The US spends more on healthcare for no gain says new report from Johns Hopkins
jhsph.edu
jhsph.edu
https://www.amazon.com/Healing-America-Global-Better-Cheaper...
France, Germany, and Japan all have similar systems, according to the book. They have private nonprofit insurance, some kind of mandate to purchase it, a government price list on services, guaranteed coverage of anything on the list, and digital medical records.
A lot of German primary care doctors don't even hire office staff. They prescribe whatever they want, swipe your medical card, and they're guaranteed to be paid in a week, no questions asked.
Japan has a clever way to handle the mandate. If you don't pay your premiums, nothing happens, but if you need healthcare you're not covered until you pay your back premiums.
I wish all the Americans who think the rest of the developed world runs on single payer would read this book. None of the three countries I just mentioned use single payer. The book also covers Canada and the UK, both of which are single payer (and single provider in the UK), and while their results are pretty good, they're not as good as the other three.
"there is no reason my money should pay for the care of others, but if I personally need care, then it should be of the absolute best quality and should be provided until my last breath no matter what"
The people maintain the system themselves by insisting on that, and that is the root of every other problem. Before alleviating restrictions for med school, US people should think about pulling the plug on the legions of evidently terminal patients receiving maximal care that just prolongs their intense suffering every day around the country.
Why do you think your doc does every exam under the sun as soon as you step foot in the office?
1 - if solo, more money; if networked, makes you look better for the "employer" (insurance company/hospital/HMO, etc.)
2 - if you have too many exams, you will complain on the internet. If you have too few exams and something goes wrong, you will drag the doc into court.
Weigh the incentives and I think even the most conservative person should see a problem.
Your healthcare industry: "if you personally need care, then it should be of the absolute best quality and should be provided until your last cent no matter what"
Isn't the cultural issue largely a idealogical issue - things like the UK NHS are avowedly socialist? In the words of Aneurin Bevan, founder of the NHS:
" A free health service is pure Socialism and as such it is opposed to the hedonism of capitalist society."
https://en.wikipedia.org/wiki/Aneurin_Bevan
Personally, at least when it comes to healthcare, I'm a socialist:
"The collective principle asserts that ... no society can legitimately call itself civilised if a sick person is denied medical aid because of lack of means."
Another point is that IMO, you can't go extreme on one principle without impacting the others. Nonmaleficience is clearly a problem in the US.
The dictionary has socialism as "means of production, distribution, and exchange should be owned or regulated by the community as a whole" and I've never thought of health care as a "means of production". Now if the government tries to own all the factories that's socialism.
The hostility I think comes not from the fact that it is mandatory, but from the fact that if it is managed by the state, it will be badly managed, abused by a minority, and you end up over-paying while getting a bad service yourself the day you need it.
A worker who is free to offer his labour to whomever he wants knowing that his healthcare is not tied into their employment has more options and choice to them then someone who can't change jobs.
A point on your last point, people would argue that even in the US you can still access the emergency room when you have no money so no one is turned away due to lack of means.
Financially they're the most efficient of all the countries in the book.
American insurance is merely rent seeking. It soaks up money like a goddamn sponge and offers absolutely nothing in return. It's literally worse than nothing since it's driving prices up. There are companies out there with--no joke--hundreds of thousands of employees, just growing bigger by the day, and offering negative value to Americans. UnitedHealth has 270000 employees. That's as big as Apple and Microsoft combined, but they've got nothing to show for it except colossally fat and minimally taxed earnings.
Forgive my ignorance but how is that possible? The highest out of pocket maximums for Marketplace plans is $15700 for an entire family.
Went to Germany got it done on the same equipment in luxury stay for 14 days at $870
You need to travel more. The German system, for example, is very old, very simple and works very well.
We are having some trouble due to austerity cuts and freezes by the current conservative government. But in the whole it works.
[1] https://www.commonwealthfund.org/chart/2017/mortality-amenab... (2014 figures)
[2] https://data.oecd.org/healthres/health-spending.htm (2014 figures)
There are other policy interventions that could also make a big difference to health e.g. making our urban environment friendlier for exercise by reducing traffic, reducing emissions, introducing dedicated separate cycle lanes, stricter punishment for speeding, and making our mental environment less hostile by e.g. stricter controls on advertising, control of body fetishism e.g. Love Island etc. in the media, limiting development/improving access to nature, etc.
One-third of the US population is on a US single-payer system right now.
How does all of this additional overhead provide more value to the consumer at the end? How are they actually differentiated?
There are differences. The voluntary insurance usually pays 2x to 3x of the mandatory one and covers more treatments that are seen as optional by the government insurance. E.g. physiotherapy is covered by government insurance only for clear indications while private insurances might cover it as a precautionary measure in many more cases. Also private patients can usually skip some waiting time (e.g. days instead of a few weeks).
But (nearly) everyone is covered, government or private, and can go to the doctor without worrying about money.
Even the government insurance isn't a single entity, but you can choose between multiple providers. All charge the same 14.6% of pre-tax income (capped at ~55k income) plus an additional 0.7% to 1.x% depending on the provider. They also compete on additional services. E.g. my provider adds a free professional tooth-cleaning per year and free travel-vaccination among other things.
See, now, that just really doesn't sound like a good idea to my ears. Why should someone be forced to sit through weeks of suffering while a handful of others don't, for the sole reason that they have more money to throw at the problem? I can understand buying better or more thorough treatment, or buying treatment from more expensive providers I guess, but line jumping via money just seems immoral when it comes to health care.
So despite this problem, the Canadian health care system still manages to be superior to the US system. Perhaps in the field of health care, "top talent" is not as pressing a question as is often implied.
[1] https://en.wikipedia.org/wiki/Comparison_of_the_healthcare_s...
The problem in Canada seems to stem from an inefficient manner with which health care is being administered. In hindsight, Canada's health care is following the US model, which have for a lot of reasons, failed spectacularly to provide what it was mandated to do - provide health care accessible for all.
I don't think inflating your own wages to match a system that appears systemically ineffective is the right response, especially when your own system is more effective overall than the one you are losing talent to.
In the USA, medical practioners get paid more and the country might gain talent as a result, but the people pay more for it and it results in it being less accessible and less effective overall.
Germany pays doctors less, and can, because the switching cost is far higher. Canadians get to keep their first language (most of them do at least), stay on the same continent, which reduces travel to see old friends and extended family, and otherwise have fewer culture shocks to adjust to.
