Re: "prices are already disclosed and agreed upon beforehand, by insurers."
Yes, that's the point. If there's any price transparency, it's maybe between insurers and providers. Not patients. So patients need insurers to protect them against arbitrary overcharging. That should be part of basic capitalist law and order, but physician "sovereignty" has been allowed to override that and turn the whole system into rent-seeking paternalism. That's the problem I'm trying to solve.
The price controls are a bad idea. They would not be "temporary", and they would be manipulated by left-leaning administrations to try to force prices below market rates.
re: "price controls" They are also already heavily regulated and price controlled. Those trillions of prices weren't SET, they were negotiated, between each hospital, provider and medicare and insurers. And the insurers are everywhere and always constrained by regulation on what they can/have to reimbursement, if by no other mechanism than the ceilings/floors set by medicare. As you note, the limitation is doctor/hospital leverage: if you don't pay them enough, they will go out of business and you will have no care for your constituents.
And this shows the problem with price controls: they are already controlled by the government and therefore they are extremely malleable to special interests, not the least of which are patients themselves. Our system's defects are largely a feature of excessive price control, because the people who CAN price control do not have the info to do it right.
"One question does require an evolving policy answer: what counts as consent?"
This is already handled, emergency care already has a huge range of laws and regulations around what you implicitly agree to when you are admitted ot the ED unconscious, what doctors are required to do, what doctors are prevented from doing, and indeed even the prices you are allowed to be charged for these cases is (incredibly complexly regulated). The key is that insurance is not working right: you don't (and hsouldn't need to) consent to "the ED care," you just consent to, and choose your health insurance AHEAD of time, when you're lucid and not bleeding out, and that insurance has clauses for what ED care they cover. This should work just fine, but because we have a stupid and moronic patchwork system of payment for this, and we've allowed "in/out network" (why would that ever matter for emergency care?)
^ this is what you get when you demand governmental price controls on no-consent care. Literally the formula for calculating the price is a proprietary formula of the insurer and you cannot ask how they did it. You don't want more of this!
In the end, the issue is not the availability of prices, or whether the govt controls them, or consent - these all exist already. What is missing is choice. Patients can see all those prices but they can't choose them, because they are hostages of their insurer/payer plan system. Even medicare doesn't help this - if some DPC place offers lower price visits, you can't go there, because medicare (price controls can also act as floors - because as you note, the govt often is the backstop payer) won't reimburse them. But because no one picks their doctor OR their insurance, this is why it isn't a market. (this is not a criticism, obviously you get this)
But it does mean we can just streamline the solution: remove all the barriers to customer choice in both medical care and insurance, and then let the market work it out, (with govt cash subsidies for need) which it will.
- abolish employer based insurance
- everyone has to buy (yes a mandate) at least a policy that covers those ED visits (because docs are legally required to provide care). If you decline all the rest, then yes, that's on you to pay
- abolish in/out of network. Insurers cannot differentiate.
- abolish payer-provider negotiations entirely. Providers post prices for care. Customers choose them. Insurers reimburse POLICYHOLDERS for whatever their policy covers, before deductible, otherwise customers just pay out of pocket.
- make it illegal for insurers to cover predictable events. Every other insurance industry understands this. You cannot get home insurance on Monday if you have planned to demolish your house on Tuesday. Insurance, which carries legal allowances for risk premiums, cannot cover things (regular appointments, your monthly meds) which have no risk. They can only insure against unexpected things that exceed contractually obligated out of pocket maximums.
So this is good information, but I kind of feel like you think you're disagreeing with me, whereas from my perspective, you're mostly agreeing.
On "what counts as consent," for example: yes, there are laws and regulations around this, that comprise a kind of policy stance. But it's wrong. Agreed?
Re: Government price controls on no-consent care are a mess and "you don't want more of this." I agree! To some extent, I'm trying to change the accountability model and maybe improve the controlled prices a little bit, but far more important is to limit their scope. I recognize a paternalist exception and I'm trying to box it in so that most of the time healthcare is just another capitalist industry where you get what you pay for.
I'm reluctant to declare specific kinds of insurance illegal. I wouldn't even make it illegal to offer homeowners insurance policies on houses the day before they are deliberately demolished. That would be stupid, and capitalist rationality will ensure that it doesn't happen, but why ban it?
