Private enterprise bankrupting America?

[bb113]

Well make no mistake, the US healthcare system is by no means like a free market. This half-assed free market thing is probably the worst solution of all.

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[Kluge]

Related. Went to an after-hours clinic yesterday after getting some methanol-containing shellac in my eye. Mom drove me. She sprained her ankle a few weeks ago and had her ankle x-ray'd. They billed her $1400 just for the x-ray.

Asked the doctor @ the clinic about it. They are equipped to do the same x-ray and would've charged $50. To have my eye examined under UV, and some other basic tests, cost me $40 (and I'm fine, btw). Pretty darn reasonable. I also waited a much shorter time in the clinic than my mom did in ER (granted, they were at different times, so somewhat non-comparable). He also prescribed me an antibiotic for bronchitis -- $10 for a full prescription, no gov't subsidization.

So, why do hospitals charge 28x more for the same procedure than an apparently-profitable clinic? Valet services? Subsidizing those who can't afford to pay the extreme prices?


ETA: Uncle's home insurance is covering my $40 cost to have eye examined (+having bronchitis looked at in the same visit), so total out-of-pocket cost for me - being uninsured myself - between bronchitis, a z-pack prescription, and having my eyes examined for damage after a can of shellac exploded, is $10. 

Thought I'd make the edit more visible. The insurance company (uncle's home insurance -- the can of shellac exploded in his basement, and my mom sprained her ankle on their steps) didn't require I call, was friendly and accepted my emails as proof-enough, and is sending a check directly to me. Even though I requested to waive my rights to potential future claims, the insurance company actually refused to let me waive that right and is willing to cover an additional $960 if ever required. Uncle's home insurance is also covering $1k of my mom's $1.4k cost, and she's going to attempt negotiating with the hospital to bring the cost down to $1k, so ideally she'll have no out-of-pocket expenses. I'll update as updates occur. 

ETA: Hospital reduced their obnoxious price down to $1.2k, only $200 out-of-pocket as home insurance covers $1k. Not terribly shabby.

[compro01]

Three reasons US healthcare is expensive:

1.  People are allowed to sue doctors, hospitals, and drug companies for hundreds of millions of dollars.  I mean, come on, does hundreds of millions really compensate a person better than a few million would?  Either way, they're set for life.

2.  Because the US takes a free and capitalist approach to the medical world, companies pour tens of billions of dollars into R&D for innovative new treatments and techniques.  So, the US has the latest and greatest treatments, but it costs a lot to recover those R&D expenditures.

3.  Because people are allowed to be treated without paying for it.  Illegals included.  Hospitals have to recover costs from people who don't pay somehow...

1. The fact that Texas clamped down on malpractice lawsuits several years ago and hasn't seen any drop in medical procedure costs (malpractice suits by number have fallen to a mere fraction of what they were and malpractice insurance premiums did drop like a stone), which continue to grow at well above the national average, suggests this is not a significant factor.

2. The fact that pharmaceutical R&D budgets are dwarfed by marketing budgets suggest this is not the cause either.

3. The fact that other countries follow the same "treat first, worry about money later" policy suggests this is also not the cause.

[Hawker]

Three reasons US healthcare is expensive:

1.  People are allowed to sue doctors, hospitals, and drug companies for hundreds of millions of dollars.  I mean, come on, does hundreds of millions really compensate a person better than a few million would?  Either way, they're set for life.

2.  Because the US takes a free and capitalist approach to the medical world, companies pour tens of billions of dollars into R&D for innovative new treatments and techniques.  So, the US has the latest and greatest treatments, but it costs a lot to recover those R&D expenditures.

3.  Because people are allowed to be treated without paying for it.  Illegals included.  Hospitals have to recover costs from people who don't pay somehow...

1. The fact that Texas clamped down on malpractice lawsuits several years ago and hasn't seen any drop in medical procedure costs (malpractice suits by number have fallen to a mere fraction of what they were and malpractice insurance premiums did drop like a stone), which continue to grow at well above the national average, suggests this is not a significant factor.

2. The fact that pharmaceutical R&D budgets are dwarfed by marketing budgets suggest this is not the cause either.

3. The fact that other countries follow the same "treat first, worry about money later" policy suggests this is also not the cause.

Correct.  The article makes clear none of those three things matters from the point of view of the US citizens being price gouged.

