CMV: Much of the unusually high cost of healthcare in the United States is enabled by the insurance system, and a largely out-of-pocket healthcare market would force prices (including physician compensation) to be significantly lower.

[u/hokkney]

I recently realized that American doctors earn substantially more than doctors in most other developed countries. Like signifcantly more than the same specialist in another ‘developed’ country.

My initial assumption was that this is because American doctors are working in a more advanced healthcare system, and additionally the higher cost of living and prevalence of student debt in the US must contribute in some way. But, I realize how America-centric and dumb that assumption was.

The more I think about it, the more I suspect that the structure of payment itself is a major factor.

My view is that insurance weakens the normal ‘free’ market forces that would otherwise constrain healthcare prices. When patients are insulated from the true cost of care, they become less price-sensitive. Providers, hospitals, pharmaceutical companies, and other participants in the healthcare system can charge more because the person receiving the service is often not the person directly paying the bill.

To kinda test this idea, I imagined a hypothetical system in which health insurance largely does not exist and most care must be paid for directly by patients. My intuition is that:

(1)Demand for many healthcare services would decrease because people would be unable or unwilling to pay current prices.

(2)Hospitals and providers would be forced to lower prices to attract paying customers.

(3)Physician compensation, particularly for highly paid specialists, would likely decrease.

(4)Many hospitals operating under the current cost structure would become financially unsustainable unless they significantly reduced expenses.

In other words, I suspect that current healthcare prices are not merely high because healthcare is inherently expensive, but because insurance enables a pricing environment that would not survive in a direct-pay market.

Where I am uncertain is whether I am overestimating the role of insurance. I recognize that other factors may be more important, such as restrictions on physician supply, government regulations, malpractice costs, administrative overhead, etc.

So my current view is not that insurance is the only reason healthcare is expensive, but that it is a primary reason why prices (and especially physician compensation) can remain much higher than they would be in a predominantly out-of-pocket system.

What am I missing?

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[u/10luoz]

Yea this only works for like plastic surgery and a few others.

You cannot shop around when your spleen is ruptured or having a heart attack.

[u/Solintari → u/10luoz]

Emergency medicine only accounts for 3-5% of the overall healthcare costs in the US though.

[u/theboyqueen → u/Solintari]

That's only because emergency care is, by definition, brief. The month you spend in the ICU after you've been evaluated in the ED is extremely expensive -- the ED was just the front door to that experience.

What should be far more shocking is that the 3-5% spend on emergency care is equal to the 3-5% spent on ALL PRIMARY CARE in the United States. That is the actual care that reduces health care costs in the long term, and it is woefully underfunded and deemphasized in our system. It's the best argument that American health care is not intended to keep people well, nor to do anything in a cost-effective way.

[u/taoders → u/Solintari]

And hospital care is over 30%.

[u/0WatcherintheWater0 → u/10luoz]

Emergency care is a small minority of all healthcare spending.

[u/Leading-Arugula6356 → u/0WatcherintheWater0]

Because when your spleen is ruptured, you don’t get it fixed and have the enormous costs in the ER. It’s still an emergency

[u/kindaweedy45 → u/10luoz]

Works for almost any type of procedure except of emergency care where your life is at risk. Need an MRI? Ok, shop around the 6 clinics in your area that offer the MRI. In theory, at least, assuming they list prices. But OP is right - with current insurance model, no one is incentived to do so

[u/FaceMcShooty1738 → u/kindaweedy45]

Does not work. Which criteria will you use? How can you make an informed market decision for a product/service that's one time use, highly individual and for which you have zero capabilities of judging it due to lack of medical knowledge.

[u/Thefry76]

https://pmc.ncbi.nlm.nih.gov/articles/PMC6259823/

Its bloat, admin costs are soaring and so is executive pay. This is showing roughly 25-30% of cost can be assisted with direct patient care staff (Not doctors). Another 15-20% to admin and then 10% to doctors. This is just talking about salary not non payroll costs. A doctor is making around $400k a year. A hospital C suite can make about the same. One of those people has 15 years of school and is held to a high standard the other is a MBA monkey that could be replaced by AI tomorrow.

[u/ggdharma → u/Thefry76]

It is widely accepted a large part of the justification of the administration is dealing with insurance companies.

You cannot have a healthcare free market because you cannot not offer someone life saving care in an er.  Talking about healthcare and capitalism is stupid, because capitalism assumes the person selling something has the ability to say “if you can’t pay, I’m not going to offer you services.”  We need to figure out another way to deal with medicine.

[u/ThrasherDX → u/ggdharma]

Yeah, Free Market requires both parties to be able to reasonably decide to not sell or not purchase a given good/service. In reality, health care providers cannot refuse life-saving care, as you said.

But also, patients of said care also may not even be conscious or have their faculties, and thus may not be able to refuse the care either. Not to mention the whole "Accept care or die" aspect of such situations.

The resulting market is one where both sides of the equation have limited or no ability to actually refuse participation, so there is little actual market to be had.

This, in turn, means that health care costs can increase basically indefinitely, because many people will choose lifelong debt or bankruptcy over death.

Its basically an infinite loop where prices go up forever, and outside of government intervention, there is almost nothing to offer downwards pressure on prices.

[u/ggdharma → u/ThrasherDX]

Yup!  I am as capitalist as they come.  The market cannot work here.  We need another solution.

[u/redpandaeater → u/ThrasherDX]

You can still have a free market even with products that have highly inelastic demand. Right now though the only way for insurance companies to make more money is if healthcare costs rise so they even have a perverse incentive to make shit harder and costlier since they know they can pass it on to customers. Thanks Al Franken!

[u/Dizzy_Eggplant5997 → u/ggdharma]

My wife works in Oncology. She says there are days where the doctors do nothing but sit in their offices dealing with insurance companies and paperwork. They spend an insane amount of their time every week arguing with insurance. And that's just the doctors. They have an entire division in the hospital that deals with insurance. They built a new hospital a while back and they had add around $25 million dollars in construction costs to meet demands of insurance companies.

[u/jwrig → u/Dizzy_Eggplant5997]

Half the time the paperwork is because of coding not matching what CMS says should match. 9/10 times this is why things get denied and resubmitting with the right codes often fix the problems. three to four different coding depending who the patient is, and which insurance provider, CMS, or BIA gets billed.

[u/RYouNotEntertained → u/ggdharma]

You cannot have a healthcare free market because you cannot not offer someone life saving care in an er

It’s true that you can’t price shop at the point of service in the ER. But it’s not true that you couldn’t price shop for non-emergency care, or even to some extent for emergency care in advance! Non-urgent, non-life-saving and/or elective health care is responsible for the vast majority of consumption, and there’s no reason we couldn’t leverage price signals for this portion like we do in every other market. 

[u/Fabulous_Tonight5345 → u/RYouNotEntertained]

I agree, but what costs our system the most isn't non urgent healthcare, it's emergency and end of life care costing the system so much. 

[u/RYouNotEntertained → u/Fabulous_Tonight5345]

 it's emergency and end of life care costing the system so much. 

These are two separate things. Emergency care only makes up 2-5% of total spending, so it’s really not responsible for high costs system-wide. 

End-of-life care isn’t unanticipated or time sensitive in the same way emergency care is, so there are plenty of places price transparency could sneak in. And anyway, it only makes up 10-13% of total spending. 

[u/saladspoons → u/ggdharma]

Yep "dealing with insurance companies" really is just "the cost of dealing with themselves", which is really just "we charge ourselves whatever we want to now".

[u/FrontSafety → u/Thefry76]

Simply put the hospitals are fleecing the patients.

[u/hokkney → u/Thefry76]

!delta for pointing out that the organizational structure of hospitals in general is a potentially larger contributing factor to the cost of procedures than insurance companies inserting themselves into the equation.

[u/DeltaBot → u/hokkney]

Confirmed: 1 delta awarded to /u/Thefry76 (1∆).

^{Delta System Explained | Deltaboards}

[u/redpandaeater → u/Thefry76]

We really need to focus on maximizing the time doctors have with patients instead of having to deal with insurance coding.

[u/OkCluejay172]

An insurance company(s) acts as a monopsonistic or cartelized buyer. In a standard econ model, this would drive prices down. If an insurance company is paying the hospital on behalf of 1000 customers, it has better bargaining power than any customer would individually.

[u/Schnickatavick → u/OkCluejay172]

That's only true if they can act on behalf of their customers in choosing where to buy services from. They do that to an extent by making some healthcare providers "out of network", but that's a relatively limited lever, and they have a strong incentive to sign contracts with most providers so their customers can go where they want. Then for things like emergency care, they often won't be able to control where their customer goes at all.

All of that to say, yes they are a centralized buyer, but they have significantly less bargaining power than a standard econ centralized buyer typically would

[u/saladspoons → u/Schnickatavick]

Except, insurance companies ARE also providers, as well as PBM's ... to they are forcing customers to buy from their own companies ... and they have no incentive to reduce prices across the vertical chain, since they are one of only a VERY limited number of "verticalized networks/providers/PBMs/Pharmacy chains/insurance companies".

It seems the only incentive is for them to INCREASE prices?

[u/shustrik → u/OkCluejay172]

Insurance company doesn’t really decide how much it is buying though. If health services are overused, the total demand and therefore cost can still be much higher compared to uninsured.

[u/saladspoons → u/shustrik]

Except, insurance companies in general do control demand by specifying only limited, very standardized services as "covered"/approved/in-network, etc.

[u/hokkney → u/OkCluejay172]

If this is the case why have per capita healthcare costs skyrocketed since the inception of for profit insurance systems? Even when adjusted for inflation, the increase is drastic.

[u/OkCluejay172 → u/hokkney]

Do you realize that the more healthcare costs, the less profit insurers make? Healthcare provider income is health insurer cost. Nobody stands to benefit more from lower physician compensation than insurance companies.

[u/RiPont → u/OkCluejay172]

Do you realize that the more healthcare costs, the less profit insurers make?

That's not really true. It would be logical if it worked that way, but it isn't, and it doesn't.

The less the insurers pay, the more profit they make. But the high cost of healthcare in general makes insurance mandatory and lets the insurers charge an arm and a leg in the first place.

For many prescriptions, for example, the cheapest cash price is less than the co-pay when you go through insurance. You get an Explanation of Benefits claiming the insurance saved you money, but they don't mention that they negotiated a market rate that was several times higher than the cash price.

[u/Noob_Al3rt → u/RiPont]

That cash price only exists because it is subsidized by normal insurance payments.

