around, driving people into it.
... and yes, of course costs matter. Morals also matter. Maybe insurance people ought to take an oath too.
It doesn’t matter if insurance companies only represent a fraction of the total costs if their actions and incentives are still perverse. A small and very shitty part of the system remains loathsome.
Insurance companies are required by law (the ACA) to spend 80% of all premiums collected on medical care. If they do not, they are required to refund premiums. The incentive you claim does not exist.
It most certainly does exist, the 80% rule is simply a constraint in the insurer's optimization calculus. Why, in your mind, does capping the amount of profit they can make remove the motive to make as much profit as is legally allowed, even if to the detriment of the insured?
then they deny legitimate claims for fun? the wasted effort, the collectively spent hundred billions on *straight outta a dictionary* literal paper pushing, the medical consequences of the delays, the economic downstream aggregate effects....
WTF
20% is waaaay too much, and we haven't even talked about creative accounting
Where is your evidence that these claims were all legitimate? I have seen no data on this, only people who are mad their claims are denied. I have never had this problem even once. I don't doubt it happens, but I'm not about to take people's word for it on the internet.
A frustrating aspect of this is that health insurers actually provide a mechanism to fix the real problem of unreasonably high healthcare costs - play hardball with price negotiations - but people freak out whenever they try it.
BCBS trying to pay a flat rate for anesthesia should be celebrated by its customers. This is how you bring down costs. Instead, you get leftist twitter freaking out and the CT Insurance Commissioner (or whomever) making BCBS stop. There's an assumption that they are going to pocket this difference and leave you with worse services, but the low profits earned by insurance companies (as well as any insight into how stingy company benefits managers are when deciding whether to switch insurers) shows that the free market and competition do a good job of ensuring that any savings insurance companies can find are passed along to customers.
A lot of this is the dynamic you describe. Insurers are seen as the "Bad Guy" trying to deprive poor anesthesiologists of their $500k/year salaries, so people side with the anesthesiologists. Personally, I'll start to be concerned with doctor salaries when I start seeing more Hondas and fewer BMWs and Teslas with "MD" license plates.
Beyond that, if you want to blame hospital and medical group administrators for pushing up the cost of care, you have to recognize that their money comes from service reimbursements. The way you cut the salaries of people like Rick Scott (who made a fortune defrauding Medicare and Medicaid as CEO of Colombia Hospital Corp. before going into government), the way to do it is to have BCBS tell providers that they are paying a flat rate for services.
As frustrated as I can get at times with my insurance company, I'm ultimately on Team Insurance here.
That would help, but I'm not sure that's necessarily true, at least not by itself. If you're getting services on your insurer's dime, you aren't really inclined to shop around, particularly if it means switching to someone who you don't trust.
I support 1 and probably 2 (but 2 will never happen). 4 would essentially destroy the US health insurance system through adverse selection to the point where you might as well just outlaw health insurance. 3 has the problem I discussed above - it prevents insurers from negotiating prices down, though I don't see why they can't make it easier for you to find out what something costs if you tell them who your insurer is.
I predict that all 4 will eventually happen at least in some states and then it will likely ripple out to other states.
And if the only way health insurance “works” (if you consider the current system to be working) is to force people to have it, then it should be allowed to collapse. My guess is that it will be be used by a minority even if my plan is adopted.
And #2 is by far the easiest method to contain federal health care spending and balance the budget without undermining quality of care. Medical tourism is growing every year and so is the federal deficit. It is only a matter of time before a politician realizes that 2 + 2 =4.
As I said earlier, “price negotiation” does not work.
Not sure why you apparently oppose transparent prices. It is in practically every other industry.
When you have complications during or after your surgery in India, is the insurance company required to pay your spouse's lost wages while s/he stays with you in the Indian hospital/ICU, or will some American patients die alone in India because their family can't afford to fly or stay there until they recover?
United does this - in the 5 years since my employer switched to them, two of the three local hospitals went out of network when the negotiations stalled One (the one all my family's specialists work for) for several months.
Noah one of the reasons doctors order too many exams or frequent imaging follow-ups is the fear of being sued. The legal systems role should absolutely be included as a factor when discussing the overall cost of medical care.
The core problem is people in the US always want to use OPM (Other Peoples Money). This has basically created the costly system we have in the US.
A perfect anecdote example is from my father, who was a Stanford trained Pediatrician on the SF Penisula from the late 1950’s to the mid 1980’s. Private health insurance through work became more common during this period. It angered him that patients bringing a child in to get stitches insisted on meeting him in the ER (50yds across the street from his office) because their insurance would pay for it. My father would explain that if they came to his office it would be $30 and no charges for supplies, but the ER would be $200 + supplies ($40-$80) + his $80 ER charge (because that was what insurance would pay the Dr.). But their insurance would only pay for the ER after hours, not my father’s $30 in his office. Thus the total cost would be well over 10x higher for the same medical care.
The medical care system and the health insurance industry have operated symbiotically to make our health care the most expensive in the world. The insurance companies are essentially an administrative tax on the total spent on health care. It is in their best financial interest to have the total amount spent every year go up. There is no financial incentive for health insurance companies to reduce total health care spending.
Noah argues it is the providers who are charging more but as the example I gave makes clear it is the insurance companies who are allowing higher charges (e.g. $80 in ER vs. $30 in office) because they need these charges to increase.
My father always said you should fight against bad systems but you would be an idiot if you didn’t take advantage of them when you had no choice. It wasn’t his choice to charge $80, that is what the insurance company paid for the ER services of a pediatrician.
We see the same thing with Medicare and Medicare Advantage. Like all of my retired friends from graduate school and college we have all selected traditional Medicare, with Medigap G. With my current generic drugs (friends with other drugs need more costly part B) my monthly cost for Medicare A, B, D, and Medigap is $340. For that I can see any doctor in the country that accepts Medicare and there is no pre-authorization or denial of coverage. But people are choosing that they want the free gym membership that comes with Medicare Advantage rather than being able to access the best medical care when needed.
I’m very familiar with the costs of our system. Fortunately we had a $2million dollar cap (before the ACA) and in the 4 years my wife was alive with Ovarian Cancer insurance paid out over $1.3 million dollars. My wife, an RN, spent countless hours fighting our insurance, it was hell. A $5000 drug given after every chemo treatment suddenly not covered. We ended up spending ca. $150,000 out of pocket.
Excellent comment John. I totally agree with your views and especially enjoyed your comments on Medicare vs. Medicare Advantage. How are people so misinformed about this issue? It’s mystifying.
This is all accurate. But I think the bigger issue may be that health insurance is generally a terrible way of rationing healthcare. The big question of healthcare is how to say no-- unserious people get to pretend that you don't have to do that; Bernie Sanders' health care "plan" amounts to paying for whatever anyone could feasible want, and paying for it by taxing "billionaires." It's not a real approach.
Really, what we need to do is determine how to allocate scarce healthcare resources. And the way to do that probably involves... government death panels. By which I mean healthcare bureaucrats intensively studying best practices and determining what is and isn't worth paying for, and how much should be paid for it. That may be just as politically unpopular as United Health making those determinations (remember the outrage when a medical association recommended that women hold off on getting regular mammograms until they turn 50 rather than beginning at 45?), and it would hit a peak when that inevitably generated its own horror stories (the first time a woman died of breast cancer at 51 because she followed recommendations and didn't get a mammogram until 50, we wouldn't hear the end of it), but, realistically, it's probably the way to go.
An atomized system of health insurers without much market power and with fragmented provider networks and incentives to deny coverage just isn't how I think anyone would design a healthcare delivery system.
Obligatory note that Mother Teresa had a huge dark side to her, and probably shouldn't be the go-to byword for a selfless hero thinking of nothing except taking care of others.
I don't know about Hitchens, but Mary Johnson (whom I've met and found to be very insightful) had a much more nuanced take on Mother Teresa that's well worth looking into. Given that her criticisms include that Mother Teresa subordinated medical care to other goals, it seems highly on-point.
When I first moved to Vietnam one of the biggest culture shocks to me is that all hospitals and doctors require payment up front. There is no concept of "we will bill you later".
This is both good and less good: price lists are public in every hospital and there's no concept of surprise billing. But people who have been in traffic accidents aren't treated until someone pays (which until very recently was always in cash).
I'm not totally certain what happens if someone arrives unconscious with severe trauma and nobody offers to pay. I assume they aren't just left to die. But I know lots of people with less severe traffic accidents who haven't been seen until someone paid.
The "you have to pay first" is often done in an almost comic fashion, though it makes some internal sense. First you go pay for the doctor consult. Then the doctor will prescribe some tests. So you go pay for those. Then you collect the results and take them back to the doctor. They look at them and prescribe some medicine or physio or whatever. You go pay for that.
The result is there is usually a cashier on every floor of the hospital.
This column is a great example where the numbers don't tell the story. It is the uncertainty that drives people crazy. MD's get denied based on whims (too many anecdotes to cite but a common one services being denied by people who are unfamiliar with the disease being treated). MD's don't know what patients will be charged since it is unknowable ahead of time. UHC in particular has a high rate of denials (higher than competitors) the arbitrary nature of which has been covered extensively by ProPublica.
I think this misses the mark on what the actual interaction between the provider and the patient or provider and the doctor looks like. I think transparency is what is actually needed here.
Giving a personal example, a family member of mine had a stroke a few years ago and was in acute rehab after the stroke.
The Friday before New Years weekend, we got a call from the provider letting us know that the insurance company had denied their request to extend care for another week. The insurance company had received the request earlier in the week, but waited until Friday morning to put through a denial.
I spent the entire day calling the insurance company and my provider trying to connect the physician with the right person in the insurance company to do a peer to peer approval so my family member wasn't tossed out of the facility with less than 24 hours notice. This experience was incredibly traumatic for myself and my family.
This isn't a unique example, I've had something similar occur for a family member who had cancer, related to approval for at-home chemo drugs.
How might this be different?
1. Insurance companies could have predictable, reliable timelines for finding out about denial or approval of claims. Currently (from my perspective as a patient), it's highly variable whether or not a claim has a 14 day turnaround, 72 hour turnaround, or if it requires a special approval from a special person within the insurance company that isn't the normal process.
2. Insurance companies could be more open about what rights patients have when a claim is denied. I've found, multiple times, that simply calling and working your way through the byzantine phone system can connect you to a person who's actually in charge of the claim. There are appeal processes that aren't clearly documented and rely on you asking the right questions and talking to the right people.
3. Insurance companies could have 21st century methods of actually talking with providers and patients about claim denials. Right now it all happens via phone call and fax, which makes it nearly impossible to understand what happened and why. It is very hard to get information on why a claim is actually denied in a timely manner.
My perspective on interacting with UHC would have been wildly different if they had given a weeks notice that they were cutting off care, carefully explained why they were cutting off care, and sent me a list of ways I could easily appeal or learn more about the process. The numbers really don't capture how bad this experience is for a patient, especially when it is occurring at a time when all you are thinking about is how to care for someone close to you.
