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US Workers Are Paying High Taxes. But Without Any of the Benefits
- AnthonyMouse 7y ago> As the Mercatus Center noted last year, by implementing a Medicare for All system, the US could insure 30 million more people, provide dental, vision, and hearing coverage to everyone, and virtually eliminate out-of-pocket expenses, all while saving $2 trillion over the first decade of implementation. This is assuming Medicare would have the same cost structure if it insured everyone that it does right now, which is incorrect because Medicare is currently being subsidized by private insurance. In order to make healthcare in the US cost less, something that is currently being paid for has got to go away. That isn't primarily "insurance company profits" or anything like that. The profits are a single digit percentage of the premiums. The costs come from things like the extraordinarily high cost of getting FDA approvals reducing competition between pharma companies, doctors choosing unnecessary tests for liability reasons and patients preferring them when someone else is paying for them and things of that nature. It is not clear how Medicare would change any of that, given that it currently doesn't solve them even for existing Medicare patients, it just pays below its share of the fixed costs and lets private insurance pick up the difference. You have to actually get the costs down. In theory you could just declare by fiat that you aren't going to pay as much, which would cause something to be cut, but not the inefficiencies that the law continues to require. A "solution" that causes good things to be cut so that existing wasteful things will still fit into the budget is not very good.
- yourbandsucks 7y agoHealth insurance takings don't have to be 'profits' to be waste. How much unnecessary work happens around crazy billing systems and arguing over who pays what? Those people all draw salaries.
- AnthonyMouse 7y agoExcept that Medicare is "insurance" and correspondingly still has insurance paperwork.
- yourbandsucks 7y agoWayyyy simpler, and it's only one system instead of many conflicting ones. Medicare and SS move money around much more efficiently than any private system in terms of overhead. Sometimes innovation is a downside.
- AnthonyMouse 7y ago> Wayyyy simpler, and it's only one system instead of many conflicting ones. It seems like the real problem is that "insurance" has something to do with <$1000 bills to begin with. The overhead is negligible if the bill is going to be large enough to actually require being insured against, but then we use "insurance" for routine care that wouldn't otherwise be expensive enough to justify it and then no surprise there is unnecessary overhead. > Medicare and SS move money around much more efficiently than any private system in terms of overhead. They make the same argument about the IRS. Look how much money it "brings in" compared to the number of people it employees. Very "efficient" -- except that the money they take in was already the taxpayer's to begin with, so moving it around is net of zero and the only thing there is cost. And they don't count the overhead on the taxpayer's side of doing the paperwork either. It's the same here. Most of the insurance paperwork is to prevent insurance fraud and determine coverage and prevent unnecessary procedures. It's not more efficient to pay for more unnecessary procedures and lose more money to fraud. And you're still not going to beat the overhead of the patient going in for a $100 procedure, paying $100 for it, and never involving a third party to the transaction at all.
- yourbandsucks 7y agoDude, look at the topline numbers. They are completely fucked. Meanwhile, 10/10 developed nation socialist healthcare systems are comparatively cheaper and better. I'm not super impressed by well-written rationalizations in light of those facts.
- AnthonyMouse 7y ago> Dude, look at the topline numbers. They are completely fucked. Of course they are. Healthcare costs in the US are completely out of control. But if you want a better system you need to understand what causes it to be the way it is. Keeping every expensive thing about the existing system and just changing how the money is transferred is not going to fix it. > Meanwhile, 10/10 developed nation socialist healthcare systems are comparatively cheaper and better. They are cheaper because of specific flaws in the US system that cause costs to be high, which are real and need to be fixed but are independent of socialization. Low deductible insurance that encourages unnecessary tests and involves "insurance" in low cost routine transactions (currently caused by tax laws encouraging employer-provided insurance, but Medicare doesn't make it better), liability rules that encourage doctors to do the same unnecessary tests, certificate of need laws and other limits on the supply of doctors, the high cost of getting FDA approvals, lack of price transparency etc. And the patient outcomes in the US system are better for anyone who has health insurance. The net outcomes are worse only because the outcomes for people without health insurance are very bad, because the independent flaws cause routine care to be prohibitively expensive and people without insurance often go untreated, which brings down the average dramatically. That is completely broken and we need to fix it, but how about we do that without throwing away the part where the patient outcomes are better for the majority of people who are actually participating in the healthcare system?
- StephenAmar 7y agoThis is the core problem. I'm all for Medicare for all, but what to do with the many physician assistants, nurses, billing specialists that the US is employing and promoting as a middle class career as we speak. These people will not just stay silent when they become unemployed because practitioners can't afford to keep them. You need retraining programs (in what? Beats me ...), fund unemployment insurance ... The point is that things don't happen in a vacuum.
