Comment by BugsJustFindMe

I'd be fine with a 20-50% markup on MSRP to cover billing and administration costs but when the insurer owns the pharmacy they can "negotiate" whatever rate they want and you have to pay it. I don't see it directly in the article, but I suspect they do the same thing with cancer drugs as with IVF drugs and require you to go through their pharmacy for insurance coverage. Insurance plans often have lifetime maximums, and when they set their own prices and collect money from themselves for the medication they sell you they can basically dictate how much actual coverage you get versus someone paying cash. And because you chose "bill insurance" when you ordered the medication, you're now on the hook for whatever additional cost there was versus the cash price. And also they won't tell you what the cost is until after the medication has already shipped.

So it's at least plausible that they're abusing their position as the company that owns the pharmacy and the insurance plan to charge you a lot of money and provide very little coverage and also to gouge you at the very end of your coverage, because that's exactly what they did to my partner and I.

Anything above what Medicaid pays for drugs/procedures (and maybe a few % over to account for health insurance salaries) is overcharging.

Is that clear enough for you?

My wife had to quit seeing her doctor of many years a couple of years ago because as Optum has been devouring practices in our area, they stuck her with a surprise bill almost a decade ago and then fired her as a patient without providing even a statement. Now that they own her doctor she can no longer go to that practice even though she was a paying patient for many years.

You have that a little mixed up. Both UnitedHealthcare (UHC) and Optum are subsidiaries of UnitedHealth Group (UHG). UHC never bought Optum. Some parts of Optum were spun out of UHC's IT department so that they could commercialize software they had developed for internal use and sell it to other customers (including some of UHC's competitors in the commercial payer space). Other parts of Optum were acquired or created internally. What is now OptumRx (the PBM) was originally PacifiCare Health Systems. UHG acquired that business way back in 2005 before the Optum brand even existed.

I agree that more reform and enforcement is needed in the healthcare industry but let's at least get the facts and history right.

To use a software development analogy, the average person is a user of health care, not a health care project manager or designer.

Just as the user of an App doesn't need to provide an alternative design when they say "this App sucks", the average user of healthcare likewise has no obligation to redesign the healthcare system when they say "this healthcare system sucks."

"overcharge" is a qualitative source. If you're not working in the economics, I don't see much worth in finding the exact line between such a qualitative word. The market has some intuitiveness and know that charging 30$ for an item that costs $3 to make is highway robbery. Doesn't matter when or if we start to agree that $5, $6, or even $10 is reasonable (and yes, these are all pretty high markups to begin with compared to typical markups for stores).

We don't need to find the touchdown line when we're already outside of the stadium and the parking lot anyway.

So, important question: What problem are we trying to solve here? Is there any benefit to the overall populace for us in HN to debate what we feel is "overcharged"?

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But to go along with your exercise, I take a look at current market dynamics and compare it from there. Apparently, the typical wholesale markup is 20-40%, and stores will typically markup another 20-50% on top of that. So we're talking roughly a 125% markup on the higher ends from the factory into the consumer's hands as a very rough average (VERY rough, markups vary a lot per product and industry).

That's with two chains of markup, so clearly 1000% feels absurd from one part of such a chain. Outside of factors like drinks (which are easy to scale and can have markups well into the hundreds), it's pretty hard to find any part of the chain as not "overcharged" once we go past 100% markups in any given place.

on the most generous side, Costco famously has markups limited to 14% (albeit they rely on bulk purchases to mitigate that). and subsidized vehicles used to generally be a 10-15% markup price. So I'd say 15% is about the bare bottom of what to expect markups without some kind of twist. e.g. printers selling at a loss, making up for it with high markups for ink (another product that's easy to scale and marked up into the hundreds). or previously, a video game console in order to sell games (software, whose markup is hard to really determine since it's infinitely scalable and costs are more to make up for R&D).

Sure we can.

Some loaves of bread are worth a dollar. Some are worth ten dollars. The exact line is hard to pin down... but a $1,000 loaf of bread is probably excessive.

This is semantic nitting and wastes time when for all practical intents and purposes humans understand the assertion being made and find it agreeable.

You can talk about jetliners cruising over towns without discussing the height of a town's buildings. No one here seems to be in disagreement that the line is lower, which is all we need to know to describe the markup as over.

Fundamentally, you have a pretty good point here, since the system we have has two halves that are fundamentally at odds:

One part "free market -- maximize your profits as much as you can and get rewarded by a skyrocketing share price!"

And one part, unspoken except in the PR BS put out by the insurance companies, "Try to improve the health of patients and have them not die!"

The only way the two can coexist at all is if someone draws some lines like you are suggesting. I know that there are some (probably easily manipulated) laws stating that X% of premiums have to be "spent on care" and if they get too high overall margins on your group, they have to give your employer a rebate. Of course, who knows whether you'll see that money.

If we just say "maximize your profits" (and indeed, shareholders 'should' sue them if they don't) then it's obvious that morally bankrupt scum that runs all these insurers would 100% extort people for 1000% profits on lifesaving drugs. It's the most logical course of action! People will pay infinity dollars to save their own lives/their loved ones, so let's soak them!

If it's not obvious, I believe that overall the "free market" part of this system is a failed experiment that should be abolished immediately, and not just because I want all of these companies' sickening, greedy executives to go straight to hell (where Brian Thompson is burning today).

I agree as well, just drawing some lines!