It's a truism that America's system was never designed -- it's a patchwork of different pieces that each pay for some people in some situations.
But I've been reading about our system, since I fell down a rabbit hole a couple years ago. Things are bad, yes, but there are actually interesting ideas out there, and real efforts at reform that are being tried.
For example, did you know Maryland has a different way of funding hospitals than most other states? [0] And that other states are interested in copying it?
A system built as a mish-mash patchwork is likely to be solved by a similar "ground-up" framework.
Each state should be free to experiment (as Maryland has done here) and the federal levels should be restricted to providing funding and basic guidelines that have to be met.
Part of the problem is that as you begin to delve in and see where the outflows are, you start to realize that fixing the fundamental problem involves making the people healthier in general, which will rumble the very foundations of Wall Street.
One of the great powers of federalism is not having to duplicate efforts for every state. It also reduces cost by allowing 'one-size-fits-all' and economies of scale, rather than each state having its own bespoke whatever.
Many countries around the world enjoy the benefits of coordinated public health departments. Part of the United States' poor response to COVID was because there was no central public health department that could work closely with state agencies to e.g. provide data about what's going on, share best clinical practices, etc. Each state is an island.
So no, I don't agree that the only goal of the federal government should be piggy bank. States should have a lot of latitude with their policies, but generally standardizing things across the nation would be a net positive.
There are already numerous and simple policy levers that actually affect costs and cannot be gamed. Such as the age you become eligible for Medicare. You don't have to reach for anything innovative like global hospital budgets. I'm skeptical of your category of reforms - you really mean, "benign-looking administrative decisions," because if you're not making any hard choices, you're not making reforms. I would hardly call it "real efforts."
Amazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from? How do they even pay their executives' salaries? Boy have I been mistaken about how inefficient the American system is
> How do they even pay their executives' salaries?
I suspect less goes to executives than you think. Most of it is going to pay employees in the insurance industry.
The irony is that they are being paid to say "no." Perhaps if they instead went to work as service providers, we could get more services for what we spend.
> I suspect less goes to executives than you think.
How can it be less than nothing? The graph is literally showing that all the entities that are not care facilities operate without any costs and without any profits. Apparently both CEO’s and workers at these organizations are volunteers.
Healthcare executive pay is pretty darn high, more money than any family needs to live comfortably.
Keep in mind this is just for Blue Shield California. There are executives of other health insurance systems in other states and regions who are making similar compensation.
However, I'll go ahead and say right now that I support the idea of these executives being paid these salaries, but on one condition: that we first achieve the goal of 100% of Americans having affordable access to healthcare. Once that goal is achieved, then we can start paying executives big bonuses and incentives. Deal? (Yeah, right...)
Below is a summary of the compensation paid in 2024 to Blue Shield of California’s President and Chief Executive Officer (CEO), Chief Financial Officer (CFO), and top three highest paid executives (other than the CEO and CFO) who were employed by Blue Shield of California at year-end.
Epic Systems is a private company, so there's no executive pay information, but the founder Judy Falkner's estimated net worth is $7.8 billion. Perhaps Epic could reduce the price of its very expensive software for providers to help ease healthcare costs and maybe Judy could give up some of those billions and not notice any difference in her quality of life?
> Where are these insurance companies' profit margins coming from?
Vertical integration.
UnitedHealthcare's (Larger insurance company in the US) profits are effectively limited by the Medical Loss Ratio rules from the Affordable Care Act.
But they are owned by UnitedHealth Group, which also owns OptumHealth (the largest network of physicians in the US), OptumRx (pharmacies), and OptumInsight (technology consulting, which goes into the COGS for UnitedHealthcare). This is where they make their profits.
UHG controls which physicians + pharmacies are in their network and what their negotiated rates for many services are (the exception being medicare + medicaid).
> Amazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from?
they kinda have it on chart but without overhead numbers: insurance collects 1T of payments, than for business segments, they pay around 60% of that as medical expenses, and for individual plans it is more like 40% of medical expenses, meaning for individual plans insurance corps have 60% profit margin.
I’m concerned with anyone proposing “Medicare for all” in America, because they all state - for doctors who want to stay out of the system, they can be paid directly… that immediately causes a slightly different 2 tier system. Right now our 2 tier system is the 90% with health insurance and the 10% without health insurance. In the new Medicare for all, it will be the 99.9% on government insurance, and the 0.1% - the ultra wealthy - who dominate tax policy and are heavily financially incentivized to reduce their tax contributions to the public system. They will influence politicians to spend less on healthcare, with no impact to their health outcomes. The only system which will work in the US is one in which the ultra wealthy have an incentive to provide funding to the public system, and that seems like you’d need to force them to be on the public system too.
