I agree with Paul Krugman's take here—including his observation that Medicare For All isn't politically viable. But I've long thought that something along the lines of what Pete Buttigieg was touting—more or less single payer for all who want it (aka a public option) would be the best way to get us to where we need to be: robust, truly universal coverage with private health insurance relegated to ancillary services. I believe this concept should be at the heart of the next round of healthcare reform.
Yes, well, one hopes in 2029 (or, more likely, 2031 given Senate math) Democrats will be a bit more single-minded about what needs to be done than they were in 2010.
Joe Lieberman has been out of office for 12 years. 12 years before Joe Lieberman left the Senate, Georgia's Zell Miller, a racist archconservative, was still part of the Democratic Senate caucus. Lieberman has nothing to do with what is going on right now except as a historical point of reference, nor was he the only D Senator from 2009-10 who was far more conservative than any of the remaining 47 caucus members.
Lieberman was also driven by extreme antipathy towards Democrats by 2010 because he lost his primary and the party supported the primary winner, who Lieberman defeated by getting the votes of most of the state's Republicans. (That primary winner was our current governor, Ned Lamont, who is the best governor we've had in my lifetime.)
Lieberman's direct replacement was Chris Murphy, who is a top-5 Senator (and should be involved in the 2028 primaries, IMO). Although a more precise spiritual descendent would be Senator Blumenthal who is also a Jewish former-rock-star-AG. But both of them are good legislators, and neither is about to betray the party or their liberal constituents.
A great Republican lawmaker, a true believer in bipartisanship. To MAGA, Joe is a RINO. The truth is that Joe is a true Republskills.
I should know because I grew up in a very active Republican family, but thankfully of the moderate variety. I spent summers hanging out at dusty state and county fairs, eating tons of elephant ears and sticky cotton candy.
My mom held senior positions in the national and state Republican Party. She fought the extremists, including a gadfly named Phyllis Schafly, who was perhaps the loudest voice against the Equal Rights Amendment, despite being a successful attorney.
If one is a moderate, he or she could fit in the other Party. That was me. And it was my mom too, as she voted for Obama (after the McCain campaign asked her to be a delegate!)
I could go on here about my parent's accomplishments in politics and life (one was raising a crazy teenager). Having been born to them, my political DNA drew me to run for the Illinois State Senate (I lost to a Chicago machine candidate).
Thanks for reading these memories. Writing them is good for my mind and for honing my author's skils.
Late stage Lieberman was actually more of a RIAWBN. (Republican In All Ways But Name.) He was a Democrat until he lost the 2006 primary and an independent for his final term.
I think "universal health care" that immediately replaces private insurance is not viable but making Medicare available to everyone is. This would weaken the grip of the insurance companies. Perhaps, start by dropping it to say 50 years old and then point out the incremental cost to cover everyone is then really small.
The problem is that the health care system as constituted won’t run on Medicare reimbursements. Private health insurance pays a lot better than Medicare does.
...it means that Medicare can pay more than it does, if the system is reformed, without additional public expenditure.
The government is spending money. They're spending it by giving it to Aetna to give to providers rather than just giving it to providers. It's the same money.
I think the goal should be to drop the medicare age to 60...but Trump's election means if anything, Social Security and Medicare will be rolled back and the next generation will have to wait until they are 70.
Republicans have pushing the retirement age penciled in as a major priority. It's probably the least politically suicidal way to cut senior benefits, but strategically it's still not something I would mess around with. I think they are going to fail - because a handful of people in the Senate and/or House are going to want to cut more than the rest and not accept a "half measure" - and pay a gigantic political price for it anyway. But I'm not a political genius like Rick Scott so who knows.
It's also worth noting that discussing the retirement age could possibly draw some attention to inequality, if it can successfully be brought to people's attention that all the increases in life expectancy since the last Social Security reform have gone to the well-off, and the poor are going to be asked to work longer to ultimately receive less benefits before shuffling off. So the pipe fitter only collects his $15k for five years while the lawyer collects his $50k for 30.
I don't think drawing attention to inequality is generally something the "tax cuts for the rich" party wants to do.
Agreed: the reason this proposal meets such vigorous opposition is the certainty that the public option would rapidly become the de facto healthcare system and therefore land us at "Medicare for All."
They gotta think outside the box. Don't they realize they could use lobbying to make the program terrible, and then blame its problems on the innate ineffectiveness of government rather than their own sabotage? Then they can privatize even more stuff! Go big!
My husband and I are 80, and in reasonable.health. We have Medicare and we also have
individual supplemental policies to get nearly full coverage MINUS drugs which, knock on wood, neither of us has had to take very much of. With the SS deductions for medicare and the two "supplemental" policies, we pay $1100 a month for medical insurance. Almost 20% of our gross income. That's real life out here in America.
Paul said, "So I’m not calling for an attempt to end private health insurance." But why settle for the status quo? Only a radical overhaul of the system, a total war against these parasites, can bring about the change we need!
