Comment by tptacek
8 hours ago
I buy that the locus of American overspending is in fees charged by providers (my understanding is that a further principle component of that spending is in end-of-life care).
The problem, though, with going after pharma costs, and pharma benefit managers is that pharma is a relatively small component of overall spending; it's less than 10%. That is to say, you could make all pharmaceuticals entirely free, and we'd get at best a 10% discount on what we pay. I don't think any of us would be satisfied with that!
This is data from the most recent (as of last year) CMS NHE:
The 9.2% figure is pharma's direct share of NHE, but drugs are a net-positive externality. Cheap statins can stave off cardiac surgeries, GLP-1 can stave off bariatric surgeries, etc. It's ridiculous to conclude we would only save 9.2% on costs--this is not zero-sum.
No comment on drug pricing and its incentives, the existence of America's prescription drug markets drives the new innovative drugs that the rest of the world picks up for cheap.
> the existence of America's prescription drug markets drives the new innovative drugs that the rest of the world picks up for cheap.
That's the ludicrous propaganda that you've been fed but you really should be intelligent enough to dismiss it.
The world would get along just fine without you overpaying for your drugs. You pay for marketing costs.
Mostly not marketing (still large), but the R&D costs and clinical trial costs. The latter are in hundreds of millions to billions range for the entire journey from a promising discovery to an FDA-approved medicine.
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That's an interesting argument --- that massively increased access to pharmaceuticals would have knock-on impacts on other cost areas in the NHE.
I think if we dig into the numbers we're likely to find those effects, even if we maximize them, are marginal, unless we do other structural things to untangle the provider pricing system and do price transparency. Like: you could posit a material impact on CVD costs by making statins more widespread, and that should make a dent somewhere, but I don't know that CVD costs in non-Medicare-insured patients are really that big a line item, and non-Medicare is important here because people already Medicare-qualified generally have all the statins they want already. Meanwhile, providers are still ripping patients (and insurers) faces off for shoulder impingements, stents, and spinal fusions.
It's a super interesting comment. Thanks!
Even if it's 10% in aggregate it could be much higher for individuals and families that are screwed over by drug pricing.
But anyway we really do need to go after providers and end the racket that is employer provided health insurance.
Wait, I hate employer-provided health insurance and think it's a terrible policy but what does that have to do with providers charging everyone --- including Medicare! --- way too much for services?
It’s a round about recognition of the agency problem in the medical industry.
If people chose and directly paid for there own medical bills and insurance then extra fees and extra diagnostics would be born directly by the person paying for it, who would have the freedom to make other choices, like picking insurance providers who were better at preventing it.
At least that’s an argument you can reasonably make. I’m not sure it would hold up in practice given how different medicine is from other markets.
The health insurance industry drives highly increased administrative costs - costs which the insurance companies are happy to foist off onto non insurance channels?