> The only system which will work in the US is one in which the ultra wealthy have an incentive to provide funding to the public system, and that seems like you’d need to force them to be on the public system too.
In my state, I pay $15k/year in school taxes, yet I have no children. I pay $1000/year in property taxes to support my city's library, yet I don't have a library card. People are taxed for lots of things they don't actually benefit from. I don't think we would need to force rich people to use the plans. If they want to buy medical services from private doctors, sure we can let them.
The issue then becomes more about allocation of resources (how many doctors are available to be seen on the public system vs. only available to self-pay customers) rather than the issue being about how to collect taxes.
This may be small potatoes, but I've heard it said that people like you benefit "by not living in a state full of dumbasses." There's definitely an indirect benefit from these payments.
Every western country that has a single payer system as far as I know allows for private clinics, doctors and labs.
I spent 18 years in Canada. The healthcare I got was as good as anything I received in America (in both cases it depends on where you live, unfortunately) and looking ahead to 2026 was cheaper (comparing my tax burden in Ontario to the terrible insurance I can afford for 2026 in America).
Healthcare quality and access varies widely between Canadian provinces. It's common for affluent Canadians to come to the USA as medical tourists and pay out of pocket for elective procedures like MRI scans or joint replacement surgeries due to excessive waiting times at home. There are advantages to the Canadian system but some clear downsides as well.
You're never going to make a system that prevents the ultra-wealthy from augmenting it with private services. You might, however, reduce the power of the ultra-wealthy.
This is precisely what allows for the NHS to be cannibalized. They underfunded one of the best systems of healthcare and replaced it with private care for ultra wealthy while reducing quality of care for vast majority of people.
Private care has been available in Britain throughout the history of the NHS and is available to people far below the 'ultra wealthy' strata. Don't ruin a valid point with hyperbole.
> is the 90% with health insurance and the 10% without health insurance
it's even more complicated, because you can have insurance fully accepted at one clinic and "not contracted" with a different clinic. it's a total mess.
The wealthy benefit from military spending as it keeps their resources secure. The ultra wealthy are also business owners who benefit from increased commerce made possible from the highways. They don’t benefit from paying for my father’s cancer treatment.
If we're gonna stick with private insurance in the US, we should detach it from employment. The current system has created a society of indentured servants, not for money, but for "health insurance". The current system is expensive for employers that are often mandated to provide health insurance plans. And it forces people to work for something they have little or no control over.
When you work for money, you can do whatever you want with the money once you've earned it. But being compensated with "health insurance", you've got almost no control over it; you get what the company gives you - and btw, you can't purchase the same thing on your own, with your own money (way too expensive for most middle-class folks).
Detach health insurance from employment. Open "health insurance plans" to the free market, just like auto insurance. Free employers from all the administrative overhead of managing health insurance for employees (the stock market will love it!) And let health insurance companies work for their actual customers (health care patients!)
All the categories on the right side look perfectly reasonable. However what fraction of those big categories on the right, Hospitals and Physicians... that make up over half of the total, is siphoned off to pay for administratium or "shareholder value" and what fraction actually pays for medical care delivered?
I'd really love to see the breakdown between how much we spend on physicians/doctors vs. caretakers (nurses, therapists, etc.) vs. how much on hospital admin and other stuff.
At least in UK's chart, "GP & Primary Care", "Private GP Services" and "Administration" are separated. Same in Germany too.
If by shareholder value you include insurance companies etc not just the institutions themselves, it’s well over half.
Doctor time talking to an insurance company either directly or through paperwork is not actually providing any care during that time. Where things go vicious is because doctors are now so inefficient the time they are actually useful becomes increasingly valuable driving ever more paperwork to justify that time.
Physicians spend very little time directly dealing with insurance companies. They (or their employers) hire back office administrative staff for that. This is somewhat wasteful and inefficient but it doesn't directly impact the time that clinicians have available for patient care. Usually the physicians only have to get directly involved in rare peer-to-peer consults with health plans for complex cases that fall outside of normal clinical practice guidelines.
Yes, the diagrams are deeply flawed, in that they seem to suggest 100% of the money input to the system goes to hospitals, hospices, healthworkers, and so on.
I don't see a single outcome pointed at insurance companies... somehow.