Half measures and wishy-washy rhetoric by opportunists aren't the way forward. I read a post on a website that certifies people for $750 to sell Medicare Advantage that Ukraine is beginning to sell health insurance at clinics. This is a country still at war that currently has universal, free healthcare. The slimy profit-maximizing parasites are everywhere.
I am very sympathetic to Krugman's concerns about the political viability of shutting down/nationalizing the private health insurance industry and going to a single payer system, or doing something similar.
But, like, the country just celebrated the death of a health insurance executive. And it was not just isolated pockets - pretty much every single person who makes less than $200k a year is at least somewhat glad Mangione did what he did, if not explicitly approving of it.
(And honestly I would guess there are more people who approve than disapprove, straight up. Which says something terrifying about the nation and this political moment, I realize, but there it is.)
There is room for major reform here. We just have to find a way around the propaganda networks and their shouts of "death panels" and "killing innovation" and a way to drill down to the heart of the issue, like Mr. Mangione did, by drawing intense attention to the fact that these are matters of life and death. But now it needs to be done in a productive rather than destructive way.
Professor Krugman: Thanks for the excellent analysis. But it is even worse, much worse, than you describe. Insurance companies inject monopoly power into our medical system. A few huge insurance companies, including UnitedHealthCare, control most of the insurance market, which gives them great power over providers. Through mergers with pharmacy companies (e.g., CVS and Aetna) even more power is consolidated. Insurers also control pharmacy benefit managers (PBMs). PBMs are so powerful that, as the NYT reported yesterday, pharma companies are willing to pay kickbacks to PBMs to ensure that patients can buy their drugs, even to encourage addiction to drugs like opioids.
It astounds me that people who are afraid of government controlling healthcare are happy to let a small number of monopoly insurers and major healthcare providers control our healthcare.
Any time somebody has their insurance billed and gets a "copay" they should make sure than the copay isn't more than the out-of-pocket price. Incredibly common with medications, especially if you are using GoodRx coupons.
(And why the hell do GoodRx coupons exist? Shouldn't that just be the price??? For that matter, the hell IS GoodRx, and why does this private company [with no apparent competitors] have so much power? Who's making money off this and how?)
I was getting physical therapy. Insurance paid $80 per hour though the EOB always said the "real" cost was $320. When my prescription ended, I asked the provider if I could continue and I would pay personally. They said "only if you pay $320 per hour. If we charge you less than that, the insurers will kick us out of the network".
This must change! Cash payers and uninsured patients should pay the same rates the insurance companies pay.
In South Africa, many healthcare providers will give you a discount of 10-20% if you paid in cash coz it saves them dealing with the medical aids & trying to squeeze payment out of them.
I’m one of the traditional Medicare enrollees who gives it near 100% satisfaction. The private insurers who provide the Supplemental coverage are not in a position to deny anything. I find that many seniors enrolled in Advantage plans do not know there is a distinction; it is all Medicare to them. Disingenuous Advantage advertising like “combines traditional Medicare with extra services” sucks them in.
Agreed! I have traditional Medicare and a complex inflammatory disorder. I have been able to select the specialized, skilled team (provider by provider) that I need to manage my care. I have not needed a referral to see my specialists, nor insurance interventions in my services (except the Part D insurance that likes to drop one of my meds just after enrollment ends). Under Medicare Advantage, I would likely be dead by now. I try to influence other seniors to avoid Medicare Disadvantage - you may be healthy now, but old age comes with surprises.
One of my friends in an Advantage needed to see a specialist for some condition I don’t remember. Turned out the only in-network specialist she could see was located in a remote town not well served by public transport and essentially beyond reach as she does not drive. Dirty, deliberate trick.
If only there were a way for people to voluntarily give up their current private plans in favor of (improved and expanded) Medicare, maybe call it a public option or something.
1) Most Medicaid coverage is now also administered through private insurance companies (MCOs).
2) In KFF polling, Medicare Advantage enrollees are about as satisfied as traditional Medicare enrollees -- but the problems in MA tend to come when you need serious care (especially post-acute), which doesn't show up in aggregate polling numbers.
3) Insurers "save" healthcare spending by denying not only needed but unneeded care -- and it's difficult to parse out the proportions of each. Surveys indicate that MA plans do encourage people to get screenings and so may prevent more acute care down the road.
4) Some healthcare economists (e.g., Austin Frakt) find evidence that Medicare Advantage treatment protocols "spill over' into trad. Medicare and so save money there
5) Private companies (MACs) also administer traditional Medicare, but with a very broad coverage grant and few coverage denials. MACs have no incentive to deny coverage.
6) In countries that deliver universal healthcare through private insurers, such as Germany and Japan, major medical insurers must be nonprofit.
7) Private insurers probably do have the capacity or potential to add administrative and care management value. But in the U.S., profit skews the incentives. In fact, it skews incentives for providers as much as for insurers. Almost all participants are geared toward revenue maximization ("nonprofit" or not).