But as others have pointed out: we're culturally and linguistically contiguous with the U.S. and have fairly free movement of skilled professionals. It's hard to compete with an economy with a population that is ten times ours.
It's the same in our/my industry. Being right next to the U.S. means the bulk of the quality engineers here go straight south to the valley after getting their very good subsidized university education. This is a problem.
And doctors need to stop being corrupt by reducing supply of doctors through restrictive medical school entry.
Any sort of change towards this in the United States (and I agree, it's a good one) will be spun as losing jobs and crushing the economy, which is a very hard argument to defeat.
For quality results, the book used rankings by international organizations, based on statistics like "cure rate after diagnosis of major disease." For cost, it used percentage of GDP and cost per capita. Germany, France, and Japan were tops in quality, and Japan was also the cheapest at 5% GDP. Germany spent 13% GDP but with expansive coverage.
Incidentally, the UK is not single payer like we're talking about in the U.S. It's also single provider. All doctors in the system are employees of the NHS, much like the VA in the U.S.
For England that's completely incorrect.
Services are commissioned mostly by local clinical commissioning groups (There are about 195 of these across England), but sometimes centrally by NHS England, but they are provided by a range of different organisations. Some of these are NHS organisations, but they don't have to be. It's possible that NHSEngland and CCGS commission NHS services from non-NHS providers.
Doctors (and all other healthcare staff, and all manager, and all admin staff) are employed by NHS Trusts, or by other provider organisations.
Some examples of non-NHS providers who are commissioned to provide NHS services might be-
Livewell South West, a large community interest company that provides a range of in-patient and outpatient treatment. https://www.livewellsouthwest.co.uk/
Priory Group, a large private provider that also provides some in-patient NHS treatment, especially around in-patient eating disorder treatment or inpatient learning disability "care". https://www.priorygroup.com/
(Note that LiveWellSW are pretty good, and Priory Group are piss-poor and often abusive.)
Even NHS Trusts aren't single provider. They are their own organisation, with their own executive boards and accounts, working independantly from other NHS Trusts. If they're a foundation trust they have a bit more freedom with their budgets and staffing.
Here's a nice description of what the NHS is and how it works: https://www.kingsfund.org.uk/audio-video/how-does-nhs-in-eng...
Wouldn't it always be a good idea to not pay premiums until you have a major expense then?
But if it turns out to be a problem, you could always charge interest.
My understanding of Japanese culture is that, by and large, people don't do that. Americans, meanwhile, have a pretty heaping helping of petty asshats. For exhibit A, go look up some of the asinine BS tax protesters try to get out of pretty basic civil responsibilities.
The system doesn't seem too different from the US to be honest, in that people with poor financial planning skills may decide to skip on insurance premiums and end up not having enough money saved to pay for medical expenses/back premiums when they occur.
So what happens when you go to the ER? Obviously if it's a true emergency they'll save your life and try to bill you later, but then what?
Would it ever make sense to deliberately stop paying your premiums? If you can pay "out-of-pocket" for medical expenses, you might be better off saving your premium money until you need medical care that's actually more expensive than the back premiums. That creates an adverse selection problem (assuming that enough of your prospective customers are devious enough to try this). Even if you can't pay out-of-pocket, you could just stop going to the doctor until something serious happened.
Here's the relevant chart: https://i.imgur.com/s97bp9R.jpg
"Health-Care Paradox Threatens to Add to Japan’s Debt Problems"
"Japanese seniors, who enjoy the world’s longest life expectancy, pay as little as 110 yen ($1) out of pocket for specialist appointments. While these visits may help prevent expensive-to-treat diseases, they’re becoming unaffordable in a country where almost 1 in 7 people is 75 years or older, and annual health-care expenditure grew at a pace 40 times faster than the economy from 2000 to 2016."
https://www.bloomberg.com/news/articles/2018-12-13/health-ca...
That's hardly unusual. I come from a similar system.
It seems to work that way in France too, my mother lives over there half the time. She gets medical appointments and treatment almost immediately for almost anything where in the UK she'd be in multi-month long queues. I'd take the NHS over the US system any day, but there definitely seem to be useful lessons to learn from Europe as well.
I'ma huge Maggie fan, she was our best post-war PM by far, and a good candidate for best PM ever, but her market based reforms of the NHS were utter failures.
So what happens if you don’t pay your premium but then have to use the ER? Do they refuse to take you, or are you stuck with a bill? Does that bill go away if you pay your back premiums or not!
The ER don't doctor spent about 2 minutes with her and wrote a prescription for some topical thing.
Later the hospital sent her a bill for about $1500. I went with her to the hospital's billing Dept, helped her fill out a form that basically said "I have no insurance and no money".
The hospital ate the bill.
What they can do - specifically relevant if you're a US citizen - is send you a bill and then after you don't pay it send it off to collection agencies, which then harms your credit rating for the next five or seven years (I believe various states have different laws on when these have to drop off your credit rating, it's usually either seven years or slightly less). This has improved a bit lately, with new credit scoring updates that considerably reduce the hit from medical bill collections on your credit. However it's obviously still a ridiculous situation.
Most non-private hospitals in the US have low income programs you can sign up for (eg if you go into the ER due to an emergency and run up a big bill), that eliminate most or all of your bills if you fall under a certain income level. That's subsidized by government funding programs. Typically though if you're at that low of an income level, you should just sign up for Medicaid anyway. Those programs are usually most valuable when someone in the eg 22-50% income bracket (the most vulnerable in the US insurance system, where you're above Medicaid and below typical good paying career or job status) is caught inbetween insurance / jobs for a number of months and gets hammered by an ER visit.
I have never been to a German doctor who didn't have some staff. It's true however that they usually do not have admin-only staff.
They have, depending on the size (and specialty) of their operation, 1-3 "Medizinischer Fachangestellte" (MFA, qualified medial employees) per doctor and maybe 1-2 "Auszubildende" (people still in training). This a qualified job which requires formal training and a diploma. Usually it's one person in charge of the appointment book and reception/waiting room and additional people helping the physicians.
They are helping during examinations, calling up people from the waiting rooms, keeping appointment books, keeping the patient files and printing out the prescriptions etc (to be signed by the doctor), and to some degree interact with the health insurers. But they also do some hands-on jobs, like they are usually allowed to apply some medications, and operate medical equipment on their own (e.g. last time I visited my dentist, the x-ray machine was operated by an MFA; she had to have a special qualification for that). They are also in charge of writing the invoices for procedures not covered by health insurance providers (e.g. additional checkups).