It seems like we're both trying to chart a course to healthcare capitalism. I'd love to hear a description of your proposed path that's similarly detailed to mine.
No, you're right, I'm not disagreeing with you, I totally agree at the high level, particularly on "healthcare capitalism" which I agree is the ideal goal.
I think my "disagreement" is more just around the... prioritization. I work in the industry and I see where we have a lot of this stuff already and it's not working. Yes, I totally agree that your form of it is better, and would likely lead to better outcomes, but the industry right now is a giant machine for taking well intentioned improvements and turning them to evil bureaucratic sclerosis. Again, not a critique, just that the scope is immense, and the incentives so out of whack.
"On "what counts as consent," for example: yes, there are laws and regulations around this, that comprise a kind of policy stance. But it's wrong. Agreed?"
Yes, with the corollary that I think most of the policy would actually work if patients had choice in insurance providers. (ED care being the archetype of "get insurance to insure against this event")
"I'm trying to change the accountability model and maybe improve the controlled prices a little bit, but far more important is to limit their scope. I recognize a paternalist exception and I'm trying to box it in so that most of the time healthcare is just another capitalist industry where you get what you pay for."
Yes, and I agree, but my hesitation (rather than disagreement) is based around the idea that, based on what I've seen, it isn't possible to limit the scope of the price controls. Good intentions are important, but looking at the data every day, I see how the currently existing powers of price control are used: where hospital X negotiates a high reimbursement for procedure A with the government/insurers, because they do lots of A, in exchange for claiming "cost reductions" on procedure B they do few of. In exchange, hospital Y, which does lots of B, now gets much less revenue, so negotiates a reimbursement increase in code C, that they do a lot of. Patients, who due to being locked into networks by their employer insurance, have no ability to shop, and so the ones who have to go to Y pay more, and the ones who go to X pay more too, even though we've "negotiated prices down" officially.
"I'm reluctant to declare specific kinds of insurance illegal. "
Yeah, agreed, and my suggestion is less "make illegal" and more usually just "abolish by removing the constraints and choice that otherwise would make those options untenable." Like on employer-based insurance, remove the tax incentives.
But yes, for some, really it should be illegal. These are the "paternalist exceptions" that I support. Employers should NOT be allowed to condition things like health insurance on your employment. Yes, I think if we fixed a lot of the incentives, (taxes) they would be less likely to do so, but we really can just short cut this. Employers should not run health plans. Ever. This is like the "company store" issue gone wild. Probably there's a really good sequence of policies that would reform the system and wind it down in an optimal way, but the industry is just too good at corrupting these processes. Just make it illegal day one, and transfer by fiat every employer based health insurance policy (AND the wage subsidy) to the employee. This is part of the "rallying support for healthcare capitalism." People need to see how badly things have been distorted.
"I'd love to hear a description of your proposed path that's similarly detailed to mine."
Why don’t you think restoring the expanded subsidies and getting the remaining holdout states to expand Medicaid would be enough to resolve the current issues with Obamacare? It sounds like the biggest losers right now are unsubsidised middle class professionals whose subsidies were allowed the expire by the Republicans, or the folks making 100% of the poverty line in states like Mississippi that refuse to expand Medicaid.
First, prices are already disclosed and agreed upon beforehand, by insurers. His argument is against copays, which is just going to make the moral hazard worse, and move those costs into premiums - a worse outcome.
Second, you just can't use consumer microeconomics on high fixed cost standby utilities. The prices are never going to make sense because your $10 pill of tylenol is paying for an anesthesiologist to be on call at 3am. Squeezing prices is going to shut down unprofitable wards, like labor and delivery, emergency rooms. The high fixed costs make it like a waterbed - you push down in one place and it goes up elsewhere.
Re: "prices are already disclosed and agreed upon beforehand, by insurers."
Yes, that's the point. If there's any price transparency, it's maybe between insurers and providers. Not patients. So patients need insurers to protect them against arbitrary overcharging. That should be part of basic capitalist law and order, but physician "sovereignty" has been allowed to override that and turn the whole system into rent-seeking paternalism. That's the problem I'm trying to solve.