8) In the U.S. whatever money insurers save by managing (denying) care is swamped by overpaying providers, which happens because we have no uniform payment rates, so providers divide and conquer. In the case of Medicare Advantage, where providers are paid Medicare rates or less, the savings are negated by payment formulas that overpay MA plans on a capitated basis, via a) an ridiculous risk adjustment system that incentivizes massive gaming, b) over-generous payment benchmarks, and c) bonus payments based on quality ratings that don't measure quality effectively.
Hello from an Italian. I really don't understand this hatred against public health that is discarded regardless by you Americans. It is revalued by the individual only when he/she finds himself/herself ruined.
Hatred is cultivated. Our far-right uses Fox News for extensive persuasion & propaganda to promote the agenda of the rich and powerful. This has happened since nobody is fighting hard to stop the propaganda - delivered under the over-arching banner of freedom of speech. Unlike Trump, Democrats failed to use executive orders, lawsuits, bribery, threats, and well positioned allies. The Democrats are fighting all their battles on the wrong hill, while using inadequate strategy & tactics.
We Americans are, as always, afraid of what we don’t know. It is quite frustrating. I’m quite sure we would be rioting in favor of totalitarianism and repression if that was the norm in our society.
Evil companies will always call an ethics problem a public relations matter. First advice from PR professionals with integrity (maybe a dying breed): fix your ethics first
Mr. Krugman, if you are reading the comments, I wonder if you could explain something. I'm a cancer survivor, not currently in treatment but receiving expensive screenings at a major cancer center affiliated with a prestigious university. My health plan almost always denies part or all of the claims submitted by my providers, but says I owe nothing because the provider has agreed to accept the smaller amount (or nothing) under a contractual relationship. My question is: how do these provider-insurer contracts factor into health costs?
They're accounted for as the amount actually paid. But the problem is illustrative of our issue, which is that we have a weird tiered system where prices differ based on contractual relationships between providers and payors, and those themselves can vary radically. A procedure could cost your health insurer $5K at one hospital, but $15K at the hospital up the street. And if someone is uninsured, the procedure could cost them $50K. It's byzantine and not worth trying to untangle in any individual case. But this excellent book discusses it in the aggregate.
Thanks for the book recommendation. It's that byzantine tiered system that I'm trying to understand. Why is an uninsured person charged $50K for a service that a hospital is willing to provide to someone else for a $5K insurance reimbursement? I know, I know. It's not worth going crazy trying to understand something so deviously convoluted.
You'll drive yourself crazy trying to figure out why... I wouldn't bother (and I myself certainly don't understand all of the plumbing involved). In a way, sticker prices don't REALLY matter-- what matters is what we pay, and markets aren't going to effectively impose that discipline because, as Kenneth Arrow observed over 60 years ago, people lack the expertise to evaluate the quality of healthcare that they get (unlike, say, the quality of their couch, which they can evaluate by sitting on it at the furniture store and reading reviews to judge its reliability). So what we should focus on is designing the system such that incentives and payouts align with necessity and quality. Which is a really really easy thing to say and a really really hard thing to do.
Sort of. I am talking about the difference between the allowable rate and the claimed amount that is supposedly swallowed by the provider and not passed on to the patient - e.g. a provider accepts a total of $1000 for one patient but gets $1000 plus a $800 copay for another for the exact same service. What does that service actually cost? I’m just curious.
No one knows. The provider probably doesn’t even know. For example, MRI cost doesn’t really stay the same - they should get cheaper over time. At some point the machine is fully depreciated and paid for, and every additional scan is just paying for labor costs and power, yet the scan never gets cheaper.
The only way to find this out, I think, would be to cut reimbursements and you’ll soon figure out which ones all the different care providers scream about.
Joining the rest of the civilized world and enact universal healthcare.
They spend a third of what the US does for objectively better outcomes. TWO-THIRDS of what we spend on Healthcare is therefore the excessive overhead and private profit.
> So we really have a system in which taxpayers foot the bill for around 80 percent of health insurance. Yet much of that money flows through private insurance companies.
That’s how Bismarck universal health systems work too.
You also present a false dichotomy. The choice isn’t just between single payer and no universal healthcare, in fact single payer systems are failing everywhere, even in the Nordics. Bismarck style health systems present the best combination of aligned incentives, economic rationality, and universal coverage.
I've long admired the German healthcare coverage model (if that's what you're alluding to here), but understand for profit insurance plays a relatively minor role in Germany. The "sickness funds" that cover the vast bulk of the population are stringently regulated, non-profit enterprises. Their system also utilizes a fairly robust form of all payer rate setting—aka price controls.
I'd be happy to see the US migrate to such a system. But it would be a pretty radical departure from the US status quo.
