Mapping the US healthcare system’s financial flows

It's a truism that America's system was never designed -- it's a patchwork of different pieces that each pay for some people in some situations.

But I've been reading about our system, since I fell down a rabbit hole a couple years ago. Things are bad, yes, but there are actually interesting ideas out there, and real efforts at reform that are being tried.

For example, did you know Maryland has a different way of funding hospitals than most other states? [0] And that other states are interested in copying it?

[0] https://www.vox.com/policy-and-politics/2020/1/22/21055118/m...

Amazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from? How do they even pay their executives' salaries? Boy have I been mistaken about how inefficient the American system is

I’m concerned with anyone proposing “Medicare for all” in America, because they all state - for doctors who want to stay out of the system, they can be paid directly… that immediately causes a slightly different 2 tier system. Right now our 2 tier system is the 90% with health insurance and the 10% without health insurance. In the new Medicare for all, it will be the 99.9% on government insurance, and the 0.1% - the ultra wealthy - who dominate tax policy and are heavily financially incentivized to reduce their tax contributions to the public system. They will influence politicians to spend less on healthcare, with no impact to their health outcomes. The only system which will work in the US is one in which the ultra wealthy have an incentive to provide funding to the public system, and that seems like you’d need to force them to be on the public system too.

If we're gonna stick with private insurance in the US, we should detach it from employment. The current system has created a society of indentured servants, not for money, but for "health insurance". The current system is expensive for employers that are often mandated to provide health insurance plans. And it forces people to work for something they have little or no control over.

When you work for money, you can do whatever you want with the money once you've earned it. But being compensated with "health insurance", you've got almost no control over it; you get what the company gives you - and btw, you can't purchase the same thing on your own, with your own money (way too expensive for most middle-class folks).

Detach health insurance from employment. Open "health insurance plans" to the free market, just like auto insurance. Free employers from all the administrative overhead of managing health insurance for employees (the stock market will love it!) And let health insurance companies work for their actual customers (health care patients!)

Or, just open Medicare to all.

All the categories on the right side look perfectly reasonable. However what fraction of those big categories on the right, Hospitals and Physicians... that make up over half of the total, is siphoned off to pay for administratium or "shareholder value" and what fraction actually pays for medical care delivered?

The healthcare system in the US is, indeed, the best...if you're rich. If you're not rich, you're gonna spend a lot of time on the phone, arguing with bureaucrats and getting treated like shit.

A friend of mine is rich. We both have a health insurance plan from UnitedHealthcare. His experience is radically different from mine. He can make a phone call, and actually talk to his doctor within a few minutes. He can see his doctor the same day he asks to. He talks to one person who manages all the BS for him.

I'd be more interested in how much of that $5 trillion finds its way to shareholders.

Most people generally don't have a problem with the idea of being charged a fee for a healthcare service. They have a problem with a system that grossly inflates that fee so that people who had nothing to do with the service get paid at the expense of people who are ill or injured. And of course, with the people in the system who are heavily incentivized to make sure that those dead-weight actors get as much money as possible.

This chart breaks it down by spending, it does nothing about determining the effectiveness of said spending. How much actual care per $ spent?

I've been on a mock jury for a personal injury lawsuit--and it was obvious to a couple of us that the smoking gun presented by the defense clearly showed she was running up the bill on something minor. We were pointing out the problem--did that sway the majority? No. The general opinion seemed to be she was owed something for what had happened--and they had failed on the voir dire, they asked about my background, didn't ask anything about family. Oops--I knew it would end up all going to the lawyer and doctors, nothing to her (the proposed amount was less than the bills she had run up.) I played it fair and didn't speak up about what would happen.

And all the national systems have a fox guarding the henhouse problem. Provide proper treatment for the expensive stuff or lower the standards? So long as you make a sufficient portion of the electorate think you're doing a good job the reality is the standards get lowered. And cook the books in pretending it's fair. (Two examples that come to mind: Including "fairness" in the measure of health system quality--automatic selection for UHC, and comparing infant mortality (they admitted the comparison was not valid, did it anyway.) The reality is the biggest "cause" of infant mortality in the developed world is how the medical world falls on the stillbirth/infant mortality line. Even elsewhere--Cuba gets it's good infant mortality numbers by setting a minimum birth weight. The ones that were born too early and never had a chance get classed as stillbirths.)

I think this analysis has little to say. What would be important to know how those $ are being spent, not where they are collected from. We do not know how those $ are being spent.

1. Doctors, Nurses, Administration (management and field administration), other. We need to know total employment and total salaries (including private practices).