How is it the providers fault when a doctor doesn’t even know what it will cost a patient? All a doctor can do is perform a service and code for it based on what insurance companies say we are allowed to do in which they set the rates. Hospitals are the ones who manipulate billing within a hospital and give most of the suprise costs. That’s administration and not providers.
The whole enterprise is "the provider", whether it's the parts who are up all night keeping a person alive, or the parts manipulating the bills and driving that same person into bankruptcy. It's not reasonable to insist that outsiders draw a line between the "Good Doctor Provider" and the "Evil Administrator" when they walk into a hospital needing care. A hospital's internal politics and procedures aren't the patient's problem; they're not equipped to understand or navigate it, and they don't deserve to be drafted into internal fights over who on the hospital payroll specifically deserves the blame.
And if I had to take sides, I'd side with the nurses over the administration OR the doctors.
The insurance companies purposely don’t allow full transparency to even the doctors or administration to find out easily what a patient actually owes. This is often not known Properly until the patient is billed for services and then it very dependent on what version of a health plan a patient has which doctors have zero insight too. It’s opaque on purpose to benefit the insurance companies ans separately, the hospitals also get away with this. I’m confused how this would be bc of the doctor?
Also, for the record, despite my adamant disagreement with this article, I’m still a big fan of your writings and your podcast. I appreciate what you do
Isn't the job of a company to provide reliable service? It's a little strange to ask how insurers can reduce the uncertainty when it is they that are the ones who are variable. That's like asking how we can hold car companies responsible for providing good brakes. But a minimum might be to ensure that they establish a standard of care for which they will pay. And let customers and MD's know what that is. There is a vast literature on issues with prior authorization and various suggested solution. See also https://en.wikipedia.org/wiki/Prior_authorization. And https://pmc.ncbi.nlm.nih.gov/articles/PMC8302155/#:~:text=As%20this%20case%20report%20highlights%2C%20prior%20authorization,care%2C%20PA%20must%20be%20regulated%20and%20standardized. As far as fault goes, you should become familiar with the No Surprises Act, which went into effect in 2022 and the various discussions around that. Finally, rather than take these few notes as definitive, I suggest you contact your local medical board for more information on this issue. They can provide much more in depth discussion and some MD's who can tell you more.
Are you kidding? The system just doesn’t work that way. I had UHC claw back funds from my doctor 6 months post payment because they bought my previous insurer, and I was flagged as multiple insurance because of of it. Calling the system Byzantine and arbitrary does not do it justice. I’ve had prescriptions denied because they want to spend a year going through every cheaper option first, and my experience I better than most. Pretending insurers aren’t a huge part of the problem is literal wishful thinking to meet your ideological bent.
How about the part where the insurance companies charged Medicare through Medicare advantage plans for services not delivered? The intended companies now own the providers, many of the hospitals, the clearinghouse, etc. there is almost only the monopolistic power of the insurance companies left…
The numbers don't tell the entire story, but they certainly can help set boundaries on attributing cause/effect, and can help determine which ideas for how to improve healthcare are good, and which are pointless reactionary drivel if not actively counterproductive. Which you would think would matter more to people than getting to fully bask in their daily Five Minutes Hate about corporations or whatever, but sadly it doesn't seem to be.
The problem of wrongful denials is a distinct and individual one, and they should solve it. Chances are that it would drive premiums up somewhat. Maybe not much, I don't know, but they would go up to cover the increased costs. So we solved that problem, but healthcare got even more expensive across the board, so now what? Back to blaming insurance companies?
It doesn't make sense to me unless they're also including private healthcare - the only real out of pocket charges in the NHS are prescription charges which is roughly 0.25% (£600mn/year out of £157bn).
My thoughts were dentistry or maybe optical care where folks may have something like Denplan or Simplyhealth cover. But the chart is very misleading.
Because, as you say, NHS treatment is free except for prescriptions. My immediate family have had 40 years of diabetes, cancer, ambulances, 3 premature children needing immediate neonatal care, sepsis, broken limbs, etc. and have paid £0.
(For those outside the UK, medicine prescribed by a doctor is charged at £9.90 per item. You can also pay £33 to cover all prescriptions for a month, or £115 a year to cover all prescriptions for a year. https://www.gov.uk/get-a-ppc.
Some long term conditions like diabetes qualify you for free prescriptions.
Private health cover is a thing here as the NHS has waiting lists. I am in a scheme through my employer and on that scheme there are copays for some medical operations. You *can* get private emergency care but I believe most folks would use the NHS and pay nothing)
Noah, generally speaking I respect your opinion and enjoy your very informed opinions on most subjects. However as a physician you’re very wrong that doctors and especially nurses “know” the cost of their therapies, tests, etc. They don’t know, I didn’t know as our system is too complicated and cumbersome to know. We were too busy attending to patients to know. I think you are biased in this regard from some experience and base your opinion on that. I agree the US system is too costly because all the studies have shown that fact time and time again. Much work and political fortitude will need to be shown to get those costs down. It’s all about political will. Good luck!
I think Noah is talking about providers and doctors in the institutional sense, that is the fact that you guys have ended up with a system in which you literally do not know what anything costs, is not considered to be a problem of the user or a problem created by some separate administrative staff, it is a problem you have created collectively.
I cannot think of any other industry or even any other country where the people who sell you things literally have no idea what they cost and don't appear to consider that a problem. This thread is full of American doctors correcting Noah on this point, but it seems absurd. You should know what things cost, and if that requires significant investment in IT in order to answer this question on the fly then why aren't you doing it? There osn't even anyone attempting to propose a solution to this problem in this thread, which is embarrassing to the American medical profession. Fixing this sort of terrible experience should be one of your top priorities, and you guys even have a union with which you can do it.
There is a serious cultural problem baked into your answer. Saying "We were too busy attending to patients to know" is severely hurting patients. Somebody is going to pay for what you're telling people to do, and pretending that costs don't exist or that they are unimportant just places higher costs on the patient later, often in the form of crippling medical debt.
Doctors and nurses participate in a cultural ecosystem where ignoring costs is somehow considered noble because you're "saving lives" and shouldn't waste effort on thinking about costs. But those costs are real, and they are part of what it means to "take care of somebody." The best analogy I can think of is inviting your mother over to stay with you for a week, tending to her every whim and nurturing her, then sending her a bill a week later for all the food, lodging, and hourly rate for everything you did for her, then patting yourself on the back for being such a "great son." No, it is in fact quite selfish.
I agree with Noah. But as the parent of a special needs child who is on Medicaid I have to say that the dynamic makes me hate the insurance companies more. I can't fight about prices with the doctors who are providing my child with care. But I am more than happy to fight with the insurance company that figures out ways to mess up his coverage, make us pay out of pocket for prescription drugs and then ask for reimbursement, etc.
Coincidentally. My family switched to United Healthcare in the past month because of work related stuff and they called today to tell us they are denying coverage for my sons C-Pap machine, which he has had for 2 years. They claim he doesn't need it. Previous insurance (Anthem)covered it. We are going to see if Medicaid picks it up.
It makes me think that some of this anger towards health insurers is related to the social interaction of rejection. It is stressful to be rejected and have to deal with the uncertainty that comes with it. My wife and I have dealt with this type of crap for years, so we don't stress about it anymore. It's more of an annoyance for us. But I can see how for many people this is really triggering.
I agree that health insurers are not the main culprit of the high cost of healthcare in the US. However, your arguments that’s it’s the “providers” knowingly charging the patient which leads to the high cost is in my opinion part right/part wrong and extremely oversimplistic.
I am an infectious diseases physician to get my bias out there first. In my view the reasons costs of high are many fold but some of the highlights
1: The way care is compensated. The AMA created a compendium of codes (CPT) and assigned value to each (RVU). Medicare then decides how much to pay for each RVU. This is used as a surrogate of productivity and the way physicians are both judged and paid. Procedures have long been given more “value” so physicians who practice procedures are paid more (surgeons, cardiologists, dermatologists). This incentivizes providers to do “things” to generate RVU and does not incentivize prevention of disease. For example: I am in the lowest paid field of medicine because I have perform zero procedures and much of my job is stopping antibiotics or switching them to cheaper ones. This leads to much more expensive treatment as opposed to prevention.
2. The system is fragmented and Byzantine. Most physicians have no idea how much each test costs or what will lead to the lowest cost for the patient. Your example - MRI - this cost wildly varies and is based purely on the cost insurance has negotiated with various operators of MRI. If I could give patients a flyer the cost of an MRI by location and point them to the cheapest I would! But I have no freaking clue. I think the fragmentation also leads to many other inefficiencies that raise the cost of care.
3. Litigation. The US is extremely litigious and the fear of a lawsuit leads to physicians to practice defensive medicine in ambiguous situations (which in medicine is common). Some physicians pay > 100K for insurance even those who have never been used.
These are just the three I could write down on my train ride home. The whole system is not great and was made by accident in the 1940s-1960s. Providers are part of the problem but I just don’t think we are the only problem and a solution needs to tackle it all not just blaming doctors and nurses for pulling a fast one on patients.
I think you're offering some reasons *why* providers charge so much.
My point in this post is much much simpler than that. My point here is that it's not the insurers causing the excess cost. It's the providers, not the insurers.
As for *why* providers charge so much, that's a deeper, more complicated question, and these are all interesting hypotheses.
As a doctor working in a sports medicine / orthopedic clinic, where imaging is frequently ordered, I have a list of how much our system charges for XRays, and I tell patients that the charge for a MRI is around $2000 if obtained through our healthcare system (in both instances, the charge varies based on body part). A few points on this. What the imaging actually costs the patient is based on their insurance and where the patient is at in their annual deductible. They have the option to obtain advanced imaging at outside facilities, but I advise checking with their insurance first. Some independent imaging centers will “charge” less ($600-$1000 range), but not accept insurance, such that the payment is out of pocket. So a $2000 “charge” for a MRI might actually cost the patient nothing, $100, or the full charge- depends on insurance. These images are ordered for a reason: to rule out or in ailments and injuries that can cause significant morbidity or mortality.
As a provider (doctor) in a large health system, I don’t financially benefit from the patient’s payment for the imaging. My financial gain is essentially tied to the number of patients I see, the services I perform during visits, and the “complexity” (billing term) of the visits.
A lot of the animosity in the comments seems to be oriented around the article lumping the actual “providers” (doctors, PAs, NPs) with your more generic use of the term “providers” (doctors, PAs, NPs, hospital system, lab, technicians, imaging center, pharmacies, or anyone other entity that may receive a portion of the insurance company and patient’s payment). The implication here being that doctors are misleading AND financially benefiting from not fully disclosing what the hospital system / practice / outside imaging center / pharmacy is going to bill / charge the insurance, which isn’t true.