The German model is one interpretation, yes, in reality there are many forms of the Bismarck model. The Netherlands, Switzerland, France, and Belgium all have their variation, with the public, private, and charity sectors all playing different roles in each. Perhaps the Dutch model might be preferable for the US to aim for as it allows firms to operate for profit, and has excellent results.
Have you read the post? Krugman only presents those two alternatives, and doesn’t even mention multi payer healthcare systems. How is it a non sequitur if we’re considering healthcare systems?
"single-payer systems are failing everywhere..." racism is succeeding? Trump and his watermelon jokes promise us a bright future? Medicine for profit is a perverse incentive. In American history, we decided to put some things beyond money. Good schooling for ALL children is pax Americana. "A fair shot" is almost an essential part of the American identity. If we say, the profit motive is a good idea when dealing with sick people, why is America so low among developed nations when it comes to health care outcomes and efficiency???
In 2010 Obama and Democrats in Congress were definitely single minded in what needed to be done: Lift U.S. economy out of a Great Recession and stimulate economy without triggering inflation.
Let’s never forget Obama and Democrats in Congress had to clean up after Republican-led financIal deregulation policies led to the Great Depression—akin to the Wall Street crash of 1929 and lasted 10 years. In 2010 Democrats had to deal Republicans in Congress constant and unanimous pushback from Republicans on every policy initiative proposed.
Let’s never forget that millions of people lost their homes to foreclosure (many illegal bank foreclosures). Let’s remember Steve Mnuchin. Before DJT appointed him Treasury Secretary, Mnuchin CEO of OneWest bank, dubbed 'foreclosure king’ of California. Let’s remember in 2010 the unemployment rate was 10%. Let’s remember 50 million people in USA had no health insurance in 2010. Let’s remember Ken Cuccinelli, the Republican conservative extremists who didn’t give AF about the uninsured people and immediately began wasting his time plus Virginia tax payers money with a lawsuit against Obama Administration over the Affordable Care Act. Let’s remember that now, December 2024, there are 10 Republican-controlled states still that choose to leave more than 1.5 million of their constituents uninsured by not adopting Medicaid expansion.😳
In essence, it’s not possible for a Democrat WH Administration and Democrats in Congress to focus on a single-minded issue, if I’m correctly understanding your interpretation. Historically, Republican Administrations f*ck up U.S. economy while Democrats are forced to it clean up in too many areas impacted while Republicans publicly clutch their pearls about Dems federal spending—determined to make Democrats in congress suffer and pay a political price for digging U.S. out of their created messes. Sadly, too many people who actually vote fall for this 'wash, rinse, repeat Republican ploy.
Thank you for the Warpaint! They fuel my hopefulness. The billing-coding-payment shadow banking industry produces nothing for customers, only profits for investors. It is a massive jobs program that wastes our health and well-being as a nation. Retired nurse-midwife here--I know some things. Just not how to break them.
My preferred method of comparison between public vs private health insurance &/ healthcare is bang-for-the-buck, i.e. “how much healthcare do a person receive for evey dollar paid in premiums, health tax & co-payments?” Economics would call it rent seeking by the gatekeepers, i.e. extracting excess money without adding value.
Taking into account the profits of private health insurance & private healthcare providers, incl. inflated costs of specialists, private hospitals & medicine, as well as administrative costs, I would not be surprised if it is like 60c in healthcare for evey $1 in premiums. (10c-12c profit to health insurance providers, 10c-12c to private healthcare providers, 5c-10c in excess in medicines & 10c-15c for administrative costs by all involved)
An efficient public system could provide 90c-95c for every $1 in health tax. (The VA provides it as high as 97c for every $1, & the NHS in the UK is likely about 90c-93c for every $1 in taxes, but it is inefficient for most of its clients). But this depends on avoiding high costs for medicines, paying below market rates for its workers, underinvestment in capital, not maintaining its existing capital, etc. in reality, it will likely be more like 80c-85c in healthcare services for every $1 paid in health tax. In a public system with high levels of corruption/ rent seeking, excess investment in capital infrastructure, high wages, etc it may come down to 50c-60c for every $1 paid in tax. (E.g. many developing countries such as South Africa).
I agree with Paul Krugman's take here—including his observation that Medicare For All isn't politically viable. But I've long thought that something along the lines of what Pete Buttigieg was touting—more or less single payer for all who want it (aka a public option) would be the best way to get us to where we need to be: robust, truly universal coverage with private health insurance relegated to ancillary services. I believe this concept should be at the heart of the next round of healthcare reform.
Readers may wish to Google the name “Joe Lieberman.”
Yes, well, one hopes in 2029 (or, more likely, 2031 given Senate math) Democrats will be a bit more single-minded about what needs to be done than they were in 2010.
Joe Lieberman has been out of office for 12 years. 12 years before Joe Lieberman left the Senate, Georgia's Zell Miller, a racist archconservative, was still part of the Democratic Senate caucus. Lieberman has nothing to do with what is going on right now except as a historical point of reference, nor was he the only D Senator from 2009-10 who was far more conservative than any of the remaining 47 caucus members.
