Why We Are 50th

US Healthcare Industry

The US Healthcare system costs about 18% of GDP which is about twice the cost of what it is in every other developed nation. That’s with the US having a very high GDP per capita compared to these other nations which should be a mitigating factor.

There are 3 primary reasons we are currently stuck with a unsustainably expensive system:
Cost insulation, employment, and perception.

This cost is largely insulated from the average citizen because:

  1. Employers pay a large portion of the health insurance premium up front and this may not be evident to the employee
  2. The premiums are pretax money which falls outside the average person’s attention. Imagine the difference in perception, and potentially outrage, if the average person had to pay health insurance just the same as their car insurance.
  3. It is divided among premiums, the government, deductibles, copays, etc. Several of these can be painful for a family to absorb but spreading them out still obfuscates the true cost of the service.

To grossly oversimplify things but still provide perspective of the cost of healthcare relative to other taxes:
The median income is 36,000 a year and the median household income is 68,000 a year. The effective tax rates on a person making $36,000 a year would be 7.32% Federal, 7.65% FICA, and 3.63% state for a total of 18.60% or about $7,000 a year. That is funding the federal government, social security and medicare, and their state taxes for an equivalent amount of funding their healthcare before they retire. Meanwhile, the average yearly single premium is $3600 and average yearly family premium is around $9000. This is 10% of the single median income and and 13% in the household example.

The employment situation is difficult because of amount of unemployment potentially created. We have a complete administrative system that is itself the waste, when you fix the waste you kill those jobs.

Obamacare limited the health insurance industry to 20% of healthcare costs. That means that a fifth of the GDP is in healthcare and a fifth of that is in health insurance, so 4% of the economy would be potentially unemployed overnight by a universal healthcare system. That is a huge political problem and it is understandably directing the substantial number of those employed by this industry to vote in their best interest.

“Socialism” is a long weaponized word and it has been used effectively to maintain the status quo in this case. America overall is wealthy enough to waste 10% of its GDP and that is evident by the lack of action by average citizens. Since there is no significant pressure from those that would benefit, the only way to improve is seen as in direct conflict w/ traditional American capitalism, and negative short term political implications it is no easy to see how this discussion is decades old with little to no progress.

Median household income is 68k. So your numbers are roughly cut in half updated in main post

While I think you would get rid of some, I don’t think you are going to get rid of the full 4% of the GDP with a universal healthcare system. Just because everyone is covered doesn’t mean that you don’t still have people applying for care and needing someone to decide who gets what. Now that might not mean that those earning that 4% see the change as detrimental and so the force of that 4% is fully against the change.

You’ve listed why you think our healthcare system is broken (I read as too expensive). Here is an extremely brief article that I think better sums up our issues.

I wholeheartedly concur that we have administrative waste. I also think we are doing more treatment in general, and more costlier treatment. In general we used to not treat near as much as we do now. Combine that with an aging population and healthcare cost explodes. While we do exceed others, everyone is seeing rising Heath care costs.

I can agree that cost insulation is a problem. I can agree that employment is a problem (though thats a problem with every issue in American politics). I think your view on the perception of “Socialism” is strongly biased by your feelings on what you assume to be the correct answer to this problem. I would actually argue that your whole post is biased towards that without actually stating it. Unless things have changed or I misunderstand your views, I disagree with you on what the best solution is (and yes I do see your view as Socialist and “bad”).

@whyweare50th I would be interested in having you state it though so there is no confusion.

Yes, sorry. I guess I should step back or even say that this issue is huge so feel free to reframe the discussion, particularly if you think there is a market option available. My position on healthcare and many other stagnant issues is that there is an obvious problem (which we may or may not acknowledge) and a path to a solution that we are not exploring for faulty reasons. My priority is recognizing the problem and exploring the faulty reasoning so that we can move towards solution. In most instances I feel that is going to be a “socialist answer” because if there were a true market lever available to pull, it would have been pulled because that’s what the market does, and wouldn’t be discussing the issue in the first place.

