If you want to fix medicine, increase transparency. Earlier this summer, I had white spots on my throat and needed to go get checked for strep.
I called around, and finally settled on a facility that told me they could check for strep for just $59. I go in, get my throat culture, then get my bill.
"Well yeah, the throat culture was only $59. But the nurse had to do it and it's $120 to see a nurse. Also, the doctor has to check in before any operation is performed, and that's $200. After all other fees, your total bill is $400".
There's no way that should be legal. I was quoted $60.
The lack of transparency is due to perverse incentives in the healthcare system stemming from overly complex legislation.
As a country, the US hasn't decided whether healthcare is a fundamental right or privilege. As a result, we constantly make political decisions that straddle the line without ever really going one way.
The biggest culprit is the "fee-for-service" model of reimbursement, where healthcare providers (physicians) are reimbursed based on the quantity of care rather than patient outcomes. Each procedure has a code (CPT) that is used to bill insurance. Billing for each of these codes is completely arbitrary and up to provider/payer negotiations. The fee-for-service model is a clear example of a perverse incentive.
Who reimburses the fee-for-service model? Either the government (Medicare/Medicaid isn't even entirely government-run, as many states rely on a for-profit Medicare Administrative Contractor) or private health insurance companies. The perverse incentives can now be seen from both the provider's side and the payer's side: hospitals and physicians negotiate to get the best reimbursement rates that they can. And of course, because these insurance companies want to make money, they make it "difficult" for providers to get paid for each procedure and will find any reasonable way to deny the claim from going through. Because of this, providers artificially raise the amount charged to the payers as high as they think they can get away with in the hopes that insurance will pay up.
Meanwhile, patients suffer greatly as there's no transparency.
Yes sir, we can replace your spark plugs for only $4.00 each.
It costs $75 to pull the car into the garage, the lift fee is $105, it's $21 to open the hood, $64 to unplug the wires from the old plugs, $64 to plug the wires into the new plugs, then there's $18 to close the hood (gravity assist discount), and another $75 to put the car back in the parking lot.
If I suspect strep, I make a same-day appointment with my family doctor, show my government issued health card, get swabbed and have a result in a few minutes. I then smile at the receptionist and walk out; there is no bill for seeing your doctor or having tests run.
If I need antibiotics, my employer provided insurance covers the full cost and I pay a fixed $10 or so fee to the pharmacy.
You live a few hundred km south of me I bet, and in every way except this our world is very similar.. but you guys have far deeper problems then just transparency. Your entire view of healthcare is wrong.
It is just insane to me that you have a medical issue and you're calling around for quotes. I know we have had this conversation to death for decades now but it just makes me so angry.
It’s worth noting that Kaiser does this. They post a fee schedule for just about every routine procedure in every region they operate in. There is no abiguity about what an MRI costs.
Transparency won’t fix healthcare in the US, but it is a starting point. Hell, it’s fundamental to simple free market economics. It’s silly to say we have a free market healthcare system when there is virtually no cost information about goods and services until after purchase.
That's pretty frustrating. I had a related experience where I needed antibiotics. As it was the weekend, I just went to a local walk in clinic. The person in front of me did not have insurance and his cost to see the doctor was $90. I had insurance and my out of pocket was initially $45, a couple weeks later I got the remainder of my bill for using out of network: $135. So in total I was charged double the individual without insurance plus the cost of my medication.
It seems that a major driver of insurance and medical costs is that doctors are allowed to charge different pricing for the same service. In this case, paying a monthly fee for insurance ended up costing me more.
That sucks. The CVS Minute Clinic will quote you $99-129 for a strep throat visit, which includes the culture and the script if you actually have it. Nurse practitioners are, I think, the future of primary care.
This stuff is all bad, but it's useful to remember that primary care is actually a small fraction of the overall price of health care. Where we're really spending the money is on long-term and end-of-life care.