My GP is a single lady shop, and she hired 3 MFAs. My dentist shop has 3 dentists working there and one "technician" and has an MFA support staff of maybe 15.
So there is still a lot of admin work, after all.
>They prescribe whatever they want
Not exactly. German doctors prescribe an "active agent" (even tho a lot of times they will put a brand name). German public insurers will only pay for a max price for a given agent. So if "generics" are available, the pharmacies will likely fill prescriptions with those.
>swipe your medical card
Eh, you give your card to the doctor's MFAs and they will put it in their card reader, etc. It's not like there is a checkout line where you swipe stuff yourself.
>they're guaranteed to be paid in a week
Usually one month to four months.
It goes like this: Every physician has to be a member in the "Kassenärtzliche Vereinigung" (KV, physicians association, and KZV for dentists) of their federal state. Otherwise, you cannot be reimbursed by the public insurers. There is about 160k physicians and 60k dentists organized in the KVs and KZVs.
The physicians then report all the items (procedures, prescriptions, consolations, etc) they want to charge to the KV, which collects the information, tallies up everything and calculates the earnings based on a complicated "points" system, charges the insurers and distributes the money back to their members.
The physicians are paid once a month (usually the 15th of each month for most KVs) a progress payment, based on the estimated earnings for a quarter, estimated based on previous quarters in particular. The actual final tally is done only once a quarter where any money not yet paid through the progress payments is paid out. In the worst case, this could be a negative number, meaning a physician has to pay back some of their previously collected progress payments. That's why (AFAIK) KVs will usually underestimate the progress payments to avoid exactly this later.
>no questions asked.
The KVs will totally ask questions if your doctor starts billing a lot "funny" items (e.g. if a single doctor would charge a lot of flu vaccinations during the summer months, the KV will ask about it). And last I heard, there are spot checks/(not-so) random audits too. The KVs by law are required to make sure everything is OK, so they also dabble in fraud detection and quality control.
I co-founded a company that sells practice management software to primary care doctors in Germany. We work closely with the Hausärzteverband -- something like a union for primary care physicians -- and I speak with doctors in Germany, board members of the HAVG, and so on basically every day.
Germany has three different medical/insurance systems -- KV, HzV, and private insurance -- I worked with HzV so am most familiar with that but everyone has at least a passing understanding of KV as well since it was the only one until recent decades. HzV is more popular in certain geographies -- for instance if you work for Volkswagen you'll be in the HzV system and not the KV system under a BWQ contract.
I've never met a doctor in Germany that doesn't have staff. A quick check of the analytics of all the practices using our software doesn't show a single one.
As rndgermandude says, every single one has at least an MFA (and nowadays probably a Vera as well, since they can earn extra money that way). Our analytics shows 2-3 MFAs per doctor is the average but there are always edge cases.
>They prescribe whatever they want
This is not really true. Every insurance contract will have different rules about what can be prescribed. They can't FORCE a doctor to follow those rules but they doctor is monetarily incentivized to do so. For instance, getting a bonus every quarter so long as 80% of their prescriptions follow insurance company rules. The checks are done at run-time, every doctor knows instantly if a prescription is against insurance rules, and practice management software is REQUIRED to suggest alternatives that meet insurance requirements.
>they're guaranteed to be paid in a week
Doctors are basically NEVER paid in a week. They submit their billing at the end of the quarter (here I'm speaking primarily of HzV contracts; I'm not sure how the third option -- private insurance -- works) and then get paid a while after that.
>no questions asked.
No, this is not remotely true.
Have you noticed how there are next to no startups disrupting the health industry? Why can't you sign up for insurance like you can sign up for a stock account on RobinHood?
There's no free market. Government licensing and regulations have created huge barriers to entry. I thought this would be more understood by those technically/entrepreneurially minded.
When things are too expensive, you need to raise the supply to get the price down. Not create price controls and socialize markets.
Read this article because it explains the problem better than I can.
https://hbr.org/2004/06/redefining-competition-in-health-car...
Some people talk about a hypothetical second workable model, which involves a massively de-regulated free market system. It's important to note that nobody has successfully deployed this model in an industrialized nation, and it's not clear if it can even be implemented in practice -- for political as well as practical reasons (unregulated medical providers tend to kill people, so voters enact regulations, and then you're on your way out of the sweet spot.)
Whatever your preferences, the important thing to keep in mind is that while both of these two points may exist, the points between them are highly suboptimal. Removing 10% or even 50% of the regulations on our current healthcare system is unlikely to produce a substantially more efficient system. It produces a new system with most of the weaknesses and entry-barriers of our current approach, but replete with massive new profit-taking opportunities and substantially worse protection for patients.
This is why two decades of political infighting in the US have failed to fix healthcare. There is literally zero chance that the working, de-regulated system is going to come into existence. There is some probability that we can get closer to regulated single-payer, since we already have Medicare and it's much more efficient than private insurance, even though politicians have restricted its bargaining power. There is an overwhelming probability that in the process of trying to deregulate the current system, you end up making everything substantially worse.
I quickly found some numbers from 2008. All numbers are a percentage of GDP:
US: 7.4% public, 8.5% private
Switzerland: 6.3% public, 4.4% private
Sweden: 7.7% public, 1.7% private
France: 8.7% public, 2.5% private
graphic:
https://kaiserfamilyfoundation.files.wordpress.com/2011/04/h...
kff study:
https://www.kff.org/health-costs/issue-brief/snapshots-healt...
Healthcare economy is naturally inefficient if free. Information asymmetries and other market failures emerge without good regulation and mechanism design.
I agree there are needs for regulations--more like proper norms though and a good tort system.
If you need a piece of rebar removed from your chest, then you need a piece of rebar removed from your chest. The price doesn't matter, the choice of provider doesn't matter. The "consumer" is completely at the whim of whatever provider happens to be closest. That's not how free markets are supposed to work.
>> The goal for American healthcare companies is increasing shareholder value, not reducing costs
Reducing costs increases shareholder value. The shareholders don't benefit from these inflated administrative costs. This is money that could be converted to profit and distributed to shareholders.
This suggests something else is going on
Half of US healthcare spending is public payers - Medicare and Medicaid. They do set prices for providers and still spend far more than other countries.
And if you’ve been involved in US healthcare you’d realize it’s drowning in regulations already. It’s not a free market by a stretch.
Both institutions work in tandem[0] with one another to establish pricing guidelines. That's why your hospital-purchased ibuprofen is $10 per pill instead of $6 per bottle. The insurer and hospital "work out" a price that let's them achieve the profit needed to pay their administrative costs, plus margin.
