United Healthcare's CEO murdered this morning

[sloop]

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This man is essentially a CPA who worked his way up to be a very gloried CFO. People have to know he has no role in individual case determinations and really no role in setting specific medical or mental health coverage policy, limits, or direction. There are layers and layers and layers of MD leadership, individual Medical Directors, and population health researchers and statisticians behind all this. Regarding UBH's Behavioral Health UM practices, some of their policies and decisions are pretty apt and reasonable for the monitoring of outpatient utilization (most psychiatry and mental tx is OP). Not the best. Not the worst. But again, not that this should matter. This is a man. A husband and a father.

I don’t think the guy deserved to die, but this apology for his role is unwarranted, in my opinion.

It is deeply immoral and should not be allowable that people profit from denying a basic need to others. Insurance apologists might argue that they are merely denying payment, not care, but the effect is the same (and perversely, this is more directly true the more vulnerable the insured). Participation in such a scheme is immoral, and nobody is more responsible than the person who oversees the entire enterprise.

The simple reality is that the moral responsibility cascades uphill. To make an analogy (and let me be clear that I am not inviting a debate about this issue, just using it demonstratively), if one believes that execution is wrong, it is entirely reasonable to blame a governor for signing the death warrants even if they don’t personally strap them to the gurney and push the drugs.

None of this justifies murder, but it is not inappropriate to hold him responsible for the suffering caused by his organization.

 

[lobstar]

I don’t think the guy deserved to die, but this apology for his role is unwarranted, in my opinion.

It is deeply immoral and should not be allowable that people profit from denying a basic need to others. Insurance apologists might argue that they are merely denying payment, not care, but the effect is the same (and perversely, this is more directly true the more vulnerable the insured). Participation in such a scheme is immoral, and nobody is more responsible than the person who oversees the entire enterprise.

The simple reality is that the moral responsibility cascades uphill. To make an analogy (and let me be clear that I am not inviting a debate about this issue, just using it demonstratively), if one believes that execution is wrong, it is entirely reasonable to blame a governor for sitting the death warrants even if they don’t personally strap them to the gurney and push the drugs.

None of this justifies murder, but it is not inappropriate to hold him responsible for the suffering caused by his organization.

I think this analogy is spot on. Heavy lies the crown, with great power comes great responsibility. Isn't there military law related to war crimes and the lower ranks being less culpable as they were just following orders? (assuming they were in fact just following orders) I see the CEO who is setting policy and getting the financial benefit as the main person responsible for denied coverage. I could see an argument that the board of directors should be more responsible than the CEOs even. You can't have max financial benefits without any skin in the game. We have ours with malpractice, and potential personal guilt, hanging over us.

Although to be fair to the insurance companies, they could argue they are merely selling an insurance product and are supposedly up front with employers about what the coverage is. Perhaps the companies/employers buying these insurance products for their employees should eat some liability too,

Edit: Went and found it--Superior orders, also known as just following orders (or the Nuremberg defense), is a plea in a court of law that a person, whether civilian, military or police, should not be considered guilty of committing crimes ordered by a superior officer or official. It is regarded as a complement to command responsibility.

 

[clausewitz2]

Insurance companies in this country largely gave up being serious about cost control decades ago and have settled into the business of figuring out ways to pass costs more effectively to their customers in many important respects. They are not why prices are high.

The single payer systems we are talking about are definitely cheaper. They control costs in a number of ways, but a significant one is putting downward pressure on healthcare salaries. The median Canadian psychiatrist salary according to the best data I can find is somewhere in the ballpark of 230k USD. The average UK psychiatrist salary is closer to 150k USD.

It's fine to say that this is a tradeoff you're prepared to make or is a desirable one we should all make. But any meaningful efforts at cost control absolutely 100% will involve you personally taking a non-trivial haircut as a psychiatrist. Best to be clear-eyed about that.

 

[Sushirolls]

A 'hair-cut' doing a garden variety Big Box job; nope not worth it. 230K for a full time Psychiatry job seeing clinical hours 34 per week, and especially 150k? Absolutely not. Let the ARNPs inherit the med sphere. Heck, they'd probably go back to floor RN jobs, too.

I'll retrain myself to be a tree service for the suburbs. Fall some trees. Play with chainsaws. Secondary products from the waste I haul off. Wood chips. Saw dust in pelletizer. Logs in sawmill.

 

[LeaveNoTrace]

A 'hair-cut' doing a garden variety Big Box job; nope not worth it. 230K for a full time Psychiatry job seeing clinical hours 34 per week, and especially 150k? Absolutely not. Let the ARNPs inherit the med sphere. Heck, they'd probably go back to floor RN jobs, too.

I'll retrain myself to be a tree service for the suburbs. Fall some trees. Play with chainsaws. Secondary products from the waste I haul off. Wood chips. Saw dust in pelletizer. Logs in sawmill.

Good luck with that. From doctor to...tree doctor! There is a patient log joke in here somewhere, too!

 

[clausewitz2]

A 'hair-cut' doing a garden variety Big Box job; nope not worth it. 230K for a full time Psychiatry job seeing clinical hours 34 per week, and especially 150k? Absolutely not. Let the ARNPs inherit the med sphere. Heck, they'd probably go back to floor RN jobs, too.

I'll retrain myself to be a tree service for the suburbs. Fall some trees. Play with chainsaws. Secondary products from the waste I haul off. Wood chips. Saw dust in pelletizer. Logs in sawmill.

So you would retrain to make $30 an hour instead? Huh.

