Super interesting. Learned a lot! When can we expect a breakdown of how the US healthcare system works compared to those other countries?
One area I would love to see covered there is how although US healthcare is expensive, we typically receive the care we need.
I believe hospital shortages are typically worse in more social-provided systems.
And side-note, I personally think the US should make prescription “kick-backs” or % requirements illegal. Over prescription is just evil! So many people getting prescribed medication when they aren’t active, diet is bad, etc.
Not sure if this writing plays well in the young Republicans club, but asserting that Luigi Mangione had no understanding of the healthcare system is ignorant of the facts.
- the percentages for explaining the UK vs US life expectancy adds up to over 100% so that was confusing. Not sure what that’s about.
- the idea that health care is expensive because we’re all over fat doesn’t explain much to those of us in the US who deal with other health issues - for example a recent MRI bill for a cancer scare cost a friend (pre coverage) $13k. Luckily she had coverage but it was still $3k. Both of those numbers feel absurd for what is essentially a picture in a tube. Electricity involved didn’t cost that much, and pharma isn’t involved in that scenario, so what’s going on here? I think if you covered legitimate care cases (like cancer treatment) you’d still see exorbitant costs, and I’m not sure your essay captured those cases
- I really was hoping you’d go HAM on car culture and how America is socially isolated by design. I think about this whenever I visit my parents in the suburbs (I live in nyc now). I’d love it if you could do a dedicated piece on social connectivity, third spaces, the problem with America, and proposed solutions.
yanik this is all GREAT feedback, thank you so much! i also despise car culture, definitely on the list of things i want to write about - the more i think about it the more i think i should’ve made this piece a bit longer, there’s a lot more i wanted to touch on, things you mentioned (i.e not only pharma but also medical devices, sales, doctor commissions, how that all works), on the first point - i noticed that too i thought maybe it was something to do with covariances but will double check. the plan is to continue writing so thank you for the sub!
I would be curious to see what sort of involvement government has to play with insurance and big pharm and what would happen if they spent some of that money incentivizing healthy habits i.e. subsidizing farming/ affordable and easily accessible healthy foods/ education + kick-backs for fitness programs.
This is a really interesting take, and while it may be entirely factual it’s leaving out a lot. You failed to ask the question, why is healthcare so expensive because the answer is, insurance companies. If you compare the procedure cost for a knee replacement for example in the US to another country with single payer, it is WAY higher here, tens of thousands higher. And it’s not because the outcomes are better, it’s because the hospital has to charge fees that allow them to balance the books, paying for the care that was provided at no cost to those without means. If someone has an emergency and gets care but doesn’t have insurance to pay, their bill is going to be insanely high. If they call the hospital finance office, they could probably negotiate a lower cash rate but it’s likely still a huge burden. So what happens if they just don’t pay? The goods, services, time, etc the hospital invested in that patient is a sunk cost and has to be recouped somehow. So the cost of the procedure goes up. Insurance giants like UHC can negotiate with each individual hospital system, etc and pay the best rates, but they are still artificially high because of those that cannot pay at all. With single payer, you eliminate that disparity, and the whole system becomes more affordable…ideally. The same goes for drugs, sort of. Drug companies claim costs are high so they can pay off R&D, but that means they do so on the backs of Americans because all drugs are cheaper outside of this country, even OTC. I bought Claritin in Spain and got a month’s supply for €6 when it would cost about $30 here. Although at this point the US is so far off the rails of what is realistic I have my doubts we’ll ever find our way back.
It feels fair to judge a company in comparison to other peers in the same industry, which is where United does poorly. You highlight it in the claims denial statistics, where United has the highest rate of denials.
Note: I totally understand that claims denials are part of the process. Insurance would be much more expensive if the companies covered everything with no due diligence. However, excess claims denials are absolutely a problem. From the statistics I'm aware of, appeals of denied claims are overturned at rates of anywhere from 40-80%. It's safe to assume that the company with the highest denial rate is at the higher end of that spectrum.
I work in insurance. We do extensive analysis on claims, claims denials, premium vs average losses, premium vs tail losses, and all kinds of other metrics. We are obsessed with these metrics, and by deciding what business to write and at what price, we largely have control over their long-run values.
Point being that United is making a choice. They have higher claims denial rates to grow their revenues faster.
Nice article Lucas; however, please watch for basic number checking.
The CEO was not paid a $10M salary. He was paid a $1M salary and $1.2M in non-equity compensation. In short, total cash compensation of $2.2M. The rest was equity compensation that often cannot be exercised right away (for many good reasons)
I don't think that error changes the story. But I am seeing lots of basic factual errors or numbers used out of context in this UH story.
As a counter-point, big kudos to you for discussing the UH net margin rather than just the profit dollars. Profit dollars mean nothing absent the broader financial picture of the business (e.g. revenue, expenses, etc.)
Super interesting. Learned a lot! When can we expect a breakdown of how the US healthcare system works compared to those other countries?
One area I would love to see covered there is how although US healthcare is expensive, we typically receive the care we need.
