Dirty Tricks of the Private Healthcare Industry

[richardm]

satisfaction rates are higher amongst Medicare patients than private ones. I don't have the stats to hand (does anyone), but if true that shows the "private care is better care" to be just another industry-peddled deception.

I wonder if part of that higher satisfaction is directly due to the "private care is better care" mantra? People are surprised by the quality of the Medicare offering because they keep getting told it's no good so aren't expecting much.

 

[TragicMonkey]

Um, you do realize that "private" healthcare takes Medicare, right? The only difference between "private" and "public" is the source of the money, not the facilities. Doctor A sees two patients, Patient B and Patient C. Patient B has private insurance so Anthem pays. Patient C has Medicare so Medicare pays. It's the same doctor.

Unless, do cities or states own hospitals? All the hospitals around here are owned by private companies. The only truly "public" hospitals I know of aren't really open to the public despite being owned by the government--they're military hospitals.

 

[volatile]

Um, you do realize that "private" healthcare takes Medicare, right? The only difference between "private" and "public" is the source of the money, not the facilities. Doctor A sees two patients, Patient B and Patient C. Patient B has private insurance so Anthem pays. Patient C has Medicare so Medicare pays. It's the same doctor.

So the stuff about lower quality care on Medicare is FUD? Another talking point against government healthcare demolished, then?

Unless, do cities or states own hospitals? All the hospitals around here are owned by private companies. The only truly "public" hospitals I know of aren't really open to the public despite being owned by the government--they're military hospitals.

In the UK, most hospitals are owned by the state.

 

[Rolfe]

Yes, but they don't have to be. There are many countries where the hospitals are privately owned but the government pays the bills. Or the mandatory insurance pays the bills, with the government paying the premiums for those who can't afford them. These countries do not seem to suffer from the USA's problems of profit-driven insurance companies preferring to channel funds to profits, dividends and gold-plated cutlery on their executive jets rather than to patient care.

It sems to come down to control on overheads. In places like Japan and Germany the government exercises tight control on prices which ensures that overheads get squeezed till their pips squeak. It seems to be perfectly possible to run a health insurance company which spends 95% of its income on buying care for its customers.

In the US, the government seems to be (or have been) exercising similar control as far as Medicare is concerned. Medicare has (or had - I'm not sure what happened when GWB was in power) substantially lower overheads than the insurance-funded sector. However, nobody at all seems to be exercising any control on the efficiency of insurance-funded care. So we get 22 cents in every dollar going on overheads, instead of about 5.

We're told that the private sector has mechanisms to impose efficiency. That competition will sort it all out. That seems logical. If it's possible to offer the customer more for their money by cutting overheads from 22% to even 15%, you'd think such a company would flourish with customers beating a path to their door.

But it's not happening. The interview tells us a bit about why. The actual number of insurance companies is decreasing, with mergers and acquisitions swallowing the smaller ones. The big Wall Street giants gobble up the competition. Then they go through the customer list to see what unprofitable business they can find, and get rid of it. This is completely normal behaviour in business. It's just that when this "unprofitable business" is a woman who's just been diagnosed with breast cancer or a small business policy for a firm which has an employee with a chronically sick child, this is actual people we're talking about here.

The business model favours the shedding of unprofitable business, and incentivises the mazimisation of share prices and shareholder benefits. Companies which take the decision to increase spending on heathcare at the expense of dividends take a direct hit on their share price.

I want to know what the free-marketeers think of this. In what way is this a good deal for anyone apart from the shareholders and the executives of the insurance companies?

Rolfe.

 

[Rolfe]

Just to take that point further, although the interview claimed that 78% of income is spent on healthcare by the US insurance companies, I question whether this is directly comparable to the state-mandated systems where 95% is spent on care. Specifically, I suspect the in the USA, customers get poorer value for their 78 cents in the dollar.

Just as there is no control on the overheads of the insurance companies, there is no control over the overheads of the healthcare providers themselves. Look at the huge difference in cost between an MRI scan in Japan and an MRI scan in the USA. The inflated US price will still be counted as "spending on healthcare", but you'll get a lot fewer MRI scans for your 78 cents than you would in Japan.

There was certainly complaining on the documentary I linked to that doctors in Japan and Germany are underpaid, and that hospitals cannot make a profit. Clearly, that's not good either. You have to allow such enterprises at least to break even, and you have to reward your doctors sufficiently well so as to attract enough bright youngsters into the profession. (At the same time though, I would submit that you don't want it to be such a gravy-train as to attract the merely mercenary.)

