Comment by snakeyjake
1 year ago
The primary reason for the cost difference is the massive network of middlemen injected into the system, and rampant profiteering by for-profit healthcare companies.
Average cost of 1 vial of insulin in France: $9.08
Average cost of 1 vial of insulin in the US: $98.70
HDThoreaun: huffing some libertarian shit "The people are using too much insulin."
https://www.rand.org/pubs/articles/2021/the-astronomical-pri...
https://www.visualcapitalist.com/cost-of-insulin-by-country/
https://aspe.hhs.gov/reports/comparing-insulin-prices-us-oth...
It’s not middlemen. The middlemen (managed care organizations, aka health insurance companies) earn low single digit profit margins.
In the US healthcare chain, the ranking of profit margins goes (and this is public info from public financials):
Pharmaceutical companies
Healthcare software companies (based on other software company margins)
Healthcare providers (doctor groups)
Hospitals (HCA, tenet, etc)
Managed care organizations and retail pharmacies at the very bottom.
The big one I don’t know is legal, which I assume slots between hospitals and healthcare providers, but could be higher. Those millions and tens of millions of dollar judgments don’t come from thin air.
Go ahead and get rid of MCOs, and at best you will reduce costs by 5%. That’s an objective fact. They are just allocating the very limited resources among more and more demand.
> Go ahead and get rid of MCOs, and at best you will reduce costs by 5%. That’s an objective fact.
That doesn't make any sense. Profit margin is meaningless if you are spending billions on a bunch of useless administrative staff pushing paperwork for no reason.
Obviously some of that is necessary, but certainly not nearly all of it. I don't care about a company making 5% on top of a $150k/yr admin salary. I care about the $150k/yr salary which is the true cost added to the system.
Having watched from afar my friends in healthcare who actually provide bedside care vs. the administrative bloat - it's going much like education. Tons of admin staff added that don't ever touch patients that seemingly just get in the way of the folks doing the actual work.
Margin is a meaningless number if you can just pump your expenses to increase the total dollar amount.
> Margin is a meaningless number if you can just pump your expenses to increase the total dollar amount.
That doesn’t make any sense. If one MCO were to pump their expenses, there are 4 to 6 others waiting to take their customers with lower premiums.
Currently, medical loss ratios are around 85% to 90%, which means MCO administrative costs are 8% or maybe 10%, at most.
However, getting rid of the MCO doesn’t mean those costs go away. Government employees will have to do the prior authorizations rather than MCO employees. So I split the difference, and you end up with a net savings of 5%. Make it 10% if you want to be super optimistic and think the government will streamline paperwork for healthcare providers.
The other 90% of healthcare costs are still there.
2 replies →
I think you left out several layers. At least one of which in the news lately is the PBM, which sit between hospitals/providers and pharmaceutical companies, and are able to exert monopoly power on that market. They have agreements with hospitals that hospitals are only allowed to purchase through them, and then their suppliers are permitted to purchase exclusive access. This results in things like the saline shortage last year, and pushing small local pharmacies out of business. The PBMs also have incredible profit margins, upwards of 80%.
https://www.youtube.com/watch?v=d_2yTvHoGs4
Not true. PBMs are just departments of MCOs, so they are included in the profit margins of MCOs (at the bottom).
>The PBMs also have incredible profit margins, upwards of 80%.
I would love to see a single SEC filing showing this, mostly because there exist no standalone PBM.
Also, YouTube is not a source for financial information. 10-Ks, for example, would be.
> the massive network of middlemen injected into the system
Does anyone have a good reference for this? It's something that I inherently assume exists but would love to see a flowchart of how rampant it is and where different layers are siphoning their penny.
Would that even be possible?
just look up increase in headcount of administrative staff at hospitals, providers, insurance companies, pharmacy benefit managers, etc.
all their salaries and profits are coming from patient's pocket