The price controls are a bad idea. They would not be "temporary", and they would be manipulated by left-leaning administrations to try to force prices below market rates.
Great piece here. Thank you.
I think you've got a good idea here, but we already have a ton of this and (some of it) is not working:
"Imagine a nationwide, publicly searchable schedule of maximum billable prices per episode of care"
Prices are already "transparent" - if you have a few million spare CPU cycles and unlimited fiber, like I do :
[self-promotion]
https://medicalprices.morgan-industries.com/
re: "price controls" They are also already heavily regulated and price controlled. Those trillions of prices weren't SET, they were negotiated, between each hospital, provider and medicare and insurers. And the insurers are everywhere and always constrained by regulation on what they can/have to reimbursement, if by no other mechanism than the ceilings/floors set by medicare. As you note, the limitation is doctor/hospital leverage: if you don't pay them enough, they will go out of business and you will have no care for your constituents.
And this shows the problem with price controls: they are already controlled by the government and therefore they are extremely malleable to special interests, not the least of which are patients themselves. Our system's defects are largely a feature of excessive price control, because the people who CAN price control do not have the info to do it right.
"One question does require an evolving policy answer: what counts as consent?"
This is already handled, emergency care already has a huge range of laws and regulations around what you implicitly agree to when you are admitted ot the ED unconscious, what doctors are required to do, what doctors are prevented from doing, and indeed even the prices you are allowed to be charged for these cases is (incredibly complexly regulated). The key is that insurance is not working right: you don't (and hsouldn't need to) consent to "the ED care," you just consent to, and choose your health insurance AHEAD of time, when you're lucid and not bleeding out, and that insurance has clauses for what ED care they cover. This should work just fine, but because we have a stupid and moronic patchwork system of payment for this, and we've allowed "in/out network" (why would that ever matter for emergency care?)
Just gaze into the QPA (how to calculate prices for getting ED care out of network) red tape abyss here: https://www.claritev.com/insights/qpa-101-practical-information-about-qualifying-payment-amounts-and-the-no-surprises-act/
^ this is what you get when you demand governmental price controls on no-consent care. Literally the formula for calculating the price is a proprietary formula of the insurer and you cannot ask how they did it. You don't want more of this!
In the end, the issue is not the availability of prices, or whether the govt controls them, or consent - these all exist already. What is missing is choice. Patients can see all those prices but they can't choose them, because they are hostages of their insurer/payer plan system. Even medicare doesn't help this - if some DPC place offers lower price visits, you can't go there, because medicare (price controls can also act as floors - because as you note, the govt often is the backstop payer) won't reimburse them. But because no one picks their doctor OR their insurance, this is why it isn't a market. (this is not a criticism, obviously you get this)
But it does mean we can just streamline the solution: remove all the barriers to customer choice in both medical care and insurance, and then let the market work it out, (with govt cash subsidies for need) which it will.
- abolish employer based insurance
- everyone has to buy (yes a mandate) at least a policy that covers those ED visits (because docs are legally required to provide care). If you decline all the rest, then yes, that's on you to pay
- abolish in/out of network. Insurers cannot differentiate.
- abolish payer-provider negotiations entirely. Providers post prices for care. Customers choose them. Insurers reimburse POLICYHOLDERS for whatever their policy covers, before deductible, otherwise customers just pay out of pocket.
- make it illegal for insurers to cover predictable events. Every other insurance industry understands this. You cannot get home insurance on Monday if you have planned to demolish your house on Tuesday. Insurance, which carries legal allowances for risk premiums, cannot cover things (regular appointments, your monthly meds) which have no risk. They can only insure against unexpected things that exceed contractually obligated out of pocket maximums.
All we need is choice.
So this is good information, but I kind of feel like you think you're disagreeing with me, whereas from my perspective, you're mostly agreeing.
On "what counts as consent," for example: yes, there are laws and regulations around this, that comprise a kind of policy stance. But it's wrong. Agreed?
Re: Government price controls on no-consent care are a mess and "you don't want more of this." I agree! To some extent, I'm trying to change the accountability model and maybe improve the controlled prices a little bit, but far more important is to limit their scope. I recognize a paternalist exception and I'm trying to box it in so that most of the time healthcare is just another capitalist industry where you get what you pay for.