> The outcome is $4.9T - which would make it the 3rd largest economy in the world, a high 8% admin costs - compared to the UK’s 2% admin, with medical bankruptcy still possible. We’ve never agreed on what we value. So we built a system that embodies our disagreement: employer-based coverage (market choice) plus Medicare (social insurance) plus Medicaid (safety net) plus exchanges (regulated markets).
> Decision #1: Workers pay at least twice
Here’s the first thing that jumps out: if you work a job in America (and you presumably do, to afford the internet where you’re reading this), you’re already paying for healthcare in multiple places on this chart:
Taxes: federal, state, and local taxes finance Medicare, Medicaid, and various public health programs in so many places. Our attempt at embedding it in single payer.
Payroll: if you’re employed, your employer pays taxes on Medicare (even though you presumably can’t use it until you retire at 65). This is a cost that doesn’t go to your salary.
Insurance premiums: get deducted from your paycheck to fund the employer group plans ($688B from employees alone).
> Could America make this choice? Technically, yes. Politically, we’d need to agree that healthcare is a right we owe each other, funded collectively through taxes. That would mean massive tax increases, eliminating private insurance as the primary system, and trusting a single federal agency.
The operational resistance alone would be too much: I’ve watched hospital execs squeeze out thinning margins and payer executives navigate quarterly earnings calls. We’re talking about unwinding a $1T+ private insurance industry, reconfiguring every hospital’s revenue model, and convincing Americans to trust the federal government with something they currently (sort of) get through their jobs. That ship didn’t just sail - it sank decades ago.
The healthcare system in the US is, indeed, the best...if you're rich. If you're not rich, you're gonna spend a lot of time on the phone, arguing with bureaucrats and getting treated like shit.
A friend of mine is rich. We both have a health insurance plan from UnitedHealthcare. His experience is radically different from mine. He can make a phone call, and actually talk to his doctor within a few minutes. He can see his doctor the same day he asks to. He talks to one person who manages all the BS for him.
I'd be more interested in how much of that $5 trillion finds its way to shareholders.
Most people generally don't have a problem with the idea of being charged a fee for a healthcare service. They have a problem with a system that grossly inflates that fee so that people who had nothing to do with the service get paid at the expense of people who are ill or injured. And of course, with the people in the system who are heavily incentivized to make sure that those dead-weight actors get as much money as possible.
This chart breaks it down by spending, it does nothing about determining the effectiveness of said spending. How much actual care per $ spent?
I've been on a mock jury for a personal injury lawsuit--and it was obvious to a couple of us that the smoking gun presented by the defense clearly showed she was running up the bill on something minor. We were pointing out the problem--did that sway the majority? No. The general opinion seemed to be she was owed something for what had happened--and they had failed on the voir dire, they asked about my background, didn't ask anything about family. Oops--I knew it would end up all going to the lawyer and doctors, nothing to her (the proposed amount was less than the bills she had run up.) I played it fair and didn't speak up about what would happen.
And all the national systems have a fox guarding the henhouse problem. Provide proper treatment for the expensive stuff or lower the standards? So long as you make a sufficient portion of the electorate think you're doing a good job the reality is the standards get lowered. And cook the books in pretending it's fair. (Two examples that come to mind: Including "fairness" in the measure of health system quality--automatic selection for UHC, and comparing infant mortality (they admitted the comparison was not valid, did it anyway.) The reality is the biggest "cause" of infant mortality in the developed world is how the medical world falls on the stillbirth/infant mortality line. Even elsewhere--Cuba gets it's good infant mortality numbers by setting a minimum birth weight. The ones that were born too early and never had a chance get classed as stillbirths.)
Over litigation of medical malpractice is a huge problem in this country and is a large contributor to why our system is so expensive. Medical malpractice juries should not be made up of people who have no idea how medicine works.
Yeah. Jury of your peers is fine for non-technical matters, but an awful lot of cases are technical. I would like to see a profession "juror" that requires a broad science education--enough that it doesn't come down to whose "expert" is better at making it believable. And for cases involving licenses make some of it people qualified to hold the license. (And the lawyers would hate that. They go ape over supposed lack of liability with vaccines--no, it goes before medically trained people. And locally there used to be a malpractice review board--three? doctors, three? lawyers. All malpractice cases must be presented to it first--non-binding but your chances in court were pretty slim if you did get a majority from the review board. The lawyers really loved destroying that.)
