Everyone is guilty here, because once one sector forms a monopoly, they have monopoly pricing power, and so their counterparty sectors have to form a monopoly as well to keep leverage in negotiations.
50 years ago, there were many more pharma companies, many more insurance companies, and many more hospitals under individual ownership. First the pharma companies consolidated, which give them monopoly pricing power over insurers. So then the insurance companies consolidated to they could negotiate on equal footing, but then they had monopoly pricing power over the hospitals. So then hospitals consolidated so they could negotiate. And now after decades of this, we're right back we're started, except for consumers, who can't consolidate and hence get fucked.
The two solutions here are either breaking up all the monopolies at the same time-- pharma, insurance, and hospitals-- so that everyone has market competition again, or letting health care consumers consolidate so they have pricing leverage-- i.e., forming a single-payer health-care system where the government negotiates deals on behalf of a 330+-million payer pool.
It does not make sense to either blame or spare one single sector: the pharmas, insurers and hospitals are all guilty, though in a sense all of their hands were forced by their counterparties. It's a coordination problem of exactly the kind government is supposed to solve, hence why government-run health care eventually seems like the only option.
Health insurers are limited by law as to profit margins. So how to make more money? Raise prices, or signal to providers that you'll pay higher. Because if your incoming premiums have to rise, then that percentage that can be captured as profit rises.
But wait... what if you (an insurer) build/buy a middle-man to route prescription money through? That isn't covered by those profit margin constraints. So you can just up the prices of prescriptions and siphon profits that way.
Even better, you can do entirely sketchy BS (looking at you, Aetna, but also others): "Sure, you can get your scripts filled at your local pharmacy... but only for <=30 day supplies. We'll reject any script authorization for a supply of 31+ days, like those extremely convenient 90 day refills... unless you use the mail-order pharmacy that is wholly owned by us", thus making people choose between convenience and pricing.
A lot of corporate insurance is self funded by the company, with the insurance company being paid for administration of the plan rather than underwriting.
I suppose it is possible that the buyers of these plans agree to link the payments to the cost of the care provided, but I doubt it.
I used to work for a company that built claims benefit management systems, for both direct insurers, and then TPAs (third party administrators).
The flip side of what you say is this - employers are not actuaries in the world of healthcare. So, while an employer can say "hey, whatever else we're doing, we want to give every employee a massage a week, covered 100%, no copay" and the TPA will facilitate the pricing of that, for the general spectrum of care, they will say "We want basically this level of care" and really just choose a plan already provided by the insurer, because all the actuarial effort has been done and the employer has less risk of getting slammed with a multi-million bill because of unexpected incidences.
I don't think govt run healthcare is the only option... but could serve as a baseline competition if Federal Employees, VA Medical, Medicare/Medicaid were all serviced by an NPO that is govt funded in terms of providing for those federal groups AND allow anyone to buy into a policy as an individual or employer. As an NPO it would provide a baseline for competition and a minimal cost floor with greater negotiating power, that has been artificially limited by the current implementations.
On the Pharma and Devices side, there should be hard FDA requirements for dual sourcing (completely separate ownership structures) and 50% domestic production (for security) as a requirement to even offer medications/devices requiring a prescription in the US.
It could still allow for private competition for better servicing and support without federalizing everything.
I feel like you explained how we got there and our options to fix it perfectly. As you point out we have monopolies (or close to) at every single step. Whatever bandaid people and politician can come up with will quickly be neutralized by these conglomerates, at this point, any half measure is basically useless or has severe tradeoffs.
> So then hospitals consolidated so they could negotiate. And now after decades of this, we're right back we're started, except for consumers, who can't consolidate and hence get fucked.
Consumer consolidation is called voting. Its too bad most consumers have voted in politicians who don't represent their best interests
17% of the US GDP is healthcare so that's probably about 20% of the country that will scream bloody murder if you try and touch it in any way that makes it cost the other 80% less.
50 years ago, there were many more pharma companies, many more insurance companies, and many more hospitals under individual ownership. First the pharma companies consolidated, which give them monopoly pricing power over insurers. So then the insurance companies consolidated to they could negotiate on equal footing, but then they had monopoly pricing power over the hospitals. So then hospitals consolidated so they could negotiate. And now after decades of this, we're right back we're started, except for consumers, who can't consolidate and hence get fucked.
The two solutions here are either breaking up all the monopolies at the same time-- pharma, insurance, and hospitals-- so that everyone has market competition again, or letting health care consumers consolidate so they have pricing leverage-- i.e., forming a single-payer health-care system where the government negotiates deals on behalf of a 330+-million payer pool.
It does not make sense to either blame or spare one single sector: the pharmas, insurers and hospitals are all guilty, though in a sense all of their hands were forced by their counterparties. It's a coordination problem of exactly the kind government is supposed to solve, hence why government-run health care eventually seems like the only option.