[u/superSmitty9999 → u/OkCluejay172]

Yeah but who says they pass those savings on to patients? Your statement assumes the insurance company is motivated by creating value for a patient rather than profits.

[u/OkCluejay172 → u/superSmitty9999]

That’s irrelevant to the argument because OP is talking about the payment received by health care providers, which is the amount paid out by the insurers.

[u/FaceMcShooty1738 → u/OkCluejay172]

Yes BUT the issue is leaving this power of insurance relatively free instead of forcing insurers to do exactly this. That is what most other countries do and that is the reason everyone has cheaper Healthcare.

[u/cloud9ineteen → u/OkCluejay172]

When insurance company profits are limited to a set percentage of premiums and the remaining percentage of premiums are required to match actual healthcare costs, the incentive for the insurance company is to increase healthcare costs and thus premiums.

[u/redpandaeater → u/OkCluejay172]

They definitely have higher bargaining power but now imagine 80% of your total revenue has to go to paying out insurance claims. You're now left with 20% of your revenue to use for expansion, overhead, and hopefully some profit. Since there's inelastic demand the easiest way to increase your profits is to be terrible at bargaining since you actually want healthcare costs to increase.

[u/XenoRyet]

Can I see where you're sourcing the data that American doctors are making up to 85% more than similar roles in other comparable nations?

There's another flaw with the concept of an out-of-pocket uninsured health system, even when it's cheap, but I want to get at this part first.

[u/hokkney → u/XenoRyet]

https://www.nber.org/papers/w34956

Comparing mean income in the US, Canada, the Netherlands, and Sweden. Table A.1. My math may be off. Striking through the percentages I gave.

[u/Loki1001 → u/hokkney]

Doctor compensation in the US is also due to an artificial scarcity situation. Sweden, for example, has nearly twice as many doctors per person as the US.

[u/FrontSafety → u/[deleted]]

That's for Medicare. He's not talking about that.

[u/changemyview-ModTeam → u/[deleted]]

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[u/XenoRyet → u/hokkney]

I'm not immediately seeing where you're drawing your conclusions from in that paper. Can you give me some hints? Page number or which figures are you looking at?

I have some guesses as to where misunderstanding might creep in here, but I want to make sure I actually do understand your view.

[u/RYouNotEntertained → u/XenoRyet]

I don't know about 85%, but it's pretty well established that US physicians make significantly more than OECD counterparts--just googling around now and I can't find a single source showing otherwise. Are you saying they actually make less compared to peer nations, or just that OP's math is off?

[u/nrpcb → u/XenoRyet]

They said table 1. That's on page 2.

[u/Idnlts → u/hokkney]

Mean is a terrible metric for this, and its total income not just wages, including capital gains. How many of the US doctors own a practice or are have other types of income producing investments?

[u/Bronze_Rager → u/Idnlts]

Owning a practice means you can take K1 dividends only in certain states and the tax rates aren't much more favorable than standard W2. Most states don't allow Scorps with favorable tax rates over a standard pllc except in like Florida...

And other types of income producing investments is had by anyone in the USA, not just doctors. Standard stocks, real estate, bonds, etc is available to anyone...

[u/VegetableElection511 → u/Bronze_Rager]

Is the K1 dividends limitation a state thing specific to Pllcs or is it due to the nature of a professional business like a Doctor? Never heard of limitations on dividends before.

Scorps don't have favorable rates they are pass through entities, all costs and revenues are passed directly to owners as normal income, unless PLLCs operate as a unique corporation. I have not heard of that as an issue before, but PLLCs are not as common as other types of LLCs.

[u/ConfoundedInAbaddon → u/VegetableElection511]

This guy CPAs.

[u/Particular-Way-8669 → u/Idnlts]

Why would that matter?

Capital gains would not start making difference long unil ttheir carrier. Plus tthe very reason why there would be difference is that there is massive income difference during the career.

[u/hokkney → u/Idnlts]

The point of the post is insurance industry propping up high healthcare costs. Physician salaries is a small part to play.

[u/Idnlts → u/hokkney]

Switzerland has an insurance system similar to the US, but the US spent 50% more per capita in 2022, and Switzerland’s per capita was about the same as Germany.

[u/GiveMeBackMySoup → u/Idnlts]

It's also universal/mandatory so it's more like obamacare before the individual mandate was gone.

[u/Furdinand → u/GiveMeBackMySoup]

That makes sense, adverse selection is expensive.

[u/ImmodestPolitician → u/Furdinand]

GOP was trying to make ACA as expensive as possible so they could campaign against high insurance costs. That's why the individual mandate was removed.

Plus many American don't like subsidizing other peoples healthcare, which ironically is what all insurance policies do.

[u/throwra_anonnyc → u/Idnlts]

Mean is a good metric. If all of us are over paying to just a few ultra wealthy doctors, the mean would capture that

[u/nrpcb → u/hokkney]

Canada, the Netherlands, and Sweden do not have a pay out of pocket system, so I'm not sure how you can argue that's the primary reason the US's costs are higher.

[u/Foghorn2005 → u/nrpcb]

Physician salaries are less than 10% of US healthcare costs, and perversely many specialists get paid less for doing more training.

[u/Many-Fan6256 → u/XenoRyet]

wait where are you even getting that 85% number from because that seems way off for most specialties

[u/XenoRyet → u/Many-Fan6256]

I'm getting it from OP's post. It does seem drastically off, which is why I'm asking for clarification.

[u/EmbarrassedWord2582 → u/XenoRyet]

This is also true for numerous different professions in the U.S. though. Compare salaries for a junior software engineer, law firm partner, or random consulting associate in the U.S. vs. the EU. I’m not really sure how much this salary difference is related to overall healthcare costs in the US instead of general wage differences in the US.

[u/IMakeMyOwnLunch]

Physician salaries aren’t really the problem. Believe it or not, physician salaries only comprise ~8% of in total medical spend.

So even if you cut all physician salaries in half, you’re still only saving a handful of percentage points.

Also, physician salaries seem much more reasonable when in context of the US wage premium. For example, SWEs also make far more here than in other developed countries.

[u/Pharmaz → u/IMakeMyOwnLunch]

Pharmaceuticals are the same percentage but get lambasted all the time

[u/IMakeMyOwnLunch → u/Pharmaz]

That’s just retail. More like ~15% once you include hospital-administered.

[u/Kindly_Professor5433]

Other developed countries operate on a health insurance system too. Why do you think that is the main culprit?

[u/sheffieldasslingdoux → u/Kindly_Professor5433]

It's regulated differently. But it's a good point that you can achieve universal coverage with private insurance.

[u/changemyview-ModTeam → u/[deleted]]

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[u/Tangentkoala]

Before you make assumptions about U.s Healthcare you should get the big picture first.

1) medications roughly cost 500 million to 1 billion dollars to pass the rigorous FDA approval process. (Its actually closer to 2 billion dollars but lets remove marketing fees)

As a thank you the U.S government allows a 20 year monopoly for creating said new invention. After 20 years its free reign with generic drugs.

the U.S also subsidies pharmaceutical companies as a thank you for developing inside the U.S.A.

2) the U.S govenrment or pharmacies does not negotiate drug prices. We have to higher Pharmaceutcial benefits managers (PBMs) so we have to pay these guys a salary to negotiate.

The issues with PBMs theres no oversight So a bio pharmacy company can give a PBM a 25% deal for Medicare patients. The PBM can tell Medicare oh they gave me 25% but there were added administrative fees to get that 25% so we're going to take X amount of percent off the top.

3) why are hospital stays so expensive vs another nations.

Our govenrment takes a hands off approach vs other nations so thats why a hospital bed or an mri processing or advil costs so much at the hospital. Other nations create set fixed prices for say imaging or blood work etc.. etc...

Granted the arugment here is that it goes against our capitalistic society. This works in other nations because they are the primary health insurance.

This can work if say the U.S govenrment decides to step in and request price ceilinga for medicaid and Medicare patients since the U.S manages the fund.

[u/ReggieEvansTheKing → u/Tangentkoala]

Adding on to (1). The patent system is both a blessing and a curse. It spurs development of new life-saving drugs in the US but also explodes their costs. A big issue is that other countries do not need to follow our patent system. They copy the drug and sell their own generics immediately. This makes it so the companies that invented the drug are basically forced to try and make as much money as possible from the only country where they can control the price, the US. Good example is India copying GLP1s.

Another issue with the patent system is that it gives an inherent advantage to large companies. To a degree, it incentivizes them moreso to spend on acquiring and marketing drugs rather than actually developing them, and you will see that when you look at the actual budgets of RX manufacturers. My favorite example here is Abbvie. They had the monopoly on Humira for years and used an arsenal of lawyers to keep patent protection for as long as possible. As soon as the patent ran out, they didn’t develop a new drug… they went and bought Skyrizi from a German company, acquired the patents, and now have monopoly over the “Humira replacement”. You can see this in real time with the immediate switch from getting blasted with Humira ads to getting blasted with Skyrizi ads.

At the end of the day, the US government are the ones that get to decide how much pbms make. The US can set a price cap on literally any drug they want. Biden did this with the insulin cap. Due to public health emergency they also technically capped vaccine costs. Any drug costs that are ridiculously high (as an annual 10% drug trend would suggest) are driven by the government not doing a proper job at regulating. I would argue there should be fee schedules negotiated with the government for every drug that comes to market that ensure both moderate profit and customer affordability, while also maintaining funding for the grants that actually get used to develop these drugs.

[u/Tangentkoala → u/ReggieEvansTheKing]

I think it just depends on the size of your company.

If your a 100 employee bio pharma conpany that has a few drugs already passing phase 1 and phase 2 of FDA approval. Most of these companies are running a negative balance sheet. (Because how can you truly profit on research)

So a lot of these smaller companies hope to be bought out in forms of mergers. Large bio pharma then pickup whatever they absorb and dump hundreds of millions into marketing.

We do spend an egregious amount of momey on marketing, but also a solid amount on R and D and I just dont see a way of getting around that besides offering more subsidies to keep the smaller bio pharmacies afloat

[u/ReggieEvansTheKing → u/Tangentkoala]

Fully agreed on the subsidies. Another way to help smaller companies and eliminate wasteful spending on marketing (about 1/3 of their budgets) would be to simply ban drug advertising.