Readit News
But I've been reading about our system, since I fell down a rabbit hole a couple years ago. Things are bad, yes, but there are actually interesting ideas out there, and real efforts at reform that are being tried.
For example, did you know Maryland has a different way of funding hospitals than most other states? [0] And that other states are interested in copying it?
[0] https://www.vox.com/policy-and-politics/2020/1/22/21055118/m...
Each state should be free to experiment (as Maryland has done here) and the federal levels should be restricted to providing funding and basic guidelines that have to be met.
Part of the problem is that as you begin to delve in and see where the outflows are, you start to realize that fixing the fundamental problem involves making the people healthier in general, which will rumble the very foundations of Wall Street.
Many countries around the world enjoy the benefits of coordinated public health departments. Part of the United States' poor response to COVID was because there was no central public health department that could work closely with state agencies to e.g. provide data about what's going on, share best clinical practices, etc. Each state is an island.
So no, I don't agree that the only goal of the federal government should be piggy bank. States should have a lot of latitude with their policies, but generally standardizing things across the nation would be a net positive.
If one state can manage to make it actually work, it might be enough.
I suspect less goes to executives than you think. Most of it is going to pay employees in the insurance industry.
The irony is that they are being paid to say "no." Perhaps if they instead went to work as service providers, we could get more services for what we spend.
How can it be less than nothing? The graph is literally showing that all the entities that are not care facilities operate without any costs and without any profits. Apparently both CEO’s and workers at these organizations are volunteers.
Keep in mind this is just for Blue Shield California. There are executives of other health insurance systems in other states and regions who are making similar compensation.
However, I'll go ahead and say right now that I support the idea of these executives being paid these salaries, but on one condition: that we first achieve the goal of 100% of Americans having affordable access to healthcare. Once that goal is achieved, then we can start paying executives big bonuses and incentives. Deal? (Yeah, right...)
https://www.blueshieldca.com/content/dam/bsca/en/member/docs...
Below is a summary of the compensation paid in 2024 to Blue Shield of California’s President and Chief Executive Officer (CEO), Chief Financial Officer (CFO), and top three highest paid executives (other than the CEO and CFO) who were employed by Blue Shield of California at year-end.
Paul Markovich
President and Chief Executive Officer
$11,191,674
Sandra Clarke
EVP, Chief Operating Officer
$5,765,368
Peter Long
EVP, Strategy and Health Solutions
$4,360,245
Lisa Davis
EVP, Chief Information Officer
$2,873,613
Michael Stuart
EVP, Chief Financial Officer
$2,406,837
Some other CEOs:
Cerner (EMR provider to the VA), $35 million pay package: https://kffhealthnews.org/morning-breakout/cerner-to-pay-new...
Pfizer, $24.6M pay package: https://www.fiercepharma.com/pharma/rebound-year-pfizer-ceo-...
Epic Systems is a private company, so there's no executive pay information, but the founder Judy Falkner's estimated net worth is $7.8 billion. Perhaps Epic could reduce the price of its very expensive software for providers to help ease healthcare costs and maybe Judy could give up some of those billions and not notice any difference in her quality of life?
Vertical integration.
UnitedHealthcare's (Larger insurance company in the US) profits are effectively limited by the Medical Loss Ratio rules from the Affordable Care Act.
But they are owned by UnitedHealth Group, which also owns OptumHealth (the largest network of physicians in the US), OptumRx (pharmacies), and OptumInsight (technology consulting, which goes into the COGS for UnitedHealthcare). This is where they make their profits.
UHG controls which physicians + pharmacies are in their network and what their negotiated rates for many services are (the exception being medicare + medicaid).
Here's a write up on their strategy: https://www.unionhealthcareinsight.com/post/unitedhealth-gro...
And an infographic that breaks it down: https://static.wixstatic.com/media/be1b8b_b0d4ebb04ce04b44a3...
They are a racket.
they kinda have it on chart but without overhead numbers: insurance collects 1T of payments, than for business segments, they pay around 60% of that as medical expenses, and for individual plans it is more like 40% of medical expenses, meaning for individual plans insurance corps have 60% profit margin.
Deleted Comment
Dead Comment
In my state, I pay $15k/year in school taxes, yet I have no children. I pay $1000/year in property taxes to support my city's library, yet I don't have a library card. People are taxed for lots of things they don't actually benefit from. I don't think we would need to force rich people to use the plans. If they want to buy medical services from private doctors, sure we can let them.
