Please consider Senator Rand Paul’s “Obamacare Replacement Act“.
Paul’s bill allows cross-state insurance. That’s a step in the right direction.
However, Paul misses many obvious improvements. I provide a list below. Any doctors or insurers care to chime in?
Mish Health Care Proposals
Published fees: Fees for routine services, medicine, and operations need to be published, not set by government mandate. Whether or not someone is insured, the fees should be the same.
Shopping Around: People should be encouraged to shop around for the lowest-cost provider. Insurance providers could allow specified amounts for specified services. The insured can then shop around for the best provider. Why should the insurance company care where the service is performed. Auto insurance companies typically don’t.
Foreign Services: Low-cost plans should be allowed to require foreign operations for hugely expensive operations for those Low-cost travel.
For example, Bloomberg reported Heart Surgery in India for $1,583 Costs $106,385 in U.S. Demand treatment in the US? Fine. You should have to pay for it. Obviously, this provision does not apply to emergency services like an accident, or to a heart attack.
Insurers should cover travel expenses for the insured and spouse for stays longer than 10 days.
Drug Pricing: There should be a price schedule for drugs. Pharmaceutical companies should not be allowed to charge less to overseas buyers than US buyers. There can be volume discounts but they have to be across the board. Medicare and Medicaid should get the same volume discounts as everyone else.
Medicare/Medicaid: Medicare should be no different on foreign care or shopping around. Right now, those over 65 simply do not care much what things cost. Incentives are necessary to make sure they do. This includes forcing overseas treatment for those able to travel.
Right to Die: No one should be kept alive if they want to die. Nor should someone be artificially kept alive if they do not have insurance, or their spouse or designated appointee wants to pull the plug on someone’s behalf.
Right to Refuse Service: If someone is not insured, hospitals should have the right to refuse service.
Patent Restrictions: Patent laws need to be revised to prohibit making minor changes and renewing patents for extended periods again and again.
Eliminate State Restrictions: Allow any insurance company in any state sell insurance in whatever states they want.
Pooling: More pooling seems welcome. But I fail to understand one phrase in Paul’s proposal: “so long as the organization does not condition membership on any health status-related factor.”
Is age a health status-related factor? If not, we are going to see pools based on age.
Also consider a pool of those enrolled in college. How many people would take a class if it saves them a bundle on insurance? Pooling may require more careful thought than was covered by Paul.
Mish Synopsis
My proposals provide significant cost savings opportunities forced on drug providers, allowed by hospitals, allowed by insurers, and encouraged by insureds.
I invite doctors, insurers, and others to chime in on my proposals. Hopefully, we can quickly come to a solid consensus on a majority of these ideas and get them into the hands of President Trump and Senator Paul.
Revisions
The original post was revised to remove the word “standardized” when my intent was simply to require published fees. The government should not set prices. Competition should. I also added a provision to eliminate state borders.
I also added a provision to eliminate state borders.
Do Something!
President Trump and Rand Paul are nibbling at the edges. We need serious reforms.If you like my suggestions, please contact your representatives and ask for them.
Click here to Find Your Representative. You may also wish to try Contacting Congress.
If you have ideas, please let them be known.
Mike “Mish” Shedlock
I would prefer if the free market simply provided the best solutions, rather than some sort of rules set up by the government.
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There is no such thing as a free market, just as there is no such thing as free trade. If by free market you mean government gets out of the way, then you are willing a free for all calamity, wher only the most rapacious get to decide. Medicare has to be universal. it affects everyone. and that’s what governments are supposed to do, look out for everyone. They are not very good at it any more, but still represent the only viable option.
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PS. No insurance is required, except for private services. Not one dollar!
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@Mish – I would amend your Drug Pricing and add one more provision…
Drug Pricing – allow purchase of drugs from foreign countries for personal use. If need be, restrict it to western nations. Might be better than making a schedule of drug prices, as the market will likely take care of itself.
Drug Approval – allow drugs that have been approved in any other western nation (or, say, 3 of 6, e.g. Canada, Japan, UK, …) to be automatically approved by the FDA. We don”t have a monopoly on smart scientists and great concern for citizens, so no need to duplicate (triplicate, etc?) the costs.
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I alway request the cost from doctor’s staff. It is not easy. Most times they say they do not know.
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That is what we had prior to the 1960s. Unfortunately it worked so poorly that people demanded that the government step in.
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BS
Like many other things people became convinced using “fake news” and propaganda that the system we had “wasn’t working” and that people were “dying in the streets”. Even in the 1960s the medical care available in the most rural parts of the US was miles and away better than that available anywhere else in the world. Even charity hospitals – which were in nearly every major city – were miles above the care you could expect to receive in another country. Did they have the *best* equipment and personnel? No – but they were good for serving the market they catered to.
The most destructive law enacted with regards to health care was championed by Republicans in the eighties because everyone was convinced by the “dying in the streets” argument that “something needed to be done.” They passed the law that required all hospitals who participated in medicare/medicaid to treat *anyone* who showed up at their door regardless of their ability to pay. Since virtually all hospitals had bellied up to the government teat at that point (free money, yo!), they were all subject to the law.
The sad reality is that *someone* has to pay for the treatment of a person who shows up in an emergency room whether the bill is $100 or $1,000,000. And when you force hospitals to spend the maximum they can to keep someone alive that bill can easily run into the millions.
To stay open, hospitals have to pay employees and doctors and nurses and they have to pay for supplies and overhead – so what do they do when they have to spend $1,000,000 out of pocket to keep someone without insurance alive for a month? They find a way to spread that amount due across the rest of their products. So you end up with $10 Tylenol and $5 band-aids. And eventually that “inflation” creeps into everything the hospital does.
