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Well, that was interesting.
What I'm unclear on is whether "health spending", in this analysis, is defined as money paid to care providers such as hospitals and dentists, or money paid by citizens for healthcare. Because you've got insurers and PBMs taking profit.
The ratio of those two numbers is the efficiency of the American insurance model. How does it compare to the administration of a single-payer system such as the NHS?
Until I see some data indicating otherwise, I'm going to look at my £200pcm national insurance and my £9.90 prescriptions and my free ambulances, and Americans' $500pcm insurance and their unlimited prescription costs and their four-figure bills even when insured, and I'm going to continue to believe that Americans are punching themselves in the face.
We spend even more money on healthcare administration than what’s directly spent on it. HR departments screwing around with insurance. Various government benefits & other agencies having to mess with private health insurance issues. Attorneys general offices and state rep offices spending time to get insurers’ and hospital billing departments’ heads out of their asses (they do a lot of this).
There are also untold hours lost in unpaid labor on the part of “clients” messing with insurance and hospital billing departments. It’s not uncommon for someone who is, or is connected to a person who is, seriously sick for even a few days to spend a work-week or more of time that year messing with the billing from the incident. This can include uneventful pregnancies and births.
Anecdotally anyone can talk to a few doctors and find out just how much time they spend on updating charts/documenting information that's not directly relevant to the care, its just to protect against liability or work with insurance. Or how many hours they spend on phone calls fighting with insurance companies. The people who actually understand medicine wasting hours with some clueless rep with 0 understanding and a flowchart who's only job is to deny claims. Dr. Glaucomflecken on youtube has many videos about that too.
So on the ground level, it's already clear some of our highest paid most valuable people spend 20-30% of their time on a flavor of administrative junk which isn't necessary in a single-payer system. I'm skeptical of claims that this waste doesn't translate into the higher level metrics.
If you used those two profit numbers you would be missing all of the expenses that medical insurance companies have, none of which do anything for providing healthcare. Furthermore, you would be missing all of the expenses which exist to accommodate the systems insurance companies invented to account for things that only they care about. Insurance is the least efficient method of providing healthcare and we've committed hard to it for the benefit of few.
You forgot to mention the taxes they pay to support CHIP, Medicaid and Medicare. Which are not far off what many Europeans pay for universal health care, before most Americans even start to look at private health insurance so they actually get health care for themselves.
Well, there's also the rate of new drug and procedure discovery. I've heard it quipped that Americans are subsidizing the discovery of new medical techniques for the rest of the world. Whether that's worth a higher cost is arguable but I think the effect is there.
> What I'm unclear on is whether "health spending", in this analysis, is defined as money paid to care providers such as hospitals and dentists, or money paid by citizens for healthcare. Because you've got insurers and PBMs taking profit.
> The ratio of those two numbers is the efficiency of the American insurance model.
The ratio of those two numbers is quite divorced from the efficiency of an insurance model.
On the one side, this would count wasteful spending on unnecessary tests or overpriced services as an efficiency improvement because proportionally more money is going to providers. On the other side, if insurers better at preventing fraud have lower premiums and therefore get more customers and make more money, that would count as "inefficiency" and the fraud prevented would also count as inefficiency (because that money went to "providers"), even if the net result is less fraud and lower premiums.
That isn't to say that the US system is efficient. It's clearly quite broken. But its brokenness is because the government has been thoroughly captured by the industry -- which is the providers as much as the insurers -- and they oppose any measures that would improve actual efficiency because the inefficiency is their profit. Which is why the US system costs more than the systems in other countries regardless of whether the other countries use public or private systems.
An efficient regulatory system for a private insurance market would be something like, a schedule of service codes where each provider is required to publish a fee schedule representing the uniform fee paid by all institutional insurers, eliminating the overhead of "negotiating prices" (a major source of inefficiency) in favor of price transparency and allowing patients and insurers to choose a provider on the basis of price and distance, while still subjecting providers to competitive pressure because people would naturally favor providers with lower fees. But the existing US system doesn't do that at all.