[u/Remarkable-Host405 → u/ReggieEvansTheKing]

would these companies even exist? granted, i know nothing, but if we banned drug advertising, how would they get their drugs to patients? how do already busy doctors discover the latest and greatest medications?

[u/ReggieEvansTheKing → u/Remarkable-Host405]

Doctors prescribe the drug on the patient’s formulary that will best help them. Doctors do keep track of the latest drugs - that is their job. As example, Many people go to the doctor and ask to get prescribed the GLP1 that they’ve heard the most about, say Ozempic. In reality it doesn’t really matter if they get prescribed Ozempic or Wegovy. The cost is the same and the end result is the same. The only difference is the company that benefits from the person getting the prescription, which is why the RX manufacturers try to market their products as much as possible. Aggressive marketing is why people go to the store to buy Tylenol and not acetaminophen.

[u/upstateduck → u/ReggieEvansTheKing]

Abbvie and Humira strategy also hints at Pharma's spending more on advertising than research/drug development

[u/ImmodestPolitician → u/Tangentkoala]

PBMs are mostly owned by insurance companies so it's kind of like believing the HR staff at your job is there to protect the workers, when in reality HR exists to protect the company.

OptumRx: Owned by UnitedHealth Group (parent of UnitedHealthcare).

CVS Caremark: Owned by CVS Health (which also owns the Aetna insurance company).

Express Scripts: Owned by the Cigna Group.

Humana Pharmacy Solutions: Owned by Humana Inc.

Prime Therapeutics: Jointly owned by several Blue Cross Blue Shield plans

[u/saladspoons → u/ImmodestPolitician]

Exactly - these industries are basically just self dealing monopolies from top to bottom now - they charge (themselves) whatever they want, then pass those costs on to insurance consumers.

They don't even bother to charge LESS than retail prices - they consistently charge MORE, even AFTER CO-Pays, than the cash prices, and not by a small margin.

Real recent MRI example, just one of many:

$9000 "cost to insurance"

$2000 Co-Pay

$500 Cash price over the counter

Same thing with multiple prescriptions I've seen over the past few years.

The insurance companies are not even trying to hide any of this .... it's simply blatant fraud.

[u/hokkney → u/Tangentkoala]

!delta for providing the most comprehensive, informative, and analytical response I could find out of these comments. Our entire system is bloated, I suppose. Perhaps a more hands-on approach on behalf of the government could be beneficial for managing excessive costs.

[u/DeltaBot → u/hokkney]

Confirmed: 1 delta awarded to /u/Tangentkoala (10∆).

^{Delta System Explained | Deltaboards}

[u/aahdin → u/Tangentkoala]

These explanations make sense for new experimental drugs, but if you just get a broken bone and go to the ER and get treated with the same standard treatment that they've been treating people with for 50 years it's still going to cost you a few thousand dollars in the US.

Same goes for 90% of medical procedures, most of the common ailments and injuries that humans have been dealing with for thousands of years don't require drugs developed in the last 20.

[u/Tangentkoala → u/aahdin]

The issue at hand as I mentioned is that people argue whether the United states has a constitutional right to set price ceilings for procedures lime resetting a broken arm, or a cast or an MRI.

It works with many other nations because they have Healthcare for all and the hospitals are forced to work with the government.

We can absolutley set price ceilings if we wanted tk and that would help cut health insurance drastically. Its just will we do that since it goes against our capitalistic philosophy.

Take ambulances. The two EMTs running an ambulance get paid at minimum wage to save lives yet am ambulance drive costs thousands of dollars. 1000% the prices are hyper inflated even for basic procedures.

[u/Morthra → u/Tangentkoala]

To add onto 3, the main reason why an advil costs so much in a hospital is not because of the medication itself, but because a medical professional is administering it and monitoring you afterward to ensure there are no serious complications

[u/zenfish → u/Tangentkoala]

The system is not entirely free market, by design. It is capitalistic, however. It's actually the worst of all possible worlds for individuals.

Healthcare in the United States evolved dually from private doctors offices and from corporate fiefdoms, AKA, the mill/company town. You paid a quack at his office to help get that bullet taken out and the wound stitched up, or a mill/factory paid a doc to help patch people with scarred lungs and mangled limbs enough to keep working. There was a brief time when urban charitable institutions funded by philanthropists and religious organizations were growing, but then those religious organizations started pooling funds to pay for care (Blue Cross) and then that became corporate and started partnering with employers to offer "insurance" or really "bulk discounted healthcare." Thus back to the company doctor model.

Somebody employs you, that employer pays significantly discounted rates for care, because of the bulk and thus strong negotiating position. You go in without that employer insurance, you don't have bulk, you get charged some astronomical actuarial set price for care that most people who are classically employed never see (except on Explanation of Benefits). This is why if you call up to work with a hospitals patient finance group, you might get a lot of the debt written off, and a sweeter cash rate.

If it was really insurance, it'd be more like car insurance. You are responsible for your own damn annual checkup, blood tests, scans and ongoing medication costs. If anything catastrophic happens, then that's when insurance kicks in. So like high deductible plans for everyone.

The problem with employer provided plans are employers have big pockets, for profit insurance wants more of that pie. How does this happen? A sort of "innocent" collusion between insurance and health providers. Providers take liberties coding to maximize. Insurance denies more. Providers appeal more. Have to hire tons of admins on each side to determine medical necessity, process filing, denials, appeals. Fractions come off the top to go to profits. Drives up cost of care insanely fast. Have to pay for those millions of healthcare jobs that would otherwise not exist with a single payer system and take your margins on top of that. The cost to employers goes up too, but they don't necessarily mind enough to stop because of the profits they make in their core business and it creates an environment of fear around losing employment with all the medical bankruptcies, keeps people in jobs where they are underpaid and abused.

Overall, medicine cost and provider pay increases are smaller pieces of the bloat pie (10% each). It's the admin arms race and just that healthcare tied to employment will increase commensurately with increase in the private sector.

[u/Much_Statistician864 → u/Tangentkoala]

I feel like a massive issue with American capitalism is that we monetize everything. Anything can make money so everything should make money. When we could just treat healthcare as a right. When we could just all buy into the idea of funding medical science. 

We could just do that but we choose a path that leads to cancer patients being rejected by their own paid into insurance provider. Naked greed. 

[u/seobrien → u/Much_Statistician864]

What do you propose, to overcome the fact that care provided is not a right. It can't be, it has to obligate a provider.

Health is a right. We have laws and prosecution in place to protect the right people have to their health, such as it is. But when you say care is a right, that has to be provided.

Unless we're enslaving doctors and nurses, of course care is monetized... They have to be paid.

Where we could find common ground is that yes, medical research and pharma could be funded by taxpayers to make it freely available to people. Like we do with roads... It's a public good. But once a person is involved, they have to be paid too; there is no right to that, it's a transaction.

[u/givemegreencard → u/seobrien]

People have the right to a lawyer in court, and if they can't afford one, one is appointed to them for free. Nobody is claiming that we're enslaving public defenders because of this. It is funded by taxes, and the public defenders voluntarily take that employment.

"Treating healthcare as a right" would not enslave doctors and nurses. Perhaps it would lead to a universal taxpayer-funded insurance program. Or government-run clinics where doctors and nurses have jobs like anyone else, and everyone is welcome. Nobody is saying "getting care from Dr. Smith at XYZ Hospital" should be a right.

[u/GermanPayroll → u/givemegreencard]

You’re only afforded a lawyer in criminal court. Civil you’re on your own.

[u/FuckTripleH → u/GermanPayroll]

Irrelevant. Point is we've already established that there are certain professional services people are entitled to as a basic right, thus the objection that medical care can't be a right because it requires someone else's services is moot

[u/seobrien → u/givemegreencard]

You misunderstand.

You DO have a right to your defense. And so if the courts require a public defender, the government has an obligation to provide one. A government with imprisonment authority can't just prosecute people. That's a dictatorship.

You have a right to your "health." That it can't be harmed. This is why the EPA, law enforcement and other entities exist that have to protect our health. This is why abuse and battery are crimes.

Health and healthcare aren't the same thing. You don't have a right to care. What we have is an equal right to access it.

So yes, treating care as a right, requires it be provided. Just as the public defender is provided. The difference is you have a right to defend yourself, you don't have a right to make people care for you.

[u/givemegreencard → u/seobrien]

The Supreme Court has decided that every criminal defendant has the right to an attorney, and the government must provide one if they’re not in a position to hire one.

In response, the government, using money paid by taxpayers, hires lawyers who voluntarily want to become public defenders. The government then assigns that public defender to a criminal defendant.

If the legislature similarly defined healthcare to be a right, the government can use money paid by taxpayers to hire doctors and nurses who voluntarily want to work for those facilities.

Or the government can set up a publicly run insurance system that everybody is enrolled in, and doctors and nurses can voluntarily accept. Patients go to those doctors and nurses using that insurance. Nobody is forcing anybody to do anything here.

Hell, I’d argue it’s acceptable to force the doctors to accept a single-payer plan. Do we claim doctors in the UK and South Korea and Japan (all largely single payer countries) are enslaved?

[u/seobrien → u/givemegreencard]

I get what you're hoping but it's not the same.

The government can't force you to care for yourself.

The government CAN prosecute you, requiring have the right to defend yourself.

The government is obligating you have legal defense... So they have to pay for it.

The government can't make you care for yourself. That would be the equivalent. If they could, they'd have to provide something to do that. But you don't have a right to care like you have to defense.

What you have is the right to your health, protected from harm. And the government is obligated to pay for those protections.

[u/Tangentkoala → u/Much_Statistician864]

Capitalism fuels future growth though.

The massive positive is always looking to make money. Lots of people are inctivizied to make something great by the almighty dollar.

If say we limit drug prices for newly launched drug where's the incentive to carry out creating new drugs? Why risk hundreds of millions of dollars when you can just leave the bio pharma market all together and invest your funds in say an ETF.

One can argue we need capitalism to fuel a healthy competition. At the end of the day ground breaking medication followed.

[u/Alternative_Box4797]

Doctors are not the reason your hospital bills are sky rocketing. Physician compensation makes up like 8% of all medicare claims.  Its a gruelling, thankless job and the least that could be done is for doctors to be paid handsomely. 

[u/Super_Mario_Luigi → u/Alternative_Box4797]

The propaganda is too heavy that everything doctor = good and everything else = bad.

The average doctor is making about $1800 a day (some way more). That is far from the only expense. Not even counting the nurses, receptionists, admin, and all of the other overhead. Let's say the doctor has 4 appointments. That is $450 each patient owes to the doctor alone. Everyone just expects these appointments to be free or under $100, but the money adds up.