Lieberman was also driven by extreme antipathy towards Democrats by 2010 because he lost his primary and the party supported the primary winner, who Lieberman defeated by getting the votes of most of the state's Republicans. (That primary winner was our current governor, Ned Lamont, who is the best governor we've had in my lifetime.)
Lieberman's direct replacement was Chris Murphy, who is a top-5 Senator (and should be involved in the 2028 primaries, IMO). Although a more precise spiritual descendent would be Senator Blumenthal who is also a Jewish former-rock-star-AG. But both of them are good legislators, and neither is about to betray the party or their liberal constituents.
If you YouTube it instead, you can watch him lie about why he wouldn’t support a public option.
A great Republican lawmaker, a true believer in bipartisanship. To MAGA, Joe is a RINO. The truth is that Joe is a true Republskills.
I should know because I grew up in a very active Republican family, but thankfully of the moderate variety. I spent summers hanging out at dusty state and county fairs, eating tons of elephant ears and sticky cotton candy.
My mom held senior positions in the national and state Republican Party. She fought the extremists, including a gadfly named Phyllis Schafly, who was perhaps the loudest voice against the Equal Rights Amendment, despite being a successful attorney.
If one is a moderate, he or she could fit in the other Party. That was me. And it was my mom too, as she voted for Obama (after the McCain campaign asked her to be a delegate!)
I could go on here about my parent's accomplishments in politics and life (one was raising a crazy teenager). Having been born to them, my political DNA drew me to run for the Illinois State Senate (I lost to a Chicago machine candidate).
Thanks for reading these memories. Writing them is good for my mind and for honing my author's skils.
Late stage Lieberman was actually more of a RIAWBN. (Republican In All Ways But Name.) He was a Democrat until he lost the 2006 primary and an independent for his final term.
I think "universal health care" that immediately replaces private insurance is not viable but making Medicare available to everyone is. This would weaken the grip of the insurance companies. Perhaps, start by dropping it to say 50 years old and then point out the incremental cost to cover everyone is then really small.
The problem is that the health care system as constituted won’t run on Medicare reimbursements. Private health insurance pays a lot better than Medicare does.
As Dr. Krugman has laid out in this post, they are paying better than Medicare *with money we give them.*
That doesn’t change whether providers will be able to function with a heavier Medicare mix.
...it means that Medicare can pay more than it does, if the system is reformed, without additional public expenditure.
The government is spending money. They're spending it by giving it to Aetna to give to providers rather than just giving it to providers. It's the same money.
Private health insurers spend about $1.2 trillion a year, much more than a $300 billion tax subsidy.
I think the goal should be to drop the medicare age to 60...but Trump's election means if anything, Social Security and Medicare will be rolled back and the next generation will have to wait until they are 70.
Republicans have pushing the retirement age penciled in as a major priority. It's probably the least politically suicidal way to cut senior benefits, but strategically it's still not something I would mess around with. I think they are going to fail - because a handful of people in the Senate and/or House are going to want to cut more than the rest and not accept a "half measure" - and pay a gigantic political price for it anyway. But I'm not a political genius like Rick Scott so who knows.
It's also worth noting that discussing the retirement age could possibly draw some attention to inequality, if it can successfully be brought to people's attention that all the increases in life expectancy since the last Social Security reform have gone to the well-off, and the poor are going to be asked to work longer to ultimately receive less benefits before shuffling off. So the pipe fitter only collects his $15k for five years while the lawyer collects his $50k for 30.
I don't think drawing attention to inequality is generally something the "tax cuts for the rich" party wants to do.
Agreed: the reason this proposal meets such vigorous opposition is the certainty that the public option would rapidly become the de facto healthcare system and therefore land us at "Medicare for All."
They gotta think outside the box. Don't they realize they could use lobbying to make the program terrible, and then blame its problems on the innate ineffectiveness of government rather than their own sabotage? Then they can privatize even more stuff! Go big!
I’d sign up.
My husband and I are 80, and in reasonable.health. We have Medicare and we also have
individual supplemental policies to get nearly full coverage MINUS drugs which, knock on wood, neither of us has had to take very much of. With the SS deductions for medicare and the two "supplemental" policies, we pay $1100 a month for medical insurance. Almost 20% of our gross income. That's real life out here in America.
Paul said, "So I’m not calling for an attempt to end private health insurance." But why settle for the status quo? Only a radical overhaul of the system, a total war against these parasites, can bring about the change we need!
Half measures and wishy-washy rhetoric by opportunists aren't the way forward. I read a post on a website that certifies people for $750 to sell Medicare Advantage that Ukraine is beginning to sell health insurance at clinics. This is a country still at war that currently has universal, free healthcare. The slimy profit-maximizing parasites are everywhere.
I am very sympathetic to Krugman's concerns about the political viability of shutting down/nationalizing the private health insurance industry and going to a single payer system, or doing something similar.