 

[smalltownpsych]

It is interesting how when the insurance middle men are cut out, then the doctors get less money. I doubt that there would really be much improvement in outcomes either. The only thing worse than the insurance corporations leeching off the system and restricting care would be the inevitably inefficient government run system that would replace it and lead to lower quality and even more restricted care under the guise of shortages and waits and making rules to restrict without accountability. At least the insurance companies have some accountability to the government and the market. Bureaucrats? Ugh.
That being said, I agree with the sentiment that United Healthcare is an evil enterprise, but that’s because they are protected by the government and have a huge say in determining the legislation that regulates the industry.

 

[Sushirolls]

So you would retrain to make $30 an hour instead? Huh.

Absolutely.

Trading a crappy job with more stress, less autonomy, i.e. coal mine, for being own boss, owner of small business, happy customers every day, simplicity of reward seeing pre-work / post-work satisfaction, easy choice. And the income would be more than $30/hr as suburb tree cutters charge premium for tree removal to insure it falls in safe manner that doesn't harm house, fence, etc. If people leave problem trees on their lawn, they risk damage to structures/vehicles, and even liability depending upon the Tree Laws in their state.

Already I'm working on trying to leave medicine by building up a first generation farm. Unfortunately the capital it takes to do so is massive. My future income then is very likely to be less than ~$20/hr.

 

[Stagg737]

So you would retrain to make $30 an hour instead? Huh.

They can make way more than $30/hr. Average tree removal costs around $800-$1k, large trees may cost $5k+ to remove. If the business owner isn’t getting around $100/hr they’re below average. It’s not physician pay, but a busy company can do pretty darn good.

 

[sloop]

Insurance companies in this country largely gave up being serious about cost control decades ago and have settled into the business of figuring out ways to pass costs more effectively to their customers in many important respects. They are not why prices are high.

The single payer systems we are talking about are definitely cheaper. They control costs in a number of ways, but a significant one is putting downward pressure on healthcare salaries. The median Canadian psychiatrist salary according to the best data I can find is somewhere in the ballpark of 230k USD. The average UK psychiatrist salary is closer to 150k USD.

It's fine to say that this is a tradeoff you're prepared to make or is a desirable one we should all make. But any meaningful efforts at cost control absolutely 100% will involve you personally taking a non-trivial haircut as a psychiatrist. Best to be clear-eyed about that.

I think there are implementation strategies that bulwark against these pressures to various extents, and the massive disparity between the extent of wage depression in your examples of Canada vs the UK is implicit evidence of this. This issue also gets into various ancillary arguments that are beyond the scope of the current debate, such as issues involving the cost of medical education in the U.S. At the end of the day, though, I would say that moral concerns should prevail over preservation of lifestyle.

 

[clausewitz2]

I think there are implementation strategies that bulwark against these pressures to various extents, and the massive disparity between the extent of wage depression in your examples of Canada vs the UK is implicit evidence of this. This issue also gets into various ancillary arguments that are beyond the scope of the current debate, such as issues involving the cost of medical education in the U.S. At the end of the day, though, I would say that moral concerns should prevail over preservation of lifestyle.

Sure, not an unreasonable opinion at all, but I wanted to push back against the vibe of 'oh, those mean old insurers are the problem, just get rid of them and everything will be fine.'

 

[R. Matey]

They can make way more than $30/hr. Average tree removal costs around $800-$1k, large trees may cost $5k+ to remove. If the business owner isn’t getting around $100/hr they’re below average. It’s not physician pay, but a busy company can do pretty darn good.

The money is really only there if you own the company and have other people do the work for you. At the individual level, it's lower middle class pay and the physical demands should not be understated.

 

[Merovinge]

Insurance companies in this country largely gave up being serious about cost control decades ago and have settled into the business of figuring out ways to pass costs more effectively to their customers in many important respects. They are not why prices are high.

The single payer systems we are talking about are definitely cheaper. They control costs in a number of ways, but a significant one is putting downward pressure on healthcare salaries. The median Canadian psychiatrist salary according to the best data I can find is somewhere in the ballpark of 230k USD. The average UK psychiatrist salary is closer to 150k USD.

It's fine to say that this is a tradeoff you're prepared to make or is a desirable one we should all make. But any meaningful efforts at cost control absolutely 100% will involve you personally taking a non-trivial haircut as a psychiatrist. Best to be clear-eyed about that.

That's not a fair comparison at all. Canada has a GDP per capita of $53k, UK $49k, US is $81k. UK physician salary from the UHS is not the entire salary, many to most of the doctors also work in private hospitals to supplement that salary (to be clear, they still certainly make less than the US on average). Take a look at average tech salaries in Canada, the UK, and then the US; then do finance next. You will find just as large (if not larger) spread between Europe/Canada as physician salaries.

These types of arguments are made all the time to rally physicians against single payer systems. This is a talking point straight out of the Fox News playbook. There might be slight downward pressure with single payer but almost assuredly with less total clinical volume to compensate.

 

[clausewitz2]

That's not a fair comparison at all. Canada has a GDP per capita of $53k, UK $49k, US is $81k. UK physician salary from the UHS is not the entire salary, many to most of the doctors also work in private hospitals to supplement that salary (to be clear, they still certainly make less than the US on average). Take a look at average tech salaries in Canada, the UK, and then the US; then do finance next. You will find just as large (if not larger) spread between Europe/Canada as physician salaries.

These types of arguments are made all the time to rally physicians against single payer systems. This is a talking point straight out of the Fox News playbook. There might be slight downward pressure with single payer but almost assuredly with less total clinical volume to compensate.

Look, the healthcare industry in general has a number of drivers of costs. Personnel salaries are one of those major drivers of costs. Spending less in the system probably means they will need to go down. Please don't accuse me of being a Fox News shill because I am pointing out a basic truth.

It's fine to say the decrease in salaries and other cost-cutting measures are worth it. Totally respectable position. I'm just saying there are not big pots of free money in the system you can slash without any impact on how things function.