Everything that’s wrong with healthcare and the health insurance industry stems from this one law – and the subsequent failure of government to get out of the business. Number of doctors? Regulated. Number and locations of x-ray facilities? Regulated. Number and locations of MRI/CAT facilities? Regulated. Number and locations of lab facilities? Regulated.
Regulated, regulated, regulated.
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Not BS at all. The simple fact of the matter is people didn’t die in the streets (well a few did). They died at home, because they couldn’t afford medical care. Because they were old and couldn’t work anymore.
And no one would insure them because they were old and were going to get sick. The Democrats ran on a platform of creating medicare for the elderly and were wildly successful with it.
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And ultimately resulted in both demographic and economic destruction for the sake of virtue signaling.
You are living the results of that success now.
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What people don’t get is that the existing practice is illegal and could be cleaned up by applying existing laws against racketeering and for competitive markets. It is illegal to charge people different rates for the same service, and it should be illegal not to post prices, just as you car repair shop needs to give you an estimate.
That said, even though prices are far more reasonable in Europe or Canada, they are still far too high, and for the very same reason. As long as people have insurance, they will not shop around and there will be no price differentiation or discount offers. Most medical expenses (except for catastrophes) should be paid out of pocket by the person themself, otherwise there is no incentive to go cheap.
Imagine you have hardware insurance for your hardware needs (every time you go to the hardware store). People would buy hammers they don’t need. Insurance companies would be happy with capturing an ever growing stream of revenue representing an ever growing slice of the economy. And the hardware companies will gladly be selling you $200 hammers. There is no incentive for good behavior in this 3-party cycle.
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Absolutely agree. Prices on all minor and most major procedures should be available on the net or at the facility before the patient gets treated. The law is supposed to protect us from monopolies and discrimination, yet in the medical field this doesn’t happen. People should be rated on how often they use their insurance in order to charge them properly. How many folks are being financially raped with insane premiums and never use it to subsidize those that do.
Why are the same drugs in the US substantially higher then everywhere else. This is where the Trump administration can help and cap all drugs purchased by any federal insurance at Canadian or Mexican pricing for the same drugs. Time to expose the crooks and get prices in line.
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We still need to Fix the Damage done by (OC) Obama Care and fix those problems that OC didn’t. Will the new system encourage employers to hire full-time workers again? And law suits and “over treatment” still eat up far too much of health care premiums?
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The Free market has been providing the solution. The free market as we have it. Big lobbying money creates all the outcomes. Where ever there is a gigantic amount of cash flow you can be sure there are lobbyists there with fistfuls of money to take control of that channel of commerce.
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LOL! You had me at “free market”.
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I like the idea of medical insurance be not-for-profit, not single-provider. The doctors, nurses, hospitals, etc should be able to profit but not insurance. Interested in your thoughts.
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libertyhealthshare.org
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President Trump seems to want free market forces to play a bigger role. For this to happen it is essential that the free market be allowed to function concerning the number of students entering medical school each year. The AMA has way too much influence in maintaining an artificial shortage of doctors. Politicians and other elites probably don’t appreciate just how little time most doctors are able to allocate to each patient in flyover country. Most waiting rooms are packed. One solution to the longer times that would be necessary for new doctors to recoup their “investment” under a more competitive environment would be government subsidies to qualified and deserving medical students. Unfortunately, the AMA has lots of money to pass around. Drain the swamp indeed.
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MIT’s Jon Gruber collected $500,000 in consulting fees from the Obozo administration for designing obamacare… while Gruber was supposedly teaching at MIT at the same time.
Outside of academia, employees are not allowed to be “on the clock” for two different employers at the same time.
Full time students are required to carry a full course load (4-5 courses a semester, or equivalent in trimester systems). How many college professors teach more than 2 courses per semester? Basically none. And they have grad students acting as teaching assistants, the professors aren’t even covering the course alone.
Lazy professors will counter that they are doing “research”, but that would mean they are really part time professors, part time researchers. How many college brochures amount to advertising fraud? Part time professors listed as though they were teaching full time (and paid as though they were full time).
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I agree there aren’t enough doctors. Probably because it’s very difficult to become one. One side of the argument is it ensures all doctors are qualified, but sometimes you have to be pragmatic. I’m all in favor of more doctors, even if it means a greater risk of something going wrong.
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“Mish, On Published fees/Shopping around:
Hospitals are now actively discouraging price competition by not quoting prices on even routine surgeries.
Forcing the hospital to publish what they have actually charged in the previous year for procedures and the ancilliary costs associated with them forces an accurate price quote.
For (simple) example:
Hernia Surgery:
Service Cost
Doctor’s Service: $5,000 used 100% of time w/ hernia surgery = $5,000
Recovery Room $500 used 100% of time = $500
Anesthesiologist $500 used 100% of time = $500
Rare Procedure $2,000 used 20% of time = $400
Very Rare Procedure $20,000 used .05% of time = $10
2,000 X .20 = 400
20,000 X .0005 = 10
Total Quote = $6,410
Not rocket science right?
I don’t think most doctors want price competition because they feel it is somehow beneath them. Good for the plumber and roofer sure, but not *him*. Think we may need to pull them kicking and screaming into the world of price competition.
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Drug price schedule = Drug Price Setting. There is no faster way to decimate the industry and kill innovation than to say that the government knows best what a product is worth.
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I believe the idea is US taxpayers should not subsidize the world, especially the developed countries, by paying more for the same drugs. In fact, the America First doctrine demands that we get a better deal!
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Where did I say govt sets the prices?
I propose no such thing
I propose there is a price list that applies to all at the same schedule
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Since the biggest purchaser of drugs is governments and probably the main reason drugs are cheaper in foreign countries is the governments refuse to pay the inflated prices, the governments will effectively be setting the price.
I’m not disagreeing with the single price since it will almost certainly lower drug costs in the US, but the prices will be determined by what governments are willing to pay.