Profit margins for insurers are pretty low on a percentage basis. The Affordable Care Act (Obamacare) imposed a minimum medical loss ratio on commercial payers. You can read the financial statements for those that are publicly traded. Some of the largest insurers such as Blue Cross Blue Shield Association members are non-profit.
The NHS isn't really a "single-payer system" in any meaningful sense. In the UK, most healthcare providers are employed directly by the government and their wages are fixed below the market rate to control costs. There are internal financial transfers but there aren't really arms-length negotiations and payments between separate payer and provider organizations.
If the USA was to adopt a single-payer system like the various "Medicare for All" proposals that politicians have floated that wouldn't do much to reduce costs. Any meaningful cost reduction for the system as a whole would require driving down provider wages, rationing care, and ending the way that we subsidize drug development costs for the rest of the world. Those measures might be good things to do on balance, but they aren't politically popular.
Studies have found that Kaiser Permanente (an integrated health insurance/care provider—basically a non-governmental equivalent of the NHS in comprehensiveness—that is available in many US states) is more efficient and effective than the NHS for about the same cost.
Examples:
Health care prices in the US were reasonable until the government got involved in it in the 1960s.
Prices rose with inflation until 1968, when they started angling up steeply. 1968 was soon after the advent of Medicaid and Medicare.
The 1962 FDA amendments also resulted in a steep rise in drug costs, and a sharp reduction in new drugs being developed.
It is surprisingly hard to track down what is meant exactly. It is not either of the options you listed here, but closer to the first. Chasing a very long chain of citations to other citations, it appears this paper contains the original explanation of where the data come from: https://sci-hub.st/10.1007/s11205-015-1196-y.
They survey all of the possible healthcare goods and services available across OECD nations, make their best attempt to select a representative basket that is both available across all nations and reasonably similar, then estimate what they call a "quasi-price" per unit of good and/or service, to account for the fact that the actual charged price is often artificially suppressed or set to zero by government fiat. This seems to be done by scouring management accounting databases to figure out what the payers and providers consider to be reasonable reimbursement rates for accounting purposes, whether or not that is what they actually receive.
I get what they're trying to do, but this probably explains some of the counterintuive results, because mostly people are probably thinking more along the lines of "add up all premiums paid to insurers, out of pocket expenses paid directly by consumers to providers, and all government outlays classified as healthcare" and that's how much your country spends on healthcare.
That's a reasonable comparison to make, but as the blog and the OECD report both point out, it does nothing to account for differences in quantity and quality of healthcare goods being paid for. The problem is this discourse then inevitably leads to "well the US gets worse outcomes," but to what extent is that fair? The only reason I can walk today is because of US healthcare. If you incur a musculoskeletal injury that requires intervention in various different countries, how likely are you to fully recover? If you get cancer, how likely are you to go into remission? I don't necessarily know exactly what should be measured, but I know that when the discussion goes straight to lifespan, that is heavily confounded. Americans drive more, own more guns, are fatter. There has been tremendous industrial pollution in various places, though I don't know how that compares to the rest of the OECD. I wouldn't be surprised if we have more backyard pools. There are many, many reasons we might live shorter lives that have nothing at all to do with the quality of the healthcare we receive.
Americans look at their 9k a month salary and don't care about loosing an extra 300 USD on health insurance. I've experienced the British and Swiss systems - Swiss is like the American - pay roughly 600 CHF a month - and it's way better than the NHS. You can see a specialist the next day, get a scan the next day etc.
The US government(s) spend about as much money per capita on health care as the average European country. Obviously US health care costs are out of control for other reasons than the existence of private insurance.
To be clear because that's easy to misunderstand: despite the fact Americans do not have universal public health care, the government already spends as much as many European countries that do, per capita. Part of this, of course, is because US public health care spending is concentrated on the old (Medicare) and disabled/poor (Medicaid). But it's still a shocking testament to US health care costs.