The issue then becomes more about allocation of resources (how many doctors are available to be seen on the public system vs. only available to self-pay customers) rather than the issue being about how to collect taxes.
Deleted Comment
I spent 18 years in Canada. The healthcare I got was as good as anything I received in America (in both cases it depends on where you live, unfortunately) and looking ahead to 2026 was cheaper (comparing my tax burden in Ontario to the terrible insurance I can afford for 2026 in America).
it's even more complicated, because you can have insurance fully accepted at one clinic and "not contracted" with a different clinic. it's a total mess.
Does that mean we can’t have these things unless the wealthy want them?
When you work for money, you can do whatever you want with the money once you've earned it. But being compensated with "health insurance", you've got almost no control over it; you get what the company gives you - and btw, you can't purchase the same thing on your own, with your own money (way too expensive for most middle-class folks).
Detach health insurance from employment. Open "health insurance plans" to the free market, just like auto insurance. Free employers from all the administrative overhead of managing health insurance for employees (the stock market will love it!) And let health insurance companies work for their actual customers (health care patients!)
Or, just open Medicare to all.
At least in UK's chart, "GP & Primary Care", "Private GP Services" and "Administration" are separated. Same in Germany too.
Doctor time talking to an insurance company either directly or through paperwork is not actually providing any care during that time. Where things go vicious is because doctors are now so inefficient the time they are actually useful becomes increasingly valuable driving ever more paperwork to justify that time.
I don't see a single outcome pointed at insurance companies... somehow.
> The outcome is $4.9T - which would make it the 3rd largest economy in the world, a high 8% admin costs - compared to the UK’s 2% admin, with medical bankruptcy still possible. We’ve never agreed on what we value. So we built a system that embodies our disagreement: employer-based coverage (market choice) plus Medicare (social insurance) plus Medicaid (safety net) plus exchanges (regulated markets).
> Decision #1: Workers pay at least twice
Here’s the first thing that jumps out: if you work a job in America (and you presumably do, to afford the internet where you’re reading this), you’re already paying for healthcare in multiple places on this chart:
> Could America make this choice? Technically, yes. Politically, we’d need to agree that healthcare is a right we owe each other, funded collectively through taxes. That would mean massive tax increases, eliminating private insurance as the primary system, and trusting a single federal agency.The operational resistance alone would be too much: I’ve watched hospital execs squeeze out thinning margins and payer executives navigate quarterly earnings calls. We’re talking about unwinding a $1T+ private insurance industry, reconfiguring every hospital’s revenue model, and convincing Americans to trust the federal government with something they currently (sort of) get through their jobs. That ship didn’t just sail - it sank decades ago.
A friend of mine is rich. We both have a health insurance plan from UnitedHealthcare. His experience is radically different from mine. He can make a phone call, and actually talk to his doctor within a few minutes. He can see his doctor the same day he asks to. He talks to one person who manages all the BS for him.
Sounds a lot like the Spanish healthcare system.
Actually, the data doesn't even support that notion for the rich. But then, they can opt to fly to a specialist...
Most people generally don't have a problem with the idea of being charged a fee for a healthcare service. They have a problem with a system that grossly inflates that fee so that people who had nothing to do with the service get paid at the expense of people who are ill or injured. And of course, with the people in the system who are heavily incentivized to make sure that those dead-weight actors get as much money as possible.
I've been on a mock jury for a personal injury lawsuit--and it was obvious to a couple of us that the smoking gun presented by the defense clearly showed she was running up the bill on something minor. We were pointing out the problem--did that sway the majority? No. The general opinion seemed to be she was owed something for what had happened--and they had failed on the voir dire, they asked about my background, didn't ask anything about family. Oops--I knew it would end up all going to the lawyer and doctors, nothing to her (the proposed amount was less than the bills she had run up.) I played it fair and didn't speak up about what would happen.
And all the national systems have a fox guarding the henhouse problem. Provide proper treatment for the expensive stuff or lower the standards? So long as you make a sufficient portion of the electorate think you're doing a good job the reality is the standards get lowered. And cook the books in pretending it's fair. (Two examples that come to mind: Including "fairness" in the measure of health system quality--automatic selection for UHC, and comparing infant mortality (they admitted the comparison was not valid, did it anyway.) The reality is the biggest "cause" of infant mortality in the developed world is how the medical world falls on the stillbirth/infant mortality line. Even elsewhere--Cuba gets it's good infant mortality numbers by setting a minimum birth weight. The ones that were born too early and never had a chance get classed as stillbirths.)