It’s completely fair to think of healthcare spending as an escalating duel between health systems and insurance companies that financially harms patients. But it’s incorrect to lump the individual medical providers in with the health systems and organizations that actually set prices and directly financially benefit from the insurance payment or out of pocket payment.
If your outpatient doctor doesn’t tell you to check with your insurance about how much something could cost, then go ahead and be mad. I’ll exclude inpatient doctors from this since the care is more time-sensitive, and detailing every individual cost is not a great use of time when stabilizing a patient. Either way, I’m disappointed in the article’s representation of where doctors stand in the healthcare expenditure system.
"As a provider (doctor) in a large health system, I don’t financially benefit from the patient’s payment for the imaging. My financial gain is essentially tied to the number of patients I see, the services I perform during visits, and the “complexity” (billing term) of the visits."
I'd reflect a little harder on these two sentences to see if you can find the connection between your financial gain and the patient's payment, whether through insurance or out of pocket.
I assume you’re proposing that if the imaging I order leads to the patient paying the hospital, then I financially benefit, since the hospital pays me. But, there are specific inputs for medical complexity related to the injury / illness that go into each visit, and this is a fairly uniform process across health care systems. I code the visit for our billers - generally a 9920_ or 9921_ code. There are modifiers for other counseling or procedures performed during the visit. Yes, I am reimbursed for the things done and coded during the visit based on patient and insurance’s payment, if I’m in a collections system. If I’m in a RVU system, then it doesn’t matter what the insurance or patient pays, I’m reimbursed by my employer (the hospital) based on the RVUs for the visit, which is correlated with complexity / coding of the visit.
Either way, this isn't what I’m speaking to in the quoted comment. I was referring to lab payments, imaging payments, medication payments, etc. None of this affects my reimbursement, since I’m not in a private practice and not a stakeholder/owner of an imaging center, lab, or any other ancillary service.
Noah clarified in the podcast that he was upset about the cost of his MRI, and he felt he should’ve been made aware of other available options for imaging centers. He went on to note that he’s not sure of the incentivizing aspects for the doctors and staff to discuss how much imaging costs at different centers. He’s right- there isn’t a financially incentivizing aspect for the doctors to discuss the cost of the imaging… but they still can. The argument in the podcast portion gets muddled when he starts referring to the entire group of doctors and the hospital system as “providers,” as if the payments from the insurance and patients all go into a single bucket and then that is redistributed in set percentages to everyone who had contact with the patient. The reality is that patients and insurances pay into several different buckets, and some of those buckets are redistributed in set ways. The challenge presented is figuring out which buckets have bloat.
Happy to answer any specific questions you have on that.
I get the desire to fall back on "well I'm salaried, don't set MRI prices, and have no stake in other departments revenue", but their revenue is directly tied to your ability to provide the service for which you get paid, and vice versa. You benefit because you need the imaging in order to diagnose/treat and thus bill the patient, and the payment for the imaging also covers costs not covered by your own billing, but which are necessary components of your trade. Whether the payments are made to Acme Hospital Inc or its subsidiaries Acme Imaging LLC or Acme Ortho LLC (or even an independent practice paying rent/use fees to occupy a portion of the clinic), and whether the payments are made by John Doe or his insurer is sort of beside the point.
To be clear, I'm not saying you're a bad guy for participating in a broken system under its existing structure and incentives! I work in an unrelated but also broken system and that doesn't make me a bad guy either. What matters is looking honestly at our industries and trying to fix problems, even if doing so puts some downward pressure on our (much higher than average) wages.
I think Noah's point is that insurance functions as an abstraction layer to the process which prevents proper price discovery. This doesn't imply providers are directly incentivized to "milk" their patients for every RVU. It just means that patients have no real means for understanding the likely cost of the services they're about to receive. As a result, they can't weigh the benefits of proceeding with various procedures against the likely cost. They have to trust the provider to guide them. Unfortunately, the providers have different incentives: don't get sued for malpractice (or bad Yelp! reviews) and when in doubt provide services/procedures to reduce risk and increase RVU.
"the good news, Mr. Johnson, is that the $10k MRI confirmed that you don't have a herniated disc; your chronic back pain is probably just due to a muscle strain, so remember to lift with your legs! The bad news is that you've been financially ruined."
Doctors should have an honored and affluent place in the world. However, physician salaries in America are pretty high. The medical profession should be expanded and salaries should fall.
Doesn't point three mean that providers charge so much because the insurance system is so fragmented/byzantine - so it is structurally the fault of the private insurance system - and the private insurance system is what allows insurers to make profits regardless of the level of those profits.
As Arrow pointed out long ago the information symmetries are such that markets simply cannot work. Single-payer systems lead to much greater transparency/price information, and thus better management of costs at all levels.
The insurers’ administrative costs are material— over 1/5 as much as they spend on actual healthcare.
There are many different pockets of fat and we can’t get to Canadian level costs by trimming any single one. It’s an across the board problem.
A rhetorical ploy, "My point in this post is much much simpler than than that."? However, your rhetoric needs data. Here's a conclusion from a study with its URL that points to the law of supply and demand in a healthcare market as it exists in the US and the healthcare price differential between public and private insurers:
"In 2000 the US had fewer physicians per 1,000 population, physician visits per capita, and acute care beds per capita, as well as fewer hospital admissions per 1,000 population and acute care days per capita (data not shown), compared to the median OECD country. The US was still not devoting more real resources to health care than most other OECD countries in 2015 or 2016. At that time, the US had 26 percent fewer hospital beds per capita, 20 percent fewer practicing nurses, and 19 percent fewer practicing physicians per capita, compared to the OECD median country. Because the US is still not devoting more real resources to medical care than the typical OECD country, we believe that the conclusion that “it’s the prices, stupid,” remains valid.2 What is different between 2003 and 2016 is that the differential between what public and private insurers pay for health care services has become wider. Lowering prices in the US will need to start with private insurers and self-insured corporations."
"It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt"
https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144
I accept what Noah says that the generally higher amounts charged by providers is the main reason why US healthcare costs are roughly double the typical level for a developed economy.
That said, isn’t there still a case for much tighter regulation of insurers? I don’t know the finer details, but I understand some countries that deliver ‘universal’ coverage do so via a network of private insurers - as opposed to a ‘single payer’ government-run system like the NHS in Britain. If I recall, Germany and Switzerland may be in this category.
It is said that, where universal coverage is delivered this way, the insurers are tightly regulated by the government and are not permitted to do some of the arguably ‘piratical’ things that they routinely do in the US.
For example, I understand there are well-documented ‘practice guidelines’ for particular conditions. Why not make it harder for an insurer to deny reimbursement for a treatment within those guidelines?
Ok, this would probably add some additional cost to the system, but at least the users would have more certainty as to their coverage and fewer unpleasant surprises. Which, as an outside observer, seems to be what really pisses people off under the current US system.
I think a bit you might be missing is that, in many cases, provider charges are cyclically because of the insurance payment rates. Like college prices going up due to government backed student loans. Provider’s business offices do a ton of math to get payment outcome based on what insurance will with their bills.
I think Noah also is glossing over how much of the providers' own costs are associated with maintaining a bureaucracy for dealing with insurers. There's an administrative-cost Red Queen's Race between hospitals and insurers, with each side spending money in an attempt to shove costs onto the other. Ultimately both sides' expenditures come out of the hides of patients or taxpayers.
I agree. Everyone hospital I have worked at has a group that reviews our notes and billing and “suggest” how we should be billing. I have even gotten “suggestions” to change my documentation to better allow for more “accurate” billing.
Is this cost from bureaucratic overhead amount to 100% - 500% of what absolutely everything else - equipment, nurse/doctor salaries, real estate, power, consumables, vehicles, etc - costs?
Because if not then that doesn't seem like a compelling excuse.
It may well be death by a thousand cuts, but if so then every person here nitpicking about who exactly did what, in an effort to minimize the points Noah was making, is actively contributing to the problem by sloughing off responsibility onto someone else.
Admin overhead is about 25% on the provider side. Some brief googling showed a few different studies in that range. Noah's point stands, but cutting admin costs by half seems like it would be a great thing - costs dropping by 10% is nothing to sneeze at.
But there is one other major factor being ignored. New treatments costs a bunch! If you only could get the care known about 50 years ago, there would still be an increase for salaries, yet everything else would be much cheaper. It genuinely costs a bunch to get the miracle treatments we have today. For example the likelihood a woman will die of breast cancer has dropped 20% since the 90s. But that involves a lot more expensive testing, a bunch more chemo and other treatments and potentially multiple treatments over decades with reoccurrence.
Completely agree. The fact that it's more expensive to discover or invent something than to copy it or buy it off the shelf isn't talked about enough when comparing the US to the rest of the world.
But that care is happening throughout the OECD - so doesn't really explain the disparity. But yes, quite happy that science and medicine have made progress.
Exactly.
The USA has a system where big government and private bureaucracies "negotiate" with each other. The result is a constant escalation of bureaucracy and regulation.
The system is trying to substitute for transparent free-floating prices in ways that more resemble the Soviet Union than market capitalism.
I believe the only solution is radical reform:
1) State legislatures or Congress require providers to advertise set prices at the front desk and on the internet and require them to accept cash/debit payments for services.
2) State legislatures or Congress require employer insurance to be voluntary and employees can have monetary equivalent added to the salaries.
3) State legislatures enable qualified nurses to function as primary care physicians. This will dramatically lower the cost of preventative medical care.
4) Medicare, Medicaid, and VA to pay for much cheaper medical procedures overseas and let patients keep a significant portion of the price savings. This will dramatically lower the cost of treatment.
https://frompovertytoprogress.substack.com/p/medical-treatment-should-have-a-transparent
https://frompovertytoprogress.substack.com/p/employer-health-insurance-plans-should
Healthcare dosen't function like other markets. Would price transparency help? Yes, but how would that impact patient care? If patients have a cardiovascular condition, and the cardiologist charges $500 per visit, patients either have to pay that, or forego care. Doctors aren't subjected to competition, in the same way a nurse or janitor is, because of the onerous educational requirements to become a doctor, and the years required(4 yrs of undergraduate, 4 yrs of medical school, 2-4 yrs of residency. They charge whatever they think people will pay. At that point, medical care becomes a luxury good, and life becomes worse for everyone else. Having NP's take over primary care isn't a bad idea though.
Yes, health care does not act like other markets. That is exactly the problem. We need to make it much closer to what works in other sectors.
There would definitely be a transition period where we might have decline in quality, but afterwards, there is no reason to believe that it will be that way forever.
And customers should be able to choose between cost and quality, just like in all other sectors of the economy. The current system forces "quality" over cost, and it is not actually that clear that the quality is so high.
In your example, patients could search on the internet for any cardiologist and they could choose between price and quality based on results. Many doctors will have incentive to lower their price to get more patients.
My reform #3 opens up nurses to preventative care. They can easily charge lower prices than doctors.
My reform #4 opens up competition for treatment to far cheaper providers in Asia. American doctors will be forced to lower their prices to compete.
