Hacker News Reader

Comment by marcell | Hacker News Reader

I can't get over the cognitive dissonance of these two points:

> (2) Californians, as individuals, employers, and taxpayers have experienced a rise in the cost of health care and health care coverage in recent years

> (4) Individuals often find that they are deprived of affordable care and choice because of decisions by health benefit plans guided by the plan’s economic needs rather than consumers’ health care needs.

So (2) is saying health care costs are rising, which is bad. And (4) is saying insurance companies are making decisions based on price, which is also bad. You can't have it both ways. Either we should keep costs down, in which case some procedures will be denied as they are too expensive, or we pay for every procedure imaginable, causing prices to go up.

View on HN

Yes you can. As a 6th largest economy in the world [1] California can negotiate prices down by 50-60% to be comparable to Canada/UK. [2]

Besides, the existing state program (medi-cal) already covers over 1/3 of CA residents [3]. So it looks like if we lower the cost by 60% we can get pretty close to normal healthcare situation using the existing budget.

[1] https://en.wikipedia.org/wiki/Comparison_between_U.S._states...

[2] https://www.washingtonpost.com/news/wonk/wp/2013/03/26/21-gr...

[3] https://en.wikipedia.org/wiki/Medi-Cal

I don't think California will negotiate prices down by 50%, and I would bet on that (conditional on this bill passing). Anyone - old-gregg? - want to take that bet at even odds? I suggest using the total cost of one each from the list of medical services in old-gregg's second footnote - angiogram, office visit, angioplasty, etc. I'm also open to other terms.

(Studies show[0] that people answer politically-charged questions more accurately when paid for accuracy, so I think we'd have better debates if people bet on their predictions.)

[0] http://www.pewresearch.org/fact-tank/2013/06/17/political-vi...

It sounds fanciful to say that we'll just use our existing Medi-cal budget but now it will cover everyone.

If the government had so much bargaining power, then Medicare and Medi-cal would already have far smaller costs. We don't really see that.

Also, who exactly, would we be negotiating with? I don't know that you can squeeze the budgets of hospitals in California by 50% and have everything carry on like normal.

Except that the lawmakers in Washington actually wrote the laws to forbid the government from negotiating for special rates for Medicare and Medicaid, unlike the UK or Canada. Which is why drugs there, for example, are so much cheaper than in the U.S.

Hmm, interesting. I know medicare reimbursement rates are still quite low compared to private insurance, so I wonder how that squares with a 'no negotiation' policy.

Edit: One study from Texas found that Medicare reimbursement rates were 70-80% below the private average. https://www.texmed.org/June16Journal/

> can negotiate prices down by 50-60%

You can only do that by paying Doctors less.

Good luck with that. If you did it anyway, good luck finding enough Doctors.

When people think "negotiate prices" they usually think of drugs, but Doctors is the real problem.

Medi-Cal (and Medicaid in general for all states) only works because the regular rates subsidize the under-market charity rates. That only works up to a point, then it doesn't.

That BTW is why hospitals never publish rates - they need the higher rates to subsidize the charity rates.

Until you change that, you will never have single payer, it's impossible to do.

Physician pay (last I checked) only makes up about 20%, including the costs of them practicing. They see about half of it in the end. There is even more spent on administration, which makes up about 25% of spending. Compare that 25% to the 9% in Canada and it becomes pretty obvious where you can save money.

> Physician pay (last I checked) only makes up about 20%

Does that number include specialists? Nurses? Lab technicians?

If not, why are you excluding them?

You basically have 4 expenses: Durable Equipment, Medication, Salary, Facilities.

I suspect that Salary is the largest one, and the hardest to reduce.

Costs across the board are higher due to structural and incentive factors - more intervention, more fee for service, etc. also, specialists' income has risen ridiculously vs. GPs .

http://www.healthbeatblog.com/2008/01/health-care-s-1-2/

http://www.vox.com/a/health-prices#chart/11

The pharma and medical instrument pricing racket is unbelievable. Took a look at the cost for our last delivery - of the $36k+ cost billed, facilities, equipment and medication were way over the billed rate of the doctors/nurses/anesthesiologists.