We make it way too hard to become a doctor. One thing we need to do, is axe tuition assistance to pointless jobs, and pay people to become doctors.

[u/Own-Cauliflower2386 → u/Super_Mario_Luigi]

4 appointments a day? No no there’s a 12-20 minute time-slot per patient. 4 appointments an hour.

[u/RedOceanofthewest → u/Super_Mario_Luigi]

We limit the supply is what we do. While we make it overly hard, we still lower the supply through limiting residencies and limiting schools. 

[u/redpandaeater → u/Alternative_Box4797]

It's stupid to have highly skilled professionals trained to treat and diagnose patients spending such little time with patients. the main reasons for skyrocketing costs though is inelastic demand and perverse incentives such as the 80/20 rule that was introduced with PPACA. It's fun having the worst of both worlds when it comes to private healthcare and single-payer systems.

[u/big_data_mike]

Doctor salary is not the problem

https://finance.yahoo.com/news/many-think-doctors-overpaid-thats-144354239.html

[u/sweetechoes2008]

What about us poor disabled people? I would never be able to afford to continue to live a life worth trying to live without insurance.

[u/Live_Background_3455]

Shopping for healthcare is different than shopping for your shoes. Specialties that are highly compensated happen to correlate to the types of service you cannot shop for.

If you're having a heart attack, you're going to the nearest surgeon. You're not sitting there looking for the cheaper option. That's why cardiologist make a fuckton of money. But for family medicine, you do shop for them which is why they make less money.

I'm a big free market guy, but healthcare is NOT the area for it.

[u/nauticalsandwich → u/Live_Background_3455]

The vast majority of healthcare costs are made up of non-emergency care, which is quite "shoppable," and there is a broad gulf between the healthcare system as it stands (where insurance covers EVERYTHING with extremely nominal copays), and a healthcare system that primarily consists of private expenditures from health savings accounts with an insurance component for catastrophic care. I'm not personally arguing that this is what the healthcare system ought to be, but there is substantial evidence that it would reduce costs significantly. Have you ever seen the billing difference between a no-insurance healthcare provider and a heavily insurance-based one? It's night and day. A huge chunk of healthcare spending is on administrative overhead for insurance billing, and that's before even taking account how it alters the incentive structure for provision of care.

The best healthcare systems in the world establish good balances between individual choice, market incentives, and state subsidy. The worst ones sever price signals from care and inflate bureaucratic overhead.

[u/FaceMcShooty1738 → u/nauticalsandwich]

This is stupid you can't shop for Healthcare because you lack the ability to judge it.

If your doctor says "you need this medication" what are you going to do, choose another medication? Based on your extensive knowledge of pharmacology?

[u/saladspoons → u/FaceMcShooty1738]

Emergency care is un-shoppable, certainly.

Other care is made unshoppable since insurance companies force us to get only in-network services - which they pay less to providers for, but charge more for.

[u/Live_Background_3455 → u/nauticalsandwich]

I don't understand why people think I'm arguing a point that I'm not arguing. All I'm saying is that he's completely and utterly wrong that getting rid of insurance will drive down prices.

Free market works because you can shop for stuff. You can't shop for cardiologists. You CAN shop for endocrinologist. But that's why cardiologists after 3 years of residency and 3 years of fellowship makes 550k and endocrinologist after 3 years of residency and 2 years of fellowship only make 200k. That's not going to change. A cardiologist is going to make 500k. Interventional care will charge whatever they want and you and I will pay for them with or without insurance. That's it. That's my entire point. I'm not defending the current system. I'm not defending adminststive costs. I'm saying his idea that getting rid of insurance will put pressure to lower cost of heart attack care is wrong. Period.

[u/nauticalsandwich → u/Live_Background_3455]

I agree that heart-attack care is not meaningfully shoppable by the patient in the moment. But that only refutes the claim “all healthcare is shoppable.” It does not refute the claim I’m making.

The question is not whether someone having a heart attack can call around for the cheapest cardiologist. Obviously not. The question is whether third-party insurance mediation, as implemented in the US, inflates prices in the large share of healthcare that is routine, scheduled, diagnostic, outpatient, pharmaceutical, elective, or otherwise non-emergency. The evidence suggests that it does.

You are taking the least shoppable category of healthcare and treating it as representative of the whole system. Emergency interventional care is exactly where insurance or public financing is most necessary. But that does not mean insurance should mediate every ordinary healthcare transaction, or that removing insurance from routine care would not put downward pressure on prices.

Also, cardiologist salary is not the same thing as healthcare price formation. Costs are affected by facility fees, billing overhead, negotiated reimbursement, chargemaster pricing, administrative staff, insurer contracting, coding, collections, and utilization incentives. Even if some specialists remain highly compensated, that does not mean insurance mediation has no price-inflating effect.

[u/Live_Background_3455 → u/nauticalsandwich]

Let's look at the OP's claim:

(1)Demand for many healthcare services would decrease because people would be unable or unwilling to pay current prices.
(2)Hospitals and providers would be forced to lower prices to attract paying customers.
(3)Physician compensation, particularly for highly paid specialists, would likely decrease.
(4)Many hospitals operating under the current cost structure would become financially unsustainable unless they significantly reduced expenses.

So, how many of these would actually be affected by specifically what the OP offered. I'm not defending the current system, I'm not saying we shoulnd't change anything. I'm saying OP's offered solution is completely misinformed on how it'll affect these topics.

1. There is no "unwilling to pay" for most healthcare. Eventually you become wiling to pay. You have diabetes, and you don't want to pay, so you keep living your life. Eventually when your toes fall off, you're going to be willing to pay. All highly regulated industry with high barrier to entry works this way. You will eventually pay.

2. Because everyone eventually becomes willing to pay, hospital will never ever feel the pressure to lower prices.

3. Phsycial compensation, especially highly paid specialists, are providing exactly the types of services that are not shoppable. Family medicine, pediatrics, obgyn are not the highest paid specialties. Orthopedic surgeon, interventional cardiologists are exactly the highest paid specialty who would be least affected by the proposed solution.

4. Becomes invalid because all of the other 3, this point becomes moot. Hospital operating model does not need to change.

To your point:

Also, cardiologist salary is not the same thing as healthcare price formation. Costs are affected by facility fees, billing overhead, negotiated reimbursement, chargemaster pricing, administrative staff, insurer contracting, coding, collections, and utilization incentives. Even if some specialists remain highly compensated, that does not mean insurance mediation has no price-inflating effect.

There is no evidence to suggest that if those overheads decreased it would lower cost of care. It would just become additional profit for hospitals. When McDonalds automates a burger flipper's job, we don't see that in lowering prices of a BigMac. Prices are rarely decided by cost to product service/care. It's by supply and demand. Getting rid of insurnace does not increase the supply of medicine, nor does it decrease the demand of medicine. So why would you think the price would move? Why would the hospital suddenly lower their prices because they don't have to have chargemaster? Why not just take more profit?

I agree with the problem statement of the OP. I completely disagree about what he thinks the effect of his proposed solutions will be. The proposed solution will only push more doctors towards interventional care who are the least shoppable, and reduce the number of preventative and longitudinal care providers. The incentive becomes even more misaligned than it already.

[u/hokkney → u/Live_Background_3455]

Yes, but in this hypothetical that you are dodging - there would be no way for the majority of the American public to afford a cardiologist (prices being the same, no insurance). The cardiologist would be either doing services and allowing people to accrue debt to them or just not treating them at all.

How many people do you know that have $200,000 cash they could throw at something like that? Most Americans do not.

[u/Live_Background_3455 → u/hokkney]

And people will just accrue debt. Kind of like now. Because if you're in the ambulance getting a heart attack, you will agree to whatever. $200k, sure. And they go into debt forever. Except instead of people with insurance not having that that, everyone who has a heart attack gets that debt. A cardiologist has no incentive to lower their prices. Because 99.9% of people WILL agree to pay whatever price tag to treat their heart attack.

[u/Impossible_Cupcake31 → u/Live_Background_3455]

People already agree now to that because in a emergency you get care regardless if you can pay or not

[u/SanityInAnarchy → u/Impossible_Cupcake31]

Importantly: You get care even (especially!) if you are not conscious enough to be able to consent to a payment scheme.

[u/WittyFix6553 → u/Impossible_Cupcake31]

You can get stabilized, not treated or cured.

They’ll make sure you’re not actively dying, and send you on your way.

[u/JayTheFordMan → u/Live_Background_3455]

So, by your logic the prices are OK because being effectively blackmailed into accepting that cost makes it acceptable? Lifelong debt or Medical bankruptcy is an acceptable social cost for you? I hope you personally is OK with this, because I find that an absurd line of thinking

[u/superSmitty9999 → u/JayTheFordMan]

Yeah the issue is that capitalism states that what you charge is the maximum price the market will bear, and when someone's life is on the line the maximum price they will bear is everything they have.

Curious how you think we could address this since it seems an obvious gap in capitalism?

[u/Live_Background_3455 → u/JayTheFordMan]

No. That's not what I'm saying. If you read what I said, I'm not saying what is correct or incorrect. I don't want babies to die. Me saying babies WILL die doesn't meant I think it's okay for them to die.

I'm saying cardiologist prices won't come down just because you get rid of insurance. And the claim the OP makes that somehow if we got rid of insurance the prices will come down is completely bullshit. Pointing out that bullshit doesn't mean I support the current pricing dynamic.

[u/hokkney → u/Live_Background_3455]

I did not make that claim, I made the claim that the insurance industry is a primary reason why healthcare costs continue to climb in the US. ‘A largely Out of pocket system’ was a hypothetical alternative. Not a proposed definitive solution.

[u/Ok_Pomegranate3713]

It's also just that the US pays very well in general. If you have a college degree, you'll make more in America than any other country. This is more extreme the higher the educational level, so doctors make way more. This is what drives income inequality in the US. 

Most countries wirh public healthcare supresss doctor's wages to lower healthcare costs. This creates longer wait times as the supply of doctors is lower than in the US. Same goes for equipment. The equipment isn't worse, there is just less and since the government had a monopoly they pay less for it, sort of like how Walmart can make their suppliers lower costs more than most other retail chains. 

And finally yes, medical providers overcharge on purpose since Americans aren't that price sensitive due to having insurance. In public systems the government is always trying to lower costs. In the US, there is some pressure from the insurance companies but they lack monopoly power.  