I'm reluctant to declare specific kinds of insurance illegal. I wouldn't even make it illegal to offer homeowners insurance policies on houses the day before they are deliberately demolished. That would be stupid, and capitalist rationality will ensure that it doesn't happen, but why ban it?
It seems like we're both trying to chart a course to healthcare capitalism. I'd love to hear a description of your proposed path that's similarly detailed to mine.
No, you're right, I'm not disagreeing with you, I totally agree at the high level, particularly on "healthcare capitalism" which I agree is the ideal goal.
I think my "disagreement" is more just around the... prioritization. I work in the industry and I see where we have a lot of this stuff already and it's not working. Yes, I totally agree that your form of it is better, and would likely lead to better outcomes, but the industry right now is a giant machine for taking well intentioned improvements and turning them to evil bureaucratic sclerosis. Again, not a critique, just that the scope is immense, and the incentives so out of whack.
"On "what counts as consent," for example: yes, there are laws and regulations around this, that comprise a kind of policy stance. But it's wrong. Agreed?"
Yes, with the corollary that I think most of the policy would actually work if patients had choice in insurance providers. (ED care being the archetype of "get insurance to insure against this event")
"I'm trying to change the accountability model and maybe improve the controlled prices a little bit, but far more important is to limit their scope. I recognize a paternalist exception and I'm trying to box it in so that most of the time healthcare is just another capitalist industry where you get what you pay for."
Yes, and I agree, but my hesitation (rather than disagreement) is based around the idea that, based on what I've seen, it isn't possible to limit the scope of the price controls. Good intentions are important, but looking at the data every day, I see how the currently existing powers of price control are used: where hospital X negotiates a high reimbursement for procedure A with the government/insurers, because they do lots of A, in exchange for claiming "cost reductions" on procedure B they do few of. In exchange, hospital Y, which does lots of B, now gets much less revenue, so negotiates a reimbursement increase in code C, that they do a lot of. Patients, who due to being locked into networks by their employer insurance, have no ability to shop, and so the ones who have to go to Y pay more, and the ones who go to X pay more too, even though we've "negotiated prices down" officially.
"I'm reluctant to declare specific kinds of insurance illegal. "
Yeah, agreed, and my suggestion is less "make illegal" and more usually just "abolish by removing the constraints and choice that otherwise would make those options untenable." Like on employer-based insurance, remove the tax incentives.
But yes, for some, really it should be illegal. These are the "paternalist exceptions" that I support. Employers should NOT be allowed to condition things like health insurance on your employment. Yes, I think if we fixed a lot of the incentives, (taxes) they would be less likely to do so, but we really can just short cut this. Employers should not run health plans. Ever. This is like the "company store" issue gone wild. Probably there's a really good sequence of policies that would reform the system and wind it down in an optimal way, but the industry is just too good at corrupting these processes. Just make it illegal day one, and transfer by fiat every employer based health insurance policy (AND the wage subsidy) to the employee. This is part of the "rallying support for healthcare capitalism." People need to see how badly things have been distorted.
"I'd love to hear a description of your proposed path that's similarly detailed to mine."
Absolutely! It's my favorite topic: https://substack.com/@brianmoore2028/p-177655699
I would also describe it using the same term you do: "medical capitalism."
Why don’t you think restoring the expanded subsidies and getting the remaining holdout states to expand Medicaid would be enough to resolve the current issues with Obamacare? It sounds like the biggest losers right now are unsubsidised middle class professionals whose subsidies were allowed the expire by the Republicans, or the folks making 100% of the poverty line in states like Mississippi that refuse to expand Medicaid.
Fundamental misunderstanding of how healthcare works
How? Share more — give us your critique so @Nathan Smith can respond.
First, prices are already disclosed and agreed upon beforehand, by insurers. His argument is against copays, which is just going to make the moral hazard worse, and move those costs into premiums - a worse outcome.
Second, you just can't use consumer microeconomics on high fixed cost standby utilities. The prices are never going to make sense because your $10 pill of tylenol is paying for an anesthesiologist to be on call at 3am. Squeezing prices is going to shut down unprofitable wards, like labor and delivery, emergency rooms. The high fixed costs make it like a waterbed - you push down in one place and it goes up elsewhere.