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@Mish–
(1) Good luck getting medicare to pay even legitimate costs, never mind the same prices as everyone else. You do know medicare is already bankrupt, and pays 14-18 months late?
Medicare appeared to work for awhile because the private sector (with more workers) paid too much, and the retiree sector (with a smaller group) underpaid… and even then the system is bankrupt. Now you think a bankrupt government is going to pay actual cost (no subsidies) for a much larger group of retirees?!?!?!? Have you lost your ability to do simple math?
(2) On a similar note, wait until the useless socialists in Europe and Canada learn of your intentions to make them pay their share of drug development costs. Losers like Obozo (and his predecessors) have constantly stuck it to US taxpayers, insisting that socialist countries get a free ride in what you mockingly call “free trade”… then you accuse Trump of starting a trade war because he stands up for the country he works for… and now in the ultimate hypocrisy, you propose making the freeloaders of Europe/Canada pay the same price as the US?
Or are you as daft as Bernie Sanders? Believing R&D costs just magically disappear in some socialist rainbow? Someone has to pay R&D costs Mish, whether you whine about it or not. Right now, the US consumer pays all those R&D costs, while the rest of the world gets a free ride. The rest of the world has become addicted to losers like Obozo screwing US consumers to subsidize everyone else — only to have everyone else complain we aren’t being generous enough.
Admittedly, a lot of the R&D is really a subsidy for a bloated FDA and even more bloated academia… all those “professors” collecting massive consulting fees while double billing students for “teaching” while they are really consulting.
How do you plan to cut off all these free loaders Mish? European drug costs will explode when they have to pay the true costs… Government bureaucrats at the FDA will scream blue murder and call their union reps…
And its impossible to imagine what the little snowflake groomers that falsely claim to be professors will do when they actually have to teach for the paycheck and benefits they think are entitlements. No consulting in a different city while simultaneously double billing students for teaching?
Unnecessary middle men and free loaders are pandemic to the US health system, and it is naive for you not to even mention this
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“Drug development costs.” Are you a shill for the industry? Most of the ideas and innovation comes from publicly funded education and research, and it is only turning it into a viable product that represents Pharma’s involvement. We should go “open source” on drugs. Do you know how many drugs have their origin in socialist Europe or even the third world? Drug development costs and America subsidizing the rest of the world are rationalizations by Pharma companies who try to milk mankind of every last penny.
The biggest drug savings would be not to take pills that are doing no good anyway. People only take them because Pharma send doctors to conferences at the beach, supplies them with free samples and “information”, and fosters this whole culture about taking medicines that the doctor prescribes, or going to the doctor to demand medicine for anything bothering you at the moment. Why do you think there are 100× as many kids getting Ritalin in the US as in France? It’s not because there is a local ADHD epidemic. Most of the high blood pressure pills and anti-depressants and what have you can be fixed far better by cutting out carbs and 2× daily exercise.
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It’s not just R&D costs that make drug development expensive. It’s all the clinical trials and getting FDA approval.
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Agreed…
I wrote in my earlier comment –> “Admittedly, a lot of the R&D is really a subsidy for a bloated FDA and even more bloated academia… all those “professors” collecting massive consulting fees while double billing students for “teaching” while they are really consulting.”
@Webej seems to have a basic reading comprehension problem. Maybe he can’t read, or maybe he can’t think., Or likely he is still throwing the dirty diaper temper tantrum he has been on since November.
Trump wants to eliminate a lot of the useless waste that is government bureaucracy — hopefully his efforts will get to the FDA as well. Forcing college professors to actually teach, instead of doing endless side jobs, once they get tenure (which is an academic concept with no legal standing) would be a great thing for drug costs and for tuition costs.
And make the universities pay taxes on their research areas –its research not teaching, so it should be taxed and accounted for the same as any other research facility. Equal treatment under the law, right?
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Well, the French let their kids drink wine. 🙂
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“You do know medicare is already bankrupt”
You do know that this is not even remotely true, right? At least you started with this statement, saving us the time to read the rest of your nonsense word salad.
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You should really learn to read. Maybe read the report written by Obama’s own budget staff. Or read the report from Medicare’s trustees, written under Obama administration directives.
Medicare is actuarially bankrupt already, and it goes cashflow bankrupt in 2018.
You @smangles don’t sound smart enough to bother arguing with
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Medicare is a federal program. So it cannot be bankrupt by definition. It doesn’t matter what they allow for it, it can be topped up forever.
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If you live a few more years, you will realize the stupidity of this statement. The same could be said for Social Security, but how much will you get?
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Mish, I really like your proposal. May I share my ‘common-sense’ approach to pre-existing conditions? Pre-existing condition coverage is often abused by ‘freeloaders’ and has contributed to out of control premium increases for everyone. We should require a graduated 3-year waiting period for all new enrollees before fully covering pre-existing conditions. E.g. first year – 20%, second year – 50%, third year – 100%. I think it will slow the increase in premiums and at the same time allow people to opt-out knowing the risk.
I also believe Obamacare subsidies is far too generous. People need to have skin in the game if we want costs under control.
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Outlaw all medical insurance coverage and watch the real free market materialize, Who would be the first to complain… the hospitals or the doctors?
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Greg,
1,000% correct.
Before widespread health insurance – Health Care was 5% of GDP and people paid that 5% out of pocket.
Now – 18% of GDP devoted to Health Care and out-of-pocket (co-pay etc) is about 5%
Health Insurance is a scam which resulted in zero benefit to consumer and a 4x income increase to industry
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we have a winner!
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It will only work if people have to pay up front. Otherwise those who pay will be forced to pay for themselves and all the freeloaders.
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Mish, the rebating provision you suggest above is expressly forbidden under state insurance laws. Rebates are not allowed everywhere except, oddly, in California.