NI does not pay for the NHS, it comes from general taxation, you’re comparing the wrong figures.
Certainly a significant number of its points were defined to explicitly exclude insurance overhead, which I have often seen cited as "very high in the US".
It's also completely ignoring the possibility of Hollywood-style accounting.
One thing I'm curious about is any correlations to number of grandchildren.
Have you tried phoning a GP or for an ambulance recently?
We should also not forget the $1B in drug advertising spend that must be recouped. People from other countries are frequently dumb-founded when they see US tv with prescription ads. Also look at all the companies buying up old drugs and immediately raising the price 10X or more.
> I'm unclear on is whether "health spending",
They list their source as 2017 OECD data. OECD seems to define this as:
"Health spending is the final consumption of health care goods and services including personal health care and collective services."
Their charts are also drawn in a standard and more understandable way.[0]
> Americans are punching themselves in the face.
Hurtful, but okay, I do hope you realize it's the rampant monopolization of health care that is the problem in this country. Yours solved it by simply creating a single publicly held monopoly.
It's not as if either system is perfect and doesn't create it's own share and particular style of inhumane healthcare outcomes. Prescription label prices are noticeably different but are they meaningfully different where outcomes are concerned?
[0]: https://www.oecd.org/en/data/indicators/health-spending.html
> Until I see some data indicating otherwise, I'm going to look at my £200pcm national insurance and my £9.90 prescriptions and my free ambulances, and Americans' $500pcm insurance and their unlimited prescription costs and their four-figure bills even when insured, and I'm going to continue to believe that Americans are punching themselves in the face.
This is a odd position to take. You're going to firmly hold onto a view despite admitting it's not that informed?
Not to mention you're not even comparing the right costs. What the patient pays is not the total cost.
It does feel that way. The worst part is that enough of our elected officials insist we enjoy the abuse.
This may be tangential but the NHS is not without some sickening expenses. The costs are just opaque and hidden but ultimately taxpayers are paying for £300 for a stainless steel bucket for patients to pee in thanks to bureaucracy and government contracrs. (that figure is pre 20s inflation)
So every month the government siphons off 40-45% of your income and donates a lot of it to Big Healthcare. So a case of being damned if you do and damned if you don't...
GDP per capita and other "per capita" metrics are also unreliable metrics for household income, as they suffer from the same issue as averages. This is a common trap that is done in population statistics, as mean and averages are always easier to calculate and reduce the complexity of the calculations.
Large wealth inequality makes GDP per capita and average household spending not representative of a real-world median household. If healthcare costs have outpaced median income but kept up with mean income, that is a MASSIVE societal issue.
Most of the plots and arguments in the article overlook this, so I don't trust the arguments much.
However, it is still interesting how strong the correlations are. It gives some interesting insights into what goes into the cost of running hospitals, I suppose.
This analysis in the end doesn't show what it claims to show and actually proves the reverse - US Health care spending is much larger than other countries, it eats up significant fraction of productivity gains in other sectors (rises faster than income as shown by the 1.8 slope in the very first graph), and does not lead to better health outcomes. It actually proves we would be better off if we spent less and focused on lifestyle.
> US Health care spending is much larger than other countries
The thing is that in USA (and Canada) radiologist compensation went from 300k/yer to 500k/year over the last 10 yeas. It's the same radiologist. While spending is growing quantity of doctor per population is diminishing.
In USA/Canada there is cartel enforced cap on how many new doctors can be minted per year, and this cap is not even scaling up with the population growth.
> It actually proves we would be better off if we spent less and focused on lifestyle.
Speaking purely anecdotally, I can 100% get behind this. I live in a more rural area, work outside regularly, and a large majority of what I eat is either grown locally (without pesticides/herbicides) or I grow it myself. I haven't been to a doctor in 7 or 8 years and am in better shape, and feel better, than I ever have.