In the USA(this is all from a US citizen's perspective), there are regulations that limit what percentage(15% in my state) of an insurer's income can be profit vs administrative cost. This means that a higher hospital price results in a higher profit for the insurance provider. This provides both parties an opportunity to set prices for an optimal profit. With government-mandated health insurance participation, the pool of people paying into this system has increased.
It is what is. Tell your elected official if you think it would help.
0: Anthem, Blue Cross, and UHC executives sit on the Baptist Health(hospital chain) board of directors, and vice versa.
The only benefit an insurer would have from a higher price is if they have a monopoly position - no other insurer. Otherwise the other insurers will pay less, charge a lower premium and grab all the customers.
When choice is harder, they can play the price game better.
Insurers already have an incentive to limit prices, though, which is essentially what their contracts with providers are. As in, they list how much they'll shell out for CPT codes.
In terms of these insurers who control providers, can you give an example?
The reason we spend so much on Medicare and Medicare is because people are less hesitant to use the service. On a per capita basis, the public payers have reduced overhead and costs compared to the private markets. If you have sources proving me wrong, I’d be happy to look at them.
And while the US market my be drowong in various regulations, it is severely lacking in price control regulation - the whole reasons for this discussion.
Yes, they reduce costs by saying “this is what we’ll pay”, but it’s still much more costly than other countries’ systems.
---
(Yes, yes, I understand that to an economist, a "free market" is free of regulation, a product of laissez-faire economics. But to the lay person, a "free market" is one where prices are set by perfect competition, which requires a balance of power, the prevention of monopolization, and information symmetry.)
I just use the term "free enough market" to describe it.
- The story I'm looking at now had someone complaining he couldn't afford his Lantus.
- Lantus is pretty much the most expensive 24 hour insulin available. Last I checked it was something like $275 per bottle.
- Walmart has cheaper insulins R, N(PH) for somewhere in the range of $20-25. They're older insulins and don't work as well, but they are an option for any diabetic that can't afford the newer insulins. (Note, I can't find it on Walmart's web site but, as I understand it, you can't but it online, so that may be why)
For context:
- My insurance doesn't cover Lantus either. I take a generic (to be fair, I don't believe that generic was available at the time of the story) version of it.
- I used to take R and N insulin
It's time to stop perpetuating this myth. Especially in a thread directly about how the US overpays for everything compared to literally every other developed country on the planet.
If Medicare managed all of US health care and nothing else changed (that is, if we relied on Medicare for funding and kept the rest of the system we had intact), we'd reduce prices by something in the low teens percentage points. Families upset about the cost to insure their families on the ACA markets would not be mollified by that level of price relief.
California and Vermont found this out when both determined single payer options; read : the state; were not affordable without seriously curtailing care options. As in, when you tell people no it becomes affordable, when you bend over for every little thing it suddenly becomes what we have today.
Healthcare is extremely regulated, but poorly. In addition to the much-talked-about “more vs. less” dimension of regulation there is the much more important “better vs. worse.”
There's zero regulation on the software industry, and prices have trended to zero. I suspect the problem with the health care industry is much deeper than not enough regulation.
I'm not saying this model is right. I'm just saying that doing away with it will have fundamental consequences to healthcare R&D
EDIT: To be clear, a minority of drugs are either very hard to manufacture (It's been a while for me so I don't recall their exact name, but I think they may be called "biosynthetics" – please correct me if I'm wrong) or researched for a very small number of patients (so-called "orphan drugs"), which confers them additional protection from generics and competitors. These generally have much higher prices than the "standard" drug.
https://www.newyorker.com/magazine/2016/04/04/inside-the-val...
By anyone's standard, they are not representative of the U.S. Pharma market as a whole.
It is. If the US starts paying what Sweden pays for drugs, there is no one left to pay the cost of developing drugs on this planet.
Some characterise this as freeloading, but looking at the NHS for example, they set relatively clear limits for how much they will pay per quality-adjusted life year that a drug provides. If a drug costs more than this limit, financially more people will lose out if our healthcare system purchases this drug over something else (more doctors, hospital beds, etc.).
Does this make us immoral for "freeloading", because we prefer putting our limited money into cost effective treatments?
Also, is it not worth looking at why pharma R&D costs so much? The pharma industry seems to run at a very healthy profit margin compared to most other industries. Maybe the lack of market pressure is allowing the pharma industry to remain fatty? Obviously there's a fear that cutting US pharma revenue would hurt global medical R&D, but I don't see this as being a foregone conclusion. It could just as possibly be market failure and regulatory capture keeping pharma R&D expensive.
It doesn't make you immoral, but it is important in understanding the tradeoffs of suggesting that the US switch to an NHS-style system.
> Also, is it not worth looking at why pharma R&D costs so much? The pharma industry seems to run at a very healthy profit margin compared to most other industries. Maybe the lack of market pressure is allowing the pharma industry to remain fatty? Obviously there's a fear that cutting US pharma revenue would hurt global medical R&D, but I don't see this as being a foregone conclusion. It could just as possibly be market failure and regulatory capture keeping pharma R&D expensive.
They may be doing well, but you may not be seeing all the little pharma companies that die trying. At the end of the day, investors are allocating capital where they think they can get returns. If you reduce the returns of pharma, you reduce the attractiveness of investing there.
Drugs in the US are priced at the profit-maximizing price. That profit-maximizing price has nothing to do with how much pharma earns in other countries.
And it has absolutely nothing to do with the cost of R&D. R&D is a sunk cost, has no effect on drug pricing.
But not compared to other high risk, capital intensive industries, i.e. tech.
It depends on whether some drugs that your system considers affordable today as generics, would have not existed without being funded by US taxpayers, I suppose.
Or profits because the company gamed the market.
EDIT: "hard to manufacture" is in quotes because it's what I said in my parent comment (though to be fair I said "costly to manufacture"), but I meant it as an umbrella term for everything that can't be substituted by generics
Their clinical trials for new compounds are extremely expensive, freeway-tunnel-under-harbor expensive, Carl Sagan expensive (billions and billions).
They pay generic-drug manufacturers to refrain from making competitors to their compounds for which patents have recently expired.
They pull the enantiomer hack. Many organic compounds have a right-handed and a left-handed version of their structures, only one of which is active as a drug. Chemists call these two versions "enantiomers." The first patent on a compound covers the basic chemistry. Then, when the first one expires they patent the same compound, but only the purified active enantiomer. They then send their sales reps out to convince docs the newly patented drug is way better than the old one.