However, the problems in Germany and Japan were quite clearly identified. These countries are spending only 6% or 7% of GDP on healthcare. They need to realise that they have to spend a bit more. The USA is currently spending 16% of GDP on healthcare. Thus we get right back to the point that the money is there, it just isn't being well spent.

I don't know what doctors' salaries are in Germany or Japan. I do have some idea what they are in Britain, and they're not bad at all. And Britain is spending about 7 or 8% of GDP. So controlling overheads to get more bang for the patient buck does not necessarily mean condemning doctors to penury.

These are the things I'd like to hear the pro-status-quo posters discussing. Not seeing anyone addressing them yet though.

Rolfe.

 

[ponderingturtle]

It appears, however, that the reasoning behind these arguments is not genuine concern for the health of the population or for efficient healthcare delivery, but a desire to protect insurance company profits and share prices.

Hey a lot of politicians are clear that this is a major problem with a public system.

 

[ponderingturtle]

He just regurgitates the usual. I find "worrying about competition from the government" an odd statement.

How many private companies can force you to help pay for their product even though you use the competitor's? And I don't mean a "Microsoft tax", I mean real threats to use real men with real guns to put you behind real bars if you don't pay.

This is why we need to get rid of medicare, they are old and useless so we should let them die as god and nature intended. If they want to they can have private health care if they can afford it.

 

[ponderingturtle]

I don't imagine there's any logic or reason that can get past Beerina on this one. Maybe he has shares in health insurance companies.

No he just hates the goverment and taxes.

 

[ponderingturtle]

So the stuff about lower quality care on Medicare is FUD? Another talking point against government healthcare demolished, then?

Pretty much. Medicare patients are good because you can count on getting paid, onlike with private if they decide not to pay, and the person can't you are out of your money.

 

[Rolfe]

Hey a lot of politicians are clear that this is a major problem with a public system.

So, you have a lot of politicians declaring that protecting insurance company profits and share prices is a higher priority for them than improving citizens' access to healthcare?

Why does anybody vote for them?

Rolfe.

 

[ponderingturtle]

So, you have a lot of politicians declaring that protecting insurance company profits and share prices is a higher priority for them than improving citizens' access to healthcare?

Well they don't mention the second part. Just that it is wrong for the goverment to take people work and business away from them.

And people buy this because there is broad belief in how horrible your health care is.

 

[Prometheus]

Um, you do realize that "private" healthcare takes Medicare, right? The only difference between "private" and "public" is the source of the money, not the facilities. Doctor A sees two patients, Patient B and Patient C. Patient B has private insurance so Anthem pays. Patient C has Medicare so Medicare pays. It's the same doctor.

Unless, do cities or states own hospitals? All the hospitals around here are owned by private companies. The only truly "public" hospitals I know of aren't really open to the public despite being owned by the government--they're military hospitals.

I think there might still be some public hospitals around. My city used to own one, until about 10 years ago when they were forced to sell it because the private management company they hired to run it went belly up after losing a million dollars a month for several years providing free care to people without health insurance.

 

[BartiDdu]

I think there are a great deal that can be done without compromising the principle of healthcare "free at the point of need".

The implication I draw from this is that you believe 'free at the point of need' to be a laudable principle. Mine, being the more libertarian one is that I would prefer to have choice over how to spend my health dollars/pounds. Just two differing opinions, the underlying principles are probably best debated in other threads (and are as we speak).

However, that's not what this thread is about.

Agreed, yet when you have Potter, as I pointed out in my first post in this thread, describing the current US system as 'very much a free market healthcare system', it's not really possible to keep these fundamentals out of the debate is it? And I suppose we shouldn't be too harsh on people who see the current US health system as being 'free market' when those who bark those words loudest and hide behind sound principles are those doing so to protect the protectionist status quo.

So whilst my primary reason for supporting freedom of choice is that it is in my book right (and is a right), I would like, on a skeptic site to see reasoned arguments as to potential consequences of different options.

My opinion is not far from that put forth by CATO (yes, I know - and when you've finished with the booing and hissing you might want to resume listening!). And I think the most important thing to establish at the outset is that the current system is all but a free market system. Instances I gave above include tax penalties for individuals opting to choose their own insurers over their employers, the imposition of state-limited choices and all the regulation that makes better competition, better service and lower prices impossible.

This is about the protectionist behaviour of the US health insurance companies.

