why the American health insurance can/would not change?


As a European I still can’t understand the American health insurance, as why is it like this? Who profits with this system? As far as I know a vast majority of the population has to pay exorbitant bills while not having the funds, so why it is still going and hasn’t changed to a more affordable one?

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The people owning the insurance companies are probably the most likely to profit from this. Might also be the people that own hospitals, pharmaceutical companies or any other companies that benefit from this system.

The insurance companies profit. They made around 35 billion in profit last year. So they have a vested interest in not allowing the system to change and spend a good amount of money lobbying to prevent changes.

>As a European I still can’t understand the American health insurance, as why is it like this?

Choice and taxes. The American government is based on being free. An important aspect is choice. We currently have the choice of health care insurance and providers. Our government is supposed to have minimal power. The federal government is just the glue that holds the nation together. They are not supposed to be forcing people to pay for anything.

Most of us prefer minimal taxes. We started a war with England largely over taxes.

>Who profits with this system?

The insurance companies and health care providers. Thats how capitalism works. But it’s not really about that. Who profits is a small part of the health insurance debate.

>As far as I know a vast majority of the population has to pay exorbitant bills while not having the funds, so why it is still going and hasn’t changed to a more affordable one?

This is incorrect. Approximately 8% of the population of the US does not have health insurance.

Requiring health insurance does not change the exorbitant costs for medical care in the US. We tried that with the Affordable Care Act. It required everyone to have health insurance or be taxed for government provided health care. The costs did not change. They probably will never change. Imagine your employer coming to you tomorrow and telling you that your salary is going to be cut by 50% because the government said so.

On the other hand, the US has some of the best healthcare in the world, many innovations come from the US. Other countries do well also, with public health care, but they are not the US.

> vast majority of the population has to pay exorbitant bills while not having the funds

That happens, but not nearly as often enough to be called “vast majority”. The literal majority of politically active people do not feel that they need to worry about cost of medical care. And there is a feeling that government healthcare will be worse than private one (not without reason), and fear that it will require substantial increase in taxes.

Decent insurance will take care of the most of cost, and decent jobs come with health insurance. People over 65 get free insurance from government (Medicare). There are ways to keep cost reasonable, by going to hospitals that are covered by your insurance, understanding how deductibles work, using tax-deductible medical savings account. Also taking care of things before they become an emergency, which gives you time to figure out best way to do it.

If you are very poor, you can get “free” care at emergency rooms. They will try to bill you for it, but if your credits score is already messed up, there is very little consequence for not paying. Collectors will come, but it will take years, and they cannot do much if you do not have anything.

So people who pay the high bills are low-income, or not very organized. That keeps them from putting pressure on politicians.

As for profits, they are split between all parts of healthcare system. Overpriced drugs make the news, but drugs are less than 20% of healthcare cost.

Biggest component is hospital fees, but hospitals have to maintain very high standards, and pay high salaries to doctors, and provide free emergency treatment to anybody who cannot pay for it.

Doctors are paid very well, but they also have huge student debt from spending like 10 years in school.

People who make and sell medical equipment and supplies make good money. In part because of patents, which are reward for innovation.

Private insurance does add it’s profit margin, around 3%.

Nurses are not paid very well, although they can get educated into almost-a-doctor (CRNP).

Proper solution would require government to regulate and subsidize all of these components of healthcare system, and fight lobbyists of everybody who loses their profits. This is way to complex for our congress.

There are several reasons why it can’t change.

Some of the reasons are greed: there’s money to be made as an insurer, and they want to continue to make that money. With that said, the amount of profit an insurer makes from offering insurance is actually pretty thin. In fact, my company loses money each year on core health insurance. An insurer is essentially a bank you can only withdraw from under certain conditions, so they make money like other banks. They invest, create financial products to sell, amongst other activities.