My veterinarian charges around $60 for office visits. A surgery with general anesthetic might be $1000. It's about 10x cheaper than a human doctor, maybe 100x if you go to a random emergency room. Veterinary medicine involve all the same steps as for a human patient. I can usually get appointments the same day too. It's a totally free market, where vets compete on price and service.
This is something I've been advocating for in California. Basically the equivalent to the auto repair law that guarantees that the repair is done to the quote or they tell you it will cost more and you have the right to take their quote elsewhere[1].
[1] If the technician later determines that it will take additional work and will cost more to fix your car than the original estimate, someone from the shop must contact you, describe the additional work and cost, and get your permission to proceed. -- https://www.bar.ca.gov/Consumer/Auto_Repair_Guide.html
Imagine a system where you go to the GP, and just make a walk-in appointment. You sit for ten to fifteen minutes, see your GP. They check you over, direct you to go see the nurse, who checks your throat.
Then afterwards, the GP tells you that they'll phone you later on with the results.
You walk back past the reception desk, ask what the bill was, and they either say "that'll be $40 which you can claim back by taking the receipt around the corner to Medicare", or they'll say "Oh nothing to pay, it's all bulk billed".
You walk out having either spent nothing, or spent a few bucks which you get back after a five minute walk up the road.
At least you got a quote...I've been told by providers that they only accept insurance patients (no up front cash), and they can't tell you till they bill you...Not sure why this is the only industry like that.
You don't go to a restaurant and get the pricing after you eat. Heck when you go to a buffet you don't get billed based on how many plates you get.
I work at a small community hospital about 225 beds. They have 9 VPs, 44 directors, and 44 assistant directors. This in addition to the Medical Staff Supervisors. Seems a bit much... no.
Any time you try to define what your insurance will cover, all you can get is s nkn binding estimate, yet most places have you sign an agreement to pay in full based on that estimate, even if the estimate is wrong.
The real issue is not a big percentage of the population care about the prices. A good chunk of them are covered by employer based insurance or government medicine. Only the poor and unemployed care about it and unfortunately they don’t have the gravity to change things in the US. Only the wealthy and entities able to fund a 301c can influence things. Point is I do t know what asking around for prices is going to do. By definition if you are asking around you don’t matter to the politicians.
Transparency is good and all, but there is anther way. In most advanced economies professional bureaucracy figures out the costs. Ordinary folks focus on getting healthy, not on costs.
Alternatively, socialize the costs. I've never bothered to figure out what going to the doctor would cost me, because it's so cheap here. I don't understand how it's economical to have a workforce with poor health care.
> There's no way that should be legal. I was quoted $60.
Well, part of the problem is that the state now assumes that consumers are not qualified to take care of themselves, and that the only people who are qualified are state-approved high-demand professionals. Oddly enough, opioid overdoses were not higher when you could just buy the stuff over the counter; but people have forgotten that people used to be responsible for their own well-being, and are convinced that they should not be trusted to defer to experts when they see fit.
It has long puzzled me that we don't have strong political constituencies for price transparency in medicine. Every medical provider ought to have a website that lists every fee and cost; this is not hard to do, yet when I call providers for cash prices, the answer is often, "I don't know" or "I can't tell you."
It's pretty sad that we have to rely on "billionaires" because the political system is not able or willing to bring even some level of sanity into this totally perverse system.
One thing that scares me is seeing how he's putting money into swaying how the media report on things. That one billionaire is willing to do such a thing to support the public good is great. How many are doing so for less laudable ends?
I'm not sure we have to 'rely' on them. This is just a guy that made a lot of money trying to make the world a better place. I don't think there's anything to be sad about here.
> “Where it is impossible to create the conditions necessary to make competition effective, we should resort to other methods of guiding economic activity.”
- Friedrich Hayek, The Road to Serfdom, p.37
Free markets work as expected where the alternative is dying at worst: They fail completely. If you're lying unconcious in the ER and there's zero regulation in the country of unlimited capitalism worship, the hospital can charge whatever the fsck they want. And yet, there are still a few people in the US surprised they actually do so.