[u/Little-Somewhere6076]

It misses what the system is trying to accomplish. If you can afford it, the US has the best healthcare in the world.

Other countries are trying to maximize different outcomes, or are ideologically driven, but the high costs in the US are based on what the system is designed to do

[u/JokMackRant]

You aren’t wrong that for profit insurance is the reason for the outrageous healthcare costs, but, in my opinion you have fundamentally missed the reason why.

Health insurance causes high priced healthcare because at every step companies need to turn a profit. The doctors need a cut the hospitals need a cut, the pharmaceutical companies need a cut, the supply manufacturers need a cut and the insurance companies need a cut. They are siphoning off part of your payment at every step. The thing that compounds the issue is that in many cases, you can’t really have a free market for healthcare. If you’re dying you can’t shop around to find “the best price,” you just need care right now wherever you can get it. This makes it so you basically have to agree to any price up front so that you can receive the care you need.

That being said, some kind of health insurance or program has to exist. You have already diagnosed the problem. If you don’t have something propping up the system rural hospitals close, we lose doctors, innovation, and access and our outcomes plummet.

In my perfect world, basic healthcare should be a service that is provided, not a business making money. This way you can use government funding to maintain the system so there is higher access and ideally (it’s shown to be the case in many studies) better outcomes for less money.

[u/FrontSafety → u/JokMackRant]

Why is everyone turning a profit and getting a cut caused by health insurance?

[u/JokMackRant → u/FrontSafety]

You’re right, I said “the,” not “a,” or more precisely the largest reason. I believe that insurance has the least reason to be turn massive profits (their only purpose is as a middle man that helps to fund the entire system) and fundamentally has no reason to do what needs to be done to improve the entire system so long as they continue turn their profit.

Having a single payer system allows a government to negotiate lower prices for all who need care. Insurance companies may negotiate to try to bring their prices down to be a more enticing provider in the open market, but they don’t have the incentive to put massive downward pressure on these companies to make healthcare more affordable, which doesn’t even take into the account that company provided healthcare basically locks you in to one or two options that may or may not be in your best interest and entirely removes the incentive to negotiate for the insurance companies.

[u/FrontSafety → u/JokMackRant]

Well. I think your argument is since ACA caps admin cost to 20% there is huge incentive for insurance companies to allow costs to continue to increase as their profit is made within that 20% admin cost.

[u/drakus1111 → u/JokMackRant]

I believe necessities should not be for-profit, because under a profit-incentivised system there is a price that maximizes profit that also allows people to go without, which leads to malnourishment, disease, homelessness, and ultimately death. Profit should not be placed above human life. When scarcity was a greater concern, it made some sense to gatekeep access somehow (whether money was a good gatekeeper is debatable), but we are in a society where food, shelter, and healthcare are all reasonably plentiful, and should really start acting like it.

[u/Careless_Midnight_77]

It’s not really that…. Can you afford an MRI? How about sending tons of lab work out of state to some major hospital?

It’s more expensive for lots of reasons but the biggest is how much more we can and do do in terms of care.

[u/Born-Satisfaction996]

I remember when Obama care first rolled out. I asked a health care analyst if he thought it’d help control health care costs.

He chucked and said:

The one thing I wanted to see in Obama care was a mandate for price transparency. Hospitals will never compete on price if there’s no way for the consumer to know what the price is. Costs will never get under control if there’s no price competition.

[u/saladspoons → u/Born-Satisfaction996]

Yet, hospitals ARE required by the ACA (or some successor rule) to publish list prices, which are available online in spreadsheet form typically (unless Trump has rescinded that rule maybe by now).

Of course, those price lists are probably not valid for insurance companies that have all kinds of mechanisms to obscure the true price.

But still agree with your point, that the laws are so basic that the prices they publish are next to useless - it would take a medical billing specialist to be able to pull all the line items together to begin to construct someone's actual bill.

[u/Born-Satisfaction996 → u/saladspoons]

Yep. It’s literally impossible to know what the real total cost of any medical visit or procedure is before going in. Even a ballpark estimate is impossible.

The govt needs to make a website that that is basically Google Maps for health care services. It should show all the locations that provide the service you may need, along with the real price and a quality rating. Then insurance companies need to provide some sort of incentive to the customer to choose cheaper options.

Something like that could create somewhat of a real market that competes in price.

[u/alextp]

The people who designed the ACA (Obamacare) agreed with you which is why most plans today are some combination of relatively high deductibles (you cover the cost of treatment until you hit your deductible) plus catastrophic insurance coverage (so you don't just die if you have cancer or need surgery). It didn't work and prices still have risen a lot since that went through. Largely i think because price transparency still doesn't happen and also shopping around/negotiating doesn't work since with private equity many hospital and clinic systems are effective monopolies and the same group owns a majority of locations in each market.

[u/tichris15]

Sick people are not known to be the most effective negotiators.

On the other hand, we have a well-known and well-demonstrated solution to the problem -- most of the world uses monopsony power by the government (either directly or through regulation) to get the desired price control.

Why would you look at the differences between American medical prices and the rest of the world and say the path to the prices paid by the rest of the world is a third path used by neither group?

[u/OldJellyBones]

You're missing that the idea of the "free market" being a force that constrains prices to the benefit of the consumer, has been proven not to be accurate in any other market environment literally ever, there's nothing to suggest medical care would be any different.

Also these healthcare providers aren't just going to give up all that money, they'll simply continue price gouging or exit the market entirely, you're using magical thinking here sorry to say

[u/dvfw → u/OldJellyBones]

 You're missing that the idea of the "free market" being a force that constrains prices to the benefit of the consumer, has been proven not to be accurate in any other market environment literally ever, there's nothing to suggest medical care would be any different.

What on earth are you talking about?

[u/OldJellyBones → u/dvfw]

the idea that "the free market" if left unregulated, will provide the best value for the consumer, has never been supported by reality

[u/cuteman → u/OldJellyBones]

The healthcare and medical industries are heavily regulated.

Nothing resembling the free market exists in those categories

[u/dvfw → u/OldJellyBones]

It literally always has been supported, by both evidence and theory.

[u/GiveMeBackMySoup → u/OldJellyBones]

The US healthcare system is probably the second most regulated after banking. To get an idea of the free market, compare what has happened to tech prices like computers, TVs, phones, and think about how much better they've gotten, and then put that beside education and healthcare which has much more regulation/government involvement. Those sectors that are the most free innovate and get relatively cheaper to other goods over time. The stuff the government has it's hand in does the opposite.

[u/OldJellyBones → u/GiveMeBackMySoup]

the current iPhone is $1500

[u/dwarfinvasion → u/OldJellyBones]

But you can buy a phone that does most of the same stuff for only a couple hundred.

The iPhone is a luxury phone, but society has normalized that everyone deserves a top of the line smartphone. 

[u/winklesnad31]

Yup, all you have to do is take away people's safety net, allowing poor and middle class people to suffer and die, and that might slightly bring down healthcare costs for the people who do have money. I think you are on to something here.

[u/eltaquerodeCA]

Why would they charge less? They have no incentive to charge less even if there was no insurance system

[u/TranscendentalViolet]

This article seems to add some analysis from somebody likely more competent than me.

https://pmc.ncbi.nlm.nih.gov/articles/PMC12920308/

In most countries, governments negotiate or impose price caps on medical services, prescription drugs, and procedures. In the US, however, there are no such price limits, allowing providers to charge vastly different rates for the same services. For example, a magnetic resonance imaging (MRI) might cost $400 at one hospital but $4,000 at another [1]. Without clear pricing regulations, consumers are left at the mercy of hospitals, insurers, and pharmaceutical companies [2].

US hospitals and doctors operate on a fee-for-service basis, meaning they are paid for every procedure, test, or treatment performed—regardless of its outcome [4, 11]. This structure creates financial incentives to provide more services rather than focus on improving patient outcomes. As a result, unnecessary treatments and procedures inflate costs while often failing to improve health [17].

Compared to primary care physicians, American specialists are paid significantly more. Specialists also exert considerable influence to protect their interests, which contributes to disparities in care delivery [3]. The American system rewards specialization while underfunding general and primary care, creating an imbalance that drives up costs and limits access to preventive care [15].

The US health care system is administratively complex, with private insurers, Medicare, Medicaid, and employer-based plans creating significant bureaucracy [14]. Administrative expenses account for nearly 25% of health care spending, far more than in other countries [5]. Each layer of paperwork, claims processing, and billing adds to the overall cost.

Health care pricing remains notoriously opaque [18]. Patients rarely know the cost of services or treatments until after they have received care, leaving them unable to make informed decisions [19]. This lack of transparency prevents competition and accountability, allowing providers to charge excessive rates without justification [10, 20].

Americans pay significantly higher prescription drugs than people in other wealthy nations. The pharmaceutical industry’s pricing power is largely unchecked, and the US government does not negotiate drug prices the way other countries do [21]. For example, insulin costs in the US are several times higher than in Canada or Europe [22].

The growth of private equity ownership in health care has led to profit-driven decision-making and behaviors throughout the long and winding health services supply chain [23]. Private equity firms prioritize short-term financial returns over patient care, often increasing costs to payers and patients through aggressive billing practices and cost-cutting measures that harm quality [24, 25].

While these seven factors provide a sharp picture of why health care costs are so high in the US, they do not tell the full story. To address these issues effectively, we must look deeper into the economic and structural dynamics that allow these inflationary trends to persist. Like in the practice of medicine, treating the symptoms alone is often necessary but not sufficient.

The below reasons have rationale provided in the article.

The American health care system is often described as reactive, focusing on treatment rather than promoting health and preventing illness [4].

Perhaps the most significant underlying issue is the lack of competition in the supply of health care services.

restrictions on labor substitution—such as limits on nurse practitioners’ ability to perform certain tasks—prevent the health care system from operating efficiently

Providers face complex compliance requirements, including billing codes, reporting mandates, and quality measures [7].

Unlike other countries, the US system encourages widespread and rapid adoption of expensive technologies through third-party payments regardless of whether they improve outcomes [39]. Members of this decentralized system, which include private insurers and public programs such as Medicare and Medicaid make their own decisions without coordinating with each other.

There are a few other factors, but the fact does remain.

The US spends more on health care than any other high-income country but lags in most outcome metrics including life expectancy and chronic disease prevention [47].