They lobby the US federal legislature to enact health care insurance laws (Medicare Part D) prohibiting the negotiation of prices.
They claim drugs bought in Canada aren't safe, even if they come from the same factory.
And, Purdue Pharma.
A bit over a decade ago, one very popular modern antidepressant drug used to be citalopram (cipramil). This is the racemic mixture (meaning it contains both the left and right-handed versions). The new one, escitalopram (lexapro) only contains the active stereoisomer. Its dosage is exactly half of the previous version because racemic mixture always (?) occurs in an exact 50/50 proportion.
Both drugs work perfectly well. No statistically significant difference in effect or side-effect. You just don't get the inactive half of the molecules.
Escitalopram wouldn't exist if it weren't for citalopram's patent expiring. Or maybe they were just sitting on the purified version, biding their time.
This is a straight counterexample of the argument that the insane costs of the healthcare system in the US somehow pays for new drug research all over the world.
This industry called "drug research" simply isn't motivated to improve health (not just "find better drugs"), they are just researching whatever is driven by profit.
They will just as happily waste billions of research on a drug that is almost literally identical to one that already exists and is known to work, a copy that nobody needed, only so they can patent it again.
At least they replaced it with something equivalent, instead of something worse. Because they would if they could (and given the state of reproducibility of medical research, probably did at some point or another).
That is not research, that is throwing money into a bottomless pit. Which is what the featured article is about.
Drug research in the US is no exception. You could do so much better research if it was done efficiently (and as a bonus take some pride in your work).
The fact that US drug research dominates the world market is not something that the rest of the world should be thankful for. You waste billions upon billions on such an industry, of course it's gonna dominate. Doesn't mean it's good. Other countries could do efficient drug research but if they don't get billions budgets (because you don't need it), they can't waste it on marketing and push their version of a drug no matter what.
Just because something is expensive, doesn't mean it's good.
The reason for the high prices is because healthcare in the US is an extremely, extremely lucrative for-profit industry.
https://www.investopedia.com/ask/answers/052515/what-usual-p...
https://www.advisory.com/daily-briefing/2017/05/18/moodys-re...
No company makes trillions of dollars in profit.
> higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs and higher prices for many medical services
I’m not sure if R&D costs are factored in at all for this particular study.
https://assets1b.milkeninstitute.org/assets/Publication/Rese...
As far as it’s implications on the cost of healthcare in the US I don’t think there is data for it since it’s pretty hard to measure.
Basically all equity research in the Pharma space backs up this view. Unfortunately I don't have any public data that I can share.
Costs for boring health issues like births, broken bones, diabetes and end of life care are what really matter. Oh, and administrative costs are way higher in the US.
A natural group to pay R&D for patent-free drugs is health insurance companies, who would benefit from the lower costs, and perhaps even come out ahead. But its hard for those companies to organize such an effort, because they can get the same benefit even if they don't contribute. It's a classic public goods problem.
Usually we solve public goods problems with taxes, and we could do that here, taxing the insurers and spending the money on R&D for patent-free drugs. Bernie Sanders introduced a bill to this effect several years ago. Iirc it involved "xprizes" for successful treatments, so bureaucrats wouldn't be steering all the research.
You're probably thinking of biologics [1]. These include immunosuppressant monoclonal antibodies such as adalimumab (Humira) and secukinumab (Cosentyx), used in treating autoimmune diseases such as psoriasis, ankylosing spondylitis, psoriatic arthritis, MS, Crohn's, etc. They are derived from biological sources such as Chinese hamster ovary cells [2]. They are also extremely expensive -- often several thousands of dollars per month [3].
[1] https://en.wikipedia.org/wiki/Biopharmaceutical
[2] https://en.wikipedia.org/wiki/Chinese_hamster_ovary_cell
[3] https://health.usnews.com/health-news/health-wellness/articl...
> The researchers determined that the higher overall health care spending in the U.S. was due mainly to higher prices—including higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs and higher prices for many medical services.
https://jamanetwork.com/journals/jama/article-abstract/26746...
Administrative costs of care (activities relating to planning, regulating, and managing health systems and services) accounted for 8% in the US vs a range of 1% to 3% in the other countries. For pharmaceutical costs, spending per capita was $1443 in the US vs a range of $466 to $939 in other countries. Salaries of physicians and nurses were higher in the US; for example, generalist physicians salaries were $218 173 in the US compared with a range of $86 607 to $154 126 in the other countries.
[1] http://thebalance.com/who-funds-biomedical-research-2663193
(edit: Having said that, our healthcare costs are out of control and it's not directly because of the R&D. It has more to do with wild overhead in insurance and HMOs where only a small fraction of what consumers pay goes to healthcare.)
When it comes to some really interesting drugs, prices and their accessibility are really strange.
Take HIV infection preventing Truvada. The "market" price of 30 pills is $1600 in US. It's a good drug for continuous mass use for Gilead. Instead of making it pretty much ubiquitous as vitamins, they chose to target only US market for the low volume high margins. So... I'm actually annoyed with Gilead over this. I own stock and getting good deals in Europe could get up to 50mil people on daily dose of it. That would push the stock wildly up! With 0 extra marketing, as it's not high on adverse reactions with massive preventative benefits.
Private health insurance cannot run at cost, private biotechnology companies cannot run at cost either, and this is because shareholders and executives demand it cannot. Every dollar of ROI in their portfolio is a dollar that could have gone to research and development or lowering drug prices, every yearly bonus could have tipped the scales and let one more person afford to save their life. It is tragically terrible that if you had the right books, you can calculate the exact x% of every dollar people spend towards healthcare that goes toward someone else's luxury rather than healthcare or in support of research. And thats ignoring the other half of the problem with private research, in that projects are decided by white collars and not white coats, so research efforts are focused on what will make a profit or what they can put out quickly before anyone else to dominate market share on a novel treatment, and not treatments for rarer diseases that might be backed with extensive basic research and only need to scale, but is marginally less profitable for the company.
However, if money for healthcare is taken publically, then there is no need to skim dimes on every dollar spent to grant someone a third house and a fifth car. Money can be earmarked directly for research, like basic research is, and what happens to that dollar would be of public record. Capitalism and its sole metric of success of infinite growth is inefficient by design and has no place when it comes to universal needs like healthcare.