Its amazing the difference fresh air, fresh food, and time working in the sun and dirt can make.
What was it claiming exactly that it proved to be reverse?
> we would be better off if we spent less and focused on lifestyle.
I didn't see any claim opposite of this.
Summarized into 11 bullet points by Claude:
Here's a summary of the key points from the document in 11 bullet points:
• Health spending is primarily determined by income levels, with higher-income countries spending more on healthcare.
• The rising health share of GDP is driven by increasing quantities of healthcare consumed, not primarily by price inflation.
• Technological advancements and intensity of care are major drivers of increased health spending.
• The U.S. health system is not uniquely inefficient; its high spending is consistent with its high income levels.
• Commonly cited utilization indicators do not show that the U.S. uses less healthcare than expected given its spending.
• Physician incomes and hospital profits do not explain the high U.S. health spending.
• The U.S. healthcare workforce has grown significantly, reflecting increased intensity of care rather than just higher wages.
• America's mediocre health outcomes are explained by diminishing returns to healthcare spending and lifestyle factors like obesity.
• Rising healthcare spending does not mean reduced consumption in other areas due to productivity gains in other sectors.
• Price comparisons between countries are often methodologically flawed and do not accurately reflect true healthcare costs.
• The income elasticity of health spending is high, meaning people spend proportionally more on healthcare as they get richer.
Nothing makes sense.
One prescription I get is $1.30, another is $85.
My son goes to a specialist and all $395 is paid by insurance, while my wife goes to a different one and we pay $86 out of pocket after a $14 "insurance discount", insurance pays nothing.
They're both in-network. I save my old antibiotics and such because it takes so long to get into urgent care, and it's expensive, and I can't go to my regular doctor for a sinus infection because it takes two weeks to get in.
Thankfully I pay $0 out of my check for Blue Cross since my employer pays for it. I just have co-pays, deductibles, etc
>I save my old antibiotics and such because it takes so long to get into urgent care, and it's expensive, and I can't go to my regular doctor for a sinus infection because it takes two weeks to get in.
I cringed so much reading this.
* When you're prescribed an antibiotic, you're expected to finish the course of medication. Not doing so leads to resistant strains.
* Medication has an expiration date for a reason. You generally shouldn't expect to be able to save it from one illness to the next, nor to know that the one from before is applicable to the current condition.
* The large majority of disease is caused by viruses, and antibiotics won't help. Your "sinus infection" might not be a local infection at all but just some respiratory illness resulting in sinus congestion. Never mind whether it's viral or bacterial.
The big problem with modern health “insurance” (as opposed to catastrophic major medical insurance, which is true insurance), is that it prevents the formation of of health care businesses that cater to different socioeconomic strata. I most other businesses, there are usually product offerings at different price points, eg Ford Fiesta vs Ford Raptor R, bespoke steakhouses vs Denny’s, Wal-Mart vs Nordstrom, etc.
There are some hard to discover offerings in healthcare but overall very little differentiation.
Why don’t we have multiple chains of monthly subscription diabetes centers, for instance? If it weren’t for insurance and over-regulation of every aspect of healthcare, we would see market flourishing in the US as there is an over abundance of chronic illness.
I sympathize with the PoV that we want someone else to pay because it’s expensive, but another way to solve that would be to remove all the regulatory capture and industry collusion and predatory middlemen (PBMs I’m talking to you) and let new delivery mechanisms evolve. Let supply adapt to demand.
The biggest problem with modern health "insurance" is that it's not insurance - it's a health care plan that presents a giant principal agent problem throughout the entire medical system starting with the patient and cascading from there.
I'm old enough to remember a time you could break an arm, show up to your primary doctor's office that day without a pre-scheduled appointment, and walk out with a cast on plus pain meds all for less than a week's take-home pay for a blue collar employee. This was largely due in part for the reason you were the one paying the bill and there was almost no overhead. Plus the doctors who charged absurd fees simply lost patients to the competition down the street.