I am not interested in making American doctors profitable because they have a long education.
Medical care will never become a luxury good. Humans have an enormous self-interest in getting it (assuming that it delivers results).
After my proposed reforms, all providers with too high prices will be forced to lower them to what people can afford or they will go out of business. That is how the market works, and that is how the health care system should work.
I would add state legislatures or congress should allow limited diagnoses and prescribing from AI / CDS medical services. It's already the case that they're better at a number of diagnoses and treatments, why not get them people of the loop?
Yes, that seems reasonable to me, but I think we need to make sure that AI Results remain better than humans.
The point is that nurses and doctors, barring some kind of brain disorder, know full well that healthcare is very expensive and that not everyone and everything will be covered at all times by insurance. They're not complete idiots, right? They understand that care can be expensive. That they get to wash their hands of it and feign complete ignorance and surprise was the point Noah was making.
I'm a pretty healthy person, but I've been in an ER a couple times, and I've had a couple friends who were in hospitals with serious issues. Myriad times just within this sample set there have been doctors who casually suggest a procedure or test that's non-critical, as a "nice to have," and leave it to the patient to decide whether it's a good idea or not. Nevermind that it's supposed to be, you know, the doctors job to give you clear guidance rather than saying "if you wanna do it we can," it's not credible or believable that none of them have any clue that some of these things might be expensive.
Does this supplemental blood panel cost five cents, or five thousand dollars? Gosh there's just no way to ever be sure! How could healthcare practitioners who have been working for decades POSSIBLY ever be expected to have any clue whatsoever?
Give me a break.
The doctor doesn't tell you how much it costs because he has no earthly idea. Furthermore, he has no reasonable way of finding out even if he wanted to. Here's the issue. The doctor could easily tell you how much he gets paid for that procedure, but it won't tell you anything about how much you will pay. Let's say you get the procedure. There will be 3 providers (at least).
1. the doctor
2. the anesthesiologist
3. the facility where the procedure is performed
The doctor knows how much he gets paid, but he is part of a practice. He doesn't know how much they bill for it, only how much they pay him. So for all 3 providers you could find out how much they will bill for the procedure and add that up. But it still doesn't help you.
Turns out that the amount that those providers bill the insurance company isn't the amount the insurance company pays. Each provider will have negotiated a contract with your insurance company about how much they will pay for the procedure. When the insurance company is billed, a "contractual adjustment" is applied and the insurance company pays that reduced amount. This adjustment will almost certainly be different for each of the 3 providers. And not only that, it will be different for each line item that each provider bills you for.
So the sticker price is entirely a work of fiction. And even if you could go through all that, and find out the total that the insurance company will pay, that doesn't get you to what you will pay. Now you will need to take what the insurance company will pay and figure out what your copay is based off of the terms of your individual plan are and how much of your deductible you have used in the current calendar year is.
We understand that care is expensive. I think most of us acknowledge that and try to practice high value and evidenced based care. There is a lot we don’t know and medicine is challenging. I’m not arguing that physicians feign ignorance but that the incentives of the system and its complex lend to increased costs. There are of course bad actors and those out to abuse the system for personal gain.
In regard to your second comment. In medicine is there is a ton of uncertainty. In those cases, we engage in shared decision making with the patient. Obviously, we can all be better at it and it seems that you have had bad experiences with it.
I don't quite get #2. In the case of an MRI, it may be that the doctor suggesting the MRI doesn't know how much it will cost, but the MRI provider does, right? And so, once again, it is the provider who is asking for a lot of money, getting it, and spending it on a nice car. Or is the word "provider" understood to only mean doctors?
I guess the issue is then the nuance of what you define as a “provider” which I don’t think Noah really defined. I am using it to mean doctors/nurse practitioners/physician assistants. My point was that you could get while the doctor knows an MRI is expensive, they don’t know how much it will be for you. A lot is dependent on where you get it done. There was a study in California about how the cost of the same MRI cost between like $400 and $2000 depending on where you go. On top of that insurance negotiates with various entities that provide care (they changes yearly btw) so the final cost the insurance pays and what the patient sees is also dependent upon that.
Most doctors have no idea how much an mri costs. The radiologists usually get the Referell and they barely know what’s being charged for it bc it’s the facility that makes money on imaging like a hospital or imaging center, not the doctors
Just contemplate how absurd that is.
The MRI provider I use is dictated by my insurance company, unless I'm in the hospital.
The obliviousness and indifference to costs on the part of health care providers can be appreciated by the universal use of the term”reimbursement” for payment. “Reimbursement” means being repaid for something you pay for; many years ago patients were reimbursed by insurers after they paid their doctors but for decades now that isn’t the case. Insurers pay providers directly. The providers like to say they are “reimbursed” rather than paid to portray themselves as above it all and unsullied by filthy lucre.
The malpractice excuse is narcissistic wound bullshit. Every time I hear this from a fellow physician, I propose a thought experiment: I will give you an arbitrarily large sum of money, say $10 million, on the condition that every time you do something to avoid litigation you pay for it out of that $10 million. How long and how much would you expect the average physician to pay before they generated a whole new list of excuses to do the same things that they formerly blamed on litigation?
I don’t think malpractice alone (or any reason) explains why costs are so high. I meant only to highlight a few of them. If you are a physician than at least you understand the fear of being wrong which I also believe leads to defensive medicine. If we are wrong, it can lead to harm or even the death of our patients. Every bad outcome leaves a scar on us and can even change the way we practice for better and worse. It’s human nature.
Instead of calling part of my comment “narcissistic bullshit”, if you disagree that this is a factor in physician decision making, I encourage you instead to offer arguments to the counter point. Prove me wrong.
I made the argument with my thought experiment. Whining about being sued is playing the victim to rationalize poor decision-making as well as often justifying being paid more for doing things that are unnecessary. You have insurance in the remote likelihood you are sued. Treating as a major threat rather than just part of doing business is where the wounded narcissism comes in. Most suits that aren’t about grievous errors are the result of poor communication- patients don’t feel heard- not failure to take questionable actions.
I did not say practicing defensive medicine is right or good, just that it is often a fact of medicine that needs to change to lower costs.
Fair enough
Well stated... I see a lot of US doctors moving to Medical Tourism situations which seems to be better for both provider and patient.
“it’s mostly the providers overcharging you” - i think i know what you’re trying to say (that healthcare is expensive in usa), but this isn’t up to the doctors or nurses you mention (and we don’t secretly know costs as you say, this is negotiated btwn insurance plans and hospitals) and little of it is going to the physician and nurse as your statement seems to imply. physician services are something like 15% of healthcare expenditures in usa.
They don't know the exact costs, but they have a general idea, they know the costs are very high, and they typically don't talk to patients about those costs when prescribing services to them. This is understandable, given that talking about costs would make patients less comfortable while receiving care, and one of doctors' main jobs is to make patients feel comfortable. But there's basically no point in the process of receiving care at which patients could make a decision based on cost.
I can assure you that it would be the rare MD has any idea of what the patient will be charged since each patient's insurance differs. The idea that MD's "should know" is another unreasonable expectation placed on health care providers. I doubt such as system could even be created based on the way we pay for health care.
They may not know what portion the patient will be forced to pay for after insurance, but they do know how much they are going to bill for. What we're being asked to do here is to stop thinking of these charges as some fact of the universe that providers have no ability to influence. They can tell patients "this is how much this costs, some of which your insurer may cover" -- at least that's how I interpret this article.
No the Dr. or Nurse doesn't know how much they are billing you. The Dr. enters codes for the services performed and the reimbursement is set by the insurance company. The provider has no role in this. I gave the example of my father decades ago (this would be mid 1970's), it was $30 in his office to get stitches after hours, but if the patient insisted on going to the ER, he was reimbursed $80 by the insurance company because that was the rate they had set for a Dr. meeting patients in the ER. Because the patients chose to meet in the ER the total medical cost was over $340, vs. $30.
Dentists usually have their rates posted on the walls, and if not, they'll tell you their rates when asked.
With Drs and Nurses, whenever I'm going to be billed, they discuss the amount first. Always. Except for drugs, it's typically a small, fixed amount. But they even have a good grip on common drug costs too.
I consider that disclosure to be proper ethical behaviour for the profession.
But that's Canada, where more complex billing like hospital procedures are 100% covered by insurance.
When I'm in the States, health providers can rarely tell me what it's going to cost me, for even the simplest of services. It's no wonder health services cost more!
Okay, I interpreted this as being about patient responsibility, but it's actually about the total reimbursement itself. Fair enough.
Still, I find it odd the way people here casually say that the reimbursement rate is set by the insurance company. If I were an insurance company, I would simply "set" the reimbursement rate to five cents. The provider is charging an amount that they might not have memorized but was the result of a negotiation in which they tried to get a higher number, while the insurer wanted a lower number, right?
In majority of cases, the negotiator was an entity far removed the clinical provider.
Damn, sounds like he knew the cost off the top of his head!
Your doctor might not be able to say "This will cost $550", but they typically have a good understanding of the cheapest path, probably from experience of payers forcing patients down that cheapest path.
MDs enter every treatment into an electronic system; there is no reason, from a system design perspective, that when they enter in the code for the service that it couldn't display the price.
That price could very easily be determined by multiple factors like what insurance the patient has.
This is a willful choice, not a system limitation.
They don't usually enter the code, at least for inpatient procedures. They enter data about the encounter into an EHR system, and later a professional medical coder adds procedure and diagnosis codes. It is a highly intricate skill set with certifications that are separate from being a Dr.
This doesn't really feel like a defense of the system. "The doctor who provided the service doesn't know what it is called, a special person who wasn't there actually knows."
This is a layer of complexity added purposely to remove the patient a step further from the costs.
And that is one reason why the American system is so much more expensive. Some other countries have coders too, but there are fewer codes in general, and it's possible for providers to actually know them themselves. Noah's appreciation of 'administrative costs' is too simplistic. The true administrative cost is created by the processes that are separating the patients from the providers and the insurers.
No one is defending the system. It's terrible and doctors hate practicing in it. This is just how it works (outside of the rare boutique practices that have sprung up in opposition).
How come everyone involved in running a hospital has a bachelor's degrees but apparently they are too stupid to understand the concept of a database that contains pricing information? It would be trivial to give each Dr. A device that could access this database on patient request.
There is no single price for each service. And the prices are proprietary to each insurance plan.
Let me blow your mind then about how databases work.
The database could display the price for each individual after factoring in things like the particulars of their coverage.
This “doctors don’t know the price” stuff is weaponized incompetence.
Let me return the favor. While current law requires transparency, historically Insurance reimbursements were considered trade secrets and were kept confidential. Data still largely not available. Hard make a db of those.
The doctor won’t know about it seems feasible to create solution via regulation where providers are required to patients provide CPT codes and insurance companies are required to provide the insured with an easy way to get their portion for a set of CPT codes.