An alternative plan, which is very simple, and would work:
1. Repeal McCarran-Ferguson’s provision that only states can regulate insurance. Pass a federal law prohibiting states from regulating insurance. This will immediately get rid of insurance price-fixing under state insurance laws and will relieve insurance companies of tremendous costs to which they are subject now.
2. Pass a federal law repealing all state laws requiring medical professionals to be licensed and otherwise regulating health care. Pass the Murray Rothbard Old Crone law, pursuant to which a person with a hangnail would be able to have it fixed by an unlicensed old crone for $5.
3. The increased competition in the insurance market and the healthcare market would immediately decrease costs and increase quality of service. People would use apps like Uber to find doctors with the best reviews and could check the doctors’ qualifications online. It would be great.
4. If the government wanted to throw some tax benefits at people in connection with health insurance, that would be fine, too.
5. Oh, sorry, I forgot – repeal Medicare, Medicaid, etc. Not for people grandfathered into these programs, of course. Repeal Obamacare, too – that goes without saying.
That’s about it.
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Mish, the rebating provision you suggest above is expressly forbidden under state insurance laws. Rebates are not allowed everywhere except, oddly, in California.
An alternative plan, which is very simple, and would work:
1. Repeal McCarran-Ferguson’s provision that only states can regulate insurance. Pass a federal law prohibiting states from regulating insurance. This will immediately get rid of insurance price-fixing under state insurance laws and will relieve insurance companies of tremendous costs to which they are subject now.
2. Pass a federal law repealing all state laws requiring medical professionals to be licensed and otherwise regulating health care. Pass the Murray Rothbard Old Crone law, pursuant to which a person with a hangnail would be able to have it fixed by an unlicensed old crone for $5.
3. The increased competition in the insurance market and the healthcare market would immediately decrease costs and increase quality of service. People would use apps like Uber to find doctors with the best reviews and could check the doctors’ qualifications online. It would be great.
4. If the government wanted to throw some tax benefits at people in connection with health insurance, that would be fine, too.
5. Oh, sorry, I forgot – repeal Medicare, Medicaid, etc. Not for people grandfathered into these programs, of course. Repeal Obamacare, too – that goes without saying.
That’s about it.
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Thanks
Off the top of my head without research – sounds good to me
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Addendum
Some people questioned my word “standardized”. I am not proposing government sets a price. I am simply saying there cannot be a different price for the same procedure for blacks than whites, or insured vs not insured. I do not propose all hospitals have the same price. I just want them to have a posted price. No more, no less. When you buy an item at WalMart, it has a price. The price is not set after you walk out the door. Nor does one ever pay $100 for an aspirin.
One can argue government should stop Medicare, Medicaid, etc. Ideally they may be correct. But forget it. It’s not going to happen. I am shooting for realistic proposals that may make a huge difference in bringing down health care costs.
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Mish,
your idea of forcing medical tourism for expensive operations is brilliant.
in 2015, I spent 3 days in a first class German Hospital with full surgery. total cost €2,000
The same event in California would have cost $60,000.
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Thanks Vooch
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But Vooch, you paid so little because German socialists heavily regulate the health care industry in favor of patients. You should have demanded to pay American free market rates.
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Well somehow it seems to be working over there. Their costs are lower and their health is better. Despite being the most expensive healthcare system in the world, double the industrialized world average, we rank 39th in health outcomes. Guess who is number 1, France. A shocker no doubt. A group of intelligent people without vested interest need to study why our system sucks and engineer a something that works . Right now we have special interests writing policy. When all is said and done a single payer system will be the answer as distasteful as it sounds. I would urge anyone interested in a thorough analysis of healthcare systems around the world read the book “The Healing of America” by TR Reid. A documentary was also done on this book which probably can be accessed in the PBS archives.
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The US system is decidedly not free market
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Mish — what happens when a store starts promising a discount, say for the elderly or children or some other group? Pretty quickly that group starts to think they are entitled.
The US government “trained” Europeans to think they should not have to pay for drug R&D costs. Foreign governments set prices according to production costs, ignoring the R&D costs incurred — and the losers in Washington DC allowed this to happen.
The foreign governments do not respect US intellectual property, and assume they are entitled to copy the answer (the drug) without doing the work (paying for R&D).
Now you seem to claim that if the US told these countries they must pay the same price as the US (with R&D) costs included — that would be starting a trade war (as you seem to accuse Trump of doing).
But you also seem to think we can have standardized prices (which sounds like a great idea to me — assuming one has the stones to enforce it).
Which path are you advocating? Standing up for and protecting US rights? Or defending other countries’ free loading off our R&D efforts? You can’t have it both ways
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One price for all sounds like a good solution. If the drug companies want to sell their products to Europe, at prices that don’t subsidize R&D, that’s fine. They can sell them to us for the same price.
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You are one of those people who think R&D just grows on magic beanstalks? Are you on welfare yourself?
Do you work for free? If not, where do you get off expecting drug researchers and doctors to serve you for free?
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Seriously the Federal government has to do it. It has to cover everyone in the country. Only the Fed can afford it, because it can always pay its bills. without recourse to taxpayer support. A private system, as here in Australia, can run concurrently, a personal choice affordable for those willing and able to pay. The basic system is free although it could have a small fee due each visit, say $5 max. It is not to raise revenue but to stop people going every time they have a sniffle etc or for repeat visits for the same assessment.
It will be half the cost of the existing system you have now in the USA.
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useless and dumb comment from an Australian who doesn’t know anything about the US government.
Easy for you to make dumb suggestions on how to spend other taxpayers money– but shouldn’t you fix your own messed up country first?
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I don’t understand buying insurance across state line. I buy mine across state lines now. If you want prices to drop make hospitals and clinics post their prices for everyone to see. They will drop 80% in a very short time.