I'm kind of surprised that quote is from Hayek, considering I know of him as "that Austrian Austrian economist", and mostly see him quoted in defense of radical free market ideology. I guess it just goes to show how far pro-market the Overton window's shifted recently.
There seems to be a pretty simple solution to high drug prices: the Bayh-Dole Act.
The background to the law is this: previously if a private institution used federal grants to develop a new drug, the federal government retained patent rights. The federal government isnt particularly good at commercializing products so the Bayh-Doye act allows for private institutions to retain patents for innovations funded via government grants. The government retains certain rights to the patent (this is important).
With this situation you have a case where the American tax payer essentially pays twice for certain drugs, their taxes paid for the federal grant that discovered the drug and now they have to pay a private company to actually use the drug.
Well, the Bayh-Dole act grants the government "march-in" rights, which basically allows the government to license any patent derived using federal funds to a third party if the original partner “has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the … invention”.
The government has NEVER exercised it's march-in rights. I understand the hesitation to drastically change the market for a product by granting a 3rd party a patent that they would otherwise never have, but it's been made clear over the past few years that many pharmaceutical companies are acting in bad faith and abusing their market position by drastically increasing drug prices.
I think exercising Bayh-Dole on a high profile drug (EpiPen??) would shake the market back into reasonable price structures. It's a huge hammer the federal government is not wielding.
Do you happen to know how many drugs are developed with federal grant money? I'm guessing that only a small percentage of high-priced drugs were developed using federal grants, and therefore your solution would be only a very partial solution, but I don't actually know. Do you?
I've been in healthcare, pharma industry for a long time.
Healthcare isn't 'broken'. The high drug and medical prices are by design. That's the way system is designed and it's working as intended by regulators and industry leaders.
If they really wanted to 'fix' the healthcare, they can fix it. But there is no money in fixing it at this point. One guy with small amount of funding will do nothing to highly regulated space full of deeply entrenched incumbents. regulators, doctors, pharmacists, pharma, medical device, pbm, medical insurance, hospital systems, lawyers, and IT jobs at those companies.
Agreed, though it seems there is a huge window for someone who charges fairly to get in
Fixed and transparent/fair costs (and promotion of it) will get a significant line in front of the clinic.
If someone's got a huge amount of money to play with this, it will be fun to see the incumbents getting trashed. In a way, it's "dumping" (but not really as it's still above cost)
He [Billionaire Arnold] has spent more than $100 million in health-care-related grants since 2014. A million dollars went to Civica Rx, a nonprofit formed by seven U.S. hospital systems to make generic drugs. Up to $5.7 million is pledged to Initiative for Medicines, Access & Knowledge Inc., which files legal challenges to the validity of certain U.S. drug patents, to clear the way for lower-cost generics.
He funded research about the relationship between pharmaceutical packaging and drug costs, leading Medicare to pass new rules that took effect in 2017. The state of California, advised by an Arnold-funded group, passed a law in 2017 requiring drugmakers to justify steep price increases.
In other words, Arnold is spending money on:
- a consortium that will manufacture generics
- legal efforts to hasten the expiration of patents to provide more generics
- research on packaging
- lobbying legislatures to require justifications from drugmakers on price increases
None of this sounds like it's addressing the main problems leading to high costs:
1. The customer (patient) doesn't directly pay all costs. The economic incentive to keep prices low lies mostly with the insurance providers.
2. It takes more than a decade of research and hundreds of millions of dollars to develop a drug with a new mode of action.
3. At least 90% of these projects will fail to deliver a marketable product.
4. The amount of money spent on a drug project balloons the longer it remains viable.
5. Failure of a late-stage clinical candidate often leaves a drug company with two options: (1) kill the program; and (2) send yet another candidate through the pipeline.
6. Data on late-stage clinical failures are often tightly held in silos, preventing other companies from learning costly lessons.