But they also generally CAN'T make informed decisions based on costs. Patients just generally have no clue how to evaluate the care that they receive. Studies have shown that patient reviews of providers correlate strongly with bedside manner and correlate not at all with outcomes. We've understood why this happens for a long time (I think Kenneth Arrow's seminal paper was published in 1962?). All of which just makes healthcare an inherently poorly functioning market, even with the best-designed interventions.
Nope. The doctors I and friends have spoken to have no general idea. They don't know at all. At hospitals at least there's a pretty big wall between doctors and the billing/insurance reimbursement department. Some have been staggered by the costs.
I often ask providers for cost estimates because we have a high-deductible insurance plan which in practice means we as patients actually pay most of our care. Most of the time they have no idea. If they ask their office people to research for me, they often come back with huge ranges for something as simple as a blood test ($25 to $250!) or an ultrasound ($150-$600, and it’s unclear if that is just the facility fee or if it includes the radiologist who reads the results!)
It’s insane.
We do not have a healthcare market system at all—there are NO price signals to steer decision making by anyone, or to impose market and competitive discipline on providers.
Heike, this is absolutely correct. Self-pay has set costs, but cannot be paid by traditional insurance. Traditional insurance costs are set by negotiation, and negotiations could be happening as you are speaking with the front desk, making the information you were given immediately obsolete...add to that the insurance company can change the formulary between the time you are quoted a price for a medication and when you go to pick up the prescription. No price signals and no leverage in the hands of the "end-user" per se.
Recently took a healthcare economics class, and we talked a lot about information asymmetry, in that providers have more information than patients, and may recommend treatments that have marginal benefits, but the patient is unaware of that. Another problem is prices are simply not readily available at the point of service, unlike buying any other good or service.
Why can't they make prices available at the point of service? Who is the villain responsible for that particular wrinkle?
It would require reforming the entire payment structure. The way medical billing works is as follows- Let's say you need an MRI or blood drawn for bloodwork, and your physician deems this clinically necessary to provide the best quality care they can as a doctor. You'd get an order for this from the doctor, and then have to go to the local MRI clinic in, outpatient lab or hospital phlebotomy clinic to get this done. At that point, the hospital or clinic sends the full cost of the procedure that was done to the insurance company, and the insurer decides how much, depending upon their policies, they're willing to cover. Then, they send you a bill, which is referred to as a co-pay, that you're expected to pick up some of the cost, which again varies depending upon the insurance. There's no price transparency at all. If you eliminated the insurance companies altogether, patients could pay directly, but I think they'd be shocked how much some of these tests cost. An MRI could easily run $6,000 out of pocket. Is that excessive?? I don't know! Nobody does! I don't have access to the hospital or MRI clinic's accounting books, so I honestly don't know. What's an acceptable profit margin to make off people's health??? There's no substitute good for Life, so the whole idea of economic competition that works so well, so people can buy Pepsi, if Coca-Cola becomes too expensive, breaks down in healthcare. Back in the day with less treatment options, cancer was a death sentence. An arthritic hip, that we'd today perform a hip replacement for a patient, was instead a lifetime of chronic pain, and immobility. Other countries have decided to share the costs, through universal healthcare/socialized systems, so patients aren't forced to choose between going into poverty, or dying from lack of treatment.
I can assure you we have absolutely no fucking clue what the hospital bills for my time. I can see from public sources that Medicare pays about $20/unit, MediCalabout $14. The most recent survey of anesthesia groups suggests it's about $70/unit for private insurers but that's just a median. And last I was told is that I collect about 23% of what my services are billed, whatever that number is. So the hospital has to subsidize my salary via some other pot of money (maybe the facility fee).
I'd need an econ degree to even make a ballpark guess. And I'm someone who gets to look deeper into the finances than the average physician.
Patients are also huge drivers of unnecessary tests. Not only is there information asymmetry on costs but also on value of tests. Many patients want "everything done" even if there's little benefit often because they never have to pay. If I try to talk somebody out of a test in the ER, people feel like they're getting shafted out of a service owed to them. Moving to New Zealand is very popular amongst ER docs in spite of the huge pay cut because patients there accept and trust your expertise so you can practice medicine the way it's supposed to be instead of "having it your way" like a Burger King. Yes doctors have a culture of over-ordering but that is in large part due to the demands of the patients they are serving.
I second this an an ER doc. I also cannot use "price pressure" to recommend against wasteful tests. I can tell someone the evidence recommends against getting additional testing, or that admission will increase their risk of a poor outcome...they look at you like you shot their dog. If I could say "Look, this test has been proven to be unneccessary AND it'll cost you an extra $50, $100, X dollar amount," they could make an informed decision with a slight amount of skin in the game. As it is, they possess only unbridled fear and incentive to ask for "everything" in order to deal with that fear. The bill comes later, and they wonder why it cost so much. It cost so much because I used my $200,000 education and many lost years of income to tell you that you did not need more testing and you argued until I acquiesced just so that I could step out of your room to go take care of other, sicker patients.
this seems a lot different than the idea that doctors and nurses are overcharging patients and obscuring the known cost from them (we don’t and aren’t). which perhaps isn’t what you meant but it’s how i understood what you wrote.
I think blaming doctors and nurses is completely misguided by and large they don’t know how much things cost and are mostly focused on whether a patient needs them. It’s perhaps more gray area with elective medical decisions but even there they don’t set the prices.
Noah, what do you mean by cost? What is billed for each particular part of care, or what cost is passed along to the patient?
Most of the time, patients should not care about costs. Why would we want that system?
Noah, do you want kids in public schools making decisions about which classes to attend based on the cost?
I understand that in extreme cases and that when it comes to experimental / novel therapies, we need to make cost-benefit trade-offs… but that is more of a “system” concern than something people in difficult health circumstances should be faced with imho.
I think this talks past Noah’s thesis.
Doctors and providers are not subject to cost competition, do not care to have financial tradeoff conversations with patients and are generally morally against admitting that their behavior is the main driver of cost in the system.
Most of the costs are provider bloat. Extra tests, over-investment in facility buildout, proscribing high cost, low benefit services.
Nobody is there to tell you the MRI isn’t going to help, they just order one anyway.
If you actually try to ask a doctor "so how much is this going to cost me?", from what i hear, they generally won't or can't tell you.
Certainly, if you ask them to put a number on "how likely is this to fix my disease/save my life/etc" they can't answer, though part of that is that it's a hard question and it's not considered professionally responsible to guess.
I know lots of doctors who try to be mindful about not requesting medically unnecessary procedures and tests. Doctors know better that anyone that unnecessary medical care adds health risk. But even so, the tendency will always be to overprescribe somewhat relative to the *economic* optimum, because the doctor isn't the one on the hook for costs (it's the insurer, the HMO, the taxpayer, or the patient.)
Oncologists are starting to talk about financial toxicity as a risk for their patients. In the field of cancer, they are aware.
What's interesting is the provider is SUPPOSED to tell you how much your services will cost, per this law passed by CMS in 2022: https://www.cms.gov/nosurprises
100%. There just are no price signals. At point of care patients and doctors often act as though care was free. Of course it’s not—but if people decide in the absence of prices then they are likely to over consume and over charge.
It's often not the doctor - though I wish Drs. were better about knowing what things costs and talking to you about the costs, some are - but ultimately whoever is getting the insurance reimbursement is responsible. You aren't going to fix the cost of healthcare without lowering reimbursements and the doctors professional orgs are always at the front of the angry mob, handing out pitchforks, whenever anyone suggests doing so (see the recent BCBS thing).
Seems like the composition of the angry mob has changed of late.
What is causing the inpatient and outpatient spending in the KFF chart to be more than twice has high in the US as the comparable country average? It's not physician services if that 15% number is accurate, and administration is already in another category. And while some hospitals are making a good profit, hospital bankruptcies are at a 5 year high. It's puzzling, but I guess the best explanation I have so far, though it doesn't seem adequate, is from the KFF article: "Patients in the U.S. have shorter average hospital stays and fewer physician visits per capita, while many hospital procedures have been shown to have higher prices in the U.S. This category also includes prescription drugs administered in inpatient and outpatient settings, which may lead to higher cost in countries, such as the U.S., where these drugs have higher prices."
I would guess it’s just that *everything* costs too much. There’s not much pressure anywhere in the system to control costs, so no one does.
The drugs cost too much, the devices cost too much, the doctors are paid too much, executive salaries are too high, there’s overtreatment and quantities are also excessive…
But generic drugs (which represent 90% of all drugs administered in the US) are cheaper in the US than in the rest of the world because we have such a competitive market. So, it isn't all drugs are more expensive, it's only the branded drugs.
So then who does that leave who DOES know what these costs are?
All these comments nitpicking seems to be missing the point and offering no actual rebuttal, which is that it's not insurance companies cackling and pulling the strings to make healthcare cost more. The only argument for that I could see would be because they can make more profit with a fixed profit margin if the base cost for services goes up. But like...that's incredibly dumb as a plan, and also nobody is enforcing a specific profit margin.
Ok so the doctors and nurses also are just totally utterly absolutely clueless. Does this IV bag of saline cost five cents or five thousand dollars? Argh who could possibly know? Do these 12 EKG electrodes cost ten bucks or $1,000? Well that's just like, a matter of your opinion, man.
But yes, of course it makes sense that nurses and doctors aren't spending their time researching how much every consumable and piece of equipment costs. But SOMEONE is doing that. So who?
Actually the ACA (or some similar law) does enforce a maximum profit margin. If an insurance company spends less than a certain percentage of the amount of money they collect in premiums (I think 80%) on payments for care, they have to refund the difference to customers - and I actually have gotten refund checks for this exact reason!
My wife had a serious illness that eventually resulted in her death this past March. I have had to "explain" a few things to my insurance company on the phone to get certain bills paid - as a sitcom housewife once declared, my time is worth nothing - but overall, my experience was a lot better than the horror stories that I've read online. So as far as health insurance companies go, Amerihealth NJ hasn't been that bad.
The ACA really did significantly tame the insurance companies (somewhat by their choice).
I usually like your articles but this is misinformed. The United States, especially in the democratic states, are setup for doctors to have to refer for tests that are not always optimally necessary otherwise one can be sued as lawyer lobbies are very cozy with the Democratic Party. Doctors come into practice hundreds of thousands in debt from school. Doctors never set the rates they charge. That is determined to them by Medicare and private insurance companies. You fail to talk about the impact of pbms which the big insurance companies make most of their profit from. There are a number of other corrupt layers of the medical industry not discussed In this article. To see the amount of profit that health insurance companies make and to see their monopolistic power and using AI to deny claims instead of actual doctors bc of questions of clinical necessity and to blame doctors feels short sighted. Hospitals also play a large role in this situation which has nothing to do with what the doctors want such as charging double for outpatient services performed in a hospital clinic instead of a private clinic due to legal technicalities that allow it.