Let's do some back of the napkin math: The profit margin of health insurance companies is around 6% annually (including United), roughly the same margin as hospitals generally. Just as a comparison, the UK spends about 11% of GDP on its healthcare system and in the US we spend closer to 17% annually on healthcare. So we spend about 1.5 times as much as a proportion of our GDP. Cutting out that 6% margin, even assuming insurance companies are responsible for all US healthcare spending (they're not) is not going to get us there.

We get paid well because a huge amount of money is sloshing around in the system. It is probably better for society if there is less money sloshing around because it is clearly possible to deliver decent healthcare while monopolizing far fewer of society's resources. But our piece of the pie also shrinks if the pie shrinks. It's as simple as that. There are no free lunches.

 

[sloh]

Look, the healthcare industry in general has a number of drivers of costs. Personnel salaries are one of those major drivers of costs. Spending less in the system probably means they will need to go down. Please don't accuse me of being a Fox News shill because I am pointing out a basic truth.

It's fine to say the decrease in salaries and other cost-cutting measures are worth it. Totally respectable position. I'm just saying there are not big pots of free money in the system you can slash without any impact on how things function.

Let's do some back of the napkin math: The profit margin of health insurance companies is around 6% annually (including United), roughly the same margin as hospitals generally. Just as a comparison, the UK spends about 11% of GDP on its healthcare system and in the US we spend closer to 17% annually on healthcare. So we spend about 1.5 times as much as a proportion of our GDP. Cutting out that 6% margin, even assuming insurance companies are responsible for all US healthcare spending (they're not) is not going to get us there.

We get paid well because a huge amount of money is sloshing around in the system. It is probably better for society if there is less money sloshing around because it is clearly possible to deliver decent healthcare while monopolizing far fewer of society's resources. But our piece of the pie also shrinks if the pie shrinks. It's as simple as that. There are no free lunches.

Our incomes only make up like 8% of healthcare expenses. You don’t think there’s other unnecessary bloat in the system before slashing our incomes?

 

[clausewitz2]

Our incomes only make up like 8% of healthcare expenses. You don’t think there’s other unnecessary bloat in the system before slashing our incomes?

I think actually decreasing expenses across the board will involve fairly broad changes and reductions, so 8% is not a trivial fraction. Estimates I see actually has nurse and physician expenses alone at about 15% of US healthcare expenditures so yeah, a significant percentage.

 

[Merovinge]

Look, the healthcare industry in general has a number of drivers of costs. Personnel salaries are one of those major drivers of costs. Spending less in the system probably means they will need to go down. Please don't accuse me of being a Fox News shill because I am pointing out a basic truth.

It's fine to say the decrease in salaries and other cost-cutting measures are worth it. Totally respectable position. I'm just saying there are not big pots of free money in the system you can slash without any impact on how things function.

Let's do some back of the napkin math: The profit margin of health insurance companies is around 6% annually (including United), roughly the same margin as hospitals generally. Just as a comparison, the UK spends about 11% of GDP on its healthcare system and in the US we spend closer to 17% annually on healthcare. So we spend about 1.5 times as much as a proportion of our GDP. Cutting out that 6% margin, even assuming insurance companies are responsible for all US healthcare spending (they're not) is not going to get us there.

We get paid well because a huge amount of money is sloshing around in the system. It is probably better for society if there is less money sloshing around because it is clearly possible to deliver decent healthcare while monopolizing far fewer of society's resources. But our piece of the pie also shrinks if the pie shrinks. It's as simple as that. There are no free lunches.

I'm saying directly comparing salaries in the US to Canada and the UK, countries that have 2/3 our GDP per capita and that pay the top 5% of their workforce dramatically less than the US as a 1:1 apples to apples comparison is disingenuous. There can be less money in the system without significant impacts on physician salaries if there are efficacy gains. Starching out the insurance system entirely would get us close to the 6% drop from the latest data of how much the insurance industry is eating up from the healthcare pie, but certainly we would need to get lower drug/implant prices as well to really make that shift. I also don't think anyone is expecting us to cleave through 1/3 of healthcare spending, you would see a lot of positive come from much smaller changes than that.

 

[Stagg737]

That's not a fair comparison at all. Canada has a GDP per capita of $53k, UK $49k, US is $81k. UK physician salary from the UHS is not the entire salary, many to most of the doctors also work in private hospitals to supplement that salary (to be clear, they still certainly make less than the US on average). Take a look at average tech salaries in Canada, the UK, and then the US; then do finance next. You will find just as large (if not larger) spread between Europe/Canada as physician salaries.

These types of arguments are made all the time to rally physicians against single payer systems. This is a talking point straight out of the Fox News playbook. There might be slight downward pressure with single payer but almost assuredly with less total clinical volume to compensate.

What makes you believe there would be less clinical volume? If there is more people insured/covered you're going to see either clinical volume increase or wait times increase due to more patients seeking care. If there are truly so many people not receiving the care they need, I don't see how clinical volume could go down without causing significant worsening of wait times or availability.

Our incomes only make up like 8% of healthcare expenses. You don’t think there’s other unnecessary bloat in the system before slashing our incomes?

Do you think admins are going to slash their own salaries or cut their jobs? I don't see that happening. The other major expenditure above clinical salaries is ordering of excessive testing and treatment. Do you think that's what patients want? Because everyone I've worked with/talked to wants more tests and to figure out what's going on (also GLP-1s) unless they don't want medical care at all. Physicians are the easy place for admins to slash salaries. Forget all the years of training, debt, and liability we hold, we're the people in charge of treatment that everyone can point at that are uniformly in the top 5% of earners in the country and are the bad guys. It's nice that the view of that has shifted towards insurance companies for now, but get rid of them and we're the selfish bad guys getting more than we deserve again.

 

[clausewitz2]

I'm saying directly comparing salaries in the US to Canada and the UK, countries that have 2/3 our GDP per capita and that pay the top 5% of their workforce dramatically less than the US as a 1:1 apples to apples comparison is disingenuous.