But, like, the country just celebrated the death of a health insurance executive. And it was not just isolated pockets - pretty much every single person who makes less than $200k a year is at least somewhat glad Mangione did what he did, if not explicitly approving of it.
(And honestly I would guess there are more people who approve than disapprove, straight up. Which says something terrifying about the nation and this political moment, I realize, but there it is.)
There is room for major reform here. We just have to find a way around the propaganda networks and their shouts of "death panels" and "killing innovation" and a way to drill down to the heart of the issue, like Mr. Mangione did, by drawing intense attention to the fact that these are matters of life and death. But now it needs to be done in a productive rather than destructive way.
Professor Krugman: Thanks for the excellent analysis. But it is even worse, much worse, than you describe. Insurance companies inject monopoly power into our medical system. A few huge insurance companies, including UnitedHealthCare, control most of the insurance market, which gives them great power over providers. Through mergers with pharmacy companies (e.g., CVS and Aetna) even more power is consolidated. Insurers also control pharmacy benefit managers (PBMs). PBMs are so powerful that, as the NYT reported yesterday, pharma companies are willing to pay kickbacks to PBMs to ensure that patients can buy their drugs, even to encourage addiction to drugs like opioids.
It astounds me that people who are afraid of government controlling healthcare are happy to let a small number of monopoly insurers and major healthcare providers control our healthcare.
Any time somebody has their insurance billed and gets a "copay" they should make sure than the copay isn't more than the out-of-pocket price. Incredibly common with medications, especially if you are using GoodRx coupons.
(And why the hell do GoodRx coupons exist? Shouldn't that just be the price??? For that matter, the hell IS GoodRx, and why does this private company [with no apparent competitors] have so much power? Who's making money off this and how?)
Thank you for this! If only there was enough investigative reporting and exposes of the grift….
I was getting physical therapy. Insurance paid $80 per hour though the EOB always said the "real" cost was $320. When my prescription ended, I asked the provider if I could continue and I would pay personally. They said "only if you pay $320 per hour. If we charge you less than that, the insurers will kick us out of the network".
This must change! Cash payers and uninsured patients should pay the same rates the insurance companies pay.
In South Africa, many healthcare providers will give you a discount of 10-20% if you paid in cash coz it saves them dealing with the medical aids & trying to squeeze payment out of them.
How awful. And the opinion is that Thompson dude is somehow a victim? 😅😅😅😅😅
I’ve never seen that provision in a contract.
I’m one of the traditional Medicare enrollees who gives it near 100% satisfaction. The private insurers who provide the Supplemental coverage are not in a position to deny anything. I find that many seniors enrolled in Advantage plans do not know there is a distinction; it is all Medicare to them. Disingenuous Advantage advertising like “combines traditional Medicare with extra services” sucks them in.
Agreed! I have traditional Medicare and a complex inflammatory disorder. I have been able to select the specialized, skilled team (provider by provider) that I need to manage my care. I have not needed a referral to see my specialists, nor insurance interventions in my services (except the Part D insurance that likes to drop one of my meds just after enrollment ends). Under Medicare Advantage, I would likely be dead by now. I try to influence other seniors to avoid Medicare Disadvantage - you may be healthy now, but old age comes with surprises.
One of my friends in an Advantage needed to see a specialist for some condition I don’t remember. Turned out the only in-network specialist she could see was located in a remote town not well served by public transport and essentially beyond reach as she does not drive. Dirty, deliberate trick.
If only there were a way for people to voluntarily give up their current private plans in favor of (improved and expanded) Medicare, maybe call it a public option or something.
A few notes:
1) Most Medicaid coverage is now also administered through private insurance companies (MCOs).
2) In KFF polling, Medicare Advantage enrollees are about as satisfied as traditional Medicare enrollees -- but the problems in MA tend to come when you need serious care (especially post-acute), which doesn't show up in aggregate polling numbers.
3) Insurers "save" healthcare spending by denying not only needed but unneeded care -- and it's difficult to parse out the proportions of each. Surveys indicate that MA plans do encourage people to get screenings and so may prevent more acute care down the road.
4) Some healthcare economists (e.g., Austin Frakt) find evidence that Medicare Advantage treatment protocols "spill over' into trad. Medicare and so save money there
5) Private companies (MACs) also administer traditional Medicare, but with a very broad coverage grant and few coverage denials. MACs have no incentive to deny coverage.
6) In countries that deliver universal healthcare through private insurers, such as Germany and Japan, major medical insurers must be nonprofit.
7) Private insurers probably do have the capacity or potential to add administrative and care management value. But in the U.S., profit skews the incentives. In fact, it skews incentives for providers as much as for insurers. Almost all participants are geared toward revenue maximization ("nonprofit" or not).