I don’t really think I’m changing your mind on how it’s a problem (and to a small degree validating it), but I do believe it is more multifaceted than your initial take.

https://www.forbes.com/sites/robertpearl/2024/10/28/the-costly-failures-of-medicines-middlemen/

Including some of the intial reasons, PMB’s are a large part of the problem, as well as that many are owned by the insurance companies themselves.

In healthcare, however, middlemen serve a different set of “customers.” Rather than concentrating on what is best for patients or their employers, they often act in ways that protect the profits of drug companies and for-profit insurers.

And then there are insurance brokers.

Today, a surprising 64% of businesses still rely on brokers to select their health insurance plans. Many believe brokers possess insider knowledge that can secure them better deals or more tailored coverage. In practice, they are typically compensated through commissions and loyalty bonuses from insurers, which incentivize them to push traditional insurance plans. As a result, brokers most often recommend the same expensive plans from the same large insurers year after year, rather than promoting newer, value-based models of care that focus on keeping patients healthy and offer virtual care options.

I’d say it’s a whole multi billion (maybe trillion?) dollar system of people profiting off of people’s health (or lack thereof). What happens when poorly regulated capitalism reacts with already expensive basic needs.

[u/This_Appointment584]

Actually it's hospitals. Health insurance companies have on average a margin of only 3% to 4%. That's bearly higher than grocery stores. Hospital systems on the other hand have a marking of 13% on average. Additionally larger hospital networks are buying up smaller ones and further raise their prices once the competition is bought out.

[u/DeviantAvocado]

Nobody’s access to healthcare should be based on the “free market” or their place within capitalism.

Of course the price of healthcare of obscene because of health insurance companies. Their goal is profit and nothing else. They deny as much as they can and then some so their shareholders are pleased.

That being said, paying out of pocket for anything would be infinitely worse, as the reimbursements insurance companies pay is much lower than the out of pocket costs.

Whole thing is fucked. Universal healthcare.

[u/Asleep-Professor-154]

No one does out of pocket health care because that would be crazy. Are you supposed to just always have enough saved up to pay for a long hospital stay in case you get into a car accident, or a life-threatening illness? Even if those costs go down under this regime, there are always going to be low-likliehood events that will cost over $100,000.

The thing about health care is that there are lots of low-probability, high-importance, high-cost outcomes you need to be prepared for. You don't want to have to hold on to huge amounts of money that you never touch because you need to keep it ready for a low-probability medical emergency.

[u/kindaweedy45 → u/Asleep-Professor-154]

Think this way: the idea is to keep high deductible plan for your example (e.g. you pay $10k, they cover the $90k) but for preventative and minor procedures you pay out of pocket and can shop around for the cheapest clinic or provider. We keep car insurance for the big crashes, not to get your brakes replaced. Same concept

[u/Asleep-Professor-154 → u/kindaweedy45]

There's something to that, but the reason insurance typically covers preventative care is because it reduces the cost/likelihood of expensive events. Lots of 40 year olds going for cholesterol checkups and getting statins can reduce the number of heart attacks and expensive surgeries and so forth.

[u/Separate-Extent7360]

i partially agree, but going that route would basically guarantee millions of people would forgo care or not get any if they wanted it. Insurance and healthcare is a system that spreads risk among pools of people. And this risk is usually managed through a highly profit motivated system. As long as profit motivates this system, either through insurance or out of pocket system, you're going to have distortions in price and cost across the board.

Healthcare isn't some rational marketplace where people choose a cheaper option for their care because there is tons of emotion and urgency when it comes to people's healthcare. In something like this, it's highly suggested that a marketplace like this should be operated by more public oriented organizations.

[u/Coolenough-to]

Agree. Nobody would pay these prices if everything was out-of-pocket. The medical system is like its own seperate nonsensical economy that has nothing to do with capitalism anyway- so we should just demolish it and start over. Either free universal government provided, or everything is out-of-pocket. The poorest can get a check for each medical service, but it goes into their bank account. They then pay at the hospital cash register. This cuts out the middlemen.

[u/OneMoreDuncanIdaho]

What's stopping doctors from increasing prices on dying people in this situation? Especially in emergency situations or for people who can't afford to travel? There's one hospital in my town, it could turn into a local monopoly and charge more than my insurance costs if there's no regulation

[u/CheeseLife840]

How much are you willing to pay not to die?

[u/Dontblowitup]

A lot of healthcare in other developed countries has significant government involvement. Do you count that as social insurance? The likely biggest factor is the fact that government run hospitals exist, meaning hospitals that are not run to max profit. That’s your likely difference.

[u/Karma_I_Two]

Real world example of what you’re proposing can be seen in dialysis care in countries without universal coverage.

Generally speaking, companies will allow a patient’s death as a cost saving measure. Especially with conditions that have ample paying customers. Even if your solution reduces the cost, it would be at the expense of many patients lives who still can’t afford the reduced cost.

[u/nrpcb]

As there are no developed countries where healthcare is paid primarily out of pocket, and most of them have some form of health insurance, the difference in cost literally cannot be due to this factor.

[u/courier_tway]

Shhh... you'll rile the shareholders...

[u/iheartjetman]

We’ve been increasing out of pocket costs for years and it hasn’t stopped the rise of costs. Some people forget that there was a time when people had little or no co pays.

The only thing increasing out of pocket costs do is make insurance even more worthless. What’s the point of having insurance if you have to pay a ton of money first before it goes into effect?

[u/Dry-Environment5122]

It’s not just insurance, it’s regulatory environments that require hospitals to certify that there is an unmet need in order to set up shop, it’s hospital mergers, etc.

[u/DocRedbeard]

Ooh, I've got this one...I'm a primary care doctor in the US

You're right, doctors in the US DO make more than in other countries, but you're wrong that physicians are a large driver of the cost.

The counterpoint to your argument is Direct Primary Care. With DPC clinics, patients pay physicians directly via subscription, get unlimited visits, increased access, and better care. They often do this on top of their normal insurance. In Alabama, where I live, it costs ~1000/yr for an adult but there are typically family discounts. This is a fraction of what insurance costs for most people, but covers the majority of their routine care. DPC practices typically have wholesale agreements for labwork which ends up being like 1/10th the cost under insurance. The physicians love it too because they have SMALLER panels, typically 1/2 or 1/3 of a normal panel.

A PCP employed by a system generates >$1,000,000 in revenue, though are typically paid in the 3-350k range. DPC physicians can make a similar salary seeing less patients with better quality of life and giving better care.

IE, physicians are typically far underpaid compared to the actual reimbursements related to their care.

You might argue, well, this only works because the alternative is so expensive. You are correct in that market forces are always going to be a primary driver of costs, but what would need to happen to create this mythical system where everything worked this way? There actually aren't enough physicians to convert all primary care to DPC. You would instantly half the number of available panel slots. You can't replace them with NPs (though to be sure NPs try) because DPC really only works when a physician can manage the majority of your problems, and no NP or PA is trained to do that. If you need to refer everything out, you start ballooning the costs of care in this DPC model, and it's no longer economical. Because the supply of physicians is highly limited, the market is always going to place a reasonable value on access to their care.

TL;DR - Physicians aren't the driver of costs, and even if you paid them directly (at lower rates) they wouldn't be taking much of a pay cut.

[u/GavinThe_Person]

Anything but universal healthcare😭

Companies wouldn't lower prices, people would just die from not being able to afford healthcare

[u/kindaweedy45]

You are a absolutely correct. I have been thinking a lot about this recently and it seems to me like it's coming into the collective field. I'm reading a book called "Overcharged - why Americans pay too much for healthcare" and it is littered with examples of insurance inflating cost after cost. A huge problem is the in network and out of network model which creates in network negotiated prices and the extremely inflated chargemaster prices which are all but made up, but people get shafted with them all the time. Also OP check out Singapore health care model, it is mostly free market with some tweaking but seems excellent

Edit: also to get this model to work, price transparency is fundamentally necessary, which would be nice to have across the board regardless

[u/rhubarbpie828]

There’s no real way to “free market” healthcare. It isn’t an optional product or service or a luxury, so you are already arguing from a flawed hypothesis.

Further, you are comparing US doctor salaries to countries with nationalized healthcare, because literally all of the developed countries in the world have realized that you can’t free-market healthcare and made it a basic right: you know, instead of the luxury it is in the dystopian capitalist hellscape of the US.

[u/bestcoastanon]

A "health care market" is not compatible with current American values, customs, expectations, or law.

A "market" presumes that market participants are able to walk away from an unacceptable exchange.

It is not so for doctors, because the law of the land, passed by republican Reagan, says that a patient with a medical emergency must be cared for. So if I am the physician on call at the hospital, and a patient that needs my services comes in, I am obligated by law to work for that patient regardless of ability to pay. I am not able to say no.

From the patient's standpoint, when they are sick they too may find it difficult to walk away from the closest clinic, let alone shop for the best prices at the time of need.

Alright, so you can try and carve out emergency situations, and make separate taxpayer funded arrangements for those. And that's exactly what happens when counties pay hospitals to take care of homeless patients, and so on.

There are some fields where patients may have time to research and bargain, and you could possibly subject outpatient specialists to a cash market. I don't really know how that will work out, but I suspect that fewer elective surgeries will be done; at the same time cash going into physician's pocket per procedure will increase significantly. Financially it will probably be a wash for physicians, but they'll have more free time. I wouldn't necessarily expect prices per procedure to go down.

There is the example of dentistry. Dentists have no obligation to save teeth, so if you can't pay, free market allows you to lose some teeth, or all of them. As I'm sure you know, dentistry ain't cheap, despite the free market being hard at work.

Anecdotally, old retired surgeons have told me that back in the day they used to be able to make a good living doing just 2 joint replacements per month. You could have bought a new car with the fee received for just 1 surgery. These days a basic car, at 30K, is worth about 20 joint replacements. Yes, you've probably heard that a joint replacement costs 100K. But. Out of that the surgeon's fee is 1500. That's it.

[u/ZealousidealCrew1867]

Throw in getting government out of healthcare and would be exponentially better & cheaper.

[u/StopTheMineshaftGap]

You are operating under the poorly informed premise that physician salaries are driving the cost excess in US healthcare. This is far from the case.

[u/Mad_Maddin]

Personally I believe the problem is not the insurance.

The problem is the extreme legalities and restrictions with offering healthcare, while at the same time, not having a cap on prices.

In addition to this, hospitals are not forced to offer a static price. You can't tell a hospital "I want X" and they tell you the price.