I don't think the fact that our healthcare system is as expensive as it is is strictly exogenous to the differences in our macroeconomies. You're right they're not isomorphic comparisons but it is not at all disingenuous. Every single rich world healthcare system that gets the kind of good outcomes for less money we presumably want all feature physicians being paid less than they are here on average.

There can be less money in the system without significant impacts on physician salaries if there are efficacy gains. Starching out the insurance system entirely would get us close to the 6% drop from the latest data of how much the insurance industry is eating up from the healthcare pie, but certainly we would need to get lower drug/implant prices as well to really make that shift. I also don't think anyone is expecting us to cleave through 1/3 of healthcare spending, you would see a lot of positive come from much smaller changes than that.

I am sure there are inefficiencies that can be reduced; there always are in a large system. In general though when we are talking about making substantial reductions in huge systems, those systems end up doing less or making use of fewer resources overall. "Waste, fraud and abuse" is a great political slogan but it's really not the main driver of costs.

The median wait time to see a medical specialist in Canada from the date of referral by a GP is about 30 weeks. This is less capacity than the US system currently produces. You can and many people have argued that we have excessive capacity when it comes to a lot of medical specialties and that may be true. But cutting that capacity impacts incomes and further it does genuinely reduce the availability of actual treatments, even if they are marginal and probably not particularly cost-effective.

Other rich country healthcare systems manage to keep wait times much more reasonable but trade-offs are real. I don't think it does anyone any favors to pretend there aren't downsides to a different system. It's just a question of which downsides you prefer.

EDIT: It is interesting that the country that matches the US most closely in terms of physician salaries is also the country with the healthcare system perhaps most notorious for long wait times for certain kinds of care. If the specialists are expensive, you keep costs under control by ruthlessly limiting access to specialists. Many other rich country healthcare systems with good outcomes have much better wait times. They also have much less expensive specialists if you look at salary data. Whereas the American system punts on limiting access to specialists or aggressive reimbursement controls and just turns on the money hose.

 

[Merovinge]

I don't think the fact that our healthcare system is as expensive as it is is strictly exogenous to the differences in our macroeconomies. You're right they're not isomorphic comparisons but it is not at all disingenuous. Every single rich world healthcare system that gets the kind of good outcomes for less money we presumably want all feature physicians being paid less than they are here on average.



I am sure there are inefficiencies that can be reduced; there always are in a large system. In general though when we are talking about making substantial reductions in huge systems, those systems end up doing less or making use of fewer resources overall. "Waste, fraud and abuse" is a great political slogan but it's really not the main driver of costs.

The median wait time to see a medical specialist in Canada from the date of referral by a GP is about 30 weeks. This is less capacity than the US system currently produces. You can and many people have argued that we have excessive capacity when it comes to a lot of medical specialties and that may be true. But cutting that capacity impacts incomes and further it does genuinely reduce the availability of actual treatments, even if they are marginal and probably not particularly cost-effective.

Other rich country healthcare systems manage to keep wait times much more reasonable but trade-offs are real. I don't think it does anyone any favors to pretend there aren't downsides to a different system. It's just a question of which downsides you prefer.

EDIT: It is interesting that the country that matches the US most closely in terms of physician salaries is also the country with the healthcare system perhaps most notorious for long wait times for certain kinds of care. If the specialists are expensive, you keep costs under control by ruthlessly limiting access to specialists. Many other rich country healthcare systems with good outcomes have much better wait times. They also have much less expensive specialists if you look at salary data. Whereas the American system punts on limiting access to specialists or aggressive reimbursement controls and just turns on the money hose.

That is true, but they also pay every single highly qualified professional/white collar job less more generally. You continue to make zero reference to the dramatic difference in tech/finance/c-suite salaries between countries. The US has decided to have a very top heavy winner takes most approach to society and this clearly impacts healthcare salaries for physicians. We are more a part of the US economy than we are a part of an international healthcare system (when it comes to financial compensation) and you are referencing all the comparisons to the later without referencing our place in the former.


@Stagg737 I reference workloads going down because of my (intimate) knowledge of the UK healthcare system and (passing) knowledge of the Canadian healthcare system. I am not sure for psychiatrists specifically, but their specialists see less patients in clinic than my friends do in the same fields in the US (likely because they do not have the same financial motivation to do so). Essentially it seems like their expected patient encounters is less because the government has decided that is a safer pacing to see patients. In the US we just cram them in, because that's how all the financial incentives push behaviors.

 

[docloufan]

They can make way more than $30/hr. Average tree removal costs around $800-$1k, large trees may cost $5k+ to remove. If the business owner isn’t getting around $100/hr they’re below average. It’s not physician pay, but a busy company can do pretty darn good.

Person you are talking to does NOT want to be a physician. They want to be a "fantasy" land man. Probable "bomb shelter" stuff. Borderline nuts. Ridiculous.

 

[clausewitz2]

That is true, but they also pay every single highly qualified professional/white collar job less more generally. You continue to make zero reference to the dramatic difference in tech/finance/c-suite salaries between countries. The US has decided to have a very top heavy winner takes most approach to society and this clearly impacts healthcare salaries for physicians. We are more a part of the US economy than we are a part of an international healthcare system (when it comes to financial compensation) and you are referencing all the comparisons to the later without referencing our place in the former.

Mkay. What relevance does what a financier makes have to what a physician makes? There is some pool of people in medicine who could have opted for a lucrative financial career in NYC etc but this does not actually describe the bulk of physicians. I'm suspicious of explanations for systemic differences that boil down to "we're greedier."

I would also gently say again that paying highly qualified professionals less more generally is very consistent with having lower costs as a system overall. This is kind of my point.