We can go down the rabbit hole of how various government programs have affected or undermined the market and whether or not we should repeal mandatory live saving treatment w/o insurance, medicaid, medicare, etc and try to shift things back to the market but I doubt it’ll lead anywhere fruitful because we currently have a more market based solution than every other developed nation and it costs more with less coverage and has for 30 years. There may be incremental gains available but nothing that is going to provide the ~1.5 trillion a year we’re eating now.

So I’ll agree we have a problem (for what that is worth). I certainly don’t agree that the only solution is socialist or that the only options are socialist vs market. I think there is room for regulation to deal with the issues.

I think this issue is 100x more complex and damaging than say the immigration issue and yet we cannot come up with a solution for that. I mean there are really only a few options to even consider in that one, and not only can we not solve it, we don’t even seem to consider a solution. Everything seems to have to be incremental which is rough way (but our typical way) to solve a problem.

I think part of the problem with this question is you seem to think the only solution is one where everyone gets healthcare and it’s owned by the government. I do now, and always will have problems with that.

  • the government is (almost) always hyper inefficient
  • the government always becomes more inefficient because it’s drivers are almost always fairness and political, not cost and success. (And fairness has wildly differing definitions, I suspect we would disagree strongly on its definition)
  • the government has a very long and slow feedback loop from its customers
  • undoing a benefit given by the government is extremely hard and contentious. Once you give it, you can’t take it back. People get very angry (see Greece austerity, UK uni funding)
  • I really don’t want the government deciding what is and isn’t covered. That has room for many many abuses (granted insurance companies have the same issue… it’s easier to switch insurance companies than get the government to change)

Now I can’t guarantee you some of these thoughts are not founded in the fear mongering of socialism. But I have witnessed all of these in the government. I understand first hand knowledge may not be the strongest argument but these are fairly common held complaints about the government running things from libertarians. Whether or not my personal experiences were simply confirmation bias is something we would have to discuss.

So I do see from your side how this is a problem. We have a known issue, and a large segment of the population is never going to go for your solution. You believe it’s because I’m brainwashed, I think it’s cause your solution will never be a good one.

Right, and there are two fundamental problems with this:

  1. The large segment of the population that doesn’t like the solution path can’t offer alternatives and its representation certainly hasn’t implemented any.
  2. The fear of “Socialism” allows embedded interests to undermine proposed solutions without just cause. It doesn’t even have to be Socialist or more Socialism in actuality.

I’m not attached to any particular solution because the reality is the answers should fully vetted and explained in about a two thousand page report with input from thousands of professionals. I do assume the results of that report because of the results in other countries (more socialist) but don’t advocate for any particular country’s solution or rule out finding our own different one.

Back to point 2 with an example: Would offering medicaid for sale to anyone be “more Socialism”? Currently we have a system where the safety net is potentially better than what the market offers and sacrificing income and assets until you qualify for the safety net can be savvy. We already have the system, cover the overhead, and have a total program cost per person so it seems to me like it’d be a low effort option worth exploring with little implication. If the market loses to government via the market is that “more Socialism” than denying entire population segments access to something that is “free” to others? I realize there are a million nuances we could start wading into but again the important thing is has this been explored at a high level, if not, why, and if no reason for why then who is responsible for the incompetence/corruption. This standard process of error correction isn’t happening because of a loop of points 1 and 2 which should be called out by leadership but isn’t because of the massive scope and implications I’ve previously mentioned.

Regarding the classic debates of capitalism vs socialism and their strengths and weaknesses i think it is best summed up by considering healthcare as infrastructure. Regulating the price of public water is necessary because the market can’t practically respond to price increases (eg no one is going to build a redundant water system to compete) and the user can’t avoid its dependence on water. Currently it is common that the government doesn’t control water, own water plants, repair the pipes, etc, all that is left to private industry. However at the head of all this there’s rate negotiation/price control which is the antithesis to capitalism, and yet we live it every day and I doubt we ever have a thread on this forum about public water prices. I’m not saying price control is the solution here but the we need perspective that some aspects of government intervention in the market provide an objectively better outcome (excluding water barons) than the market would find alone.

I will someday come back to this, I’m sure of it.