- yourbandsucks 7y agoKeep the PAs and nurses, lose the billing specialists. Seems like a really clear cut call to me. I know they're people, maybe we could have retraining programs, but it's not like private capital says "what about the people?" when trimming the redundant.
- AnimalMuppet 7y agoYou're looking at it backwards. We, as a society, can stop wasting people on this nonsense, and find something worthwhile for them to do. (Yes, and we have some responsibility to make it possible for them to find a new way to earn a living, training them if needed.)
- StephenAmar 7y agoAnecdotally, I see the situation in France (I'm from there). Unemployment is always high. People have great healthcare, but they are still struggling with mininum income service jobs. They won't be ruined by a cancer diagnosis though. I don't think any western countries has figured out how to expand the middle class in recent times without heavy subsidies (in the US, we are effectively subsidizing those jobs with our high costs)
- tokyodude 7y agowell in some countries they don't allow prices that high for services and drugs. no idea what problems that caused but ATM prices charged for various services and drugs in the USA are 3x to 10x some other countries
- AnthonyMouse 7y ago> well in some countries they don't allow prices that high for services and drugs. no idea what problems that caused but ATM prices charged for various services and drugs in the USA are 3x to 10x some other countries The problem it caused is that there is correspondingly less drug R&D and more people die world-wide because they're not paying their share of the research costs.
- deogeo 7y agoGiven that pharmaceutical companies spend more on marketing than they do on R&D [1], isn't it more accurate to say that the rest of the world isn't paying their share of drug ads? How small would the fraction of revenue pharma spends on R&D for new drugs (excluding generics, which the analysis in [1] doesn't) before higher prices are no longer justified? [1] https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
- AnthonyMouse 7y agohttps://news.ycombinator.com/item?id=19659888 https://news.ycombinator.com/item?id=19659888
- deogeo 7y ago> marketing increases the number of "customers" by more than the cost of the marketing (or why do it?), and the extra money is what both encourages and pays for more R&D. Does it increase the number, or does it just reallocate customers from one company to another? And I'll repeat my question - how high do drug prices have to get, before further increases can no longer be justified because some scrap of the revenue goes towards R&D?
- maxxxxx 7y ago" it just pays below its share of the fixed costs and lets private insurance pick up the difference." Is that actually true? I always hear that line but nobody every backs it up with data. If Medicare is losing money for hospitals why do they still take it?
- ikeboy 7y agoThere are citations in the Mercatus paper to government data showing this. Medicare generally pays below cost. > If Medicare is losing money for hospitals why do they still take it? Many have stopped. The ones that do presumably are getting paid above marginal cost, but that doesn't mean they're getting paid above average total cost.
- AnthonyMouse 7y ago> Is that actually true? I always hear that line but nobody every backs it up with data. If Medicare is losing money for hospitals why do they still take it? Fixed costs vs. variable costs. It costs a million dollars to have a hospital, then there is a further $250 marginal cost to treat another patient. If there are 2000 patients then the average patient has to be charged $750 ($250 + $1M/2000) to cover costs. If Medicare says $500 or GFTO then $500 is more than $250 and they "make" $250 by accepting Medicare, but if they received that much from the average patient they wouldn't cover their costs.
- maxxxxx 7y agoAt a minimum a lot of money would be saved by standardized billing practices and costs. If Medicare pays too little then reimbursement could be adjusted. It would lead to more transparency and less bureaucracy. I think that’s how it works in Germany. There are different insurers but they operate on a set of standards. It’s nuts that in the US every insurance negotiates separately with each provider. It’s extremely inefficient and also makes it basically impossible for the patient to do any price shopping.
- testpostpls 7y agoGermany saves money by paying doctors $70k/yr. There isn’t a clever, low-impact policy shift that’ll save a ton of money in the US. Something really big has to give.
- ZhuanXia 7y agoDon't forget the doctor's guild limiting supply of doctors.
- grey-area 7y agoThis is assuming Medicare would have the same cost structure if it insured everyone that it does right now, which is incorrect because Medicare is currently being subsidized by private insurance. No, it's assuming that the successful outcomes and cost-benefits of single-payer, as proven throughout the world, can also be applied to the US.
