Comment by onlyrealcuzzo
3 days ago
I don't particularly care if health insurance is public or private.
DIRECT health care labor costs (doctor's, nurses, etc) are ~40-60% of TOTAL healthcare spending.
Smart people try to figure out ways to make our system better every day. If there was a silver bullet, we'd have already taken it.
Health insurance profits are ~1.2% of total health care spending, the cost of running it is approximately ~4% more.
It's always going to cost SOMETHING to run - whether you move it to the private or public sector is largely a rounding error.
If you take all those insurance jobs and pop them into the Federal Government - you're unlikely to see much efficiency gains (the most pro-medicare articles state it's 37% more efficient - that's an improvement of ~1.5% in total spending).
UHC had a net margin of 6.1% in 2024.
Sure, if all 6.1% of that went to spending instead of profits - health care would be slightly better.
But it's mostly a rounding error. Private health insurance profits are only ~1.2% of total spending.
Maybe you're focused on a ~6.1% margin, or ~$60B in total profits.
You're not going to get substantially better outcomes by simply having ~1.2%-2.7% more money to spend.
You'd need to bring down the actual cost of healthcare substantially - which isn't going to happen unless you pay doctor's and nurses way less money.
Pharmaceuticals are only about 9% of total US healthcare spending - even if you nationalize that (never going to happen) - you're still not getting substantially better / cheaper outcomes.
Profits on pharmaceuticals is <2% of total spending as well.
The only way you're getting significantly cheaper service is by reducing your biggest cost significantly - i.e. paying less for direct patient healthcare (doctor's, nurses, etc), and that's probably not a great strategy for getting better outcomes.
Who knows? NHS pays doctors dirt, and their system isn't obviously worse than ours. Some people think it's way better, others way worse.
Medicare administrative costs are around 2% of total program spending [1] compared to typically >10%. While what you're saying on the surface may be true from the numbers you are comparing, the fact of the matter is that healthcare costs are becoming more and more expensive during a time when many are experiencing a cost of living crisis.
The US gets a bum deal on costs and outcomes and while we can argue on which specific changes will move which specific needle I think it's clear that one of the major differences compared to the rest of the world is that running healthcare as a for profit enterprise has failed to deliver on the promise of good outcomes for as affordable a price as possible both on an individual and country wide level.
[1] https://www.politifact.com/factchecks/2017/sep/20/bernie-san...
> While what you're saying on the surface may be true from the numbers you are comparing, the fact of the matter is that healthcare costs are becoming more and more expensive during a time when many are experiencing a cost of living crisis.
Which has almost nothing to do with the amount of profits derived from private health insurance - that's only ~1.2% of spending.
Maybe it used to be ~0.8% - that delta is not moving the needle.
But has everything to do with the need to take a closer look at the entire system and how we can do things better.
I feel like focusing on this part of my comment vs. the bum deal part is disingenuous since non-US countries have figured out how to do it for cheaper with better outcomes without the main focus being the up and to the left drive for profit that our current system mandates.
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I think this is a statistical artifact. Medicare preferentially selects the cohort of customers most likely to demand services from providers (that's the premise of the program). Fixed fees in, floating costs out. If you extended Medicare to 30 year olds, that 2% would, mechanically, soar; the same inputs from customers, but drastically lower service delivery.
The same statistics are similar for Medicaid too but also missing the forest for the trees in that for profit seems to be the main differentiator with the US vs. other parts of the world. There are plenty of models around the world that show this works and it works well.
First it's the government can't do this, then it's the government wouldn't do this because of this reason while ignoring that the US healthcare system is spending more than any other country and missing the mark on outcomes. Every other developed country in the world has figured this out. While not perfect, they're paying less and broadly getting better outcomes.
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Honest question as someone who prefers single payer but acknowledged it's not a silver bullet: how much of the costs are nurses and doctors vs. admin? It seems to me there's a lot of overhead in passing the bills around to get paid. I just had my appendix out last year and got billed 8 times by 8 different firms, each with payment portals, call centers, billing providers, etc. I assume there's a lot of inefficiency internally too.
~40-60% is direct healthcare - not including admin or insurance labor costs.
Pharmaceuticals is ~9%.
Health insurance profits are 1.2%.
Other profits are x%.
Medical equipment, devices, hospital rents, etc are y%.
Most of the remainder is admin & insurance costs - only about ~2% of which is private health insurance operating costs (largely labor).
You're ignoring the fact that all of the large insurers are increasingly also the healthcare providers.
UnitedHealth Group is the owner of both United Healthcare (the largest insurer in the country) and Optum (the largest healthcare provider in the country).
Part of UHG's low profit margin is its liberal use of intra-company eliminations, where transactions between Optum and United Healthcare get zeroed out and don't count toward profit despite it ultimately generating more dollars in the parent company's coffers.
I have good news! If you move it to the public sector, you will effectively pay doctors less money for the same work. That's because the way it works currently is that the doctors have to deal with private insurance bureaucracy. By freeing them from this responsibility, they have more time to take care of patients, which should effectively gets you more medical bang for your buck.
You're describing the federal system being massively more efficient - which is theoretically possible - but rarely happens in practice.
It seems to me like centralized governments have had a rise that whether impressive or just typical of an average country, was thought to be impossible for them. Couldn't the past performance be down to the absurd costs of data collection and management in the past and the lack of scaling benefit when centralizing gigaflops of secretaries or the costs of doubling a very small number of bytes of information on every household at that time?
The federal system already runs a much more efficient enterprise as evidenced in medicare and medicade since their establishment in the 60s.
It is already established fact that Medicare is more efficient than private insurance. https://www.healthaffairs.org/do/10.1377/forefront.20110920....
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It is already established fact that Medicare is more efficient than private insurance: https://www.healthaffairs.org/do/10.1377/forefront.20110920....
6.1% profit margins is a lot when it should not be for-profit in the first place. Why is anyone making a profit off of administering necessary services?
What is the operating profit of your local firefighter brigade?
What is the operating profit of the interstate highway system?
What is the operating profit of your local water/sewer department?
Not a single person in this country doesn't need healthcare at some point. It's not an optional for-profit good.