When I was younger and more naive I went to a surgeon to ask how much a minor surgery would cost ahead of time. They couldn’t tell me. I said fine, could you give me a ballpark estimate? And they couldn’t do that either.
Imagine going into a grocery store and not being able to check the price of your groceries before you decide to purchase them?
"there should be 'compensating upside' for the few drugs that do make it to market to ensure investors continue to fund companies’ uncertain R&D efforts"
Ok, then open your books so we can see why you're pricing the way you are. Obviously, given all the recent attention this has gotten, the industry is not being very transparent about this. Why has no "outsider" been able to connect these dots and why are you (the industry) preventing them from doing so?
I'm feeling cranky as hell, so let me go ahead and toss out the wildly unpopular idea that the real solution here is more research etc into dietary and lifestyle changes. But I seriously doubt he's going to go in that direction.
That kind of research is really hard. You pretty much have to lock people up for long periods of time, and make sure they only eat what you give them. The current state of dietary research is pretty much a morass of contradictory associations, with no proof of any causative factors.
Why do we talk about "high drug prices" as some kind of mystical force? The cause is simple and very obvious: the medical industry is a for profit institution that puts margins and bottom line above everything else. It's a huge industry with a plethora of middlemen whose only purpose is to squeeze dollars out of the system. Delivering effective care is almost always a secondary consequence to making value for investors.
So long as healthcare has quarterly shareholder meetings, we will forever be locked in this battle.
We are looking at the health care problem from the wrong angle. Nobody should be needing most of these drugs to begin with. But we have a food culture and system that feed civilization disease causing foods and that's where the cycle starts.
[+] [-] tfha|7 years ago|reply
I called around, and finally settled on a facility that told me they could check for strep for just $59. I go in, get my throat culture, then get my bill.
"Well yeah, the throat culture was only $59. But the nurse had to do it and it's $120 to see a nurse. Also, the doctor has to check in before any operation is performed, and that's $200. After all other fees, your total bill is $400".
There's no way that should be legal. I was quoted $60.
[+] [-] jihoon796|7 years ago|reply
As a country, the US hasn't decided whether healthcare is a fundamental right or privilege. As a result, we constantly make political decisions that straddle the line without ever really going one way.
The biggest culprit is the "fee-for-service" model of reimbursement, where healthcare providers (physicians) are reimbursed based on the quantity of care rather than patient outcomes. Each procedure has a code (CPT) that is used to bill insurance. Billing for each of these codes is completely arbitrary and up to provider/payer negotiations. The fee-for-service model is a clear example of a perverse incentive.
Who reimburses the fee-for-service model? Either the government (Medicare/Medicaid isn't even entirely government-run, as many states rely on a for-profit Medicare Administrative Contractor) or private health insurance companies. The perverse incentives can now be seen from both the provider's side and the payer's side: hospitals and physicians negotiate to get the best reimbursement rates that they can. And of course, because these insurance companies want to make money, they make it "difficult" for providers to get paid for each procedure and will find any reasonable way to deny the claim from going through. Because of this, providers artificially raise the amount charged to the payers as high as they think they can get away with in the hopes that insurance will pay up.
Meanwhile, patients suffer greatly as there's no transparency.
[+] [-] stickfigure|7 years ago|reply
Before anyone objects with "but what about emergencies!" note that emergency care is a single-digit percentage of total health expenditures.
[+] [-] vidanay|7 years ago|reply
It costs $75 to pull the car into the garage, the lift fee is $105, it's $21 to open the hood, $64 to unplug the wires from the old plugs, $64 to plug the wires into the new plugs, then there's $18 to close the hood (gravity assist discount), and another $75 to put the car back in the parking lot.
Don't worry, changing your plugs is only $16.
[+] [-] kryptk|7 years ago|reply
If I need antibiotics, my employer provided insurance covers the full cost and I pay a fixed $10 or so fee to the pharmacy.