Another reason is that health insurance is deeply rooted in how America works. One example is something called pharmacy rebates. In short, a drug company offers a drug for $100 but has a rebate for $80 for the drug. This rebate gets paid to insurance companies. Insurance companies “share” a percentage of this rebate with the company they are servicing (Different insurance companies offer different rebate share percentages, depending on corporate strategies). These rebates are paid out quarterly or yearly in giant lump sums. These lump sums fuel a lot of pension plans for the employees of the business being insured. So, if we rip insurance out of America, this would cause a major problem for pensions.

Another reason, and this one WILL get hate for it, but insurance companies do offer something the government can’t. Right now we have Medicare (government provided plans) and Medicare advantage (government subsidized plans provided by private insurance companies). These are both meant for people over 65. I recently read a paper that stated Medicare Advantage offered better health outcomes for less cost, even when accounting for profit. Why is that? Because the market for insurance is brutally competitive, which drives prices downward.

Just switching to single payer won’t solve all the problems in americas healthcare system. People like to think of it like a total solution, but it’s not that simple. Insurance faces many problems, the largest of which is waste. Wasteful spending on healthcare accounts for like 4% of total US GDP. Now, do people really want to say the government is good minimizing wasteful spending? Another huge problem is inflation. The rule of thumb is medical inflation is twice that of regular inflation. This is a massive problem for insurance companies who have a profit motive to resolve, and nothing can get better until it is. The government would likely manage this issue worse because they have no competitive incentive to solve the issue as efficiently as private industry.

Final point, I know we like to compare our system to other systems in the world to make America look bad. There are valid points to be made in those arguments and the American system can definitely be better. However, very important details are overlooked when making these statements. First, americas population is multiple times larger than the systems we are compared to. America is 10 times larger than Canada, between 30 and 60 times larger than Nordic countries, 5 times bigger than the UK, 4 times larger than Germany. The scale of Americas system drastically changes how much it costs. Moreover, the health of the American population is generally much worse than these other countries, plus our population age is typically higher as well. All these variables drastically impact the cost of healthcare, and make just switching the American model to another country’s model a shortsighted endeavor. People don’t harp on NASA on how to build rockets, but people will harp on one of the single most complicated systems in the world like they have all the answers.

1) there are a lot of businesses dependent on the current structure, and they both profit and employ a lot of people, so there is both big money and personal pressures not to change things.

2) some things are legitimately faster for people with resources (good insurance or lots of money) compared to the systems that most Americans compare to (seems to be Canada and britain) which often involve fairly long waits for important but non urgent issues like joint replacements (deemed elective surgery as opposed to emergency surgery).

3) people perceive the level of care as higher. Now this is arguable depending on the system, but appears to certainly not be true on the societal level. But overinvestigation is pretty rampant and a lot of people struggle to tell the difference between this and their system being the best / most thorough.

4) a fair proportion of Americans do not realise how bad their healthcare system is. They dont understand that public private hybrid systems exist elsewhere eith far lower prices, or often even how problematic using their insurance is compared to getting care in other countries.

5) this is the most subjective one, but I think there’s a fair bit of “our system must be the best cos we’re American ” too. Some people can’t philosophically admit that their great country could do something this important this badly.

6) among people who understand all of the above, and know their system sucks and there are better ones, there is legitimate and I think very wise concern that radically overhauling healthcare is a huge and potentially really perilous undertaking, that should involve a lot of planning and care to avoid people’s care being messed up even worse through years of turbulent transitions. Its no good to have the best healthcare system in the world in 10 years time if you’ll be dead of cancer if the hospital you currently attend goes under.

Money. If you want the longer answer, keep reading.

Here’s a few numbers to get started. There are about 600,000 Medical Insurance employees in the US. Gross turnover in healthcare is about $4.5 trillion per year, or 20% of US GDP (UK 9%, Canada 11%). The US has about 40 MRI machines per million citizens, Australia has about 14 (using Aus for geographical / wide distance similarities, this will be explained later).