Send in the better half

so couple thoughts, just spit balling here. First of all I’m intrigued by the public water argument. I think those are essentially grossly differing in complexity. And unlike the water, you can have alternative health care providers. But still intrigued.

I am not personally against all government regulation, as you mentioned there cases where we do it and it seems to work fine. That being said, I’m against the government having to manage a complex system. If there were some forms of regulation, for perhaps insured costs I would be interested in seeing how that plays out.

I think your arguments that there are no other solutions provided are not entirely accurate. I’ve seen plans involving increasing FSA as an alternative to (some amount) of health insurance. I could totally get behind these plans.

What I see the problem is, is that we have taken something called health insurance, and transformed it into health care. I think a solution is to go back to making health insurance an actual insurance.

As an example, why is teeth cleaning covered by my dental insurance? A cleaning is not an unexpected expenditure. The only argument I’ve heard is that “regular check ups might prevent more expensive care”. But what I have seen is that we essentially expect routine care and minor care as a given, and people abuse the shit out of that. Which helps drive up the costs.

I think if you increase FSA benefits from the government, and incentivize people to handle their own care you could make insurance go back to actual insurance. It’s meant for when you get cancer, or break your back.

The other problem is since everything is covered, no one blinks an eye. I’ve had 5 different xrays for my knees, 6 different doctors looking at it, an MRI, I’m on my 4th physical therapist. One physical therapist didn’t work, oh we’ll just send you to another.

Your doctor is assigned by your insurance, your choice is mostly within your plan, there is no feedback or loss of business because new business comes from the plan. You never worry about cost of anything, because it’s all on the plan so cost can inflate.

these are some semi random thoughts, as opposed to a coherent argument, I’m aware of that but thats what I have time for at this exact moment.

Public water is just an example to show how there is a line in particular situations where the fundamental flaws of socialism are preferred to the fundamental benefits of capitalism. In the case of public water the innovation and efficiency benefits of a purely market based solution will be a distant second to the likelihood of monopolies and exploitation. To mitigate that we have a hybrid where a public entity actively regulates private industry. This plays to the strengths of each and moderates the negatives. It may be basic but this foundational aspect of evaluating policy seems long lost – and most importantly has been a nonstarter when discussing our healthcare system, because of the miraculously effective tagline that socialism doesn’t work (which can be hurled at nearly any measure proposed in the direction we need to go, even HSA/FSA could be spun to the government telling you what you can and can’t do with your money).

I don’t think our lines of thought about a path forward are mutually exclusive. I agree with HSA and FSA systems that would remove insurance and put auditing/negotiation back on the consumer but we both acknowledge that “insurance” is still a necessary thing. I think HSAs and FSAs would be a feature of the greater reform. We will still have huge administrative/waste issues associated in maintaining 1 healthcare system (VA), medicare, medicaid, and the entire private insurance industry, and the actual healthcare industry navigating between those entities. You only need 1 interaction with our healthcare system, the “billing codes”, or trying to figure out how much something will actually cost to see the madness. An example of this fundamental failure of the populace to evaluate the administrative issues/waste is the outrage related “forcing men” to pay for birth control because of efforts to streamline plans – completely missing the point that the creation and administration different plans so each person can healthcare a la carte would be more expensive overall than providing birth control to every single man that wants it and the odds of that being priced into the policy.

To big picture your examples above:

  • The VA has demonstrated a full on takeover has issues
  • Unregulated/private insurance has demonstrated that it can’t pull its weight with rate negotiation, fostering competition, or auditing claims.
  • Medicare and Medicaid have demonstrated personal accountability, auditing, and systemic oversight is a requirement.

Why does dental insurance exist at all? Policies I’ve seen have a cap of coverage of 1,000 or 2,000 – it is a fine example in my opinion of the “cost insulation” that has permeated the system, crippled both market and government responses, and perpetuated the waste. There is a whole bullshit system related to dental insurance; policies, premiums, copays, claims, rejections, preapprovals, etc. Worse yet whenever i’ve looked at the numbers the primary and perhaps only benefit it edges out between nothing is that the premiums are exempt from income tax.