@Stagg737 I reference workloads going down because of my (intimate) knowledge of the UK healthcare system and (passing) knowledge of the Canadian healthcare system. I am not sure for psychiatrists specifically, but their specialists see less patients in clinic than my friends do in the same fields in the US (likely because they do not have the same financial motivation to do so). Essentially it seems like their expected patient encounters is less because the government has decided that is a safer pacing to see patients. In the US we just cram them in, because that's how all the financial incentives push behaviors.

The UK system is not fee for service in general, of course they're not going to see as many patients per day. There is just no financial incentive to cram the schedule as full of visits as possible.

 

[Stagg737]

I am not sure for psychiatrists specifically, but their specialists see less patients in clinic than my friends do in the same fields in the US (likely because they do not have the same financial motivation to do so). Essentially it seems like their expected patient encounters is less because the government has decided that is a safer pacing to see patients. In the US we just cram them in, because that's how all the financial incentives push behaviors.

Why do they not have financial motivation? Because they're straight salaried? If so, then are they setting the length of appointment times or does the gov? If the latter, you really think the gov isn't going to push for minimal appointment times if that happened here? Physicians aren't unionized here like in the UK, so seems like a lose-lose for physicians (and partially for patients as well).

Let's say there are longer appointment times, that plus more patients leads to longer wait times. We can discuss whether that's better or worse than what we've got, but it's a different kind of coverage =/= care argument. Can't really call it care/treatment if the patient never gets seen...

We can talk in circles about all the pluses and minuses of different systems, of which there are plenty of each for any system, and there are going to be significant trade-offs from model to model. Like Clause said, the reality is that it's more of a matter of picking your poison than making a perfect system.

 

[HemeOncHopeful19]

Why do they not have financial motivation? Because they're straight salaried? If so, then are they setting the length of appointment times or does the gov? If the latter, you really think the gov isn't going to push for minimal appointment times if that happened here? Physicians aren't unionized here like in the UK, so seems like a lose-lose for physicians (and partially for patients as well).

Let's say there are longer appointment times, that plus more patients leads to longer wait times. We can discuss whether that's better or worse than what we've got, but it's a different kind of coverage =/= care argument. Can't really call it care/treatment if the patient never gets seen...

We can talk in circles about all the pluses and minuses of different systems, of which there are plenty of each for any system, and there are going to be significant trade-offs from model to model. Like Clause said, the reality is that it's more of a matter of picking your poison than making a perfect system.

I for one will never trust a system developed by a culture that eats freaking baked beans for breakfast.

 

[calvnandhobbs68]

There are tons of different reasons why medical costs are higher in the US vs other countries. Far too many to put here. People make whole masters degrees out of this. But there are a lot of misaligned incentives in the whole system. The statement about insurers not being serious about controlling costs is somewhat true. A great example of this is MLR requirements. I'm actually net positive overall on the ACA but the medical loss ratio part of it was a great example of policymakers not understanding incentives and now we're seeing this run.

MLR is the concept that insurance companies have to spend 80-85% of premiums on medical care and requires them to issue rebates if they don't meet this threshold. What policymakers seemed to miss here (or who knows who lobbied for what in that bill) is that 15% of 100 million dollars is smaller than 15% of 200 million dollars.

So seems like a great idea until you realize down the line here that it actually incentivizes insurance companies to increase premiums and then try to spend time figuring out how to predict their overall reimbursements so they land right as close to that 15-20% as possible. Which can actually then increase payouts for medical care or at least disincentive them to put downward pressure on estimated medical costs too much if they can.

So yeah we end up in this frankenstein system of various perverse incentives, where insurers are trying to decrease expenses but only to the extent that they need to, so not really too much . Compounded by the fact that an insurer like United is actually a part of a larger company that tries to do the old Andrew Carnegie vertical integration and you find out they own a lot more stuff than you thought including everything from the clinic you work at, to the software that processes your claims, to the PBM that pays for the drugs, to possibly the pharmacy that dispenses those drugs, to the home health service your patient uses.

 

[Merovinge]

There are tons of different reasons why medical costs are higher in the US vs other countries. Far too many to put here. People make whole masters degrees out of this. But there are a lot of misaligned incentives in the whole system. The statement about insurers not being serious about controlling costs is somewhat true. A great example of this is MLR requirements. I'm actually net positive overall on the ACA but the medical loss ratio part of it was a great example of policymakers not understanding incentives and now we're seeing this run.

MLR is the concept that insurance companies have to spend 80-85% of premiums on medical care and requires them to issue rebates if they don't meet this threshold. What policymakers seemed to miss here (or who knows who lobbied for what in that bill) is that 15% of 100 million dollars is smaller than 15% of 200 million dollars.

So seems like a great idea until you realize down the line here that it actually incentivizes insurance companies to increase premiums and then try to spend time figuring out how to predict their overall reimbursements so they land right as close to that 15-20% as possible. Which can actually then increase payouts for medical care or at least disincentive them to put downward pressure on estimated medical costs too much if they can.

So yeah we end up in this frankenstein system of various perverse incentives, where insurers are trying to decrease expenses but only to the extent that they need to, so not really too much . Compounded by the fact that an insurer like United is actually a part of a larger company that tries to do the old Andrew Carnegie vertical integration and you find out they own a lot more stuff than you thought including everything from the clinic you work at, to the software that processes your claims, to the PBM that pays for the drugs, to possibly the pharmacy that dispenses those drugs, to the home health service your patient uses.

Yes they get to profit the 15% but keep in mind how much employment is wasted bureaucracy. The most recent figures on the insurance industry show that for every $1 going in, 45 cents is kept within the insurance company and 55 cents goes out to pay claims. They are incinerating almost 50% of the money spent on insurance.