You live a few hundred km south of me I bet, and in every way except this our world is very similar.. but you guys have far deeper problems then just transparency. Your entire view of healthcare is wrong.
[+] [-] Waterluvian|7 years ago|reply
[+] [-] themagician|7 years ago|reply
Transparency won’t fix healthcare in the US, but it is a starting point. Hell, it’s fundamental to simple free market economics. It’s silly to say we have a free market healthcare system when there is virtually no cost information about goods and services until after purchase.
[+] [-] wonderwonder|7 years ago|reply
It seems that a major driver of insurance and medical costs is that doctors are allowed to charge different pricing for the same service. In this case, paying a monthly fee for insurance ended up costing me more.
[+] [-] tptacek|7 years ago|reply
This stuff is all bad, but it's useful to remember that primary care is actually a small fraction of the overall price of health care. Where we're really spending the money is on long-term and end-of-life care.
[+] [-] tlb|7 years ago|reply
[+] [-] ChuckMcM|7 years ago|reply
[1] If the technician later determines that it will take additional work and will cost more to fix your car than the original estimate, someone from the shop must contact you, describe the additional work and cost, and get your permission to proceed. -- https://www.bar.ca.gov/Consumer/Auto_Repair_Guide.html
[+] [-] King-Aaron|7 years ago|reply
You walk back past the reception desk, ask what the bill was, and they either say "that'll be $40 which you can claim back by taking the receipt around the corner to Medicare", or they'll say "Oh nothing to pay, it's all bulk billed".
You walk out having either spent nothing, or spent a few bucks which you get back after a five minute walk up the road.
That was my recent experience.
[+] [-] fma|7 years ago|reply
You don't go to a restaurant and get the pricing after you eat. Heck when you go to a buffet you don't get billed based on how many plates you get.
[+] [-] RaceWon|7 years ago|reply
[+] [-] ergothus|7 years ago|reply
[+] [-] rlpb|7 years ago|reply
[+] [-] yalogin|7 years ago|reply
[+] [-] valas|7 years ago|reply
[+] [-] rebuilder|7 years ago|reply
[+] [-] ryanlol|7 years ago|reply
[+] [-] H1Supreme|7 years ago|reply
[+] [-] microcolonel|7 years ago|reply
Well, part of the problem is that the state now assumes that consumers are not qualified to take care of themselves, and that the only people who are qualified are state-approved high-demand professionals. Oddly enough, opioid overdoses were not higher when you could just buy the stuff over the counter; but people have forgotten that people used to be responsible for their own well-being, and are convinced that they should not be trusted to defer to experts when they see fit.
[+] [-] jseliger|7 years ago|reply
[+] [-] maxxxxx|7 years ago|reply
[+] [-] cimmanom|7 years ago|reply
[+] [-] darawk|7 years ago|reply
[+] [-] jsonne|7 years ago|reply
https://www.cnn.com/2018/10/10/politics/drug-prices-legislat...
[+] [-] ForrestN|7 years ago|reply
[+] [-] djschnei|7 years ago|reply
[+] [-] endymi0n|7 years ago|reply
- Friedrich Hayek, The Road to Serfdom, p.37
Free markets work as expected where the alternative is dying at worst: They fail completely. If you're lying unconcious in the ER and there's zero regulation in the country of unlimited capitalism worship, the hospital can charge whatever the fsck they want. And yet, there are still a few people in the US surprised they actually do so.
https://www.forbes.com/sites/chrisladd/2017/03/07/there-is-n...
[+] [-] hexane360|7 years ago|reply
[+] [-] 40acres|7 years ago|reply
The background to the law is this: previously if a private institution used federal grants to develop a new drug, the federal government retained patent rights. The federal government isnt particularly good at commercializing products so the Bayh-Doye act allows for private institutions to retain patents for innovations funded via government grants. The government retains certain rights to the patent (this is important).
