This describes the biggest problem in US healthcare. No clear and consistent pricing. If we had a real market, you would get a prescription and then go to the seller with the lowest price. And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption.
It took me two weeks, dozens of phone calls, and multiple "escalations" to learn what would be covered and what the price would be if it wasn't
Totally insane. The kicker is that after all that, the price I was billed wasn't even the price I was given (thankfully it was less though).
Also I went in for a colonoscopy and an endoscopy. Insurance was billed for $14000. I got statements from 4 different doctors, and the facility where it was performed. None of the statements matched the explanation of benefits from the insurance company. And when I called each doctor, to pay them, they all told me that I didn't actually have to pay them what it said I owed. So I just ended up paying $2500 to the insurance company. It again, makes zero sense.
I’m reaching the point where I don’t really care if it’s private or public, but what we are doing today is the worst of both worlds. It either needs to be fully private, maybe with mandatory insurance purchase, or it needs to be fully public, though that has its own baggage.
OH YES THEY ABSOLUTELY DO!
When I was in-between jobs I had a medical emergency and I was on the ACA around the first year it was offered. I was billed above medicare rates so I was on the hook for ~40k after out of pocket max. They told me this limit is what insurance has to cover but hospitals can still bill above it. First they told me they could work on the prices and asked for my last 5 years tax returns. When they saw that I had dividend payments they said they couldn't help me and I owed them the $40k. I think that was the problem because even though I wasn't working in their mind if I had investments then technically I was not in need so they set up four-year payment plan and paid every penny with no cost reduction.
I probably did something wrong but to this day I didn't know what I would have done differently. The only people I could talk to were the hospital and they only cared about the hospital.
Maybe you just don't have any assets or make very little money. I have equity and cannot just toss it to a collection agency and hope they forget. I also play by the rules, silly, I know, but I don't want to risk getting fucked some other way later in life.
It's hard to say that it isn't racketeering at this point.
"Specifically, a racket was defined by this coinage as being a service that calls forth its own demand, and would not have been needed otherwise."
There's demand for the meds, but the demand for discount cards, forcing people to use specific services/companies, and related programs is all invented by the companies themselves.
For example, this place does it:
https://surgerycenterok.com/surgery-prices/
Insurance companies do not force the sellers to use complex billing practices, they would benefit from more transparent pricing (since they are seeking to pay less).
The root cause is healthcare is inherently complicated and complex, it has a problem of supply being nowhere near demand, and since prices for things are so high (including liability), there is a lot of cover your ass and fraud prevention going on.
They can use the rebates they get from the providers to subsidize the insured, allowing them to offer lower premiums and gain market share. This is what people mean when they say "In America, the sick people pay to subsidize the health care of the healthy people".
Of course, that above only applies if there is competitive pressure. If there is no competitive pressure (e.g. in states with only one or two insurers), they can keep premiums high and book as profit the difference between what the patient paid out and what the patient would have paid out in a lower-cost no-rebate world.
I even provided an example of a healthcare provider choosing to be more transparent. It is always Eli Lilly’s choice to sell their medicine at a flat price to everyone. But it is also in Eli Lilly’s benefit to engage in price discrimination, so that they get paid more by people who can pay more:
https://en.wikipedia.org/wiki/Price_discrimination
Another example of this was when I was in college, US textbooks cost multiple times more than the international version of the textbook I could buy on Abe books or whatever website. Or, coupons for grocery stores. The insurance company has no hand in this.
To be clear, insurance companies also cause waste, because the government does not audit them, and the insurance companies are not staffed appropriately to resolve disputes in a timely manner.
Get rid of the patents and this will solve itself in no time.
> The insurance company has no hand in this.
False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
> False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
This is a wild assertion. The sum total of all 7 publicly listed insurance companies’ market caps is less than Eli Lilly, just one pharmaceutical company. I would need some evidence before believing that health insurance company leaders have any influence on pharmaceutical companies.
I would also be surprised to learn insurance companies hold specific stocks, seems like a risk insurance companies would not take, especially ones that have lots of routine cash expenses. They spend ~85% of their premiums on medical expenses, and probably at least 5% to 10% on their own staff, so they shouldn’t even have much extra cash left to invest for the long term.
https://www.oliverwyman.com/our-expertise/insights/2023/mar/...
Edit: hit posting limit, so to respond to comment below about net income, that Yale link does not seem relevant as it is for all healthcare companies. All 7 publicly listed insurers’ combined annual net income is $35B or less for the previous 20 years, at a profit margin of 3% or less, which is peanuts. The pharmaceutical companies earn much more money than them, which is why the pharmaceutical companies have higher market caps.
> Why are we using market cap as a metric ? Look at investment value.
Because a company that owns influential portions of another company would have that reflected in their market cap. Like Berkshire Hathaway does. with the exception of UNH (due to its healthcare provider business), the other insurance companies are relatively tiny businesses compared to pharmaceutical companies and so cannot be holding any influential amount of stock.
Why are we using market cap as a metric ? Look at investment value.
From the NAIC report at https://content.naic.org/sites/default/files/capital-markets..., common stock holdings alone of U.S. insurance industry is roughly ~$1.2 trillion.
"Over the past 20 years, health care companies spent 95% of their net income on shareholder payouts, totaling up to $2.6 trillion, according to the research findings. Shareholder payouts also tripled over this period - a trend largely shaped by a few powerful pharmaceutical companies, the research team noted."
https://medicine.yale.edu/news-article/health-care-company-p...