2. OTC, prescription and hospital administered drugs (separated for acute, such as ER, and chronic, such as inpatient and elective surgery). We need to know how much is being spent on these, which is _potentially_ one of the culprits of large discrepancy between US healthcare vs European healthcare. What would be great to have these by large cohorts of population (<20; 20-65; 66-85; 85<) and maybe the top 5 buckets (i am guessing: cardiovascular - chronic; diabetes; accidents; hospice; dialysis)

3. Facility expenses (rent, maintenance, utilities, other contractor)

4. Other

Without these, very hard to opine reasonably on the state of affairs. And to be fair, I suspect there is a reason why proper expense breakdowns are not available.

Where are salaries? Where are administration overhead? Where are insurance company profits and dividends coming from?

This whole thing loses all credibility by not listing those things.

One large thing missing. Where is the flow to insurance company profit, and provider profit?

Taken together, as Andrew Tsang (too) beautifully depicts, the United States Healthcare system is arguably the largest bureaucracy on planet Earth. Larger in employees and collective spending than any effective bureaucracies in India or China.

The author says, "The operational resistance alone would be too much." True. But we need to continue reforms that clearly will improve the system. That effort seems to be stuck as we instead pause to relitigate the advances of the second half of the twentieth century. These would go a long way: mandate price transparancy, decouple insurance from employment, let Medicare negotiate prices broadly, and ban PBMs.

"A Fairytale Map of Every Dollar of America's $5T Healthcare System" is the complete, accurate title.

Is this funded by an insurance company?

> Another choice we made without admitting it: we socialize the costs of aging, but only after families go broke first.

We effectively do the same in New Zealand even though our healthcare system is very similar to the NHS. Once you go into state funded nursing, then you can keep NZ$284,636 of assets (if unmarried) and NZ$56 per week of any income. Median house price is NZ$770,000 so individuals often are forced to sell their home.

So effectively bankrupted although not quite $0.

> So what does the US value?

Every time we (the US) try to fix / change anything, a bunch of wonks with irrational arguments whine and complain until they get their way. The initiative fails, and we don't fix / change anything.

In short, we value letting irrational sabotage any form policy making; because we don't exclude people who negotiate in bad faith.

You can go one step further and make this a time-series. Costs skyrocketing. Quality of care actually going down across the country but especially in rural settings. Provider satisfaction plummeting. No one is happy…except greedy executives and shareholders.

So it's a jobs program

I wish they had this per capita in each country, so we could compare them.

The problems and solutions are all well documented. Like the article mentions, there are many existence proofs of cheaper more effective systems. The real problem is the legalized bribery that prevents any action and the current media environment that pushes people to consume partisan rage slop so we don't hold mediocre politicians accountable.

Insurance == Social Disease

There is a healthy concept of insurance where people pay to hedge against potential risk, and that's all fine and good. But one of the most insidious social diseases is mandatory insurance, or industries expecting individuals to insure themselves in any capacity whatsoever.

It is never ok for a business (or government) to offer a service that comes with risks, but then ask their customers/subjects to insure themselves for the risk to the business/government.

If I am charging people $100 for a service, then I ask them to insure themselves and everyone reliably insures themselves (the majority at least), they can still afford to pay my me $100, so why don't i just raise the cost to $100+$10000 where $10000 is the maximum the insurance will pay? You see the problem right, all the insurance achieved is the increase in prices, people still pay the same, you just now have a middle-man economy sucking up all the wealth/value people are generating.

If we could all agree on one thing, I wish it would be this. No more mandatory insurance in any context. Not fire, not flood, not health, not cars. Optional is fine, people who can afford it can hedge against the risk. But a bank shouldn't require fire insurance on mortgaged homes.

Businesses must eat the cost of doing business, in the end the price increase they impose will be less than the price increase of insurance mandates. That, or greed should be a felony (not happening).

For health insurance, it should be a simple subsidy for those who can't pay out of pocket. Some industries must be regulated, even in a capitalist free-market country. Health care, prisons, law enforcement, defense contractors, banks to name a few. Regulated as in centrally price-controlled.

For uninsured people that get sick, house burns down, car accident,etc... the government (for health care) or businesses convert the cost to debt. Same as when someone takes out a mortgage and refuses to pay at some point, or refuses to pay their car notes.

It's like we have had this 50+ year running experiment, it's failing really badly and everyone is coming up with ideas that don't involve scraping the experiment, just modifying it and waiting a bit longer to see if it works out.

One of the best explanations I have ever read about American Healthcare. Even after such good infographic it is still hard to comprehend such complexity.

> The $441B in prescription drugs - the story of incentivizing American innovation over price controls.

This itself speaks for how messedup the entire design is.

Here's an idea. If other countries can provide healthcare for much less per patient, why can't they sell that to Americans?

In other words, allow US citizens to "opt out" of the US healthcare system and participate in the German one? You'd have to make some allowances for replacing taxes with costs, billing, and allow "German" healthcare to operate in the US ...

The more free market an industry/service, the more efficient the outcome.

Why do people readily accept this for everything else, but don't see the reality in regards to healthcare?