I believe hospital shortages are typically worse in more social-provided systems.
And side-note, I personally think the US should make prescription “kick-backs” or % requirements illegal. Over prescription is just evil! So many people getting prescribed medication when they aren’t active, diet is bad, etc.
Not sure if this writing plays well in the young Republicans club, but asserting that Luigi Mangione had no understanding of the healthcare system is ignorant of the facts.
ah yes, me laying out many of the facts suggesting luigi knew nothing about the healthcare system is ignorant of the facts
I loved this!
Some thoughts:
- the percentages for explaining the UK vs US life expectancy adds up to over 100% so that was confusing. Not sure what that’s about.
- the idea that health care is expensive because we’re all over fat doesn’t explain much to those of us in the US who deal with other health issues - for example a recent MRI bill for a cancer scare cost a friend (pre coverage) $13k. Luckily she had coverage but it was still $3k. Both of those numbers feel absurd for what is essentially a picture in a tube. Electricity involved didn’t cost that much, and pharma isn’t involved in that scenario, so what’s going on here? I think if you covered legitimate care cases (like cancer treatment) you’d still see exorbitant costs, and I’m not sure your essay captured those cases
- I really was hoping you’d go HAM on car culture and how America is socially isolated by design. I think about this whenever I visit my parents in the suburbs (I live in nyc now). I’d love it if you could do a dedicated piece on social connectivity, third spaces, the problem with America, and proposed solutions.
Anyway great article in general, cheers!
yanik this is all GREAT feedback, thank you so much! i also despise car culture, definitely on the list of things i want to write about - the more i think about it the more i think i should’ve made this piece a bit longer, there’s a lot more i wanted to touch on, things you mentioned (i.e not only pharma but also medical devices, sales, doctor commissions, how that all works), on the first point - i noticed that too i thought maybe it was something to do with covariances but will double check. the plan is to continue writing so thank you for the sub!
I would be curious to see what sort of involvement government has to play with insurance and big pharm and what would happen if they spent some of that money incentivizing healthy habits i.e. subsidizing farming/ affordable and easily accessible healthy foods/ education + kick-backs for fitness programs.
This is a really interesting take, and while it may be entirely factual it’s leaving out a lot. You failed to ask the question, why is healthcare so expensive because the answer is, insurance companies. If you compare the procedure cost for a knee replacement for example in the US to another country with single payer, it is WAY higher here, tens of thousands higher. And it’s not because the outcomes are better, it’s because the hospital has to charge fees that allow them to balance the books, paying for the care that was provided at no cost to those without means. If someone has an emergency and gets care but doesn’t have insurance to pay, their bill is going to be insanely high. If they call the hospital finance office, they could probably negotiate a lower cash rate but it’s likely still a huge burden. So what happens if they just don’t pay? The goods, services, time, etc the hospital invested in that patient is a sunk cost and has to be recouped somehow. So the cost of the procedure goes up. Insurance giants like UHC can negotiate with each individual hospital system, etc and pay the best rates, but they are still artificially high because of those that cannot pay at all. With single payer, you eliminate that disparity, and the whole system becomes more affordable…ideally. The same goes for drugs, sort of. Drug companies claim costs are high so they can pay off R&D, but that means they do so on the backs of Americans because all drugs are cheaper outside of this country, even OTC. I bought Claritin in Spain and got a month’s supply for €6 when it would cost about $30 here. Although at this point the US is so far off the rails of what is realistic I have my doubts we’ll ever find our way back.
There are way fewer doctors relative to population in the US than in other developed countries, and they make way more money.
I'd be interested in reading a breakdown of how Japan handles its healthcare.
It feels fair to judge a company in comparison to other peers in the same industry, which is where United does poorly. You highlight it in the claims denial statistics, where United has the highest rate of denials.
Note: I totally understand that claims denials are part of the process. Insurance would be much more expensive if the companies covered everything with no due diligence. However, excess claims denials are absolutely a problem. From the statistics I'm aware of, appeals of denied claims are overturned at rates of anywhere from 40-80%. It's safe to assume that the company with the highest denial rate is at the higher end of that spectrum.
I work in insurance. We do extensive analysis on claims, claims denials, premium vs average losses, premium vs tail losses, and all kinds of other metrics. We are obsessed with these metrics, and by deciding what business to write and at what price, we largely have control over their long-run values.
Point being that United is making a choice. They have higher claims denial rates to grow their revenues faster.
Nice article Lucas; however, please watch for basic number checking.
The CEO was not paid a $10M salary. He was paid a $1M salary and $1.2M in non-equity compensation. In short, total cash compensation of $2.2M. The rest was equity compensation that often cannot be exercised right away (for many good reasons)
I don't think that error changes the story. But I am seeing lots of basic factual errors or numbers used out of context in this UH story.
As a counter-point, big kudos to you for discussing the UH net margin rather than just the profit dollars. Profit dollars mean nothing absent the broader financial picture of the business (e.g. revenue, expenses, etc.)