[SgtSpike]

Three reasons US healthcare is expensive:

1.  People are allowed to sue doctors, hospitals, and drug companies for hundreds of millions of dollars.  I mean, come on, does hundreds of millions really compensate a person better than a few million would?  Either way, they're set for life.

2.  Because the US takes a free and capitalist approach to the medical world, companies pour tens of billions of dollars into R&D for innovative new treatments and techniques.  So, the US has the latest and greatest treatments, but it costs a lot to recover those R&D expenditures.

3.  Because people are allowed to be treated without paying for it.  Illegals included.  Hospitals have to recover costs from people who don't pay somehow...

1. The fact that Texas clamped down on malpractice lawsuits several years ago and hasn't seen any drop in medical procedure costs (malpractice suits by number have fallen to a mere fraction of what they were and malpractice insurance premiums did drop like a stone), which continue to grow at well above the national average, suggests this is not a significant factor.

2. The fact that pharmaceutical R&D budgets are dwarfed by marketing budgets suggest this is not the cause either.

3. The fact that other countries follow the same "treat first, worry about money later" policy suggests this is also not the cause.

Ok, fine. 

[bb113]

Three reasons US healthcare is expensive:

1.  People are allowed to sue doctors, hospitals, and drug companies for hundreds of millions of dollars.  I mean, come on, does hundreds of millions really compensate a person better than a few million would?  Either way, they're set for life.

2.  Because the US takes a free and capitalist approach to the medical world, companies pour tens of billions of dollars into R&D for innovative new treatments and techniques.  So, the US has the latest and greatest treatments, but it costs a lot to recover those R&D expenditures.

3.  Because people are allowed to be treated without paying for it.  Illegals included.  Hospitals have to recover costs from people who don't pay somehow...

1. The fact that Texas clamped down on malpractice lawsuits several years ago and hasn't seen any drop in medical procedure costs (malpractice suits by number have fallen to a mere fraction of what they were and malpractice insurance premiums did drop like a stone), which continue to grow at well above the national average, suggests this is not a significant factor.

Do you have a source for this?

[compro01]

Three reasons US healthcare is expensive:

1.  People are allowed to sue doctors, hospitals, and drug companies for hundreds of millions of dollars.  I mean, come on, does hundreds of millions really compensate a person better than a few million would?  Either way, they're set for life.

2.  Because the US takes a free and capitalist approach to the medical world, companies pour tens of billions of dollars into R&D for innovative new treatments and techniques.  So, the US has the latest and greatest treatments, but it costs a lot to recover those R&D expenditures.

3.  Because people are allowed to be treated without paying for it.  Illegals included.  Hospitals have to recover costs from people who don't pay somehow...

1. The fact that Texas clamped down on malpractice lawsuits several years ago and hasn't seen any drop in medical procedure costs (malpractice suits by number have fallen to a mere fraction of what they were and malpractice insurance premiums did drop like a stone), which continue to grow at well above the national average, suggests this is not a significant factor.

Do you have a source for this?

sure.

http://www.citizen.org/documents/Texas_Liability_Limits.pdf

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1635882

http://www.washingtonpost.com/blogs/ezra-klein/post/gov-rick-perrys-texas-medical-malpractice-law-what-it-does-doesnt-and-might-do/2011/08/02/gIQAlafZJJ_blog.html

[bb113]

Three reasons US healthcare is expensive:

1.  People are allowed to sue doctors, hospitals, and drug companies for hundreds of millions of dollars.  I mean, come on, does hundreds of millions really compensate a person better than a few million would?  Either way, they're set for life.

2.  Because the US takes a free and capitalist approach to the medical world, companies pour tens of billions of dollars into R&D for innovative new treatments and techniques.  So, the US has the latest and greatest treatments, but it costs a lot to recover those R&D expenditures.

3.  Because people are allowed to be treated without paying for it.  Illegals included.  Hospitals have to recover costs from people who don't pay somehow...

1. The fact that Texas clamped down on malpractice lawsuits several years ago and hasn't seen any drop in medical procedure costs (malpractice suits by number have fallen to a mere fraction of what they were and malpractice insurance premiums did drop like a stone), which continue to grow at well above the national average, suggests this is not a significant factor.

Do you have a source for this?

sure.

http://www.citizen.org/documents/Texas_Liability_Limits.pdf

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1635882

http://www.washingtonpost.com/blogs/ezra-klein/post/gov-rick-perrys-texas-medical-malpractice-law-what-it-does-doesnt-and-might-do/2011/08/02/gIQAlafZJJ_blog.html

This is pretty much what I found. The thing I was wondering is why they only include medicaire costs and not claim rates for procedures covered by commercial insurance or payed out of pocket.