Healthcare is not like other goods and services because (a) it's an universal need for which price sensitivity is zero (b) no one should have to pay life-crushing bills because they had no luck in the genetic lottery and (c) even for those health risks that people can control (obesity, cardiovascular problems), we have to admit that educating the population to eat better, sleep more and exercise is a pipe dream, particularly in the U.S. where shitty food is everywhere, the lobby for junk food and sugar is rampant, labeling and advertising for food is downright evil and work is incredibly demanding (unbelievably more demanding than in Latin America or Europe).
Healthcare and Education should be entirely subsidized by the government. Everything else can just be regulated to various degrees, always with the dual goal of minimizing state intervention while ensuring the market remains competitive.
With something like pharmaceuticals, of course the U.S. customers are going to pay the higher price, they need the medicine! That means that European countries are of course squeezing the drug companies (which really means squeezing U.S. citizens) as much as they can get away with. They would be dumb not to.
You also have to factor in that americans take more pharmaceuticals than in other places, likely fruitlessly or even harmfully in a lot of cases.
Might not be a bad thing to try it out and see what the consequences can be.
E.g. my health region in Canada will pay up to $50k or so per year of additional life provided.
And even in doing so, we're getting contaminated meds. See the article at Ars,[1] which is based on a recent study from Kaiser.[2]
[1] https://arstechnica.com/science/2019/01/scary-reality-meds-t...
[2] https://khn.org/news/how-tainted-drugs-reach-market-make-pat...
we're getting contaminated meds
Even if it's true, we should just fund drug research explicitly.
My dad is a conservative and his talking point about the house member who called trump a motherfucker shouldn’t have said that because she’s a woman. It’s ok that Trump swears but my dad was literally screaming about this representatives language.
Not saying I'm convinced it is true. I'd like to see a deeper unbiased analysis.
“U.S. consumers are in fact subsidizing other countries’ public health systems, at least with respect to drug pricing,” Jacob Sherkow, an associate professor at New York Law School, said."
https://www.ibtimes.com/how-us-subsidizes-cheap-drugs-europe...
https://assets1b.milkeninstitute.org/assets/Publication/Rese...
This btw went up fairly recently especially since Indian generics became accepted world wide in the late 90’s and early 2000’s.
The US used to produce 20-30% of the world’s drug patents now its peaking at 60%.
It would be if the US system was in fact efficient and good. But it's not. It doesn't work for the people. It's a huge beast that is out of control and costs billions. It will happily "research" identical drugs, worse drugs or unnecessary drugs if it means it can milk patents for a few years longer.
As it currently stands, it's more accurate to say that drug research in the rest of the world is suffering because it's being dominated (because part of the billion dollar budgets go to marketing) by the US pharma industry, including everything that is broken about it.
If we were freeloading, wouldn't we just take the useful results of your research?? But we get the bullshit too, because yes, your pharma marketing budgets are so huge they do in fact reach overseas.
If you don't play ball with a government, you're denying yourself a lot of potential customers. A single person? A fraction of a fraction of a drop in a bucket.
Sort of. We also export our definitions of diseases, and since the market for new diseases is a lemon market it makes sense that other countries should pay less for the treatments. E.g. if people in other countries can't really be sure whether or not hysteria is really a real disease that affects women, it makes sense that they would be less willing to pay the full price for cure. It's just like how consumers in the U.S. probably wouldn't pay full price for a pill to prevent fan death. Overall though the U.S. probably comes out ahead by exporting its medical model.
I think one of the best is perhaps life expectancy - and that's dropping in America, patents or no.
Just a small correction for accuracy; they actually patent the 50/50 mixture of both versions first. And then they patent the purified version that only contains the active enantiomer ("mirror image").
Because of how biology works, turns out that the "wrong" mirror image (that is absent from the new version of the drug) was in fact really inactive, doesn't do anything, and thus offers no advantage over the old version, except being covered by a new patent to milk.
These are the kind of drug research "advances" that the rest of the world is supposedly freeloading off of.
It's not freeloading, it's being dominated by a multi-billion dollar global marketing budget.
https://www.thebalance.com/who-funds-biomedical-research-266...
"In a Journal of the American Medical Association (JAMA) study published in January 2010, the largest study to date to attempt to quantify U.S. funding of biomedical research by the pharmaceutical industry, government, and private sources, researchers estimate that U.S. biomedical research currently stands at about over $100 billion annually.
The pharmaceutical industry is the largest contributor towards funding research, funding over 60 percent. The government contributes to about a third of the costs, with foundations, advocacy organizations and individual donors responsible for the remaining investments."
I dont think that statement is incorrect. They spend a ton on r&d (20%), which is more than pretty much any other industry
https://www.investopedia.com/ask/answers/060115/how-much-dru...
If there would be a loss of revenue, any reduction in R & D costs lies purely with c-suite’s priorities.
https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
All while providing comprehensive, universal healthcare, free at the point-of-service.
Also, Medicare For All would theoretically be able to command substantially lower drug prices by nearly monopolizing demand.
Notably, given the study's analysis focus on OECD countries, the United States is (said to be [3]) the only of the top 25 wealthiest countries and one of two total member countries to not provide universal healthcare coverage.
[1] https://www.peri.umass.edu/publication/item/1127-economic-an... [2] https://www.mercatus.org/system/files/blahous-costs-medicare... [3] https://www.politifact.com/virginia/statements/2015/sep/01/d...
Don't let perfect be the enemy of improvement.
Constant improvement is what the system needs, and anything that improves it is good and should be done.
If the proposal had no costs, it would obviously be worth pursuing.
But it's a historically disruptive proposal. For changes on that scale, we should be targeting significant fixes. 10% is just nibbling at the edge of the problem --- to put it another way, if the cost savings is 10%, then a few years after the change was enacted, we'd be right back where we are now.
You can't iterate on restructuring the economy; it's not a PHP program. You can iterate on incremental fixes, but that's not what M4A is.
The results are pretty striking, esp here in the Bay: eg UCSF ( https://www.ucsfhealth.org/about/pricing-transparency/ ) charges $2600 for 1-way and 2-way chest X-rays, but charges $220 (that’s two _hundred_) for 3-way chest X-ray. The difference? How many angles they take of your body -ie, a 3-way includes the 2 & 1-way; and, more notably, the 3-way was used as a chargemaster item used in pricing estimators. So eg when I went in for a routine chest x-ray, I've expected a $300-ish bill, and got charged with a $2600 one. Knowing these prices now allows me to ask specifically from my doctor to select the diagnosis&intervention with the highest benefit/cost ratio.