@clausewitz2 Of course how much other high income professionals makes influences physician salaries. We are employed in the US economy and beholden to the market set by... the US economy. Physician salaries in the US have been largely unchanged against inflation for some time (certainly with wide variance bars based on specialty), this is in marked contrast to the price of insurance, medications, and implants/devices which have risen dramatically faster than inflation. Our salaries are both overall small (<10% of the expenses) and not the low hanging fruit. If you look at the pay Kaiser sends to it's physicians, you can certainly be under a heavily managed care model without low MD salaries.

 

[clausewitz2]

Yes they get to profit the 15% but keep in mind how much employment is wasted bureaucracy. The most recent figures on the insurance industry show that for every $1 going in, 45 cents is kept within the insurance company and 55 cents goes out to pay claims. They are incinerating almost 50% of the money spent on insurance.

The MLR provisions of ACA discussed above actually means that by law 80% of their revenues have to be spent on claims. They are not permitted to devote more than 20% of their collected premiums to admin, profit, etc. healthcare can be much cheaper than it currently is in this country, but it is really not because someone is setting vast sums on fire for no reason somewhere in the system. This is a fantasy.

If you have information to the contrary about a particular insurance company's revenues, please contact your state insurance commissioner or HHS immediately, they would be very interested to hear about this.

@clausewitz2 Of course how much other high income professionals makes influences physician salaries. We are employed in the US economy and beholden to the market set by... the US economy. Physician salaries in the US have been largely unchanged against inflation for some time (certainly with wide variance bars based on specialty), this is in marked contrast to the price of insurance, medications, and implants/devices which have risen dramatically faster than inflation. Our salaries are both overall small (<10% of the expenses) and not the low hanging fruit. If you look at the pay Kaiser sends to it's physicians, you can certainly be under a heavily managed care model without low MD salaries.

Kaiser is limited in how sharply it can curb salaries because there exist non-Kaiser employers who can bid up those salaries.

The salaries of other professionals matter only insofar as there is overlap between the potential labor force for the professional in question. Assuming arguendo that it is not possible for the modal physician to simply opt to work in high finance instead, please explain the mechanism by which investment bankers making large amounts of money determines what someone is willing to pay a dermatologist.


The US economy is an abstraction. It is not a thing that makes decisions or has goals. I don't disagree with you that there are plenty of other cost centers in our system but is frankly silly to pretend that at the end of the day we will suffer no negative impacts whatsoever from a major systemic reform designed to reduce costs.

 

[calvnandhobbs68]

Yes they get to profit the 15% but keep in mind how much employment is wasted bureaucracy. The most recent figures on the insurance industry show that for every $1 going in, 45 cents is kept within the insurance company and 55 cents goes out to pay claims. They are incinerating almost 50% of the money spent on insurance.

Right as mentioned above the 15-20% is the amount they get to keep overall...80% has to be payed out in claims or they have to issue the difference as rebates back to the insured.

The reason it's a perverse incentive is because it seemed like a great idea on the surface right? make the insurance companies pay out the majority of their revenue in claims and cap the amount they can keep for themselves....without realizing that unless you cap the absolute dollar amount, the actual incentive is to raise premiums as much as possible over time so your 15-20% slice keeps getting bigger in absolute terms but that 80-85% payout keeps getting bigger as well. So just ending up with more money bouncing around in the system and does nothing to control costs.

 

[Merovinge]

The MLR provisions of ACA discussed above actually means that by law 80% of their revenues have to be spent on claims. They are not permitted to devote more than 20% of their collected premiums to admin, profit, etc. healthcare can be much cheaper than it currently is in this country, but it is really not because someone is setting vast sums on fire for no reason somewhere in the system. This is a fantasy.

If you have information to the contrary about a particular insurance company's revenues, please contact your state insurance commissioner or HHS immediately, they would be very interested to hear about this.



Kaiser is limited in how sharply it can curb salaries because there exist non-Kaiser employers who can bid up those salaries.

The salaries of other professionals matter only insofar as there is overlap between the potential labor force for the professional in question. Assuming arguendo that it is not possible for the modal physician to simply opt to work in high finance instead, please explain the mechanism by which investment bankers making large amounts of money determines what someone is willing to pay a dermatologist.


The US economy is an abstraction. It is not a thing that makes decisions or has goals. I don't disagree with you that there are plenty of other cost centers in our system but is frankly silly to pretend that at the end of the day we will suffer no negative impacts whatsoever from a major systemic reform designed to reduce costs.

I appreciate the discussion on MLR provisions, I had recently heard data to the contrary but it does look like the MLR is pretty robust. That said the costs are more than just from the 20% on the MLR but also on the administrative overheard on the practice side to deal with the insurance system as shown below.

https://www.commonwealthfund.org/publications/issue-briefs/2023/oct/high-us-health-care-spending-where-is-it-all-going

I do recognize that higher physician salaries are a notable contributor here, but still only 10%. There is significant salary inelasticity for essential jobs such that I would shocked if physician salaries took a sizable nosedive under any change, it leads to revolt and goes contrary to what humans expect/tolerate. We absolutely have the ability to pay more across all areas of salary as a country because of the way the overall economy is setup and run. I cannot fathom how the US that pays the most to almost every single profession would suddenly revert to paying doctors an internationally normalized salary. If there are any examples of such a thing happening in history I would love to learn more about it.

 

[clausewitz2]

I appreciate the discussion on MLR provisions, I had recently heard data to the contrary but it does look like the MLR is pretty robust. That said the costs are more than just from the 20% on the MLR but also on the administrative overheard on the practice side to deal with the insurance system as shown below.

https://www.commonwealthfund.org/publications/issue-briefs/2023/oct/high-us-health-care-spending-where-is-it-all-going

I do recognize that higher physician salaries are a notable contributor here, but still only 10%. There is significant salary inelasticity for essential jobs such that I would shocked if physician salaries took a sizable nosedive under any change, it leads to revolt and goes contrary to what humans expect/tolerate. We absolutely have the ability to pay more across all areas of salary as a country because of the way the overall economy is setup and run. I cannot fathom how the US that pays the most to almost every single profession would suddenly revert to paying doctors an internationally normalized salary. If there are any examples of such a thing happening in history I would love to learn more about it.