Principal agent problems are rife in modern society, starting with medical care. They basically remove almost all pricing competition from the equation.
What laws in the last 20 or so years have made this situation better or worse?
That would be a huge mistake. In a deregulated market you will have more predatory middlemen not less. You would have everyone scrambling for the high end serving the top 25% population at high cost and no one wanting to serve the bottom 50% because they can’t afford it and there are lots of fixed costs (good luck hiring qualified doctors and nurses, equipment etc).
We could go back to when a dentist was someone on a stool by the side of the road with a pair of pliers, because that’s the level of health care that poor would be able to afford.
Health care has to be a universal right that a society provides for its citizens.
We have no problem with subsiding the military and defense industry to the tune of $750B a year. I’d rather spend that on having a healthy and educated population. If only we had our priorities straight.
This is fine as a high level economic discussion, but I think it misses the point of the complaints from actually US consumers: when I consume healthcare as an individual I am paying with a blank check, and I am therefore likely to be tricked into consuming more health care than I would otherwise choose to afford, perhaps to a ruinous degree.
I think ordinary consumers care much less about whether their country spends a nominal share of GDP on the heath sector, than about whether they will be unexpectedly bankrupt by consuming health services, and this is why people are actually mad.
> The claim that US health care prices are inexplicably high was never well-evidenced
I can provide anecdotal evidence that prices inexplicably high. A primary care physician will charge anywhere between $200-$500 for a visit. If you have good insurance, you don’t pay out of pocket. In the same city, I once had to go to a PCP who would only work without insurance. I had to wait a lot because of how many people were lined up in front of the office, but I paid $50 for the visit. I’m already paying 4-10x in a comprable market for the same services.
When I was abroad, I had to visit a doctor’s office for food poisoning. I paid 200 in the local currency. I could have gone to a hospital and they would charged me 500 in the local currency. But what’s important to know is that the median monthly wages in the country were 25000 in the local currency. So all in all, you’d pay a smaller portion of your wages for a simple checkup.
And that tbh is why people are actually mad.
I started and sold a company in the industry, and agree that macro level analysis misses this. In the us healthcare as a “product” has an AWFUL customer experience. On so many levels. And the worse it gets the more people want to “burn it all down”, despite the fact that it might not be as dire as we think when we do the high level analysis. Whether or not that’s a good thing is up for debate.
The outsize portion of gdp that healthcare takes up is why it is likely to bankrupt you in this country, although it isnt the reason for the lack of transparency.
A quick reading of the summary shows a lot of debunking and just one item that explains the bad health of North Americans:
Diminishing returns to spending and worse lifestyle factors explain America’s mediocre health outcomes
https://randomcriticalanalysis.com/why-conventional-wisdom-o...
If I'm understanding correctly, by "income", this article means "actual individual consumption", which is the amount of money spent by a household. Thus, the article is saying that for countries where households spend more, they spend more on healthcare. Given that healthcare is a huge fraction of household expenditures (almost 20%), this seems tautological. Am I misunderstanding something?
N=1, or, Story Time!
In 2017 my wife and I were living in Portugal for several months. When we needed to refill her prescriptions, our short-term rental host said, "Go to the ER."
Backstory: we're well familiar with ERs in the U.S. Due to various conditions, we've been to at least a dozen ERs a total of perhaps twenty times. For anyone who doesn't know, unless you are actively dying, visiting the ER in the U.S. is sloooow. The average time to see a doctor, in our experience, is about an hour.
So we replied: "the ER? seriously?"
He assured us it would be fine, so we walked ten minutes to the ER and signed in. We had barely turned in the history paperwork when they called us to go back. No preliminary check-in with the nurse -- straight to the doctor.
She said, "Why did you come to the ER? We could have been busy and you would have had to wait."