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Under Shop Around all health care providers, doctors, hospitals should be required to post their fees. All of these providers known this this information already and where this has done it has affected the pricing and provided savings to consumers. Maybe you don’t need to go to India but go to the Midwest for cheaper Drs and hospitals.
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In a free market, having the libtard goobermint require you to post your prices is pure socialism. Must everyone be denied their fundamental liberty to operate their businesses (property) as they see fit?
In a free market, the doctors who publish their prices will quickly gain the trust of the consumers and have a competitive advantage. I expect to see it any day now that Trump is president.
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I like your proposals with one each exception. Patents on other products don’t expire like they do with drugs. Can you imagine if drug companies didn’t have to make their entire R&D cost plus other costs plus profit in 5 or 7 years (I can’t remember the patent life). The entire pricing schedule would change. And why does a drug company do all their work then have to turn over that work to competitors who never had to spend a dime developing that Intelllectual Property. That doesn’t happen in any other industry.
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Patents are theoretically good for 25 years…. but the FDA drags their feet (doing something close to nothing) for the first 15-20 years. And the drug company can never guess just how much red tape will be involved, so they have to assume the worst.
Get rid of useless bureaucrats and dumb testing protocols (which fail to keep unsafe drugs off the market anyway). Get rid of the useless academic consultants making a fortune doing the statistical “analysis” on the absurd tests…. those two changes would drastically slash R&D costs without helping or hurting safety.
Then make the drug companies amortize the much smaller R&D costs over 20-25 years (instead of 5-7 now), and drug prices could be much much lower.
And absolutely, require all foreign countries to pay the same price that US consumers pay. One price for everyone. Any country that does not respect our intellectual property can pay massive US trade tariffs until they go broke. No more free loaders.
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Great start Mish!!! Whatever you send up the flag pole, I will contact our Senator, Congressman in our area as well. I also serve on a Board with an Indiana Senator. Let me know if it’s convenient!
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Mish,
I know some hospital do a certain amount of indigent care but as far as I know no hospital or Doctor is required to provide treatment beyond the stabilization of a patient who shows up or is brought to an emergency room. Someone needing treatment for cancer or an open heart surgery is NOT entitled to that treatment based on any law unless arrangements for payment is made!
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I wondered when someone was going to address the hospitals being able to refuse patients. I’ve never honestly looked at whether or not hospitals local to me refuse/can’t refuse services due to inability to pay. I know if posted prices were available, there’d be a whole lot more people far more conscience of the financial burden they’d face if they knew how much it’d be. As of right now, no one knows, and consequently do not care until they get the sticker shock in the mail. Watch for routine preventative checkups go away for people unable to pay, as the costs for these maintenance visits slide back to the insurance purchaser. Wth do you even buy insurance for if not for these anyways?
I refuse to go to any doctors lately as I know it’s ridiculously cost prohibitive in these current times. Sure, if it became life threatening, that sentiment goes right out the window; I’m not going to lie about it. Then I’m stuck with the possibility of facing medical bankruptcy. But for as long as I can manage it, I’m done with the medical/insurance industry as I simply can’t afford the out of control costs.
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My personal doctor is a Hungarian immigrant. We always talk about the craziness of the US healthcare system. He told me that his number one expense after paying his two nurses salaries is the cost of interfacing with insurance companies. From negotiating prices with dozens of carriers to having staff to quality checks on procedure codes, to staff that have to handle billing and claims.
He says, and I assume it is true, that it is the insurance industry that doesn’t want prices published because it would show how much of a markup they are taking.
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Yeah, they’re legally raping everyone. As for the top two expenses, at least those are functioning in actual job performance. There is a real measurable production/performance on their part. Imo, not that it’s worth much, insurance is the largest fraud scheme in history (including the infamous Ponzi!).
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One of the main problems is most people take healthcare for granted. There is no incentive to take hospitals or the medical community to task for services rendered. Go try and get an itemized bill for a procedure and you will know what I mean. The wife and I always ask for an itemized bill.
On one procedure alone the hospital tried to over charge my wife 6900 bucks. Her hysterectomy to be precise. Most people do not care as they have insurance.
R&D cost should be share where ever the drug is bought plain and simple. It boggles my mind a person with AIDS pays 3500 a month for a drug dispensed in Africa for 4 bucks a month. Stifle R&D is not an excuse just a cop out for those in the medical community.
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The lack of enforcement of existing anti-trust laws has been a key reason that the cost of healthcare products and services have exponentially increased around 9% PER YEAR FOR OVER 30 YRS. Trump does not appear to be addressing this issue, which means the healthcare lobby still controls politicians. So sad. Nothing will change until we have short term limits, which means every incumbent needs to be voted out of office, every election.
https://market-ticker.org/akcs-www?post=231780
https://market-ticker.org/akcs-www?post=231778
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During the campaign Trump’s website had his platform. Included in this was a call for transparent pricing for healthcare services and reimportation of drugs. I haven’t heard anything about this since the election except for the defeat of a bill allowing drugs to come in from Canada. I agree that antitrust law enforcement is a no-brained.
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More than just term limits, we need to elect independents. The deep money in both parties will always find another candidate to do what they want. Those guys get all the money that wins elections. When people start electing candidates that don’t have the money or backing by the two main parties, then things may change. Job security for Democrats and Republicans needs to disappear.
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Earlier Kenneth Neel stated that the AMA and med schools created the shortage of Drs. Actually, a high number of DO schools have entered the market to fill that void. Further, a high number of physician assistants and nurse practitioners are being put out to fill the primary care role. A bigger problem is the lack of residencies being created- funded by the federal gov’t- to train those increased number of Drs coming out. It is becoming increasingly difficult to for graduating physicians to get a residency- the effect of which is they never get to practice medicine.