COVID mRNA vaccines (Pfizer-BioNTech, Moderna) got billions in public funding. Yet, patents usually belong to the private company and prices are not capped as a condition of public funding. It is gross corruption begging for heads to be put on pikes.
But instead, people rail at health insurance companies and pharmaceutical companies and others who can’t or won’t make a difference.
Because this is the Corrupt Evil Nexus that continues to ensure that taxpayer funds and exclusive patents keep flowing to them, while keeping prices high. They buy political power via campaign financing by the bucketload and the congressman/woman changes their vote to kill/oppose bills that would make a difference. You can find dozens of examples. Do your own research. As an example, take a look at the voting for the bill to permit Medicare to negotiate drug prices. Look at who received bribes and from whom to vote "No".
(Although it is, of course, true that having special drug rates for Medicare trends against rather than towards "clear and consistent pricing".)
More specifically, the stronger acts which were killed by Big Pharma bribes would have
- Tied U.S. prices to international reference pricing (e.g., prices paid in Europe)
- Broad Medicare negotiation for many high-cost drugs - including dozens of new drugs.
- Applied negotiated prices beyond Medicare in the commercial market. (Private Insurance too!)
- Imposed strong penalties on drug companies that refused to comply
- Generated large federal savings. Also would have had faster rollout. Remember IRA pricing is YET to come into effect.
PS: Look at the Senators who diluted drug-pricing in BBB even further to a bad JOKE. (lol at price reduction for 10 drugs in 2026). Look at whom they received bribes oops..donations from.
I mean, I think a lot of the incentives behind textbook pricing in the US are honestly not that dissimilar to the ones in healthcare. I know Pearson is particularly egregious for price gouging students because they have exclusive deals with schools to provide the textbook for some specific class or subject. They raise prices because f*ck it why not, they won’t get pushback, which is not a valid reason to do so in most other countries.
This sounds like typical negotiating 101. You know you are going to be forced to lower from your starting position, so increase your starting position so when you do negotiate down you are closer to where you wanted to be.
Insanely comical.
Some experts report that PBMs overcharge for generics; The Wall Street Journal estimated that Cigna and CVS Health, both of which own PBM services, are able to charge prices for specialty generic drugs that are 24 times higher than what manufacturers charge.
https://www.americanprogress.org/article/5-things-to-know-ab...
The article is about drug pricing, which is the part I found interesting (and by extension thought we’d find interesting). I thought taking it out both saved space and made the comments less likely to veer into flamebait.
I'm sure Trump pressure will soon bring those 1000% savings on pharmaceuticals, just hold on.
ref- The Billion Dollar Molecule
Isn’t this any capital-intensive business with variable demand?
https://www.healthsystemtracker.org/brief/how-medicare-negot...
This is satire btw.
Drug maker thinking
Foreigners aren't the reason American healthcare sucks. Stop looking for people to blame abroad, all the sources of your problems are in the presidency, congress, and in the boardroom that directs the former.
The European pharma companies are doing more than fine, despite their main market being heavily regulated and price-controlled.
The less charitable explanation is that US companies want to charge outrageous prices, and the American system let them to, so they do it.
That's what the USA are: a machine to prioritize profits over people. Sometimes it turns out fine, like for the startup scene. Sometimes it's terrible, like when lives at stake.
Other explanations sound like heavy copium to me.
- Doesn't make them non viable without the American market, just less rich.
- Doesn't reflect the 5 to 10 times higher price Americans pay for the same drugs.
You can have a healthy industries with plenty of billions to be around and have decently priced drugs.
What you get in the US is uber profitable industries and people scrapping around.
Turns out all the low hanging fruit have already been picked, so the only "more efficient ones" left are stuff like gene therapy, which are absurdly expensive, but still theoretically cheaper than a lifetime of care. Unsurprisingly the high sticker price draws much backlash from the public and politicians.
What is that based on?
Also, I'm not talking about 'low hanging fruit' necessarily; only solutons that become cost effective for vendors if drug prices aren't so extreme.
There's reason to think there is low-hanging fruit: Research is incentivized for the most profitable solutions for the vendors, not the most cost-effective solutions for patients.
Healthcare, like real estate, is a dysfunctional marketplace lacking real competition
This is a trope among populists: pass legislation around <thing>, observe consequences of doing so, blame the "free market", repeat.
A look at how European governments negotiate with pharma companies helps explain why Americans pay more for prescription drugs.
https://news.stanford.edu/stories/2024/11/what-other-countri...
You could just say "Americans need to vote better and cleanup their laws around this" and yes, that would be ideal, but I don't see that happening anytime soon. It's part of why some want the government to not involve themselves at all: no matter how good the politicians you elect, others can come into office and fuck it all up while everyone is forced to deal with it because they have the monopoly on violence. Not to mention the glacial pace at which our legislative bodies move.
I can think of a number of things.
Few days ago, Donald Trump pressured Emmanuel Macron to raise the prices of all medicines. The pressure was made with unspoken threats according to several mainstream French media such as this one [1].
[1]: https://www.tf1info.fr/international/trump-se-vante-d-avoir-...
Furthermore how Macron can increase prices of drugs? I was thinking that Americans are all about free market.
If given two options, they will take the one that will hurt more people, every day of the week.
It would end inflation within 90 days
Even their silly 15% tariff fallback law abuse would be more sane than the 50-150% currently
Next few years is going to be insanity
The lesson has been learned by this point though, even a day laborer is holding silver and crypto nowadays because we have in recent memory the COVID shenanigans of mass QE.
People in China and Russia have basically taken for granted so long that their currency is completely manipulated, they all already knew to not be hoodwinked.