"Doctors never set the rates they charge. That is determined to them by Medicare and private insurance companies."
That's not really true. Even in the screwy US health insurance industry, supply and demand still apply. If insurance companies set reimbursement rates too low, hospitals won't contract with them. If hospitals agree on low reimbursements and try to pay doctors less, the doctors will go elsewhere or just stop working. No, doctors aren't literally setting their rates, but they are negotiating salaries and responding to financial incentives.
There’s nowhere to shop around bc there’s only a few insurance companies that set rates. This is a free country. Why should a doctor have to work for less money than is worth it to them after all that training and hard work? Should they get payed minimum wage? Ridiculous
How do you reconcile this with the fact that doctors are first in line to protest anyone suggests that we increase the cap on medical degrees handed out? Or that we let nurse practitioners cover more patient areas, or operate with less supervision?
I think it is beyond disingenuous to claim that doctors, alone among all of humanity, do not respond to financial incentives.
The cap isn't on medical degrees, it's on residency slots. The government subsidizes a certain number of residency slots in hospitals each year, and hospitals don't offer any additional ones beyond that.
And the AMA specifically advocates FOR more residency slots! https://www.ama-assn.org/about/leadership/more-medicare-supported-gme-slots-needed-curb-doctor-shortages
People are all looking for a villain. There is no villain.
Our healthcare is expensive because we can't balance innovation and care delivery. For all the talk about inequality at the low end, it's very hard to buy a premium level of healthcare above a basic level of insurance. So we just pay for everything.
If an insurance company denies care, they're greedy. If healthcare workers respond to market demand, they're greedy. Hospitals bring in consultants like McKinsey to help control costs, which, in turn, adds to bureaucratic costs. And, yet, we get paid extra to take care of patients on weekends because demand is still far above supply and people don't want to have NHS-like waits for a joint replacement.
This is the system that evolved in response to consumer and voter demand. It's absolutely terrible but maybe there's a reason it's been extremely difficult to blow up? I'm one of those heretic doctors that would absolutely LOVE some sort of single-payer system, who also favors expanded scope for mid-levels. And my own patients would apparently fight me from doing any of that.
And here's the kicker. It turns out that most people even LIKE their insurance. (https://www.kff.org/private-insurance/poll-finding/kff-survey-of-consumer-experiences-with-health-insurance/). There are a LOT of bad things happening but apparently there are even more good and neutral things happening.
And, pet peeve, the AMA has been literally trying to get Congress to approve more residency slots for a long time! This is from the current AMA president. https://www.ama-assn.org/about/leadership/more-medicare-supported-gme-slots-needed-curb-doctor-shortages
The AMA of 20 YEARS AGO did advocate for that but a lot of things have changed since then. Yes, there are major repercussions from that today even though those decision-makers have long since retired. IDGAF if anyone likes the AMA but people need to really update their priors from the pre-ACA days. It's a VERY different landscape after major legislation, a large recession, a pandemic, and the retirement of Boomer physicians.
Sorry, that's not how it works. Every organization that does something bad deserves to be defined by it forever. It's not like the KKK could just start complaining that everyone still judges them for being racist. "We've changed, trust us". Once evil always evil.
See my comment above about being sued and “reimbursement”.
If you want care from unqualified providers, then go for it. What’s the point of doctors going through training if you prefer to have a pa with two years of school? It seems there has to be a bad guy and Noah is trying to make it the doctors and make the insurance companies seem like charities. I’m not sure if he payed him to write this or if this is actually a shared delusion not based on actual data or reality
My wife and I use PAs as our primary "doctors" for annual check-ups and other routine stuff. But, not to get a colonoscopy or "real" surgical procedure, although my PA loves to use his nitrous tank to burn things off my face and arms. In fact, he loves it a bit too much. One thing I've learned is that Hawaii of all states is the only state that does not allow PA signed prescriptions (even for non-dangerous drugs) to be filled. Has to be an MD.
Ok who sets the rates then? Why doesn't everyone pay the Medicare rate?
Because Medicare reimbursement doesn’t actually cover the cost to provide care.
I've never understood this - what force makes hospitals or providers (outside emergencies) do money-losing procedures? Surely if Medicare reimburses below cost for, say, knee replacement, the hospital can just not do knee replacements for Medicare patients.
(Also health policy research never finds evidence for the cost shifting to private insurers that is supposed to ensure)
There are some providers that don’t take Medicare or Medicaid. It’s harder for hospitals to not take it because of the enormous fixed costs of operating a hospital. Getting some reimbursement is better financially than a bunch of beds sitting empty.
In rural areas, it is common for people to investigate the cost of certain procedures (such as hernia repairs, knee replacements, etc.) at different hospitals/clinics before choosing one to get it done. The prices can be dramatically (e.g., 3-4x) different between hospitals that are not that far from each other. It pays to shop around in situations where you can.
They also deny claims in the hopes that the patient won't pursue it. This is yet another reason why Americans hate insurance companies.
I’ve now seen two commentators, one on each side of the political divide, advance the argument that healthcare insurance companies are not villains. And you’re both just downright wrong.
Noah’s characterization of how we interact with insurance companies is also so incomplete as to be wrong. For example, on two separate occasions this year, I have been denied prior authorization for something ordered and deemed medically necessary by my PCP as well as a specialist to whom I was referred, and that my plan (PPO through Anthem Blue Cross) supposedly covered. The evil of insurance companies often happens well before we see a medical provider.
Noah, did any of the quips quoted at the opening of your article mention cost of services rendered? No, the focus was on how these companies operate. It isn’t the high cost that is outright evil, it’s the way these companies are incented to behave based on their obligation to return value to shareholders. It doesn't matter that their profit margins are low, what matters is how they improve those margins. When plans are chosen an annual basis and companies are already operating efficiently, the primary mechanism by which these companies create incremental return for shareholders is through denying policy holders access to the medical care we are entitled to. Make no mistake, it is a fucking evil industry and, until we take steps to address it, more health insurance CEOs will be targeted by lunatics.
"My personal experience proves my random feelings equal truth, and health insurance companies are villains."
They’re commonly demonized by populists, but Noah’s point is that they aren’t the root cause of high healthcare costs, nor do they have a direct incentive to inflate them. Every attempt to make this distinction is always immediately drowned out by emotional anecdotes, as if personal hardship itself is proof of systemic failure. That doesn’t solve anything.
Shouting “They’re EVIL!” changes nothing. Complaining that they must enrich shareholders doesn’t automatically explain runaway costs. Nevermind that at this point "shareholder" is synonymous with "bogeyman" as used by idiots who think "Corporate profits maaaan!" are the only thing you need to say to be an expert on everything. You literally brush off the cost of healthcare as a problem because hey, the REAL problem is REALLY those EVIL incentives that those dastardly SHAREHOLDERS have! Why, they could make healthcare free but it will still be EEEEEVIIIILLLLL if you don't zero out every single shareholder - including, you know, the overwhelming majority of shareholds who are regular people and not billionaires. But nevermind any of those boring details, I wanna rabble!
Yes, very fine people, etc.
Healthcare costs matter, and no company can pay every claim at a loss indefinitely. Driving them out of business wouldn’t fix the system; it would only create other problems.
In short, your argument is weak. Enjoy being one more voice on the internet screaming “Insurance companies are evil!” without understanding the bigger picture. Drowning out anybody who dares to try having a productive conversation in lieu of impotent bitching is certainly working wonders so far, keep at it!
Anecdotal evidence matters a bit more when everyone has the same anecdote.
But I will attempt to elaborate on my argument and explain why costs, whatever they are, are incidental to the villainy of health insurance companies. Let's just assume that the prices set by providers represent an equilibrium determined by supply and demand.
From there, insurance companies set premiums that actuarial tables project will cover costs and yield modest profit. The thing is, they're incented to lowball premiums somewhat because the more accounts you cover, the more revenue you generate, and when you can deny coverage to target a "modest" return, the more profit you have to show your shareholders. The profit motive in health insurance, independent of the costs providers charge, makes these companies operate in objectively villainous ways.
Everyone doesn't have the same anecdote. I have never had a health insurance claim denied. Stupid bureaucracy over prior authorization, yes. BS about insurance companies fighting over which is responsible when I had two policies, yes. Doctor ordering expensive tests that they admitted to me were not medically necessary, but served only to jump through the hoops insurance requires for a diagnosis, yes. But a claim denied, never. If you want to say that insurance companies are out there denying valid claims let and right, then you need to come with proof.
I've had to call my insurance company a number of times to "explain" that claims that were denied as out-of-network should have been allowed as "inadvertent out-of-network use" (because the bill was for services performed inside a covered hospital, or similar reasons) and get the denial overturned.
The one major thing that they actually wouldn't allow was when the local hospital wanted to transfer her to a long-term acute care hospital instead of keeping her for several more months, but the insurance company said that their policy was that patients should stay in regular hospitals instead of LTAC facilities. So I gave a metaphorical shrug and decided that if they wanted to keep paying the hospital instead of letting her go to what was probably a less expensive facility, that was their problem.
Imagine for a moment your perfect health insurance company. No "well there wouldn't be any in my ideal healthcare system" copouts.
What would it look like? How would it operate? How would that affect healthcare costs overall? How would they disincentivize overcharging or overtesting or whatever else on the part of healthcare providers?
We can call various companies evil all day long. Present a better alternative, and one that's actually feasible for a well run and ethical insurance company operating today to implement.
In case anyone has misconstrued my criticism of the system as a tacit endorsement of these events, let me start by doing something I didn’t do in any prior comment: unequivocally condemning the cold-blooded murder of Brian Thompson. Full stop.
I’m not claiming that there’s a simple and obvious solution here. But at the same time, I’ve always disliked the attitude of, "Don't bring up problems if you have no solution". That is idiotic in the most obvious of ways, for it is usually by getting enough smart people to agree there’s a problem that a better solution can emerge. The, “if you’re so smart, how would you fix it” attitude is always unhelpful and produces status quo bias. And I truly believe that the perceived intractability of the problem is a major factor in providing cover for the malfeasance of health insurance companies. In my opinion, we're letting them off the hook by saying it’s a tough nut to crack.
What I know is that people and companies respond to incentives. And you don’t need to be an expert in game theory to understand how the incentives at work in health insurance give rise to a system that promotes predatory behavior. And to the point many other commenters made, predatory behavior is particularly sadistic when you’re literally talking about what are, at least in some cases, life and death decisions. Context matters.
I am generally a free-market proponent, but it’s my observation that it’s been a long time since any objective good has come from “innovation” where financial instruments are concerned. The timing of the financialization of everything in our society and the immiseration of seemingly everyone in our society is more than just coincidence in my opinion. I believe Noah has posts to this effect as well. Innovation in the financial services context always means finding more ways to make your money their money. Simply put, I do not believe for-profit health insurance should exist in the private sector.
