Comment by Aurornis
3 days ago
I haven't seen any defenses of insurance companies lately. In fact, it seems like insurance companies are the only safe target for criticism of US healthcare problems right now.
> Virtually every insurance provider is going up 15-20% / year to the point that it’s completely unsustainable.
The elephant in the room is that healthcare costs are going up. Even if we waved a magic wand and eliminated health insurance overhead, profits, and executive pay, your rates would still be going up that same 15-20% per year.
This is the part that seems to confuse everyone. There's a common misconception that insurance companies are raking in huge profits and that prices would plummet if we could just eliminate those profits. You see it throughout this thread with phrases like "dancing on the graves all the way to the bank" and blaming "capitalism" or "corporate greed" with the implication that insurance companies are the purveyors of this greed.
Yet we have non-profit insurance companies. They're not appreciably cheaper. If you look at insurance company profits, they're actually relatively low for companies that large. If you map healthcare spending on a big pie chart, the slice that goes to insurance company administrative overhead and profits is not that big. Single digit percentage. Even companies with socialized medicine have some overhead in this same slice.
The problem is multifactorial. The challenge is that it's not politically safe to touch on some of the drivers of US healthcare costs. Everyone loves to point at insurance companies and drug pricing because it's easy, but things get much quieter when you point out that our doctors, surgeons, and providers are paid substantially more than their peers in other countries. Americans also love to consume more healthcare and many would be very upset if they were forced to accept the level of allowed care and delays in other countries. It's not just insurance companies who have decision trees about when and what care is allowed. Americans also consume medications at an extremely high rate. Again, they don't take kindly to suggestions that we limit prescribing or drug prescriptions (see outrage over the DEA limits on amphetamine production or complaints about hesitancy to prescribe opioids, even though we already consume far more opioids than most countries).
Many Americans also live unhealthy lifestyles which contribute greatly to healthcare costs, but it's taboo to mention that. Everyone has seen the life expectancy charts showing US lagging international peers, but fewer people have seen the per-state version that shows that life expectancy depends heavily on where you live (and therefore what you eat, how active you are, and the local culture). Instead, the only acceptable target of blame is our food. While we have some room for improvement, we're not going to solve the obesity epidemic and lifespan problems by banning red dyes. Lifestyles and diets need to change, but that's a difficult topic. Much easier to point the finger at insurance companies, "CEOs", and the food industry and pretend that those cover all that is wrong with healthcare.
This is why it's politically difficult to accomplish anything in the United States. If anyone tried to copy and paste the health care system of a European country, from doctor pay to allowed procedures to more limited prescribing practices, there would be riots. People want all the healthcare, they want it now, they want it how they decide, and they want someone else to pay for it.
I was shocked to hear from an anesthesiologist friend of mine in Germany that an American salary could be 10x higher.
The medical costs are skyrocketing because insurance companies inflate the price of medicine. The slice of the pie that goes to the insurance company is small compared to the pie, so they make the pie bigger to make their slice bigger. The other parts of the pie, many of whom are owned by the same insurance company, aren't complaining. They are horribly inefficient. The cost of hospitals processing payments to insurance companies alone (and note this is typically one company sending itself a bill) is nearly $400 Billion per year. That's about 8% of all US healthcare spending, and it generates no value.
What isn't happening is increasing cost because of either more or improved care. As time goes on it should be easier to make drugs, meaning that prices should go down. Instead the cost per gram of even very simple drugs like epinephrine and insulin are going through the roof. Doctors are paid well, but they've always been paid well, and in fact while physician pay over the past 70 years has kept pace with inflation, it has been far outstripped by the price of education needed to achieve that salary, meaning doctors today are generally worse off financially than they used to be. other medical professionals like nurses are seeing increasing workloads without commensurate increase in pay. American life expectancy is decreasing, as are numerous other measures of healthcare efficacy. While we are paying more, we are getting less than we used to.
Then there is the common argument - our high drug prices subsidize new drug development. Only issue is that new drug development has been steadily slowing down. Most drug development is in the form of minor changes to existing drugs that serve little purpose beyond resetting the clock so cheap generics don't come on the market. Where new drugs are developed, they tend to be focused on profits, for example new pills to help people maintain erections rather than treat rare diseases. When the stars align and a new drug is developed that genuinely helps people, it tends to be insanely expensive, such as the cancer drugs TFA is talking about. This is not to say that nothing at all gets done, but it's less than it used to be.
Is insurance the only problem in America? No, obviously not. But at the same time, healthcare prices dramatically higher than anywhere else in the world that are also rapidly increasing is not an inescapable fact of life. Our healthcare can be both substantially cheaper and higher quality than it currently is by eliminating purposefully inefficient systems that use anticompetitive practices to jack up prices. When the dust settles US healthcare might remain a bit pricy per capita - part of having a country with very high wealth per capita is that everything is expensive per capita - but our money will be going towards paying skilled people to do useful work for our benefit.