Here I find your wording fascinating, and I believe back-to-front! It is only governmental power that can legally provide protectionism. Of course the current beneficiaries are going to spend some of that easily-earned money sloshing around to lobby and to play the PR game. The last thing they want is a true free market because they'd have to get their act together and start looking at providing value for their services to keep customers.

But by confusing the current US system (the status quo) with a free market system you, and they, are cutting off consideration of the potentially beneficial consequences of moving away from government intervention rather than diving head-first into a government controlled system.

I don't see anyone here arguing for the status quo so please stop assuming that it's the only alternative to what you're proposing.

So, principles aside (I have no health-pound choice in the UK anyway, and if the US is already committed to taking this freedom away) is the question how to get the best 'free at point of need' system?

Combining the figures you gave (7% GDP, 95% 'efficiency' for Germany, 16% GDP, 78% 'efficiency' US) with GDP per capita figures from Wikipedia I come to the following:
If the current health cost per head in the USA were increased to 95% 'efficiency' it would be $9150 per anum as against £2520 in Germany - that's over 3.5 times as much!

Just to take that point further, although the interview claimed that , I question whether [the 78% of income is spent on healthcare by the US insurance companies] is directly comparable to the state-mandated systems where 95% is spent on care. Specifically, I suspect the in the USA, customers get poorer value for their 78 cents in the dollar.

It goes against the grain for me to think that bureaucrats could allocate funds and provide services better than businessfolk but I think we're all in agreement at least that something 'aint right! I think it would be difficult for a blindfolded bureaucrat to do worse than the way things are right now! However, is it the only option? I think not, and I don't think there's enough looking at going the other way, especially, as has been pointed out in another current thread, when libertarians are considered cranks!

BDd

 

[ponderingturtle]

Why does anybody vote for them?

Rolfe.

See Bartidbu

 

[Rolfe]

The implication I draw from this is that you believe 'free at the point of need' to be a laudable principle. Mine, being the more libertarian one is that I would prefer to have choice over how to spend my health dollars/pounds. Just two differing opinions, the underlying principles are probably best debated in other threads (and are as we speak).

You might like to put that quote of mine back in context. I was talking about the situation in Britain, and replying to a poster who was implying that our only choices here are to "watch the NHS implode" or change to a US-style system. Healthcare "free at the point of need" is what we actually have in Britain, and I was pointing out that there are plenty things that can be done to improve the system we have without compromising this commitment.

I don't think it's a "laudable principle", I know it's what I've got, and what everyone else in this country has got, and we'd rather keep it that way thankyouverymuch.

Now, you would rather have a choice as to how you spend "your" health dollars. Well, you don't have one right now. You have no choice about how the tax you pay which goes towards funding Medicare and Medicaid is spent. And the amount of that tax, pro rata, is a little bit more than we currently pay here to fund the NHS. The big difference is that I get to access the system my tax money is paying for, while you don't.

You's rather have a choice how to spend the money that goes to your own healthcare, perhaps? That's the extra money, the money I don't have to spend on healthcare at all, which I have a completely free choice what to do with? (So who has more freedom here, I ask?) OK, you got it. So long as you choose to spend it on the insurance company your employer mandates for you. (OK, maybe that's not the case for you perdonally, but it is the case for a large proportion of US citizens.)

I can choose whether I spend any of my after-tax income on healthcare or not - one more choice than you have. And if I do, I can freely choose which health insurance company I want to go with.

Not looking so good, this free choice thing, is it?

I imagine that was your actual point. That the present US system has a lot of features which are not free-market. Point taken.

So how would you like to see your system changed to make it more like what you want to see?

Rolfe.

 

[BartiDdu]

I really don't have any answers for you US folk but overall, we in the UK are as married as we can get to the concept of 'free' healthcare. No popular politician would dare question the principle of 'free' health care...

Rolfe,

You included the above in quoting me earlier but failed to notice I am also a UK resident. What system you and I currently live under is not the point. I brought up the UK to imply that "free at the point of need" is not necessarily an efficient way of providing a magnificent service either.

I don't think it's a "laudable principle",

Maybe 'laudible' was the wrong word but you also say:

I know it's what I've got, and what everyone else in this country has got, and we'd rather keep it that way thankyouverymuch.

So are you saying you like the NHS system as it is, that you like, agree with, believe in a publicly funded "free at the point of need" service or what? I wasn't trying to quote you out of context. In my eyes you're contradicting yourself but maybe I'm wrong.

I will make an effort to follow the rest of your post but it's so your v mine (US v UK) oriented that I have to try and pretend I'm a US citizen to make any sense of it!