Taking on obligations that are many times a matter of life and death and then committing enormous amount of resources to facefuck people over every and all possible channels to try to weasel out of said obligations, to have such an adversarial way of "upholding their end of the bargain", to organize wilfully and knowingly the "fulfilment" of said obligations in such an incredibly negligent way is morally wrong. It's many many times the exploitation of desperate people at the absolute end of their financial, emotional and realistically cognitive limits.
There's a reason we don't let those in a position of power get drunk on it and just go around scamming blind R-tards ... oh wait.
If you can't fulfill the obligations then negotiate to cancel it, worst case declare bankruptcy. Not the other way around, driving people into it.
... and yes, of course costs matter. Morals also matter. Maybe insurance people ought to take an oath too.
It doesn’t matter if insurance companies only represent a fraction of the total costs if their actions and incentives are still perverse. A small and very shitty part of the system remains loathsome.
Insurance companies are required by law (the ACA) to spend 80% of all premiums collected on medical care. If they do not, they are required to refund premiums. The incentive you claim does not exist.
It most certainly does exist, the 80% rule is simply a constraint in the insurer's optimization calculus. Why, in your mind, does capping the amount of profit they can make remove the motive to make as much profit as is legally allowed, even if to the detriment of the insured?
then they deny legitimate claims for fun? the wasted effort, the collectively spent hundred billions on *straight outta a dictionary* literal paper pushing, the medical consequences of the delays, the economic downstream aggregate effects....
WTF
20% is waaaay too much, and we haven't even talked about creative accounting
Where is your evidence that these claims were all legitimate? I have seen no data on this, only people who are mad their claims are denied. I have never had this problem even once. I don't doubt it happens, but I'm not about to take people's word for it on the internet.
https://www.astralcodexten.com/p/what-your-doctor-spends-80-of-their
https://www.propublica.org/article/cigna-pxdx-medical-health-insurance-rejection-claims
A frustrating aspect of this is that health insurers actually provide a mechanism to fix the real problem of unreasonably high healthcare costs - play hardball with price negotiations - but people freak out whenever they try it.
BCBS trying to pay a flat rate for anesthesia should be celebrated by its customers. This is how you bring down costs. Instead, you get leftist twitter freaking out and the CT Insurance Commissioner (or whomever) making BCBS stop. There's an assumption that they are going to pocket this difference and leave you with worse services, but the low profits earned by insurance companies (as well as any insight into how stingy company benefits managers are when deciding whether to switch insurers) shows that the free market and competition do a good job of ensuring that any savings insurance companies can find are passed along to customers.
A lot of this is the dynamic you describe. Insurers are seen as the "Bad Guy" trying to deprive poor anesthesiologists of their $500k/year salaries, so people side with the anesthesiologists. Personally, I'll start to be concerned with doctor salaries when I start seeing more Hondas and fewer BMWs and Teslas with "MD" license plates.
Beyond that, if you want to blame hospital and medical group administrators for pushing up the cost of care, you have to recognize that their money comes from service reimbursements. The way you cut the salaries of people like Rick Scott (who made a fortune defrauding Medicare and Medicaid as CEO of Colombia Hospital Corp. before going into government), the way to do it is to have BCBS tell providers that they are paying a flat rate for services.
As frustrated as I can get at times with my insurance company, I'm ultimately on Team Insurance here.
Transparent free-floating prices work far better than big institutions negotiating with each other.
That would help, but I'm not sure that's necessarily true, at least not by itself. If you're getting services on your insurer's dime, you aren't really inclined to shop around, particularly if it means switching to someone who you don't trust.
Agreed. I am actually advocating for a much more fundamental change. Transparent free-floating prices are just the general principle:
1) state legislatures enable qualified nurses to function as primary care physicians.
2) Medicare, Medicaid and VA to pay for much cheaper medical procedures overseas.
3) State legislatures to require providers to advertise set prices at front desk and on internet and require cash/debit payment for services.
4) State legislatures require employer insurance be voluntary and employees can have monetary equivalent added to the salaries.
https://frompovertytoprogress.substack.com/p/medical-treatment-should-have-a-transparent
https://frompovertytoprogress.substack.com/p/employer-health-insurance-plans-should
I support 1 and probably 2 (but 2 will never happen). 4 would essentially destroy the US health insurance system through adverse selection to the point where you might as well just outlaw health insurance. 3 has the problem I discussed above - it prevents insurers from negotiating prices down, though I don't see why they can't make it easier for you to find out what something costs if you tell them who your insurer is.
I predict that all 4 will eventually happen at least in some states and then it will likely ripple out to other states.
And if the only way health insurance “works” (if you consider the current system to be working) is to force people to have it, then it should be allowed to collapse. My guess is that it will be be used by a minority even if my plan is adopted.
And #2 is by far the easiest method to contain federal health care spending and balance the budget without undermining quality of care. Medical tourism is growing every year and so is the federal deficit. It is only a matter of time before a politician realizes that 2 + 2 =4.
As I said earlier, “price negotiation” does not work.
Not sure why you apparently oppose transparent prices. It is in practically every other industry.
When you have complications during or after your surgery in India, is the insurance company required to pay your spouse's lost wages while s/he stays with you in the Indian hospital/ICU, or will some American patients die alone in India because their family can't afford to fly or stay there until they recover?
United does this - in the 5 years since my employer switched to them, two of the three local hospitals went out of network when the negotiations stalled One (the one all my family's specialists work for) for several months.
The cartel that is the AMA is more culpable than insurance companies.
It's one of the well known bad actors but not the only one. The whole med school cartel needs to be overhauled - LCME, AAMC along with AMA.
I don’t disagree with you, but we need far more radical reforms than that:
A far more effective means to do so is for:
1) state legislatures to enable qualified nurses to function as primary care physicians.
2) Medicare, Medicaid and VA to pay for much cheaper medical procedures overseas.
3) State legislatures to require providers to advertise set prices at front desk and on internet and require cash/debit payment for services.
4) State legislatures requires employer insurance be voluntary and employees can have monetary equivalent added to the salaries.
The above would transform the system, regardless of the AMA.
https://frompovertytoprogress.substack.com/p/medical-treatment-should-have-a-transparent
https://frompovertytoprogress.substack.com/p/employer-health-insurance-plans-should
Many good suggestions. If we're going to allow medical tourism, why not allow getting care across state lines as well?
Isn’t that legal now? If not, then absolutely.
Even if you abolished the AMA, it would change virtually nothing about the American healthcare system.
Noah one of the reasons doctors order too many exams or frequent imaging follow-ups is the fear of being sued. The legal systems role should absolutely be included as a factor when discussing the overall cost of medical care.
The core problem is people in the US always want to use OPM (Other Peoples Money). This has basically created the costly system we have in the US.
A perfect anecdote example is from my father, who was a Stanford trained Pediatrician on the SF Penisula from the late 1950’s to the mid 1980’s. Private health insurance through work became more common during this period. It angered him that patients bringing a child in to get stitches insisted on meeting him in the ER (50yds across the street from his office) because their insurance would pay for it. My father would explain that if they came to his office it would be $30 and no charges for supplies, but the ER would be $200 + supplies ($40-$80) + his $80 ER charge (because that was what insurance would pay the Dr.). But their insurance would only pay for the ER after hours, not my father’s $30 in his office. Thus the total cost would be well over 10x higher for the same medical care.
The medical care system and the health insurance industry have operated symbiotically to make our health care the most expensive in the world. The insurance companies are essentially an administrative tax on the total spent on health care. It is in their best financial interest to have the total amount spent every year go up. There is no financial incentive for health insurance companies to reduce total health care spending.
Noah argues it is the providers who are charging more but as the example I gave makes clear it is the insurance companies who are allowing higher charges (e.g. $80 in ER vs. $30 in office) because they need these charges to increase.
My father always said you should fight against bad systems but you would be an idiot if you didn’t take advantage of them when you had no choice. It wasn’t his choice to charge $80, that is what the insurance company paid for the ER services of a pediatrician.
We see the same thing with Medicare and Medicare Advantage. Like all of my retired friends from graduate school and college we have all selected traditional Medicare, with Medigap G. With my current generic drugs (friends with other drugs need more costly part B) my monthly cost for Medicare A, B, D, and Medigap is $340. For that I can see any doctor in the country that accepts Medicare and there is no pre-authorization or denial of coverage. But people are choosing that they want the free gym membership that comes with Medicare Advantage rather than being able to access the best medical care when needed.
I’m very familiar with the costs of our system. Fortunately we had a $2million dollar cap (before the ACA) and in the 4 years my wife was alive with Ovarian Cancer insurance paid out over $1.3 million dollars. My wife, an RN, spent countless hours fighting our insurance, it was hell. A $5000 drug given after every chemo treatment suddenly not covered. We ended up spending ca. $150,000 out of pocket.
Excellent comment John. I totally agree with your views and especially enjoyed your comments on Medicare vs. Medicare Advantage. How are people so misinformed about this issue? It’s mystifying.
This is all accurate. But I think the bigger issue may be that health insurance is generally a terrible way of rationing healthcare. The big question of healthcare is how to say no-- unserious people get to pretend that you don't have to do that; Bernie Sanders' health care "plan" amounts to paying for whatever anyone could feasible want, and paying for it by taxing "billionaires." It's not a real approach.
Really, what we need to do is determine how to allocate scarce healthcare resources. And the way to do that probably involves... government death panels. By which I mean healthcare bureaucrats intensively studying best practices and determining what is and isn't worth paying for, and how much should be paid for it. That may be just as politically unpopular as United Health making those determinations (remember the outrage when a medical association recommended that women hold off on getting regular mammograms until they turn 50 rather than beginning at 45?), and it would hit a peak when that inevitably generated its own horror stories (the first time a woman died of breast cancer at 51 because she followed recommendations and didn't get a mammogram until 50, we wouldn't hear the end of it), but, realistically, it's probably the way to go.
An atomized system of health insurers without much market power and with fragmented provider networks and incentives to deny coverage just isn't how I think anyone would design a healthcare delivery system.
One nit: Courtney Barnett is from Australia
Noted and corrected. Great band.
I am also a fan of Ms. Barnett, although the elevator tune was a bit of an ear worm..
Obligatory note that Mother Teresa had a huge dark side to her, and probably shouldn't be the go-to byword for a selfless hero thinking of nothing except taking care of others.
https://np.reddit.com/r/badhistory/comments/gcxpr5/saint_mother_teresa_was_documented_mass_murderer/
Most of the anti Mother Teresa stuff comes from an incredibly biased and factually incorrect Christopher Hitchens hit piece.
I don't know about Hitchens, but Mary Johnson (whom I've met and found to be very insightful) had a much more nuanced take on Mother Teresa that's well worth looking into. Given that her criticisms include that Mother Teresa subordinated medical care to other goals, it seems highly on-point.
When I first moved to Vietnam one of the biggest culture shocks to me is that all hospitals and doctors require payment up front. There is no concept of "we will bill you later".