I’m really curious seeing consumer reactions to this, because current medical billing practices must die.
And there are a billion things for which you might want/not want to move to another country. And I'm healthy, and there are many other things that might seem crazy about America. I don't know, maybe I'm just paranoid, but I do seriously hope for the sake of everyone (and I don't mean to be meddlesome), that US citizens stop accepting this as normal and the situation changes soon.
Especially now, having spoken to people from all over the world (Europe, mainly), who simply never worry about any of this. Six-digit bills, insurance premiums, copays, in- vs. out-of-network doctors, these are all things that are completely unknown to people who live in countries with functional healthcare systems. I would suggest that any difference in care quality--which it seems like doesn't exist, but if it did--is immediately ruined by the emotional and economic overhead of having to worry about all of the aforementioned.
Your mileage may vary. I would describe my few serious interactions with American healthcare as "nightmarish".
I’m currently paying more then %100 of my annual income into an insurance pool, because I need insurance to protect my assets. (It’s complicated...) Moreover, the cost is not tax exempt because it is not employer sponsored. I’m healthy and don’t really consume much in the way of services. Meanwhile, others in the same insurance pool I’m paying into never see the price of their premiums, and don’t pay taxes on them. I understand that the point of insurance is to pool risk for insurable events, but how can we ever have an efficient market without price information?
As Milton Friedman put it “No one is as careful with other people’s money, as he is with his own.”
We pay much more, and are ranked nowhere near the top for lifespan, childhood mortality, and other measures.
Obamacare was a great first step. Define what basic healthcare is and form markets that encourage apples-to-apples comparison. Let the free market work.
Sucks that one party used this as a weapon to wrestle power.
Oh well.
Not going to argue here about healthcare reform, though. So if you disagree, don't expect a response.
Respectfully, enough with this free market garbage. The healthcare industry is not a free market, it can never be. It's not possible for the consumer to be educated.
Even if you put emergencies aside, when an unconscious person can't start price shopping emergency rooms, you still have regular office visits that are impossible to price shop.
Ask yourself when the last time you asked your physician how much a service cost. I asked my physician and they had no clue. They finally gave me an estimate of "it'll be nominal", so I accepted the procedure. Turned out to be ~$200. I'm currently disputing it and refuse to pay based on their original quote of "nominal".
Imagine your at the doctor and need to get a blood test. What do you do? Start calling around local labs to ask which one has the best price? Maybe check Groupon for a discount? All this while your doctor waits to see if the price is within your budget, so they could continue the test.
Pricing in the medical industry is not even opaque. It's solid black.
There are so many reasons why healthcare isn’t close to a free market. Here are a few:
1. All medical residents receive their salaries from Medicare.
2. It is illegal not to treat people who go to the emergency room. This actually makes the whole system socialized in some ways in that there is a guaranteed way to get healthcare without having to pay for it. It’s literally the worst way to socialize medicine though (what with preventive medicine being cheaper).
3. Within the industry itself their are drug pricing cartels, lab monopolies and facility provider splits that even some hospital administrators don’t understand. You mentioned shopping around for lab results, but I think there is only one option in a lot of states.
Forget single payer socialize the whole thing (it already is in the most expensive, stupid way).
The only thing that approaches socialized healthcare is free flu shots.
The most successful markets are a careful balance of well crafted regulations.
Healthcare in the US is not carefully balanced.
BTW, hospitals in the US begin publishing their pricing data online this year. By law.
Name one country on this or any other planet where this exists. Anywhere, except some bullshit theoretical textbook funded by a think-tank with obvious conflicts of interest.
> BTW, hospitals in the US begin publishing their pricing data online this year. By law.
More garbage. Those aren't real prices being published, they're approximations. And good luck calculating your service or trying to price shop while sick in bed.
I'll edit the comment and add a source for that soon. Found it[1].
The most ridiculous part is that some would call those published prices a good start. As if continuing down the road of an "educated consumer" is the right path.
IT IS IMPOSSIBLE FOR THE CONSUMER TO BE EDUCATED IN HEALTHCARE.
Prices are just a small part of it of the impossibility.
Doctors and nurses go through years of school. They go through all that because medicine is hard. Even the basic aspect of pronouncing the words is hard.
If you can't pronounce the words, how can you be expected to remember them and shop around, while sick...
EMS: You have a broken leg and a concussion. Which hospital do you want us to take you to?
Me: can you pull over for a few minutes while I lookup some prices? Actually, my service in the area is terrible. Does this ambulance have wifi?
EMS: Sure.
Me: Is it free?
EMS: No but you'll be happy to know the prices are published on our website.
Edit: [1] https://www.newsweek.com/end-hidden-costs-january-1st-all-us...
The prices listed are the retail prices while is not what the hospital usually charges. It's still not possible to know what price will end up on your bill. How much of a discount will you get at one hospital VS. another? Who knows...
Kenneth Arrow pretty much proved in 1963 that 'the free market' doesn't work for healthcare. Nothing since has produced a shred of evidence that he was wrong.
This is a case of expectations. $200 is nominal as far as medical procedures go. Based on my last couple encounters with healthcare, $200 barely gets you in the door. I paid $2000 on my last ambulance ride. My last stay was $14,000 for a couple days. That's with insurance.
The person who gave me the "nominal" quote also said my insurance would likely even cover the test. She was wrong.
I spoke to the office manager and she seems to agree with my take on the situation.
If you give a vague subjective word like "nominal" for a service, it's on you to hope the consumer agrees.
ummmm... last year. I always ask the doctor or dentist how much something's gonna cost. (not that I get a reliable, accurate answer, but I still ask.)
In the US, patients go bankrupt and physicians go bankrupt — money flows to the parasites who set prices: administrators and insurers.
And what happens when the market is not in equilibrium? It means some services are priced out of reach for some buyers. When the market is commodities like soy beans, that's okay... it means some people don't buy soy beans. When it's healthcare, it means some people don't get healthcare and they die. Not so good.
Disagree, it was a horrible first step directed at the demand instead of the supply. In fact, I couldn't think of a worse step of reducing provider-driven costs than heaping rules on the payers (insurers and their customers) to force paying into the system without equally significant rules controlling the suppliers. Obamacare has entrenched the ones charging all this money, not alleviated it.
Before, if you felt too hemmed in you could always move west and get free land, get together with other locals and form a small town.
Better to be the founder of your town than a random nobody in your previous town.
