yunyun333
5d ago
It's on page 30 as 'eliminations'.
UHC pays its own doctors more, and in general insurance companies will steer customers towards their own, more expensive facilities, but there's limited studies on how it affects care in general. You'd think that it should increase the number of procedures done at least, but that's not so clear.
The study found that when independent physicians integrated with a hospital, they changed their care practices (for example, by reducing the number of patients they put under deep sedation) and increased their throughput (measured by the number of patients they treated). Specifically, the integrated physicians reduced their use of deep sedation by about 3.7 patients for every 100 treated. However, patients of integrated physicians experienced “a significant increase in both major post-colonoscopy complications such as bleeding (3.8 per 1,000 colonoscopies) and other complications such as cardiac or nonserious GI symptoms (5.0 and 3.3 per 1,000 colonoscopies, respectively).”
The researchers found that the reduced use of deep sedation “at least partially explains the increase in adverse outcomes” and that it was “driven mainly by hospitals no longer allocating expensive anesthesiologists to relatively unprofitable colonoscopy procedures.”
Moreover, integration increased the number of patients a physician was able to treat and elevated reimbursement per procedure—integrated doctors were reimbursed about $127 more per colonoscopy procedure than independent doctors, or about 48% more.
yunyun333
5d ago
It's at least the reason for high drug costs.
If you look at UnitedHealth's 10-k, Optum (the provider network) made $253b in revenue, but $151b of that was 'internal eliminations' transfers from UnitedHealthcare (the insurance arm) to Optum.
https://www.unitedhealthgroup.com/content/dam/UHG/PDF/investors/2024/UNH-Q4-2024-Form-10-K.pdf
yunyun333
6d ago
Vertically integrated insurance companies can charge themselves more so it looks like patients get more bang for their buck. The PBM (owned by the health insurance company) charges the health insurance company a high price for a drug, increasing "payout" (numerator of the medical loss ratio) while simply shifting revenue internally. The same thing happens with insurance-owned clinics and pharmacies.
yunyun333
6d ago
Pharmacy benefit managers (PBMs) are supposed to negotiate drug prices between manufacturers, pharmacies, and health plans, since they can essentially pool negotiating power. In practice, they're integrated with the health insurance companies, so they rent-seek and take what are basically bribes from the manufacturers (in the form of rebates) to make the drugs "cheaper" to consumers, while also forcing independent pharmacies to take smaller reimbursements or lose access to their network.
yunyun333
6d ago
Doctors get paid well but the administrative burden is also a large part of the discrepancy. Providers have to spend way too much time negotiating with insurance companies over payments and what will and won't be covered. There's an entire business around denying as many claims as they can get away with. Part of it is inherent in a multi payer system (Germany's public-private system has higher costs than the UK) but there are plenty of aspects to the 'managed care' system, like provider networks and utilization management, that are unique to the US.
Similarly, drug development is notoriously expensive and the costs have to be passed down to the consumer at some point - but the insurance companies are hardly innocent bystanders forced to pass them through. Pharmacy benefit managers are supposed to negotiate reasonable prices/rebates and formularies between drug manufacturers, pharmacies, and insurance companies - but the three largest companies (Optum, Caremark, Express Scripts) managing 80% of all prescriptions are owned by UnitedHealth, CVS, and Cigna, which defeats the whole 'independent negotiator' thing and just makes them rent seekers at consumer/government expense. It also makes it possible to skirt the medical loss ratio rule by shifting profits.
yunyun333
6d ago
What will the future of the US healthcare system look like?
The current system is a patchwork of primarily employer-sponsored healthcare (60% of non-elderly Americans), the ACA marketplace (offering government-approved plans through private insurance companies), Medicare for the elderly, and Medicaid for the poor, disabled, and children. About 8-9% of the population is uninsured. Prices are higher and health outcomes worse than comparable developed countries.
Obamacare attempted to reduce the uninsured population by, among other things, implementing Medicaid expansion to all adults under 138% of the federal poverty level and granting tax credits to help defray the cost of marketplace plans (for incomes up to 400% of the FPL). During COVID, these subsidies were increased and expanded to higher income levels, but Congress allowed them to expire this year, resulting in average premium increases of ~114% for about 22 million people, although an additional vote is scheduled this month.
In addition, low-income adults utilizing expanded Medicaid will be required to demonstrate 80 hours of work per month starting in 2027. Mike Johnson framed this as kicking out unemployed young men mooching off the system - even the old welfare queen trope has been de-DEIified. Georgia already implemented a similar work-requirements program as part of their Medicaid expansion in 2023, resulting in the bulk of the money going to administrative costs and only about 9k out of 250k low-income adults enrolled.
As a result of all of this, the uninsured population will likely increase this year, which may even cause premiums for people with health insurance to rise due to a death spiral effect - if more people are uninsured and can't pay their medical bills, the costs may be shifted to covered patients.
The above article takes the pessimistic view that the system is unlikely to improve significantly, because tying healthcare to employment is such a nice perk for employers (the system started during WW2 when companies offered health insurance as a replacement for wage increases due to federal wage freezes). European or Canadian style universal healthcare certainly seems less likely than ever.
Ultra niche markets would obviously be rife with insider betting. Fool and his money, etc.
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