On another note re: R&D, look at the time and cost for drug approval. Most drugs never ‘get there’. Over a decade and 100’s of millions of $$$. Then those drugs are going to a non-compliant self-abusive society with TV lawyers on the ready to sue. Newly approved drugs represent the lottery to CEOs and lawyers alike.
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All new drugs will always be a lottery. The simple fact is that science doesn’t know what every single protein in the body does, and how they all interact in every situation and especially between people with different genetic profiles.
The $100’s of millions spent on efficacy testing is insurance to make sure you are not about to kill a million people or create tens of thousand of deformed babies. But once through you are pretty much guaranteed to help some people and hurt others. Hopefully you help a lot more than you hurt and your lawyers are better than their lawyers.
If you create a product and leave consumers with the belief that it is safe to use and it causes them harm, you are guilty of fraud and should be jailed. Pharmaceuticals should be no different.
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Mish, you left out tort reform. In exchange for no limits on awards for malpractice, malpractice insurers have the right to drop providers. If a provider has no insurance they get banned from providing services. Finally, looser pays the costs of the suit, court costs and any judgement.
This way, those injured by malpractice, carelessness or malfeasance are not arbitrarily limited for their injuries or suffering. Lawyers will think hard whether there is actually a case to be made, rather than throwing a sob story in front of a jury who too often make the “rich insurer” (in reality us) give up a pile of money.
Those truly wronged get compensated, those who provide substandard care are weeded out and finally unjustifiable suits for profit become very costly.
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I’ve read quite a few stories about the dangers of cross-state insurance. It feels like an opportunity for the insurers to all move their operations to a very corporate-friendly, lightly regulated state. They would be able to sell policies across the country, but consumers would be obligated to compare those plans based on the laws of the insurer’s home state, not just the laws of the insured’s home state. How would someone in Michigan know if they would be better served by a policy based out of Texas, Delaware, or Vermont?
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Ever read a health insurance contract? Have your attorneys review it very carefully before signing anything.
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I am a physician and have a few ideas:
-Community Rating and guaranteed issue are both deterrents to buying coverage if you are young and healthy. Anything requiring a mandate is ,of course, an unattractive product.
-Acceptance of the mandate is acceptance of government coercion, which is like inviting the vampire inside-you can’t get them to leave.
-Catastrophic-only coverage should be allowed. Not everybody wants the full spectrum of coverage. Every added mandated coverage adds about .7% to the total cost.
-The creators of Obamacare exempted themselves and their sponsors from it. That stinks to high heaven.
-If people had a mandatory copay, there would be much more rational decision making. William Forster Lloyd gives a pungent and on point discussion in “The Tragedy of the Commons.”
-Medicare and Medicaid and Worker’s comp do not pay enough to break even for physicians, We treat these patients as a moral duty and few physicians are eager for this demographic.
-I remain in medicine because it gives me and my loved ones access to the system. It should not be such a problem to get access.
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If 85% of costs in your practice are wages, then break even is purely a function of what wages are paid.
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The ACA was implemented starting 2010 and obviously failed to solve US healthcare industry problems. Republicans have only pretended to repeal the law since that time (over 7 years).
In a few minutes reading this blog there are presented dozens of simple ideas which would have much more effect in resolving the issues. Why haven’t any of these ideas been discussed or debated seriously.? They should have been top points of consideration by the politicians and media. Are any of these ideas being discussed even now by decision makers ?
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(1) Nancy Pelosi designed Obamacare to maximize HER lifestyle, to maximize bribes she collects (calling the bribes campaign donations doesn’t fool anyone with a brain cell). The more complex and expensive it is, the greater incentive lobbyists have to bribe members of Congress.
(2) “We the people” are supposed to be the decision makers.
The people who are supposed to represent us, didn’t read the cr-p until after they passed it… and almost the minute they read it, they exempted themselves.
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If already mentioned, my apology: hospitals should be non profit organizations.
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Most hospitals are already non-profit organizations (religious, university and state/municipal). There are some for-profit hospitals, but they are a small percentage.
You should really try to learn something about a subject before commenting. Voting in ignorance is even worse.
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Where is tort reform?
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I have a suggestion for tort reform, which I call “Less Reasonable Pays.”
This is a variant of the “British System” (actually most of the world) called “Loser Pays” however, it is designed to promote early out-of-court settlement.
Before litigation begins, both plaintiff and defendant must provide their lowest demand/highest offer. If the case goes to trial, the jury decides if there is liability, and if so, the jury selects between only those two possible outcomes.
Since the demand/offer that is not selected has been found “less reasonable”, that party must pay all legal fees and court costs.
The intent here is to make the parties come together early in the process. If both parties are attempting to be reasonable (from their point of view) both run the risk of paying legal fees in addition an unfavorable outcome. In most cases, the parties will find that settling provides a better probable outcome.
I do have a video on this subject, here’s the link:
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The biggest problem with US healthcare is the reliance on third-party payers. As a result, neither the doctor nor patient is subject to market forces.
If the doctor is compensated by procedure, he is motivated to provide as many as possible as frequently as possible. Malpractice liability encourages extensive and unnecessary testing as a CYA measure. “Accepted practice” means the doctor has many reasons not to try new and possibly better methods that might be cheaper with better outcomes.
Since patient liability is limited to small co-pays, the patient wants premium service unconstrained by cost. Since he’s in the doctor’s office he might as well agree to all the recommended procedures, as well as requesting drugs seen on TV that may not be cost effective for his situation.
Administrative fees as a portion of total cost can exceed 25% of the bill and require a significant portion of the doctor’s time.
Obviously, self-insurance carries a huge risk. The individual also does not have the knowledge or information to make an informed choice as to doctor, cost, and appropriate procedures and no unbiased sources to help with the decision. Further, he has no group negotiating power to correct outrageous bills or reduce rates.