[bb113]

It looks like the relative cost of hospital visits is dropping, but imaging and testing is rising. Very interesting.

[bb113]

It looks like malpractice insurance only directly accounts for a small percentage of the total cost. The idea in limiting malpractice claims is more to reduce ordering extraneous tests.

I think what is going on here is a culture of defensive medicine. Defensive medical practice is "sticky". Once a doctor is trained, and used to running many tests, they are unlikely to change this practice just because of limited liability. We may have to wait for the next generation of doctors before we could expect to see an effect.

[SgtSpike]

It looks like malpractice insurance only directly accounts for a small percentage of the total cost. The idea in limiting malpractice claims is more to reduce ordering extraneous tests.

I think what is going on here is a culture of defensive medicine. Defensive medical practice is "sticky". Once a doctor is trained, and used to running many tests, they are unlikely to change this practice just because of limited liability. We may have to wait for the next generation of doctors before we could expect to see an effect.

Well, when it's not coming out of the doctor's pocket, why NOT order all the tests that they need?

[bb113]

It looks like malpractice insurance only directly accounts for a small percentage of the total cost. The idea in limiting malpractice claims is more to reduce ordering extraneous tests.

I think what is going on here is a culture of defensive medicine. Defensive medical practice is "sticky". Once a doctor is trained, and used to running many tests, they are unlikely to change this practice just because of limited liability. We may have to wait for the next generation of doctors before we could expect to see an effect.

Well, when it's not coming out of the doctor's pocket, why NOT order all the tests that they need?

Why doesn't a mechanic check every single thing in your car when you get an oil change? Because people don't want to pay what that would cost. It is alot easier to replace a car than your health though.

[Hawker]

It looks like malpractice insurance only directly accounts for a small percentage of the total cost. The idea in limiting malpractice claims is more to reduce ordering extraneous tests.

I think what is going on here is a culture of defensive medicine. Defensive medical practice is "sticky". Once a doctor is trained, and used to running many tests, they are unlikely to change this practice just because of limited liability. We may have to wait for the next generation of doctors before we could expect to see an effect.

It won't make any difference.  The cost comes from further up the supply chain.  Tinkering around with MDs incentives is an interesting pastime for legislators but it doesn't affect the cost issue to any meaningful extent.

[bb113]

It looks like malpractice insurance only directly accounts for a small percentage of the total cost. The idea in limiting malpractice claims is more to reduce ordering extraneous tests.

I think what is going on here is a culture of defensive medicine. Defensive medical practice is "sticky". Once a doctor is trained, and used to running many tests, they are unlikely to change this practice just because of limited liability. We may have to wait for the next generation of doctors before we could expect to see an effect.

It won't make any difference.  The cost comes from further up the supply chain.  Tinkering around with MDs incentives is an interesting pastime for legislators but it doesn't affect the cost issue to any meaningful extent.

You mentioned vendors earlier but then we got distracted. Where in the supply chain?

[Hawker]

...snip...
You mentioned vendors earlier but then we got distracted. Where in the supply chain?

From the article:

The result is that, unlike in other countries, sellers of health-care services in America have considerable power to set prices, and so they set them quite high. Two of the five most profitable industries in the United States — the pharmaceuticals industry and the medical device industry — sell health care. With margins of almost 20 percent, they beat out even the financial sector for sheer profitability.

The players sitting across the table from them — the health insurers — are not so profitable. In 2009, their profit margins were a mere 2.2 percent. That’s a signal that the sellers have the upper hand over the buyers.

[bb113]

So then the question is why are the insurers losing out so much.

[Hawker]

So then the question is why are the insurers losing out so much.

Please read the article.  It takes you less time to read it than it takes me to copy paste the answers.

[bb113]

So it once again comes down to someone who wants data vs someone who wants a narrative that makes sense to them. If you are uninterested in the data just say so from the beginning from now on.

[stochastic]

You have to know that most of these medical services are the cutting edge of technology and that technology is financed and researched in America.  It is like getting the PS7 while the rest of the world plays on the PS3.

How much would you pay to live forever?

[Hawker]

You have to know that most of these medical services are the cutting edge of technology and that technology is financed and researched in America.  It is like getting the PS7 while the rest of the world plays on the PS3.

How much would you pay to live forever?

I twould help you to read the article.  The US overpays but it gets the same stuff.