I'm not saying that we would suddenly drop to UK levels or anything. You're right, the US is the richest country in the world that is not a banking haven, a major oil producer, or a tiny city state. Our salaries are likely to be on the higher side. I'm just saying, healthcare goes from 17% of GDP to 10% of GDP, it will be reflected in your paycheck in some way.

I expect the political economy of a major healthcare reform in the direction of more universal coverage in the name of cost control would also entail weakening some of our guild privileges, especially in terms of limiting numbers of available physicians, but that is strictly speaking a separate issue.

 

[HemeOncHopeful19]

I appreciate the discussion on MLR provisions, I had recently heard data to the contrary but it does look like the MLR is pretty robust. That said the costs are more than just from the 20% on the MLR but also on the administrative overheard on the practice side to deal with the insurance system as shown below.

https://www.commonwealthfund.org/publications/issue-briefs/2023/oct/high-us-health-care-spending-where-is-it-all-going

I do recognize that higher physician salaries are a notable contributor here, but still only 10%. There is significant salary inelasticity for essential jobs such that I would shocked if physician salaries took a sizable nosedive under any change, it leads to revolt and goes contrary to what humans expect/tolerate. We absolutely have the ability to pay more across all areas of salary as a country because of the way the overall economy is setup and run. I cannot fathom how the US that pays the most to almost every single profession would suddenly revert to paying doctors an internationally normalized salary. If there are any examples of such a thing happening in history I would love to learn more about it.

If physician pay has already dropped 30% relative to inflation over the past 10-20 years why do you think it is impossible for that trend to continue?

As a second Gen doc I make about 68% of what my father made when he was my age in a similar specialty.

 

[Merovinge]

If physician pay has already dropped 30% relative to inflation over the past 10-20 years why do you think it is impossible for that trend to continue?

As a second Gen doc I make about 68% of what my father made when he was my age in a similar specialty.

Glad you asked. Please see the data here

Golden Age of Medicine – Are Doctor Salaries Down? | White Coat Investor

Has there ever actually been a golden age of physician income? And if so, when was it? The answer might not be what you're expecting.

www.whitecoatinvestor.com

There will continue to be ups-and-downs with specialty pay (we seriously need to not pay Gas more than subspecialty surgery but that's another talk show) and also large intra-specialty variations, but our pay has not been slashed and continues to hum along basically as expected.

 

[HemeOncHopeful19]

Glad you asked. Please see the data here

Golden Age of Medicine – Are Doctor Salaries Down? | White Coat Investor

Has there ever actually been a golden age of physician income? And if so, when was it? The answer might not be what you're expecting.

www.whitecoatinvestor.com

There will continue to be ups-and-downs with specialty pay (we seriously need to not pay Gas more than subspecialty surgery but that's another talk show) and also large intra-specialty variations, but our pay has not been slashed and continues to hum along basically as expected.

That article was terrible when it came out and then completely glosses over the important point at the end of “oh yeah everyone else has gained substantially except for us”

 

[Merovinge]

That article was terrible when it came out and then completely glosses over the important point at the end of “oh yeah everyone else has gained substantially except for us”

View attachment 396350

That showed the only counterfactual he could find over a specific 8 year period when cherry picking data to exactly find that. That's like pulling a specific decade where bonds outperformed stocks and going "see bonds outperform stocks as a secular trend". He is trying to make the strongest case possible for both arguments and that was the very best he could do. If you actually read the data in it's entirety or look at any average physician pay over the past several decades you will not find anything resembling 10-20% reduction in pay compared to inflation.

Yes we all know that one doc who took the gravy train in the 90's and was killing it. I also know multiple psychiatrists clearing 750k/annually now. He even shows you what the top percentage points of MDs are doing but that does not represent the median and barely impacts the average for a reason.

 

[Stagg737]

I do recognize that higher physician salaries are a notable contributor here, but still only 10%. There is significant salary inelasticity for essential jobs such that I would shocked if physician salaries took a sizable nosedive under any change, it leads to revolt and goes contrary to what humans expect/tolerate. We absolutely have the ability to pay more across all areas of salary as a country because of the way the overall economy is setup and run. I cannot fathom how the US that pays the most to almost every single profession would suddenly revert to paying doctors an internationally normalized salary. If there are any examples of such a thing happening in history I would love to learn more about it.

It depends on what you consider a nosedive. I don't think we'd see salaries tank to UK or European levels, but could I see average psych salaries going from ~$300k to low-mid $200ks? Absolutely. Especially seeing as many jobs are already offering that pay range now. And let's be real, if admins or gov are called upon to trim the fat in healthcare it's either going to come in the form of limiting approval of expensive treatments or physician compensation. Admins aren't going to decrease their own salaries and physicians will be seen as replaceable by mid-levels, we already hear people complain about that all the time.

Not trying to be doom and gloom, but our jobs aren't seen as inelastic, we're seen as cogs in the machine often interchangeable with NPs or PAs to admins in many situations. Don't be surprised if you see mid-levels pushing to do more straightforward procedures going forward. Honestly, it is part of why chose psychiatry as opposed to EM or another field, worst comes to worst and I can go into PP (even cash only) and still do well.

 

[HemeOncHopeful19]

That showed the only counterfactual he could find over a specific 8 year period when cherry picking data to exactly find that. That's like pulling a specific decade where bonds outperformed stocks and going "see bonds outperform stocks as a secular trend". He is trying to make the strongest case possible for both arguments and that was the very best he could do. If you actually read the data in it's entirety or look at any average physician pay over the past several decades you will not find anything resembling 10-20% reduction in pay compared to inflation.