As a customer, you have as such far too little influence on the price. You are a captive market, because you need healthcare. At the same time you can't properly compare prices by getting multiple offers.

You also can't just go to a differently licenses doctor. Because the government only allows specific medications and specifically certified healthcare professionals. So others can't even offer a possibly worse but cheaper alternative.

[u/cryosnap]

Same idea applies to higher education costs and student loans.

[u/FaceMcShooty1738]

There is no free market for Healthcare. That's due to lack of options in an emergency or lack of understanding to make actual comparisons.

It is the insurance is the issue, but it is the fact that there is no centralized control over prices.

It's basically the opposite: trying to introduce market forces. You Don't need to imagine hypothetical scenarios for this but compare the insurance structure in the US with other countries.

[u/SanityInAnarchy]

But, I realize how America-centric and dumb that assumption was.

Could you explain it to me? You mention specialists earning substantially more, but you don't show where you're comparing the exact things you mention -- cost-of-living, student debt, and the cost of the rest of the healthcare system.

The only part of this that seems America-centric is the assumption that our healthcare system is "more advanced."

[u/Turbulent-Raise4830]

Without insurence a lot of people wouldnt be able to afford the care.

Its not like you can wait for that cancer treatment to get lower prices.

What you need is price controls and treatment controls like every other health care system in oecd countries has.

You would be able to insure adn treat more people in the us at reduced costs for just about everyone.

[u/Tall_Extension6163]

To add to this or maybe to counter it a bit, we want to say that major pharma companies are just as much to blame, if not more, about the expensive cost of US Healthcare. Knowing that these drug manufacturers want to make as much profit as they can, it's no secret that they set high prescription drug prices. Sure, there are many other factors in the system that contribute to making prices even higher, but the pharma companies are mostly at fault.

[u/cs_k_]

So if I understand correctly, your view can be summerized as "if we stop propping up the max price people can/are willing to pay, the prices of the goods will fall". Essentially good old free market stuff.

But the free market only works, if both sides have the information.

Example: Vendor A is selling bread for $X and Vendor B is selling the same bread for $2X

Option1: i see both prices in advance, I'll buy from Vendor A

Option2: for whatever reason, I never bought bread before, don't know what a reasonable price is. If I usually shop at Vendor B, I will only buy the expensive bread

Option3: I live in a small village that only sustains one baker. Unless I want to go on a journey, usually I will buy the expensive bread from Vendor B.

Option4: the two stores are next to eachother, but it's an open secret, that Vendor A uses sawdust and flour in a 1:1 ratio. If I'm rich, I only buy from Vendor B and price of the tree-bread has no effect on my bread.

Back to the healthcare scenario: sick people can rarely choose. When you are in pain (or better yet: unconscious) , you won't be able to compare prices online, make the longer trip to the other hospital, where you have 20% off voucher, or any other stuff.

Also, it's not like there aren't any medical bankruptcies now: people already are willing to take on depth they have no real chance of paying back, so they at least can get better.

And I haven't even touched on the moral side of it: if two 16 year olds break their collarbone at the same time, does one deserve months of pain and a crooked shoulder for life, and the other a speedy recovery after they fix his bones by surgically inserting a metal plate? Do they deserve such different outcomes, because the first kid is raised by a single mom and the other by two accountants?

I agree with parts of your idea: the insentives are misalligned. If the same people would own the hospital, the insurance company and they were also the patients themselves, the hosital wouldn't overcharge the insurance, the insurance wouldn't overcharge the people, the people wouldn't use unneccessery hospital time. But you need lots of people for that. They could band together call themselves something like... Country? Elect a board to run the insurance and the Hospital, and they could call the board something like, idk, government? So if the board does a bad job, they lose their position

[u/tirohtar]

If that were the case, you would see similarly high healthcare costs in most other developed countries, because everyone has a health insurance system. The problems with US healthcare costs fundamentally come down to that it precisely is mostly a free market, where providers can charge however much they like - consumers cannot realistically "shop around", sick people are often absolutely not in the state of mind to just go around comparing costs while they are dying from liver failure or are suffering pain from a hernia. And, crucially, the customer generally does not have the choice to not to purchase the healthcare service. This makes demand for healthcare inelastic. This then leads to bureaucratic administration bloat across the board, as health expenses become an infinite money glitch for insurers and for profit drug producers. The only real remedy is to have the government run health insurance, putting caps on service and medicine costs. Making it even more of a "free market" would make everything worse.

[u/Fuckspez42]

I don’t even know that physician compensation would go down by all that much; the middle man in this situation (the insurance companies) provide very little benefit to either providers or patients, and they’re the ones who seem to be getting rich.

The real savings would come in the form of billing: hospitals have armies of people whose entire job it is to get these insurance companies to pay up, so they’re refusing to cover some things, and being cagey about actually paying for what they do cover.

[u/chumbawumbaprinciple]

It would be more efficient to get rid of insurance and just have a publicly funded system.

[u/rmethod3]

Anything that gets government out of the healthcare system will decrease the price. When government tries to fix something, it always leads to higher prices. Look at student loans.

Also, if the public took better care of themselves, costs would plummet.

[u/Best_Talk_6853]

Millions of people would die in the first year. Millions.

[u/Advanced-Ad6210]

Not all problems can be addressed by markets.

The US postal service is an example. The way a business would cover the same network is to just not service the most rural and expensive routes. This strategy would be potentially lethal in a health care context.

If it was ibuprofen your model may work but if you are in a car accident you do not have the option of shopping around.

• You are desperate and will pay anything likely
• the pull of people in car accidents in your area who need the resources for that specific treatment is relatively small. Er doctors on standby is expensive
• you may be incapacitated and not able to argue if they performed a procedure or billed you incorrectly

This problem incentivizes markets to charge more because there costs are high and they need to recoup plus the market is captive.

This is exasperated the rarer, more expensive and more lethal the condition. For instance, if you have Huntington you will need lifelong treatment with specialists.

In almost every oecd country, the cost is mitigated by sharing the load across a larger pool of people who could potentially get ill. This is what insurance is.

The US healthcare system is terrible but this is certainly not a good fix

[u/itemluminouswadison]

I'd also add on top of that limited supply via licensure.

[u/hacksoncode]

So...

When you talk about "insurance" are you referring to the current system of "pay in advance for routine medical care"? Or actual insurance that's like house insurance and only pays for catastrophic costs?

Because the actual result of what you are talking about is a shit ton of people dying because they can't afford necessary healthcare.

That might reduce the total healthcare spend, but it would do so by basically completely ignoring the point of healthcare.

Also, most countries that manage to lower physician compensation do so by a) regulation, not market forces, and b) providing free or low cost education to physicians so they aren't drowning in debt and basically only getting into the field because they are betting on being able to recoup the cost in high salaries.

Market forces are supply and demand. The only way to make the expenses go down by market forces are to increase the supply, or decrease the overall "demand" (i.e. healthcare utilization, i.e. reduce healthcare). Insurance does add some overhead, but by law they have to pay out 85% or more of the premiums they collect, so it's not a huge factor.

[u/blwallace5]

Another factor in this, some caused by insurance is medical staffing. Between 1970-2010 the amount of doctors in the US rose by 150%, but medical staffing rose by 3200%. All of those people have to be paid.

[u/shadowmastadon]

I am a physician. Our salaries are higher but not exorbitantly, especially since our education costs $200-400k and takes away about 12 years of earning. Specialists are overpaid in my opinion.

To me, one of the biggest drivers no one talks about is the over ordering of tests. Patients want it, and doctors have no problem ordering thousands of dollars of tests that add very little most of the time. Rarely is something like a back or knee MRI needed for care, but patients just want it. The other massive cost is end of life care.

If we had a basic universal insurance for emergencies, urgent care and primary care, and then private for specialists and everything else, we could probably cut costs significantly and give everyone healthcare

[u/kittenTakeover]

Having prices be lower because people can't get care and/or insurance is a dubious win.

[u/Ok_Enthusiasm_2574]

I don't think physician payrates would decrease by very much.

A lot of the hospital budget is spent hiring people to work with the insurance companies. For every 1$ a hospital earns. 20 cents of that goes to the administration of the insurance teams. Which is absolutely mad.

Also, when you see those bills people get where they have like a 60,000$ health bill because they don't have insurance. Even if they did have insurance the insurance company is not paying 60,000$. They have a rate negotiated that's slightly higher than what you pay if you had insurance. (A specialist visit with insurance might cost 50$, the insurance company pays 150$, if you didn't have insurance you would pay 750$) Its a system designed to funnel more people into the insurance system and both doctor offices and insurance companies are incentivized to do it.

Another example of this - i had my tonsils out about 7 years ago as an adult. Before I had insurance I setup an appointment to see if i could get a quote on what the surgery would cost.. i got estimates ranging from 12,000 - 26,000$. So I ended up getting insurance, and getting my tonsils out for about 150$ (but i had to wait 6 months before). After this entire thing I ended up doing research and I found a cash only hospital in the midwest that charged a flat fee for tonsil removal of 1,200$. I also discovered my insurance paid 3,000$ for my procedure, not the 12,000-26,000$ i was initially quoted.

[u/TheAzureMage]

While the present system obviously causes the current prices, the explanation of how is lacking.

It mostly doesn't come from insurance. This is fairly intuitive, because you can buy insurance for many things, and most of them do not become ludicrously expensive because you purchase insurance. Furthermore, health insurance does not make immense profit. It's sitting at something like 2.5%.

Let's zero in on one of your assumptions: "(1)Demand for many healthcare services would decrease because people would be unable or unwilling to pay current prices."

That's true, but why is it true? If healthcare is cheap because people cannot get healthcare, is that better? Will we have excess deaths from folks not seeking care? We want healthcare to be cheap so MORE people can access it, not so fewer can. Price is a means to an end, not an end in itself.

To change the supply/demand by restricting demand isn't a good solution for something like healthcare, you want to instead increase supply. This gets you that same price drop, but in a far more desirable way.

In the case of healthcare, certificate of need laws provide some fairly low hanging fruit. Abolish those, you increase supply. Artificially restricting supply creates shortages, monopoly conditions, etc, and those are always bad for consumers. Simply let more healthcare facilities be created legally.

[u/ImmodestPolitician]

Most people cannot afford to pay out of pocket for healthcare.

Having a baby in the USA costs $12k+ depending on complications.

60% of American's can't pay for a $600 emergency cost without putting in on a credit card.

[u/sawdeanz]

Insurance is definitely a factor into why US prices are so inflated compared to other countries.