- asark 7y agoAt this point the fact that the whole friggin' rest of the OECD states have managed to come up with something less-broken and less expensive than what we do, and that AFAIK even the most "free market" and incomparable to ours demographically and geographically (e.g. Singapore) have done this with price controls and a "public option" or similar, is such easy-to-come-by and oft-repeated info that "gee I just don't know how this could work in the US" or "more government intervention can't possibly fix anything" can't be charitably interpreted. It's concern trolling or gross ignorance. Period. We've been talking about this for decades. The data are there. They're not hidden. It's not theoretical. Pick a demonstrated-to-work system and do it.
- deleted 7y ago[deleted]
- narrator 7y agoSingapore's system is not even single payer. Why is the only choice single payer or nothing? Also, if Americans could import drugs from abroad, that would greatly lower health care costs as the overseas drugs are made by the same manufacturer and are sold at 1/10th the price in India and elsewhere.
- deogeo 7y ago> if Americans could import drugs from abroad Free trade for me, not for thee.
- asark 7y agoYeah, there are plenty of non-single-payer ones that work. Probably it'd be safer to pick a system that works for a country more similar to ours (Canada, Australia, even France or Germany) but a Swiss or maybe Singaporean system would likely still be better than what we're doing. Singapore's odd and can do to-us-crazy (that is, restrictive) stuff to improve public health if they need to to keep costs down, so I'd hesitate to advance that as the best choice, but our system is so very bad that it'd probably still be better than sticking with what we're doing. Price controls, public option, everyone must get insurance. Maybe outlaw for-profit health insurance. Those seem to be the basic, minimum common factors that make these suck less than ours, if you don't want to go single-payer or nationalized.
- Youden 7y ago> In order to make healthcare in the US cost less, something that is currently being paid for has got to go away. This is some super back of the napkin stuff. I'm just looking at each aspect of the healthcare industry and estimating how much inefficiency (profit) there is to eliminate by looking at the margins of the largest player in that industry. Anthem financials: https://finance.yahoo.com/quote/antm/financials/ https://finance.yahoo.com/quote/antm/financials/ - $20B profit on $92B revenue. Assuming this is roughly the same as other insurance providers in the $967B industry, there's ~$200B in savings. Pfizer financials: https://finance.yahoo.com/quote/PFE/financials/ https://finance.yahoo.com/quote/PFE/financials/ - $42B profit on $53B revenue. The pharmaceutical industry in the US is $935B so there's another ~$750B in savings. We're at $950B now. HCA healthcare (largest hospital system in the US): https://finance.yahoo.com/quote/HCA/financials/ https://finance.yahoo.com/quote/HCA/financials/ - $18B profit on $47B revenue. Hospitals are also at ~$1T, so there's another $380B in savings. So there's $1.2T in savings. There are surely other parts of the US healthcare industry I'm missing but there's also a lot to be saved by vertically integrating everything.
- AnthonyMouse 7y ago> Anthem financials: https://finance.yahoo.com/quote/antm/financials/ https://finance.yahoo.com/quote/antm/financials/ - $20B profit on $92B revenue. Assuming this is roughly the same as other insurance providers in the $967B industry, there's ~$200B in savings. Anthem is an HMO, not "just" an insurance company. They tend to make higher margins specifically because they're more cost efficient and correspondingly have more profit, so extrapolating from that is somewhat misleading. But even using your numbers, $200B is not "the problem" here -- that's around 5% of the money being spent, and because of the nature of insurance tends to scale down with other costs and remain at the same percentage of the then lower absolute costs when other costs are reduced. > Pfizer financials: https://finance.yahoo.com/quote/PFE/financials/ https://finance.yahoo.com/quote/PFE/financials/ - $42B profit on $53B revenue. The pharmaceutical industry in the US is $935B so there's another ~$750B in savings. We're at $950B now. People still want Lipitor and Zoloft, so that's all still there unless you regulate drug prices, which you can do or not independent of single payer (but that has its own problems). And you can't just write off all profits as "we don't need that let's get rid of it" -- it's just measuring risk adjusted reward on capital. To have a hospital you have to put down millions of dollars to buy MRI machines and everything else, which then gets paid back with interest over a period of years. If it's private that comes from the investors and then the "profit" is their interest on the investment. Making the hospital "public" doesn't deprive you of the need to raise money to pay for equipment and then pay interest on it, unless you're going to pay 100% of the costs up front out of taxes in year zero -- and deprive the taxpayers of the interest they would have collected on the same money in the meantime. TANSTAAFL.
- mahgnous 7y agoAlso you have a trillion dollar revenue insurance industry that is going to fight whatever it is tooth and nail cause it doesn't want to just disappear.