Back in the 18th-19th centuries, medical care was primitive and sometimes dispensed by the barber.
For toothaches and broken limbs, you might see a dentist or a doctor, for anything life threatening you toughed it out and died at home.
We don't do that anymore of course, but it's almost as if attitudes about self sufficiency have lagged behind.
It seems to me that many people who are opposed to socialized medicine don't necessarily disagree that it would give the poor better care; rather they fear that it will result in them receiving worse care.
Anecdotally, I'd say they do crap.
Friends outside LA are upper-middle class. Extremely good health insurance for the last 20+ years. Had a baby, emergency C-section. Less than 12 hours later they were told they must move hospital or else pay the $60,000 per day out of pocket because their insurance wouldn't cover it anymore. They had to drive themselves, in their own car, less than 12 hours after an emergency C-Section, with the infant.
Of of this after paying through the nose for 20+ years for excellent health insurance.
As an Australia/Canadian this is barbaric, and utterly unacceptable.
In Canada, we have free healthcare. If you have the money you still can go private if you think you'll get a better care.
But I guarantee you won't go private for hearth surgery. There's not market for it because the care you get is already the best in the public sector.
https://en.wikipedia.org/wiki/Healthcare_in_Canada#Restricti...
It shouldn't be "spends more for no gain"... it should be "spends more for worse healthcare."
"No gain" implies that we are getting the same level of healthcare as other countries, when in fact we have worse outcomes, less nurses/doctors, worse wait times, and always get stuck with the bill. Only in America do people regularly end up in bankruptcy for medical expenses.
The first Fortune 500 company to give it's employees free travel to Mexico, Canada, or Cuba for affordable care will cause quite a few waves.
Or a smart country could open up "embassy clinics" throughout America, offering affordable healthcare and taking the profits back home.
I'm not saying what is right or wrong, just what the problem is. Fast, cheap, good - you can always only pick two.
It boils down to two clear facts:
1) The US has no price controls whatsoever
2) The US has a for-profit system where your health is a business.
It's not that complicated. The rest of the world has it figured out for the most part.
https://www.commonwealthfund.org/publications/journal-articl...
I don't get fast - seeing a doctor immediately isn't easy, and I still have to wait in the reception. If I need immediate care, it's either $900 for ER, or a few hours wait... basically the same as UK NHS expectation. I don't get cheap - the premiums aren't cheap, and it's company sponsored. I can't say that it's much better care - they're only there for the damn ZocDoc review of a bedside manner.
I mean... I had a tapeworm scare and my doctor was literally reading medical encyclopedia in front of me.
I wonder if legalizing euthanasia would help significantly. Also, perhaps more awareness for geriatric strategies that promote comfort over cures. Many elderly people spend a ton trying to fix problems that can't really be fixed and should probably just have the discomfort treated.
Also, I wonder how we stack up against the rest of the world if we ignore expenses for people over the age of 70 or so.
Australians can get these at a fraction of US prices though
Mr Meschemberg’s cancer is HER 2-positive (HER 2 is a protein found on the surface of some cancer cells). HER 2-positive cancer cells tend to be far more aggressive, as they divide and grow faster than normal. “That makes [my cancer] a bit different,” he said. “There are drugs that are available to help but they’re not on the PBS.”
https://www.news.com.au/lifestyle/health/health-problems/mee...
Now this is obviously untenable. In my professional estimation (ex-health policy analyst) I think you CAN have a public option be viable. But financing it will likely have to be done by expanding revenue through middle class tax hikes (not just millionaires), which never fend very well in our current political climate.
In a single payer system, providers compete but buyers don’t, so prices are kept low.
Prioritization is based on need.
Basically, it's easier to spend less when you just don't do certain things that are much more expensive.
Trivia: What percentage of for profit healthcare corporations are directly or beneficially controlled by foreign investors who reside in countries that do not have our healthcare cost problems?
Honestly - it is.
A single dose was billed at $100k US
Allegedly healthcare in the United States costs exactly as much as that formula would predict.
I don’t have a citation here, and if anyone has one that would be great.
But if it is true, we might be trying to fix something that isn’t broken in any of the ways people intuitively conclude.
But if paying for extra care is illegal in Canada then my argument doesn't work.
The usual debate follows: yes but US funds research - yes but doctors, insurance and pharmaceutical companies get paid a lot more than anywhere else - yes but that’s the market, I want to pay more to have a top notch doctor / insurance - blah blah blah.
I am short on hope.
but then, when you have this HUGE industry which literally spends hundreds and hundreds of billions on all kinds of nonsense like wasteful billing administration, unnecessary defensive medical tests, overpriced drugs, etc, the same economists are unhappy.
The least regulated industry is software, with the lowest prices (most software is literally free).
People in the United States spend roughly 2x per capita compared to Germany, Canada, and the UK. This does not mean that drugs in the United States are twice as expensive.
The US tends to use newer molecules in the drugs that are purchased -- particularly ones that are still patented and more expensive. Other countries like Germany and the UK tend to use older drugs (e.g. molecules over 30 years old).
A naive analysis would notice that the US spends more on drugs for a lower number of sales and would conclude it's because prices are high, but that ignores the fact that US doctors tend to prescribe newer on-patent drugs which are -- drumroll -- more expensive and not necessarily more effective. I'd argue this is the fault of the doctors prescribing the drugs more than any drug company's fault.
If you examine Exhibit 6 in the study, you'll see that, yes, the United States does tend to have more expensive drugs than most other countries but it is NOT an outlier. For example, Japan and Mexico pay more than the US for the same drugs on average. Drug prices are not nearly as big of a problem as people make it out to be.
Also, to its credit, the US also has significantly cheaper generics and over-the-counter drugs.
[0] https://www.healthaffairs.org/doi/full/10.1377/hlthaff.27.1....
The solution is to make the consumer participate in driving costs down. One employer I know of has an excellent solution to the problem: Make employees pay 100% of the bill up to a certain amount, such as $6000. That's a large amount, but the employer then contributes a large amount to your Health Savings Account (HSA), such as $4000. This amount is for you to keep regardless of whether you have any health bills or not. (This money can be used for medical expenses only, but can be used any time, including after retirement). So the maximum you will spend out of pocket per year is $2000. How does this encourage the consumer to scrutinize and control medical expenditure? Because the first $6000 of medical spending in a year is "your money". This is money you'd be able to keep in your HSA if you didn't have any medical expenses. This gives the consumer a strong incentive to reduce costs, question charges, avoid unnecessary services, and so on.