Yes we all know that one doc who took the gravy train in the 90's and was killing it. I also know multiple psychiatrists clearing 750k/annually now. He even shows you what the top percentage points of MDs are doing but that does not represent the median and barely impacts the average for a reason.

I think you are biased by your experience being in a field that has generally blossomed nicely over the past decade tbh. I don’t think it is coincidental that this field has the highest % of physicians who have abandoned insurance entirely.

His article was massively flawed (IMO) by not doing an actual real world comparison to other high paying fields like engineering, nursing or small business owners. I’m glad he did the deep dive to make sure we had kept our lead over barbers and bus drivers, though. He also uses such robust data points as the medscape survey which nobody has ever suggested should be taken seriously as long as I’ve been in medicine.

Accurate salary data for physicians would have been much harder to catalogue in the 90s when everyone was in private practice. Not to mention if you compare the patient workload and admin burden from then to now we aren’t even in the same ballgame anymore.

 

[Merovinge]

I think you are biased by your experience being in a field that has generally blossomed nicely over the past decade tbh. I don’t think it is coincidental that this field has the highest % of physicians who have abandoned insurance entirely.

His article was massively flawed (IMO) by not doing an actual real world comparison to other high paying fields like engineering, nursing or small business owners. I’m glad he did the deep dive to make sure we had kept our lead over barbers and bus drivers, though. He also uses such robust data points as the medscape survey which nobody has ever suggested should be taken seriously as long as I’ve been in medicine.

Accurate salary data for physicians would have been much harder to catalogue in the 90s when everyone was in private practice. Not to mention if you compare the patient workload and admin burden from then to now we aren’t even in the same ballgame anymore.

My friends/family are: hospitalists, ED, pulm/crit, gas, non-interventional cards, endo, rhum, peds, ob/gyn rad onc, and at least 4 different surgical subspecialties. Every person in my partner's extended family is a doctor themselves or married to a doctor and almost every friend I have is a doctor themselves or married to a doctor. We talk about money a lot, because the taboo around the conversation is dumb, and frankly every single one of them is doing well for themselves. I think we are going to have to agree to disagree that the financial reimbursements of MDs is being heavily degraded by inflation. Has it kept up with tech, finance, or C-suite? Absolutely not, but that's the argument being proposed. Anyone who wants to make money is a fool to go into medicine, it's a field where you get to be paid in the top 1-3% but never the top 0.1%.

 

[clausewitz2]

My friends/family are: hospitalists, ED, pulm/crit, gas, non-interventional cards, endo, rhum, peds, ob/gyn rad onc, and at least 4 different surgical subspecialties. Every person in my partner's extended family is a doctor themselves or married to a doctor and almost every friend I have is a doctor themselves or married to a doctor. We talk about money a lot, because the taboo around the conversation is dumb, and frankly every single one of them is doing well for themselves. I think we are going to have to agree to disagree that the financial reimbursements of MDs is being heavily degraded by inflation. Has it kept up with tech, finance, or C-suite? Absolutely not, but that's the argument being proposed. Anyone who wants to make money is a fool to go into medicine, it's a field where you get to be paid in the top 1-3% but never the top 0.1%.

Unless you're the Sacklers. Don't be the Sacklers.

 

[Merovinge]

Unless you're the Sacklers. Don't be the Sacklers.

I mean amen. But also that was joining a family business with a random MD along the way unless you mean the OG Sackler.

 

[VA Hopeful Dr]

My friends/family are: hospitalists, ED, pulm/crit, gas, non-interventional cards, endo, rhum, peds, ob/gyn rad onc, and at least 4 different surgical subspecialties. Every person in my partner's extended family is a doctor themselves or married to a doctor and almost every friend I have is a doctor themselves or married to a doctor. We talk about money a lot, because the taboo around the conversation is dumb, and frankly every single one of them is doing well for themselves. I think we are going to have to agree to disagree that the financial reimbursements of MDs is being heavily degraded by inflation. Has it kept up with tech, finance, or C-suite? Absolutely not, but that's the argument being proposed. Anyone who wants to make money is a fool to go into medicine, it's a field where you get to be paid in the top 1-3% but never the top 0.1%.

I think as a whole physician incomes haven't kept up with prices of nice things.

For instance: my uncle was an FP (retired last year). He had at any given point 2 kids in private school/college. Huge house (6000 sq ft), wife didn't work. He also owned an airplane and an enormous time share at a beach here in SC.

I'm an FP, my wife is an internist. We couldn't afford all of that right now. I'm not exactly complaining, we have a pretty nice life. But not private airplane and beach house nice.

 

[Merovinge]

I think as a whole physician incomes haven't kept up with prices of nice things.

For instance: my uncle was an FP (retired last year). He had at any given point 2 kids in private school/college. Huge house (6000 sq ft), wife didn't work. He also owned an airplane and an enormous time share at a beach here in SC.

I'm an FP, my wife is an internist. We couldn't afford all of that right now. I'm not exactly complaining, we have a pretty nice life. But not private airplane and beach house nice.

Please understand that your uncle's anecdote is an n of 1. There were plenty of physicians in his age cohort who made roughly the same as we make now adjusted for inflation. If you have data from the IRS or a reputable source describing a drop in our income compared to inflation over a meaningful time frame I would love to see it.

Again, I know a couple who worked in rural Iowa who made private airplane money back in the 90's, but I also know docs now clearing 7 figures. There's a psychiatrist on this board doing around 750k without working crazy hours. The FP's I know doing concierge medicine do very well for themselves while working less clinical hours and answer an occasional out of business hours text/email and very rarely a call.