8) In the U.S. whatever money insurers save by managing (denying) care is swamped by overpaying providers, which happens because we have no uniform payment rates, so providers divide and conquer. In the case of Medicare Advantage, where providers are paid Medicare rates or less, the savings are negated by payment formulas that overpay MA plans on a capitated basis, via a) an ridiculous risk adjustment system that incentivizes massive gaming, b) over-generous payment benchmarks, and c) bonus payments based on quality ratings that don't measure quality effectively.
I tightened these points up a bit and added links here https://xpostfactoid.substack.com/p/krugman-is-health-insurance-a-parasitical
Hello from an Italian. I really don't understand this hatred against public health that is discarded regardless by you Americans. It is revalued by the individual only when he/she finds himself/herself ruined.
Hatred is cultivated. Our far-right uses Fox News for extensive persuasion & propaganda to promote the agenda of the rich and powerful. This has happened since nobody is fighting hard to stop the propaganda - delivered under the over-arching banner of freedom of speech. Unlike Trump, Democrats failed to use executive orders, lawsuits, bribery, threats, and well positioned allies. The Democrats are fighting all their battles on the wrong hill, while using inadequate strategy & tactics.
We Americans are, as always, afraid of what we don’t know. It is quite frustrating. I’m quite sure we would be rioting in favor of totalitarianism and repression if that was the norm in our society.
totalitarianism and repression are being normalized in the US by the minute and grow as we chat here.
Evil companies will always call an ethics problem a public relations matter. First advice from PR professionals with integrity (maybe a dying breed): fix your ethics first
Mr. Krugman, if you are reading the comments, I wonder if you could explain something. I'm a cancer survivor, not currently in treatment but receiving expensive screenings at a major cancer center affiliated with a prestigious university. My health plan almost always denies part or all of the claims submitted by my providers, but says I owe nothing because the provider has agreed to accept the smaller amount (or nothing) under a contractual relationship. My question is: how do these provider-insurer contracts factor into health costs?
They're accounted for as the amount actually paid. But the problem is illustrative of our issue, which is that we have a weird tiered system where prices differ based on contractual relationships between providers and payors, and those themselves can vary radically. A procedure could cost your health insurer $5K at one hospital, but $15K at the hospital up the street. And if someone is uninsured, the procedure could cost them $50K. It's byzantine and not worth trying to untangle in any individual case. But this excellent book discusses it in the aggregate.
https://www.amazon.com/American-Sickness-Healthcare-Became-Business/dp/1594206759
Thanks for the book recommendation. It's that byzantine tiered system that I'm trying to understand. Why is an uninsured person charged $50K for a service that a hospital is willing to provide to someone else for a $5K insurance reimbursement? I know, I know. It's not worth going crazy trying to understand something so deviously convoluted.
You'll drive yourself crazy trying to figure out why... I wouldn't bother (and I myself certainly don't understand all of the plumbing involved). In a way, sticker prices don't REALLY matter-- what matters is what we pay, and markets aren't going to effectively impose that discipline because, as Kenneth Arrow observed over 60 years ago, people lack the expertise to evaluate the quality of healthcare that they get (unlike, say, the quality of their couch, which they can evaluate by sitting on it at the furniture store and reading reviews to judge its reliability). So what we should focus on is designing the system such that incentives and payouts align with necessity and quality. Which is a really really easy thing to say and a really really hard thing to do.
You’re talking about allowable rates?
Sort of. I am talking about the difference between the allowable rate and the claimed amount that is supposedly swallowed by the provider and not passed on to the patient - e.g. a provider accepts a total of $1000 for one patient but gets $1000 plus a $800 copay for another for the exact same service. What does that service actually cost? I’m just curious.
No one knows. The provider probably doesn’t even know. For example, MRI cost doesn’t really stay the same - they should get cheaper over time. At some point the machine is fully depreciated and paid for, and every additional scan is just paying for labor costs and power, yet the scan never gets cheaper.
The only way to find this out, I think, would be to cut reimbursements and you’ll soon figure out which ones all the different care providers scream about.
There is almost certainly an exorbitantly expensive service contract going along with that MRI. I’m sure the technician isn’t free either.
MRI's in the rest of the world, using the same machines and same service contracts are much cheaper.
Right, when you start cutting reimbursement to the padded cash cows, you will start figuring out what was really subsidizing the underfunded care.
The creation of Medicare Advantage plans was a dismal and destructive addition to the holding of private health insurance companies.
So, what do you propose?
Joining the rest of the civilized world and enact universal healthcare.
They spend a third of what the US does for objectively better outcomes. TWO-THIRDS of what we spend on Healthcare is therefore the excessive overhead and private profit.
That's no way to run a country...
My question too !
MFA, clearly. He just doesn’t think we will do the right thing.
> So we really have a system in which taxpayers foot the bill for around 80 percent of health insurance. Yet much of that money flows through private insurance companies.
That’s how Bismarck universal health systems work too.
You also present a false dichotomy. The choice isn’t just between single payer and no universal healthcare, in fact single payer systems are failing everywhere, even in the Nordics. Bismarck style health systems present the best combination of aligned incentives, economic rationality, and universal coverage.