To correct all of these flaws, I came up with the idea of “Group Self-Insurance”. This is a health-sharing idea that does not currently exist, but would compete with other programs. I believe it could cut healthcare costs by more that 50%, for improved care.
Here’s the link:
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End the Council on Graduate Medical Education, an arm of congress staffed by AMA (really a lobbyist group). Unlike other professions; Lawyers, engineers, truck drivers, congress controls the supply of doctors. COGME controls the supply of trained physicians by choking off training programs (aka physicians residency). Reduce the supply they can then charge more.
http://usatoday30.usatoday.com/news/health/2005-03-02-doctor-shortage_x.htm#
Repeal the Hatch Waxman Act, ending the FDA ability to grant exclusive privilege to big pharma to produce medications. For example, colchicine, a medication used to treat pericarditis and gout, has been around for 3500 years. Yet recently, the FDA granted URL Pharma exclusive rights to produce this medication, effectively taking the medication out of the public domain. The cost went from 5 cents a pill to $5 a pill.
Reform and reduce drug patent lengths to 5 years. Don’t believe big pharma propaganda that they’ll stop producing and developing medications. In fact, if we open competition, we’ll see many more treatments available to us. Drug patents and the FDA are part and parcel why some life saving cancer drugs cost $100,000 a year or more, and they stifle competition and innovation.
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that’s the perfect eg. I tell patients to mail order colchicine through Canada where its about 50 cents a pill. The vast majority of insurance companies won’t pay for colchicine anymore.
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I am a US physician and work all of my time in a hospital. What most people fail to understand is that for every physician-patient encounter that occurs, there are THOUSANDS of administrative encounters happening in the background. You are not just paying for healthcare — you are paying for all of the myriad of insurance, regulatory compliance, quality metric compliance, government lobbying, pharmaceutical, and consulting encounters going on in the background. The ACA not only legitimized this — it threw government subsidies at it.
If there was some way of getting rid of the many layers of middle-men who are leeching $$ out of the system, the cost and service would go up a bunch.
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…big government lives off “all of the myriad of insurance, regulatory compliance, quality metric compliance, government lobbying, pharmaceutical, and consulting encounters going on in the background.”
You just listed the entities who give Nancy Pelosi and Obama all the bribe money they use to control DNC party elections.
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You would support a law outlawing health insurance then ?
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“Right to Refuse Service: If someone is not insured, hospitals should have the right to refuse service.” This is one that I think needs more thoughts into it because of the potential fatal consequence for a patient in critical condition. If government requires that no hospital should refuse service which is not free, then government should be responsible for paying for it. Use Canada as a reference, government has good oversight in insurance and fees (not talking about insane fees US hospital charges).
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If Canada’s system is so good (it isn’t) — then why did Canada’s minister of health decide to get surgery in the USA??
Canada’s system would shut down today without massive subsidies from selling oil and natural gas… Those massive subsidies, combined with a smaller population in Canada, is what makes the ridiculous system appear to function.
Even ignoring the subsidy problem, Canada’s minister of health travels to the US to get more complicated surgery (without the wait time that Canada’s system imposes).
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Using an isolated case and an anecdote and then saying it somehow won’t work here despite us already having Medicare for the mostly expensive demographic) and despite every single other civilized country having single payer is basically what the healthcare complex wants so they can continue to gauge Americans.
We spend $4000 more per person than Canada and Germany and all the others, that’s $16k a year for a family of four. Google health care spending per capita if you don’t believe me, Health outcomes are as good or better in other countries. We have obesity issues but they smoke a lot more.
In the end, start with the more cost-efficient system (theirs) work out the kinks. Insurance companies, hospitals, big pharma want the current system and the only realistic solution to break them is extending Medicare to cover everyone.
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Your first clump of words is a giant run-on sentence that ends with your misuse of the word gauge (noun – a standard of measurement). Public education may not have taught you the correct spelling of “gouge”. Since the letters “a” and “o” are on opposite sides of a keyboard, it was not a typo — you really don’t know how to use a dictionary.
The rest of your platitudes are not a coherent argument about healthcare or politics. You seem to prefer big government run healthcare, and arrogantly assume everyone else should also. Your arrogance is not an argument at all.
For historical and legal reasons, England is the country most similar to the USA (which used to be part of England, has same language, same legal system, etc).
England’s NHS has been running on subsidies from North Sea oil field royalties for decades. England still has severe troubles financing the system, which has forced them to try alternate solutions for the past 15-20 years. Richard Branson formed Virgin Health systems about 10 years ago, which the UK government outsourced health services to (outside the NHS!). There were lots of issues, both with NHS and with Virgin’s model.
Fix your argument and go take a writing course before commenting.
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You may think you’re a genius because you pointed out I misspelled a word, but your post was just an ad hominem attack on me and pointing out how one healthcare system is funded.
My point is how much they spend on healthcare compared to us. The problem is how much is spent, not where the money is coming from.
The UK also has fully socialized medicine, which is very different from just national health insurance. I would argue extending Medicare is more similar to copying Canada’s system. Comparisons should be made to them or France/Germany before the U.K.
Pointing out we spend a lot more money and don’t have anything to show for it is not a platitude. Nor is the fact that every other country has a much more efficient system a platitude.
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The main problem with Mish’s proposal is that it tries to treat healthcare with regular shopping, like you’re shopping for a car. Unfortunately, a lot of healthcare decisions are under duress or emergency situations where this doesn’t work.
Currently hospitals basically just gauge patients. The main role of the insurance company is to negotiate down the made up amount for service. So we’re paying a company whose only role is to try to make another company screw us less if we find ourselves sick. This leads to a lot of overhead and all the problems with the current system.
Every country with single payer pays less for healthcare. Every western country with single payer has similar or better health outcomes. No one in Europe or Canada wants our piece of shit health system. Don’t bother with a few anecdotal remarks of a few rich people who come here for rare treatments.