There is a tremendous amount of money involved. More than the national GDP of Germany. So much so that to move to a Universal system, it would impact the economy harder than 2008 and Covid combined. Think of it like housing. The governments in Europe also let housing go up because it makes it look like the GDP is growing. Taking the waste and corruption out of US healthcare would lower US GDP significantly, put a lot of people out of work, and have many knock on effects to tertiary industries.

When healthcare is a business, patients are customers and hospitals are companies. If your clinic or hospital doesn’t have a an MRI machine, your customers will look elsewhere. So what to do? Buy an MRI machine. In Germany if you go to a hospital that doesn’t have an MRI machine, they simply direct you to another local hospital that has one because they are not competing businesses. So you need less as MRIs are not commonly required. But in a private system, if you want that customer’s money, you need to have one, and then you need to justify the expense by giving everyone an MRI.

The incentives are not as good as Universal Healthcare. If a doctor leaves a sponge in you, what happens? Well, you’ll need to rent the bed for another few nights, incur the cost of another surgery, anesthesia, etc. This isn’t such a bad thing for the private company that is preforming the procedure. Insurance has to pay it regardless of fault. Doctors commonly make up fake surgeries and bill the insurers and there is no set price list to be checked against, no market standard, so inflation rises quickly in the US.

The US government likes this. CIGNA, AETNA, etc., make huge donations to politicians from both parties and neither party wants that to change. Obama helped the Insurance and Medical companies greatly while he was in power. When Presidents leave office, they typically go on speaking tours and collect money from the industries they helped. Obama went straight to medical conferences and was paid $400,000 for just one speech to the medical community, and much more from numerous other engagements. This is because the “Affordable Care Act” was designed to drive more money into the private system and it worked very well. Insurers and clinics got tens of millions of new clients, and profits have skyrocketed since the ACA came into effect.

Prior to Obama, Bush signed into law that Medicaid and Medicare (the US equivelent to Universal coverage for emergencies and those over 65) was barred from negotiating the price of medicines with pharma companies. No collective bargaining. This helped increase the government expenditure on heathcare up to about $13,000 per person today ($6,500 in Canada, $5,000 in the UK for reference). Profits went up, pharma companies started charging $100,000 for cancer drug regimens, and of course insurance premiums rose with inflation. Gues where Bush got a lot of his speech money from after his Presidency?

The government spends about $13,000 per person to cover only some emergencies for uninsured people / people who can’t pay, verterans and those over 65. Meanwhile Canada pays $6,500 and covers everyone for everything. Try to imagine the corruption level and waste. Then on top, companies and / or individuals pay an average of $6,000 (ind) to $12,000 (fam) per year to insurance to access hospitals through insurance (often with significant out of pocket from deductibles even on top of that). Cleaning this up would drop economic output by trillions.

So. It won’t ever change, because A) it drives the economy / jobs, and B) it’s a campaign war chest for politicans on both sides. In short – Money.

Insurance companies make a lot of money to lobby Congress.

A lot of jobs are because of health insurance. Most medical billers exist because health insurance is so complex and their job is to extract as much money as possible from insurance.

Companies also benefit. Big companies like Amazon can basically offer healthcare as a cheap benefit that is expensive as an open market.

Amazon insurance per person cost like $300 a month and Amazon pays $200 of it but If an individual tried to buy this insurance plan it would cost way more per month. You can’t as an individual buy the Amazon insurance plan for $300.

This means large companies rather pay the health insurance benefit because they are basically selling a $500+ benefit for $200.

Another step in the puzzle is we have roughly 1/2 the population in the country actively against state run healthcare because they hate poor people. This “lift yourselves by your own boot straps” crowd actively kills any healthcare improvements and included the VA which is the military health care system for soldiers who go back to civilian life

They cut funding to the VA and the VA sucks. Because the VA sucks that same political party that hates universal healthcare points to the VA they cut funding for and claims it’s shit don’t change it.

So we basically have a bunch of rich people and politicians who want to keep things the same even though objectively both sides know universal healthcare would be cheaper.

It’s a money making machine. Also keeps the have nots from getting the health care they need and deserve.