I've long admired the German healthcare coverage model (if that's what you're alluding to here), but understand for profit insurance plays a relatively minor role in Germany. The "sickness funds" that cover the vast bulk of the population are stringently regulated, non-profit enterprises. Their system also utilizes a fairly robust form of all payer rate setting—aka price controls.
I'd be happy to see the US migrate to such a system. But it would be a pretty radical departure from the US status quo.
The German model is one interpretation, yes, in reality there are many forms of the Bismarck model. The Netherlands, Switzerland, France, and Belgium all have their variation, with the public, private, and charity sectors all playing different roles in each. Perhaps the Dutch model might be preferable for the US to aim for as it allows firms to operate for profit, and has excellent results.
That's not a dichotomy. That's a single fact. And your comment is a non-sequitur. Have a nice day. =)
Have you read the post? Krugman only presents those two alternatives, and doesn’t even mention multi payer healthcare systems. How is it a non sequitur if we’re considering healthcare systems?
"single-payer systems are failing everywhere..." racism is succeeding? Trump and his watermelon jokes promise us a bright future? Medicine for profit is a perverse incentive. In American history, we decided to put some things beyond money. Good schooling for ALL children is pax Americana. "A fair shot" is almost an essential part of the American identity. If we say, the profit motive is a good idea when dealing with sick people, why is America so low among developed nations when it comes to health care outcomes and efficiency???
In 2010 Obama and Democrats in Congress were definitely single minded in what needed to be done: Lift U.S. economy out of a Great Recession and stimulate economy without triggering inflation.
Let’s never forget Obama and Democrats in Congress had to clean up after Republican-led financIal deregulation policies led to the Great Depression—akin to the Wall Street crash of 1929 and lasted 10 years. In 2010 Democrats had to deal Republicans in Congress constant and unanimous pushback from Republicans on every policy initiative proposed.
Let’s never forget that millions of people lost their homes to foreclosure (many illegal bank foreclosures). Let’s remember Steve Mnuchin. Before DJT appointed him Treasury Secretary, Mnuchin CEO of OneWest bank, dubbed 'foreclosure king’ of California. Let’s remember in 2010 the unemployment rate was 10%. Let’s remember 50 million people in USA had no health insurance in 2010. Let’s remember Ken Cuccinelli, the Republican conservative extremists who didn’t give AF about the uninsured people and immediately began wasting his time plus Virginia tax payers money with a lawsuit against Obama Administration over the Affordable Care Act. Let’s remember that now, December 2024, there are 10 Republican-controlled states still that choose to leave more than 1.5 million of their constituents uninsured by not adopting Medicaid expansion.😳
In essence, it’s not possible for a Democrat WH Administration and Democrats in Congress to focus on a single-minded issue, if I’m correctly understanding your interpretation. Historically, Republican Administrations f*ck up U.S. economy while Democrats are forced to it clean up in too many areas impacted while Republicans publicly clutch their pearls about Dems federal spending—determined to make Democrats in congress suffer and pay a political price for digging U.S. out of their created messes. Sadly, too many people who actually vote fall for this 'wash, rinse, repeat Republican ploy.
https://stateline.org/2024/07/19/in-the-10-states-that-didnt-expand-medicaid-1-6m-cant-afford-health-insurance/
Thank you for the Warpaint! They fuel my hopefulness. The billing-coding-payment shadow banking industry produces nothing for customers, only profits for investors. It is a massive jobs program that wastes our health and well-being as a nation. Retired nurse-midwife here--I know some things. Just not how to break them.
My preferred method of comparison between public vs private health insurance &/ healthcare is bang-for-the-buck, i.e. “how much healthcare do a person receive for evey dollar paid in premiums, health tax & co-payments?” Economics would call it rent seeking by the gatekeepers, i.e. extracting excess money without adding value.
Taking into account the profits of private health insurance & private healthcare providers, incl. inflated costs of specialists, private hospitals & medicine, as well as administrative costs, I would not be surprised if it is like 60c in healthcare for evey $1 in premiums. (10c-12c profit to health insurance providers, 10c-12c to private healthcare providers, 5c-10c in excess in medicines & 10c-15c for administrative costs by all involved)
An efficient public system could provide 90c-95c for every $1 in health tax. (The VA provides it as high as 97c for every $1, & the NHS in the UK is likely about 90c-93c for every $1 in taxes, but it is inefficient for most of its clients). But this depends on avoiding high costs for medicines, paying below market rates for its workers, underinvestment in capital, not maintaining its existing capital, etc. in reality, it will likely be more like 80c-85c in healthcare services for every $1 paid in health tax. In a public system with high levels of corruption/ rent seeking, excess investment in capital infrastructure, high wages, etc it may come down to 50c-60c for every $1 paid in tax. (E.g. many developing countries such as South Africa).