We explained how our host had assured us this was the best way to go, and that the ER would take care of us.
The doctor nodded and said, "Sure, I'll sign for the prescriptions, but just remember it might take more time the next time."
We went back to the front desk. Remember, we had no travel insurance, this was full freight. "That will be twenty-eight euro." We happily paid, and walked out the door, prescriptions in hand, less than 30 minutes after we walked in.
Bonus: the cost to buy the prescriptions, again with no insurance, was less than the co-pay in the U.S. with employer-healthcare.
N=2: When my daughter was visiting me in Bangkok, she got a bit of a gastro issue. Same as in Portugal, we had no insurance for her. I took her to Bumrungrad, one of the best hospitals in Thailand. We were in and out in under an hour, including picking up the prescription, and the total cost was under $100.
I'm not trying to rebut the article, just throwing out some details.
> Health spending is determined by income
Whoa. That's eye-opening. If country X spends less than country Y, rather than surmise that country X is more efficient with their healthcare spending we might want to look at whether country X has less per-capita income than country Y.
This makes sense, though it's very surprising. I've seen so much commentary here about how much better the Europeans are at dealing with healthcare than us Americans...
I skimmed what I can while on break. What I didn’t see is something I’ve heard from doctors but can’t verify. It’s that insurance companies require them to do extra procedures or have extra employees they don’t think they need. Some who didn’t take insurance say it keeps their cost down.
One told me the insurance companies incentivize him to treat patients like an assembly line where cash only lets him spend one on one time with customers. He also might treat people for several things on the same bill which he claimed he’d have to itemize and charge separately for with insurance.
So, do people here have specific examples (esp links) to support or refute those anecdotes? If they were true, it would mean insurance rules were driving much of the cost. Looking at their causes, my first guess would be how they respond to losses from both real malpractice and greed-driven lawsuits. I can’t imagine that costs aren’t impacted by this with all the lawyer ads I see for suing insurance companies. ;)
If anyone, like me was looking for the UK and the NHS on those graphs - it's labelled GBR (I guess), assuming that's not Gibralter
I notice that the terms "debt" and "bankruptcy" (and their variants) appear nowhere in the article.
Nope. The price of something is somewhere between the cost of production and what the market will bear (with exceptions not relevant here). The well-to-do in the USA will bear high prices, and The State doesn't care about the rest. This is a bit of agi-prop for the health insurance industry. The graphs go up on the right: good; and down: bad. Arrrrr!!! There MIGHT be content, but that is not the message.
And btw the "(a primer)" in the tag line is (according to this linguist) setting you up to think you're stupid if you don't get it.
Healthcare became like public education in the USA, a political ideology that subverts the body politic to support jobs for people who do not have real skills but whose great granddad had 33 degrees in secrecy. In other words it is entirely a support system for the least of the privileged, while also paying huge sums to the owners and "providers" of those systems (textbooks, syringes, insurance, etc).
If U.S. Americans did not have an irrational verve for education as the supposed panacea of democracy, there would be no public education system. If they did not believe the intense pseudoscience of the medical industry, they would not care about health insurance.
But as they are under the sway of such false conscience, the system of gradual decline called inflation pays for unqualified people to keep a livelihood at the expense of a misled and deluded public. That expense is not only the costs of running these systems but their detriments to the health and education they pretend to treat.
The increased spending on healthcare is no different than spending more on education or the "homeless problem", it is simply a politics of shifting more funds into systems that are legally obligated to pay high sums for a lot of nothing. It only appears different than education because we pretend its not completely wrapped up in public spending and politics like education is. Obama made sure that healthcare would hold such a place as education in the system with the reforms to healthcare, and the people applauded this.
High incomes paying more for healthcare is simply those who can afford it using the system that ultimately pays for the health and education of the rich at the expense of the health and education of the poor. After all we know that nobody who is rich is paying any of their healthcare bills, they have excellent health insurance for that.