- bradleyjg 7y agoThe costs come from things like the extraordinarily high cost of getting FDA approvals reducing competition between pharma companies, doctors choosing unnecessary tests for liability reasons and patients preferring them when someone else is paying for them and things of that nature. You missed the biggest one: massively overcompensated specialty physicians. We can expect price controls to reduce that. And since there is currently a massive surplus of qualified applicants to medical schools, we shouldn't expect shortages either.
- specialist 7y ago"...Medicare is currently being subsidized by private insurance." Did you mean "supplemented"?
- dgemm 7y agoEveryone knows this but those that benefit from the status quo also have enough influence to keep it.
- mrep 7y agoDiscussed 5 days ago with 504 comments (same author and article, just a different website): https://news.ycombinator.com/item?id=19609191 https://news.ycombinator.com/item?id=19609191
- strstr 7y agoThis isn’t surprising in light of [0]. The core statement in [0] is that american health costs are high. In particular, predictably high based on Actual Individual Consumption. [0]https://randomcriticalanalysis.com/2018/11/19/why-everything-you-know-about-healthcare-is-wrong-in-one-million-charts-a-response-to-noah-smith/ https://randomcriticalanalysis.com/2018/11/19/why-everything...
- ggregoire 7y agoSalaries in the US are more than twice as high as salaries in Europe tho. Maybe not having any benefits is a part of the equation to get those salaries? (naive suggestion, I'm not an economist) (Source for the salaries: https://www.thebalancecareers.com/average-salary-information-for-us-workers-2060808 https://www.thebalancecareers.com/average-salary-information... $28,000 for no high school degree -> people with BS gets this kind of salary in Europe. $37,000 for high school degree -> people with MS gets this kind of salary in Europe. Same logic for the other salaries on this chart.)
- alexandercrohde 7y agoMaybe, if Salaries in the US are twice as high as Europe, then the average American is already paying more total tax than the average European and thus might expect more benefits.
- analyst74 7y agoA lot of the benefits' cost are labour (i.e. doctors, fire fighters, etc), hence are more expensive to provide. It's the circle of life.
- thucydidesofusa 7y agoprobably because the US system is set up so workers pay for others benefits? Most of the tax-funded spending goes to people who can't /won't pay for things on their own: those unwilling to work, europeans (via US defense obligations), children, the elderly. If U.S workers want their tax dollars to benefit them, it's easy, divert the Obamaphone/entitlement budget to pot holes, tell 90 year olds they're not getting new knees at no cost to them, and start throwing kids out of school when they assault teachers rather than putting the kid in special education and paying to train yet another replacement teacher.
- anonymous5133 7y agoIf you look at the federal budget, it is easy to see that the federal government is misallocating a significant amount or tax money to purposes that don't really benefit the average American. Interest on the national debt and military spending are the two big ones. There are probably also wasteful spending in most of the other programs as well. Then there is the issue of too much inefficiency within existing insurance programs. American consumers are not getting a good value for the healthcare dollars that they do spend. Lastly, I would say that the American education system is too expensive and too inefficient at training new medical staff.
- onlyrealcuzzo 7y agoIt's easy to rip on US military spending, but it's actually not far out-of-line with other OECD countries. Considering the amount of war-mongering we do, I don't know how anyone expects it to be average or lower. For reference, it's about double the average country: https://www.pgpf.org/chart-archive/0184_ally_defense_spending https://www.pgpf.org/chart-archive/0184_ally_defense_spendin... It's 63% higher than China and ~double France's & the UK's. Russia's is actually 38% higher than ours (not that Russia is a model country for anything): https://data.worldbank.org/indicator/ms.mil.xpnd.gd.zs https://data.worldbank.org/indicator/ms.mil.xpnd.gd.zs Maybe if we could stop starting wars constantly, we could lower our military spending. But it doesn't look like that's the direction the voting population is moving toward.
- Allower 7y agoMaybe by not war mongering, idk..
- AnimalMuppet 7y agoSo, what, you want to just stop paying interest on the national debt? That's going to have some consequences. It also has some injustice to it - the national debt is what we got for previous spending decisions. If that ties our hands in the present, well, past decisions do tend to have that effect. Military spending is probably wasteful... until it's not. Those who have no military can still die by (someone else's) military. Having a military can be wasteful, but not having one can be very expensive. > Lastly, I would say that the American education system is too expensive and too inefficient at training new medical staff. Probably. But you could have stopped after "inefficient", and I would still have agreed. In fact, my impression (from a distance, I admit) is that medical education is more efficient than the rest of the educational system. (I agree that the expense is insane.)
- stunt 7y agoReading the history, They did a great job to make people pay tax without asking question.