I'll be back!

 

[BartiDdu]

Now, you would rather have a choice as to how you spend "your" health dollars. Well, you don't have one right now.

Correct, whichever side of 'the pond' I'm on.

You have no choice about how the tax you pay which goes towards funding Medicare and Medicaid is spent. And the amount of that tax, pro rata, is a little bit more than we currently pay here to fund the NHS.

Were I a US citizen, by the figures you're looking at, this would also be true.

You's rather have a choice how to spend the money that goes to your own healthcare, perhaps?

Yup

That's the extra money, the money I don't have to spend on healthcare at all, which I have a completely free choice what to do with? (So who has more freedom here, I ask?)

No it's not, it's ALL the money spent by me (currently very little) and by what's currently collected in taxes towards my health money.

(So who has more freedom here, I ask?)

Neither methinks!

I can choose whether I spend any of my after-tax income on healthcare or not - one more choice than you have. And if I do, I can freely choose which health insurance company I want to go with.

That's a strange concept of choice in my book!

Not looking so good, this free choice thing, is it?

Not the way you've painted it, no - but then you're a very creative painter!!

I imagine that was your actual point. That the present US system has a lot of features which are not free-market. Point taken.

Your words here say the point is taken but all that preceded it illustrates that you didn't get it at all!

So how would you like to see your system changed to make it more like what you want to see?

Well, assuming it were mine, as I've already implied twice, I'd start by removing the government imposed restrictions on freedom of choice for medical care. I could go a lot further to a total deregulation of drugs (abolish the FDA) so instead of assuming anything passed by a body is 'safe' people would have to learn to take responsibility for themselves as to what they want to take. For the majority, that would mean leaning on expert opinion along with a fundamental understanding of statistics. The years of mandatory testing required to bring a drug to market would be gone so not only would pharmaceuticals be much cheaper but I guess there'd be many more pharma companies and they'd be a lot more inclined spend on r&d. Getting off topic a bit again, but if the goal is to make the cost of medical insurance down, there's a large number of such measures that could make a big difference - if one is prepared to look further than the spend-more, tax-more, regulate-more paradigm.
BDd

 

[Rolfe]

OK, I misunderstood your location. I'll re-read what you say in that light.

Rolfe.

 

[shadron]

Um, you do realize that "private" healthcare takes Medicare, right? The only difference between "private" and "public" is the source of the money, not the facilities. Doctor A sees two patients, Patient B and Patient C. Patient B has private insurance so Anthem pays. Patient C has Medicare so Medicare pays. It's the same doctor.

To be fair, that is correct, but the doctor also has the option to not accept Medicare. There are cases in which Medicare has beaten down prices so far that some doctors refuse to accept it. Of course, the private insurances do the same thing - try to beat down the price as much as possible. That sometimes leaves doctors and hospitals trying to make up what they perceive as shortfalls by really sticking it to the patients that don't have insurance and are paying out of pocket. They have no buying power, so they get the full brunt of the charges, even inflated to make up those who can't pay at all. Evening the playing field there is something I really want to see.

Unless, do cities or states own hospitals? All the hospitals around here are owned by private companies. The only truly "public" hospitals I know of aren't really open to the public despite being owned by the government--they're military hospitals.

I'd also cite teaching hospitals, usually owned by the state college systems. The CU Medical Center in Denver Colorado is one such, and is well respected in several areas. Most of the hospitals here were formerly owned by religious organizations, bit have now converted to or been bought by corporations.

 

[Rolfe]

I'd start by removing the government imposed restrictions on freedom of choice for medical care. I could go a lot further to a total deregulation of drugs (abolish the FDA) so instead of assuming anything passed by a body is 'safe' people would have to learn to take responsibility for themselves as to what they want to take. For the majority, that would mean leaning on expert opinion along with a fundamental understanding of statistics. The years of mandatory testing required to bring a drug to market would be gone so not only would pharmaceuticals be much cheaper but I guess there'd be many more pharma companies and they'd be a lot more inclined spend on r&d. Getting off topic a bit again, but if the goal is to make the cost of medical insurance down, there's a large number of such measures that could make a big difference - if one is prepared to look further than the spend-more, tax-more, regulate-more paradigm.

Just a quick one.

You see, whan you talk about the FDA, I tend to assume you're speaking from a US perspective. You want to abolish the MHRA, is that it?

Nevertheless, I've figured out my mistake, so I'll take that into account.

What I'd like to know in the context of what you've written there, is your position on prescription-only drugs.

Rolfe.