The solution is single payer where the government negotiates the price and breaks the hospitals gauging, kills off the insurance middleman, and knocks out malpractice lawyers by doing tort reform.
Deductibles are high especially for services you have time to shop around for. Preventative services are free so people don’t end up needing expensive treatments for something that was preventable with a $5 vaccine.
Start with what Germany or Canada does and do it better. Don’t start with our horrid system and think you can make this turd magically work.
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For Single Payer to “work” you need price controls, high taxes, restrictions on doctor’s salaries, etc etc etc.
If the US adopted Single Payer without adopting all the other socialist crap with it, the system would explode in a year
Mish
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I think your line of reasoning is the problem with a lot of conservatives who are right on a lot of other issues but don’t give single payer the respect that it deserves because it’s “socialist.”
Pricing only works with consumers if pricing is transparent AND they are not under duress AND a third party isn’t covering the bills Much of healthcare spending falls under duress (emergency situations). Even factor that out it is really tough to deal with the third party issue when bills are high (or there isn’t much point in insurance anymore).
Single payer just gives the government a lot of negotiating room in regards to pricing but also simplifies things because there isn’t much of a negotiation anymore because it’s a monopsony.
But let’s look at cold hard facts. Other countries spend A LOT less on healthcare. Their healthcare systems are for the most part the same or better for most citizens. I’m not losing sleep at night if somebody doctors make $250k a year instead of $400k
Hospitals and doctors could always opt out of the system and ask patients to pay out of pocket if their care is that great and the patients are willing to.
Any tax for single payer is a lot less than what we pay in health insurance, copay a and other spending. Amounts to 4K a year per person.
Try to be open minded. Sometimes you have to cry uncle and admit our system sucks.
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Nothing but gibberish and platitudes
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Michael, I think you’re the one with the closed mind.
Our health system costs too much because subsidized goods and services can be received for low or no cost which distorts the non-subsidized prices. Throw in monopolistic regulations on drugs, doctor licensing and training, insurance, etc. and you have a formula for ever rising prices.
This is just like education or welfare. The more money thrown in, the more is needed as the cost of service expands to consume all resources.
Cash basis medicine, deregulation, patent and tort reform, and banning of food products like HFCS and “natural flavors” will produce Trumpian change.
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Medicare doesn’t present many complaints except in the government’s budget office. People and providers like it too much. So, it makes sense to go after the abuse. It will cost the government money to avoid abuse. Do it anyway, include medicaid, and outsource the handling of it from the dept of medicare and medicaid services to a number of private sector parties who offer expertise and technology. Primarily make sure care procedures are necessary and actually performed. Don’t let the states anywhere near the process because some won’t get it. Check-out the providers to shutter more low hanging fruit. Some of the oldest doctors who only see medicare patients might also decide to retire. Include, this for VA and other government health care programs.
The above will impact the under 65 sector of healthcare. For the under 65, price collusion is a big problem because it doesn’t cater at all to the customers/patients who actually pay for insurance and out-of-pocket costs. Government participates in this and collusion won’t stop in any significant way because of this. Industry costs should not vary by income and they should not vary based on who writes-out the check for the cost. With all of the research and education that is subsidized, government should require a payback for the public good but the politicians just don’t think that way. People in this country don’t reach out to get as much medical attention and still people in this country spend more on healthcare.
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I like the idea of publish prices and let people shopping around. Not sure about the travel overseas as legal liability could be very complicated. Like many pointed out in Europe and Canada, the single payer system mandated by government works for majority of the population with majority of the cases. I would suggest a two-track system: A single payer system mandated by government for all populations, rich or poor. However the quality will be the quality for the mass, and patients can sue for mistreatment but cannot be enriched for financial reward since it is a government funded public service; A private deregulated system where rich people can pay for speedier or better service, can sue for personal gain but should not allowed to get any public fund for either side. A healthcare provider cannot practice in both sector at the same time, need to choose either one or the other. Private healthcare insurance should never be allowed to participate in the public funded generic healthcare services.
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And private sector insurance should be allowed to profile customers based on their race, age, living habit, agreement with annual checkup, etc. to price insurance premium on individual level accordingly, like term life insurance and auto insurance.
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Insurance only works when the insured are pooled in a group that is similar enough to evaluate and predict risk. Age and sex are reasonable groupings, but not race. There are too many multiracial categories for that to make sense.
Pre-existing conditions must be handled separately, since costs are often high and very difficult to forecast. Luckily with some sort of universal healthcare coverage, the problem goes away. Not that people won’t develop problems, but there will always be a healthcare program that is responsible for the pre-existing care portion.
An individual’s premiums should match the insured group, rather than reflect the individual’s changed health status.
Charities can focus on individuals, who no longer can afford insurance premiums because of their infirmity, since continued payment of premiums should be far less than cost of the care itself.
Any requirement that insurance must be made available to the uninsured, after they develop a problem is doomed to promote “free-riding”.
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I just found out that Rand Paul’s bill includes a provision to explicitly exempt the medical industry from antitrust prosecution. Among other things that’s a bold faced admission that antitrust and collusive behavior is rampant there. How do we get rid of this monstrosity- and get some actual prosecution. Jail time required under antitrust legislation is a whole lot more effective than fines, and the Sherman and Clayton Act is very clear on jail time.
https://market-ticker.org/akcs-www?post=231786
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Many good comments here.
We should aim at a condition where nothing except a multi-nite hospital stay really requires health insurance.
In my own writing, I have proposed the creation of specialized health courts. Anyone was price-gouged could challenge their bill, and not need a lawyer to do this.
The mere threat of such courts — and the publicity involved, to say nothing of the chance of seeing the bill wiped out — would be enough to discipline the provider community.
Another reform would be to clarify that in all emegencies, the Medicare fee schedule will be relied upon by all, with no balance billing.
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