With this situation you have a case where the American tax payer essentially pays twice for certain drugs, their taxes paid for the federal grant that discovered the drug and now they have to pay a private company to actually use the drug.
Well, the Bayh-Dole act grants the government "march-in" rights, which basically allows the government to license any patent derived using federal funds to a third party if the original partner “has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the … invention”.
The government has NEVER exercised it's march-in rights. I understand the hesitation to drastically change the market for a product by granting a 3rd party a patent that they would otherwise never have, but it's been made clear over the past few years that many pharmaceutical companies are acting in bad faith and abusing their market position by drastically increasing drug prices.
I think exercising Bayh-Dole on a high profile drug (EpiPen??) would shake the market back into reasonable price structures. It's a huge hammer the federal government is not wielding.
[+] [-] WaltPurvis|7 years ago|reply
[+] [-] pcurve|7 years ago|reply
Healthcare isn't 'broken'. The high drug and medical prices are by design. That's the way system is designed and it's working as intended by regulators and industry leaders.
If they really wanted to 'fix' the healthcare, they can fix it. But there is no money in fixing it at this point. One guy with small amount of funding will do nothing to highly regulated space full of deeply entrenched incumbents. regulators, doctors, pharmacists, pharma, medical device, pbm, medical insurance, hospital systems, lawyers, and IT jobs at those companies.
[+] [-] gorbachev|7 years ago|reply
[+] [-] raverbashing|7 years ago|reply
Fixed and transparent/fair costs (and promotion of it) will get a significant line in front of the clinic.
If someone's got a huge amount of money to play with this, it will be fun to see the incumbents getting trashed. In a way, it's "dumping" (but not really as it's still above cost)
[+] [-] neonate|7 years ago|reply
[+] [-] apo|7 years ago|reply
He funded research about the relationship between pharmaceutical packaging and drug costs, leading Medicare to pass new rules that took effect in 2017. The state of California, advised by an Arnold-funded group, passed a law in 2017 requiring drugmakers to justify steep price increases.
In other words, Arnold is spending money on:
- a consortium that will manufacture generics
- legal efforts to hasten the expiration of patents to provide more generics
- research on packaging
- lobbying legislatures to require justifications from drugmakers on price increases
None of this sounds like it's addressing the main problems leading to high costs:
1. The customer (patient) doesn't directly pay all costs. The economic incentive to keep prices low lies mostly with the insurance providers.
2. It takes more than a decade of research and hundreds of millions of dollars to develop a drug with a new mode of action.
3. At least 90% of these projects will fail to deliver a marketable product.
4. The amount of money spent on a drug project balloons the longer it remains viable.
5. Failure of a late-stage clinical candidate often leaves a drug company with two options: (1) kill the program; and (2) send yet another candidate through the pipeline.
6. Data on late-stage clinical failures are often tightly held in silos, preventing other companies from learning costly lessons.
[+] [-] booleandilemma|7 years ago|reply
Imagine going into a grocery store and not being able to check the price of your groceries before you decide to purchase them?
Why do we put up with this?
[+] [-] myroon5|7 years ago|reply
[+] [-] perpetualcrayon|7 years ago|reply
Ok, then open your books so we can see why you're pricing the way you are. Obviously, given all the recent attention this has gotten, the industry is not being very transparent about this. Why has no "outsider" been able to connect these dots and why are you (the industry) preventing them from doing so?
[+] [-] EGreg|7 years ago|reply
http://magarshak.com/blog/?p=93
[+] [-] jhabdas|7 years ago|reply
[deleted]
[+] [-] derReineke|7 years ago|reply
[+] [-] DoreenMichele|7 years ago|reply
[+] [-] amanaplanacanal|7 years ago|reply
[+] [-] almostdeadguy|7 years ago|reply
[+] [-] jorblumesea|7 years ago|reply
So long as healthcare has quarterly shareholder meetings, we will forever be locked in this battle.
[+] [-] aviv|7 years ago|reply
[+] [-] jrace|7 years ago|reply