That number includes specialists and lab techs. It doesn't include hospital care (i.e. nurses).

You are just ignoring the profiteering done by the drug and insurance companies and the savings due to streamlining administration that a single payer system would bring.

The driver of the cost of insurance is the cost of care, and I haven't seen much, even in the form of rhetoric, paid this way.

So, can they really? Part of the reason places like Canada and the UK can do this is they can threaten to run around the industry when they try to fleece their citizens. Ultimately CA may be unable to do anything to combat the costs of medical care because the laws that give pharmacies and the AMA their monopoly in the field are enacted at the federal level.

Why can't California do the same and refuse to cover medications unless the sellers cooperate on price?

There is also no reason why you cant operate a single payer scheme AND a private insurance scheme in parallel, its just that EVERYBODY should contribute to the single payer scheme, whether they need it of not.

Some of the numbers for [2] confuse me. How can an office visit cost $30 in Canada? When I go in for an office visit, it typically takes about 30 minutes of staff time, around 15 minutes with a medical assistant and 15 minutes with a doctor. If that's $30, the implied wage is $60/hr for the medical staff, if you assume that all the money goes to staff. That just doesn't seem feasible.

Some of the other numbers seem more reasonable, though I should point out the charts are a bit misleading as they list the US 95th percentile in addition to the averages, which makes the difference appear larger than it really is.

A doctors visit isn't a good example. Folks don't go bankrupt from doctors visits. The important stuff is drugs and hospitals.

For example an asthmatic in any other country in the world pays ~$10 for a Ventolin inhaler (including tax and a % of profit), Americans pay $55-$65 and that price is increasing.

It's around $50 for 'off plan' visits (your not a canadian resident, or it's not covered by the healthcare plan).

The math should be $120/hr for the office. The assistant gets $20/hr and the doctor gets $100/hr. If you use the $50 rate, then it's $200/hr. If the doctors share an assistant, it becomes even more efficient. Because of the lower prices, there are less doctors, so they get higher utilization rates for the ones that are there.

Some office visits are shorter then others. (Although less scrupulous doctors in Canada aggressively optimize for faster visits - more money for them, worse outcomes for their patients.)

I heard this described as the "cost disease" issue (https://slatestarcodex.com/2017/02/09/considerations-on-cost...).

HN discussion: https://news.ycombinator.com/item?id=13613687

But also: https://hn.algolia.com/?query=cost%20disease

In a single payer system, there wouldn't be an insurance company sitting between a patient and the medical provider, extracting rent. The middleman and associated overhead would not exist (or be centralized), which could make the market more efficient.

OK, let's talk about overhead. Every doctor's office has one or two people per doctor who fight with insurance companies to see that the doctor gets paid. Every insurance company has people who fight with the doctors' people, trying to find ways to not pay them. Those people - on both sides - are a total waste to the business of actually delivering healthcare to people. Yes, we could cut a lot of overhead by getting rid of them.

That works... right up until the healthcare scheme is underfunded by the legislature, and then the single payer tries to find ways to reduce payments to the doctors, and then the overhead comes right back. So to reduce the overhead, the rules have to be really rules, not something the single payer tries to play with in order to control expenses.

Is that enough to get old-gregg's 50-60% reduction in expenses? I don't know. I'm a bit skeptical. It will get a large chunk of the way there, though.

I'm entirely in favor of a single payer system as it makes the most sense in my mind, but there is still a middleman.

Bureaucrats don't work for free.

A third alternative would be to increase efficiency so you can have the same level of care for less money.

Other countries spend far less on health care for similar quality, so it's possible.

No, there's another option: Health care company profits could go down. (But I suspect that people who want both (2) and (4) overestimate how far they can go before they reach zero, at which point we quit having health care companies, and then we have no health care coverage...)

Either way you're going to be reducing rent (ie, gaining market efficiency) until you're not doing that anymore. There are testable ways to evaluate the market's ability to handle cost reductions and operate effectively. Even better that California can rely on the US and Canadian market overall to compare itself.

Reply on news.ycombinator.com