This is both good and less good: price lists are public in every hospital and there's no concept of surprise billing. But people who have been in traffic accidents aren't treated until someone pays (which until very recently was always in cash).
I'm not totally certain what happens if someone arrives unconscious with severe trauma and nobody offers to pay. I assume they aren't just left to die. But I know lots of people with less severe traffic accidents who haven't been seen until someone paid.
The "you have to pay first" is often done in an almost comic fashion, though it makes some internal sense. First you go pay for the doctor consult. Then the doctor will prescribe some tests. So you go pay for those. Then you collect the results and take them back to the doctor. They look at them and prescribe some medicine or physio or whatever. You go pay for that.
The result is there is usually a cashier on every floor of the hospital.
This column is a great example where the numbers don't tell the story. It is the uncertainty that drives people crazy. MD's get denied based on whims (too many anecdotes to cite but a common one services being denied by people who are unfamiliar with the disease being treated). MD's don't know what patients will be charged since it is unknowable ahead of time. UHC in particular has a high rate of denials (higher than competitors) the arbitrary nature of which has been covered extensively by ProPublica.
Uncertainty is obviously a problem, but how are insurers supposed to be responsible for reducing that uncertainty??
And surprise bills are the provider's fault.
I think this misses the mark on what the actual interaction between the provider and the patient or provider and the doctor looks like. I think transparency is what is actually needed here.
Giving a personal example, a family member of mine had a stroke a few years ago and was in acute rehab after the stroke.
The Friday before New Years weekend, we got a call from the provider letting us know that the insurance company had denied their request to extend care for another week. The insurance company had received the request earlier in the week, but waited until Friday morning to put through a denial.
I spent the entire day calling the insurance company and my provider trying to connect the physician with the right person in the insurance company to do a peer to peer approval so my family member wasn't tossed out of the facility with less than 24 hours notice. This experience was incredibly traumatic for myself and my family.
This isn't a unique example, I've had something similar occur for a family member who had cancer, related to approval for at-home chemo drugs.
How might this be different?
1. Insurance companies could have predictable, reliable timelines for finding out about denial or approval of claims. Currently (from my perspective as a patient), it's highly variable whether or not a claim has a 14 day turnaround, 72 hour turnaround, or if it requires a special approval from a special person within the insurance company that isn't the normal process.
2. Insurance companies could be more open about what rights patients have when a claim is denied. I've found, multiple times, that simply calling and working your way through the byzantine phone system can connect you to a person who's actually in charge of the claim. There are appeal processes that aren't clearly documented and rely on you asking the right questions and talking to the right people.
3. Insurance companies could have 21st century methods of actually talking with providers and patients about claim denials. Right now it all happens via phone call and fax, which makes it nearly impossible to understand what happened and why. It is very hard to get information on why a claim is actually denied in a timely manner.
My perspective on interacting with UHC would have been wildly different if they had given a weeks notice that they were cutting off care, carefully explained why they were cutting off care, and sent me a list of ways I could easily appeal or learn more about the process. The numbers really don't capture how bad this experience is for a patient, especially when it is occurring at a time when all you are thinking about is how to care for someone close to you.
How is it the providers fault when a doctor doesn’t even know what it will cost a patient? All a doctor can do is perform a service and code for it based on what insurance companies say we are allowed to do in which they set the rates. Hospitals are the ones who manipulate billing within a hospital and give most of the suprise costs. That’s administration and not providers.
The whole enterprise is "the provider", whether it's the parts who are up all night keeping a person alive, or the parts manipulating the bills and driving that same person into bankruptcy. It's not reasonable to insist that outsiders draw a line between the "Good Doctor Provider" and the "Evil Administrator" when they walk into a hospital needing care. A hospital's internal politics and procedures aren't the patient's problem; they're not equipped to understand or navigate it, and they don't deserve to be drafted into internal fights over who on the hospital payroll specifically deserves the blame.
And if I had to take sides, I'd side with the nurses over the administration OR the doctors.
The insurance companies purposely don’t allow full transparency to even the doctors or administration to find out easily what a patient actually owes. This is often not known Properly until the patient is billed for services and then it very dependent on what version of a health plan a patient has which doctors have zero insight too. It’s opaque on purpose to benefit the insurance companies ans separately, the hospitals also get away with this. I’m confused how this would be bc of the doctor?
Also, for the record, despite my adamant disagreement with this article, I’m still a big fan of your writings and your podcast. I appreciate what you do
Isn't the job of a company to provide reliable service? It's a little strange to ask how insurers can reduce the uncertainty when it is they that are the ones who are variable. That's like asking how we can hold car companies responsible for providing good brakes. But a minimum might be to ensure that they establish a standard of care for which they will pay. And let customers and MD's know what that is. There is a vast literature on issues with prior authorization and various suggested solution. See also https://en.wikipedia.org/wiki/Prior_authorization. And https://pmc.ncbi.nlm.nih.gov/articles/PMC8302155/#:~:text=As%20this%20case%20report%20highlights%2C%20prior%20authorization,care%2C%20PA%20must%20be%20regulated%20and%20standardized. As far as fault goes, you should become familiar with the No Surprises Act, which went into effect in 2022 and the various discussions around that. Finally, rather than take these few notes as definitive, I suggest you contact your local medical board for more information on this issue. They can provide much more in depth discussion and some MD's who can tell you more.
Are you kidding? The system just doesn’t work that way. I had UHC claw back funds from my doctor 6 months post payment because they bought my previous insurer, and I was flagged as multiple insurance because of of it. Calling the system Byzantine and arbitrary does not do it justice. I’ve had prescriptions denied because they want to spend a year going through every cheaper option first, and my experience I better than most. Pretending insurers aren’t a huge part of the problem is literal wishful thinking to meet your ideological bent.
UHC was already reforming. https://www.ama-assn.org/practice-management/prior-authorization/2-big-insurers-take-small-steps-ease-prior-authorization
How about the part where the insurance companies charged Medicare through Medicare advantage plans for services not delivered? The intended companies now own the providers, many of the hospitals, the clearinghouse, etc. there is almost only the monopolistic power of the insurance companies left…
The numbers don't tell the entire story, but they certainly can help set boundaries on attributing cause/effect, and can help determine which ideas for how to improve healthcare are good, and which are pointless reactionary drivel if not actively counterproductive. Which you would think would matter more to people than getting to fully bask in their daily Five Minutes Hate about corporations or whatever, but sadly it doesn't seem to be.
The problem of wrongful denials is a distinct and individual one, and they should solve it. Chances are that it would drive premiums up somewhat. Maybe not much, I don't know, but they would go up to cover the increased costs. So we solved that problem, but healthcare got even more expensive across the board, so now what? Back to blaming insurance companies?
I spent a while trying to track down the source of the UK out-of-pocket percentages but got stuck here: https://datacatalog.worldbank.org/search/dataset/0037712/World-Development-Indicators (there's an Excel sheet but it doesn't explain the source of series SH.XPD.OOPC.CH.ZS or any prefix of that).
It doesn't make sense to me unless they're also including private healthcare - the only real out of pocket charges in the NHS are prescription charges which is roughly 0.25% (£600mn/year out of £157bn).
My thoughts were dentistry or maybe optical care where folks may have something like Denplan or Simplyhealth cover. But the chart is very misleading.
Because, as you say, NHS treatment is free except for prescriptions. My immediate family have had 40 years of diabetes, cancer, ambulances, 3 premature children needing immediate neonatal care, sepsis, broken limbs, etc. and have paid £0.
(For those outside the UK, medicine prescribed by a doctor is charged at £9.90 per item. You can also pay £33 to cover all prescriptions for a month, or £115 a year to cover all prescriptions for a year. https://www.gov.uk/get-a-ppc.
Some long term conditions like diabetes qualify you for free prescriptions.
Private health cover is a thing here as the NHS has waiting lists. I am in a scheme through my employer and on that scheme there are copays for some medical operations. You *can* get private emergency care but I believe most folks would use the NHS and pay nothing)
Dentistry?
Noah, generally speaking I respect your opinion and enjoy your very informed opinions on most subjects. However as a physician you’re very wrong that doctors and especially nurses “know” the cost of their therapies, tests, etc. They don’t know, I didn’t know as our system is too complicated and cumbersome to know. We were too busy attending to patients to know. I think you are biased in this regard from some experience and base your opinion on that. I agree the US system is too costly because all the studies have shown that fact time and time again. Much work and political fortitude will need to be shown to get those costs down. It’s all about political will. Good luck!
I think Noah is talking about providers and doctors in the institutional sense, that is the fact that you guys have ended up with a system in which you literally do not know what anything costs, is not considered to be a problem of the user or a problem created by some separate administrative staff, it is a problem you have created collectively.
I cannot think of any other industry or even any other country where the people who sell you things literally have no idea what they cost and don't appear to consider that a problem. This thread is full of American doctors correcting Noah on this point, but it seems absurd. You should know what things cost, and if that requires significant investment in IT in order to answer this question on the fly then why aren't you doing it? There osn't even anyone attempting to propose a solution to this problem in this thread, which is embarrassing to the American medical profession. Fixing this sort of terrible experience should be one of your top priorities, and you guys even have a union with which you can do it.
There is a serious cultural problem baked into your answer. Saying "We were too busy attending to patients to know" is severely hurting patients. Somebody is going to pay for what you're telling people to do, and pretending that costs don't exist or that they are unimportant just places higher costs on the patient later, often in the form of crippling medical debt.
Doctors and nurses participate in a cultural ecosystem where ignoring costs is somehow considered noble because you're "saving lives" and shouldn't waste effort on thinking about costs. But those costs are real, and they are part of what it means to "take care of somebody." The best analogy I can think of is inviting your mother over to stay with you for a week, tending to her every whim and nurturing her, then sending her a bill a week later for all the food, lodging, and hourly rate for everything you did for her, then patting yourself on the back for being such a "great son." No, it is in fact quite selfish.
Because they provide a public service like teachers do?
That seems to be what Noah is proposing. And what the practical effect of Britain’s NHS or Canada’s health systems are
I agree with Noah. But as the parent of a special needs child who is on Medicaid I have to say that the dynamic makes me hate the insurance companies more. I can't fight about prices with the doctors who are providing my child with care. But I am more than happy to fight with the insurance company that figures out ways to mess up his coverage, make us pay out of pocket for prescription drugs and then ask for reimbursement, etc.
Coincidentally. My family switched to United Healthcare in the past month because of work related stuff and they called today to tell us they are denying coverage for my sons C-Pap machine, which he has had for 2 years. They claim he doesn't need it. Previous insurance (Anthem)covered it. We are going to see if Medicaid picks it up.
It makes me think that some of this anger towards health insurers is related to the social interaction of rejection. It is stressful to be rejected and have to deal with the uncertainty that comes with it. My wife and I have dealt with this type of crap for years, so we don't stress about it anymore. It's more of an annoyance for us. But I can see how for many people this is really triggering.