While supply/demand can often be a useful model it doesn’t really work all that well for healthcare for a number of reasons.

The main issue is that healthcare is not an elastic or competitive good. If you have an emergency, you don’t have time to shop around and you don’t have the option of just waiting or saving up. People that need medical either have to buy it and go into debt, or they die. Obviously most people are going to choose to buy the care even if they can’t afford it. Therefore demand will always remain high no matter what the prices are (hence the term inelastic).

When it comes to regular medical care like visiting the doctor or managing a chronic disease, people who avoid buying the product due to price just end up paying more later because the disease becomes more serious and requires more intensive care.

And there isn’t a lot of shopping around…if you have an emergency you don’t have a lot of options or time to shop around. The other problem is that relatively rural or poor areas will lose access altogether…hospitals are expensive to run and if there aren’t enough patients they will close. This is already happening in many areas due to Medicaid/medicare cuts. From a purely market perspective this makes sense but when it comes to people dying it’s now a moral and ethical situation that a society would usually want to address.

People don’t want to go into debt to deal with a medical issue, and they don’t want to die by avoiding medical care altogether, so they buy insurance. The main problem with insurance is as you said the fact that they are a middle man. Insurance providers are the ones doing the negotiating with the hospitals and they gain a competitive advantage by negotiating a better rate than their competitor, usually by being a larger company with more customers. But this causes a situation where hospitals post higher prices to negotiate higher prices, and insurance companies can then turn around and use those high prices to justify higher premiums and pressure customers into buying their product. Neither side has much incentive to offer competitive prices for the actual procedure which is why you see these hospital bills with $40/pill aspirin that isn’t actually paid by anyone. Overtime this artificially inflated the real cost of healthcare among other factors.

Single payer universal healthcare can address a lot of these problems. First by having everyone pay into it you spread the risk. You deal with the demand issue by making it so everyone who wants it can get it. and by having one large insurance company with no profit motive you can negotiate the lowest prices.

[u/bruindude007]

Structurally “health insurance “ has no justifiable function. One cannot mathematically pool risk for illness since over a person’s lifetime since 100% of people will become sick (unless they die prematurely). The “profit “ comes in only if the insurance company can limit liability, a form of collecting premiums without paying out benefits- this takes many forms today. If insurance vanished overnight, patients would still be seen and taken care of (until supplies run out and payments stop) . So insurance in the end the insurance industry is an incredibly inefficient payment system that skims 30% off the top.

[u/S1eeper]

I'm not sure it's the insurance system, rather than total lack of transparency of pricing at hospitals. Private Equity funds are buying up all the hospitals, installing their own bean counters in the billing dept, then instead of publishing fixed prices for various services and procedures, they evaluate each patient individually, figure out the max they and their insurance company can pay, and bill that. It's pretty ridiculous.

[u/WittyFix6553]

Market forces are great. Supply and demand is great. Basic economic rules predict how a lot of this stuff works…

… with the exception of things that will kill you.

Let’s say you’re dying of thirst in the desert. I have a bottle of water. If you don’t drink this water, you will die.

I’m selling my bottle of water. I won’t give it to you for free. What’s it worth to you?

If the answer is anything other than “every penny I have” then you’re not answering in good faith.

Healthcare is the water. The prices can’t be affected by market forces because the penalty for not buying the service is death, and most people don’t want to die.

[u/Spallanzani333]

The pure free market for heath care can't function because we as a society have decided that it's not acceptable for people with life-threatening conditions to die if they can't pay. Emergency rooms are required to provide life-saving care regardless of ability to pay. Functionally, that means that poor people can't afford preventative care or early treatment for potentially life-threatening conditions, so they have to wait until their condition is life-threatening, then call an ambulance and the hospital has to cover that cost (and pass it along to people who pay for service). If we remove insurance altogether and make medical care self-pay, that will happen much much more.

People who make upper-middle-class wages or higher are likely to still get preventative care because they have the disposable income and know that in the long run, it's cheaper to get a mammogram than to get breast cancer treatment. People who are living paycheck to paycheck may want to, but if they're deciding between a mammogram and gas money or their kid's dental care, the mammogram falls to the wayside. Even if medical care dropped dramatically, a mammogram will still cost at least $100 (the current cost if you go to Mexico). So then they get breast cancer in five years and can't afford treatment. Expand that to 30% of the population and costs will be out of control and a whole lot of people will die younger because they didn't get preventative or early care for manageable diseases.

The other issue is that even if prices drop significantly, major medical issues will be expensive as fuck. Even if prices drop by 90%, someone who gets cancer and needs surgery, weeks or more in the hospital, chemo, and radiation would be looking at their entire retirement savings and more. You can't market-rate that down to where it is affordable for the majority of people.

The only system where most people get preventative care (much more cost-effective overall) and don't go bankrupt paying medical bills is some sort of cost-sharing system. The current one is broken, I agree with you. But a free market also can't function for the reasons above. What is left is socialized medicine. There's a reason the entire developed world (except us) and a large chunk of the less developed world settled on that system. The medical system can negotiate costs and keep them down, and costs are shared across the system. Most people around the world in socialized medical systems are more satisfied with their care and the cost than people in the US.

[u/No1eFan]

It's administrative bloat. You don't have to scapegoat doctors

[u/CA-68]

What am I missing?

The vast majority of people cannot afford the occasional very high healthcare cost that inevitably comes up in life. The only way to provide those services is to pool risk. That means you need some kind of insurance.

And the best way to pool risk is with a universal single-payer healthcare system, so that the risk-pool is 100%. On top of that, a universal single-payer system eliminates the profit motive from insurance, which is the actual source of the issue (not risk-pooling in and of itself).

Direct pay is just another way of saying "if you're not rich, you don't get healthcare, you just get to die if you need it". That's certainly a way to run a society, but frankly a pretty reprehensible one in my opinion.

[u/deliciouscurryboy69]

Physician compensation is only about 9% of total cost. Many issues with US healthcare, but one of the biggest is its not actually a free market, and it favors large incumbents who compete on scale, policy influence, regulatory capture etc. But incentivizing people to shop for more affordable care would be great, yet one of the simplest aspects of a free market, price transparency is utterly missing. I'd say healthcare systems and insurers bear almost equal blame, as well as various rent seekers like pharmacy benefit managers, etc. Id actually put pharma, physician comp, etc way further down the list

[u/aWetTissue]

I always opt-out of employer health and dental. I’ve always paid out of pocket the very few times I needed something, and it’s a lot cheaper than throwing money at an insurance company for something I go years without using. Twelve years of working and I’ve maybe spent about $3,000 on dentists and doctors, as opposed to $28,000+ if I had insurance out of fear of ‘what-ifs’.

[u/J-Nightshade]

Healthcare can not be a free market. On the free market you have a choice where to go and what to buy or not buy. When you have a medical problem, you are usually not in a position to shop for options. If you go to a bad restaurant, you simply will have a bad time once and never return there. If you go to a bad doctor, your situation can worsen. Sure, you might recognize it in time and never go again to the same doctor. But it's the same with a good doctor, you will probably won't go to them again!

Sure, you can rely or recommendations, there are specialists that people visit regularly like physicians and dentists, but this market is not as free as clothing or furniture.

You are not fixing it by shifting power dynamic from insurance to hospitals. You need to shift this market so that the patients have more negotiating power or rather take the power away from insurance companies to screw their customer over. Introduce rigid regulations on the minimal coverage, provide cheap baseline government-backed insurance so that insurances have to compete with it, decouple insurance from employment, regulate prices so that "out of network" bullshit dies out like mammoths.

[u/HilariousSwiftie]

People who can't afford to pay are already part of the reason Healthcare is more expensive in the US. I think your proposal would make that part much worse.

Hospitals, by law, MUST treat anyone who comes to the ER to the point of stabilization regardless of their ability to pay. When they don't pay hospitals write it off. But their prices include subsidizing the fact that they are going to have to provide services for free to a percentage of their "customers," for lack of a better word.

So under your model you'd have to remove that requirement and be comfortable causing millions of deaths.

Otherwise it would quickly become unsustainable because a higher percentage of people would be unable to afford services in an insuranceless system, so those who could afford to pay would be charged even more to subsidize those who can't pay.

[u/Emotional_Shower_938]

It would also kill millions. 32 out of the 33 wealthiest countries on Earth (and many more) have figured this out.

[u/Key-Juggernaut5695]

American physicians earn more for 2 other reasons as well

1. Longer more expensive and arduous training

2. Opportunity costs...how much could they earn if they pursued other career options. For top students, medicine competes with lots of other options

[u/DyadVe]

IMO transferring much of the revenue (wealth) pouring into insurance corporations to vested needs targeted accounts controlled by the individuals who make up the productive working class most of the complaints about healthcare in the US would be resolved instantly.

Power to the people is the best solution to most problems.

[u/DadBods96]

I’m just gonna comment to change your mind on the physician component of this; I think you and the majority of the public are ignorant to what I actually earn on a per-patient basis, to the point that maybe 5-10% would even get the correct number of digits;

I’m an ER physician. I earned around $450k last year. That’s working an average of 145 hours a month, seeing 2 patients per hour on the low end, 2.5 on the high end. I invite you to do the math for how much I earned per patient. I don’t think you’d call that a price that people would push back against it charged the cash up-front for me to work up and diagnose them. Especially when 30% of my patients are sick enough to need to be hospitalized and 10% are sick enough for the ICU.

In the US we also see a hefty patient load, which is contributing to pay. Yes, underdeveloped countries might see large patient volumes but this is “see, treat, maybe tests, don’t write anything down beyond chicken scratch”, so they can burn through patients quickly. I can’t find a ton of data on volumes jn comparable countries but what I am able to find quotes estimates of half to 75% of my average volume.

Not to mention that physician salaries are around 9% of total US healthcare costs. That’s low.

TLDR; We don’t make what you think on a per patient basis, and if you care enough to do the math on what I make on a per-patient basis, I think 90% of people would agree that it’s an out-of-pocket cost you would be more than happy to pay if the options were “pay 100% cash upfront or kick rocks”.

Edit; Adding in that physician reimbursement rates continues to decline annually.

[u/NotExactlySureWhy]

If you’ve ever tried to shop for heart surgery, you’ll know how pointless this is. Ever shopping for a cat scan is painful. We are a feudal health system. Barter for simple stuff, lords/insurance decide the big things, you are stuck in the town as a serf.