Some interesting links related to health care in the U.S.
Many patients come to Mayo Clinic for a second opinion or diagnosis confirmation before treatment for a complex condition. In a new study, Mayo Clinic reports that as many as 88 percent of those patients go home with a new or refined diagnosis -- changing their care plan and potentially their lives. Conversely, only 12 percent receive confirmation that the original diagnosis was complete and correct.
The first original sin appeared in the 1940s, when the government
agreed to allow companies to deduct the cost of health insurance,
but neglected to allow individuals to do the same. (I've discussed
this in a number of posts over the years.) This made health insurance
provided by employers much cheaper than health insurance purchased
by individuals. Not only that, but it created a strong incentive
for employers to offer health insurance which covered a whole
lot of things; and why not, if the costs were uniquely deductible
by companies?
...
The second original sin, Cochrane argues, is that "Instead of
straightforwardly raising taxes in a non-distortionary way (a VAT,
say), and providing charity care or subsidies -- on budget, please,
where we can see it -- our political system prefers to fund things
by forcing cross subsidies. Medicare and medicaid don't pay what the
service costs, because we don't want to admit just how expensive
that service is. So, large hospitals make up the difference by
overcharging you and me instead."
In fact in the US case it's not even obesity, or indeed their
greater pre-existing disease burden, that is doing most of the
work in dragging their life expectancy down; it's accidental and
violent deaths. It is tragic that the US is so dangerous, but it's
not the fault of the healthcare system; indeed, it's an extra burden
that US healthcare spending must bear. Just simply normalising for
violent and accidental death puts the USA right to the top of the
life expectancy rankings.
...
Now this is not to say the US system works well. The fact that
the US spends vastly more than everyone else, and only does a bit
better, if that, makes the system pretty unimpressive. But it's
important to understand why. The UK really does have "death panels"
that refuse treatments because they're extremely costly relative
to their tiny impact. The USA has a system where most people can
buy--are even subsidised through the tax system to buy--insurance
that is as extensive as they like, paying for ever more expensive
and marginally beneficial therapies. Eventually you're spending a
fifth of your GDP on it.
The details of the PBM (pharmacy benefit managers) architecture are extraordinarily complicated, as Dayen's piece explains. But the basic idea is reasonably straightforward. PBMs date back to the 1960s, when they served as streamlined claims processors to intermediate between pharmacies and drug companies. As the industry grew, PBMs presented themselves as a way to keep drug prices low because they could "form large patient networks, and negotiate discounts from both drug companies and pharmacies, which would have no choice but to contract with them to access the network."
Sounds reasonable enough. But over time, two big things changed: The health-care billing system got more and more hideously complex, and virtually all the PBMs were rolled up into three big companies -- ExpressScripts, CVS Caremark, and OptumRx, which now control a combined 75 to 80 percent of the market. As a result, the promised savings have not materialized. On the contrary, spending on prescription drugs exploded by 1,100 percent between 1987 and 2014, and all three companies -- which are each among the top 22 of the Fortune 500 -- rake in huge profits. Dayen reports that ExpressScripts' adjusted profit per prescription has increased by 500 percent since 2003.