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How medical insurance works
(lemmy.world)
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this post was submitted on 07 Oct 2024
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So here is a question:
A medical professional examined the person IN PERSON and has a requirement.
In comes the insurance to tell you your doctor is wrong and that you're perfectly fine, your doctor is basically lying to you.
Question: how the fuck did any of this ever become legal?
It became legal when we decided medicine was too important to be handled by a free market, and we created a labyrinth of laws governing how medicine must be administered.
Medicine in the US is the closest we have to a free market. (Newly developed pharmaceuticals being a bit of exception due to the nature of our patent system) In a free market you work on principles of supply and demand. An important concept here is that of inelastic demand. For certain goods, up to a certain point demand will remain constant regardless of price as they are essential to life or addictive. Think gasoline, water, cigarettes, etc...
With medicine people will generally spend whatever it takes often even going into debt if necessary because they value continuing to live very highly. As a result, hospitals are able to charge as much as they think people are willing to pay before they decide that dying is a better financial decision.
You could argue that in a free market, hospitals which charge less will see more business pushing costs down. For certain areas like elective plastic surgery the whole free market model actually works out fairly well since people have the option to shop around. However, let's say you get in a life threatening car crash. In that moment you don't have the time to shop around for the cheapest ambulance provider and run a cost benefit analysis on which one has the closest ambulance. After that you can't shop around local hospitals to see which can offer the cheapest solution for your procedure because first off you don't know exactly what's wrong until you get to the hospital. Second, you're currently suffering from serious injuries and need to get to the closest hospital. This is why just about the entire developed world apart from the US has nationalised healthcare. Is it completely free of issues? No. Are there some markets where private healthcare can offer better service? Yes. However, you don't have people going into financial ruin because they needed emergency medical care.
I would guess lobbying.
Politics are dumb but very important.
You do need some checks and balances because what's to stop a hospital from profiting off the insurance companies by asking for a CT scan/whatever of every single patient just because they can.
I suppose we could have the government run the hospitals too. But noooooo, that's never going to work out because communism or something.
Maybe we should try effective altruism and accelerationism instead? Let's just hand over all our money to a few tech bros and then we can go beg them to pay for the scans. And if they don't pay for it, surely someone will come up with a cheaper technology to do the same. Yes, that'll definitely work.
The patient saying no. Also a system where the patient isn’t forced to use insurance.
We could have markets run the hospitals but heaven forbid people would consent to their economic interactions.
"Hello! My mother is clutching her chest. She may be having a heart attack. Could you please email me an estimate for the treatment? I'm talking to two other car dealers, and I've read all the posts about the 4 square method online, I'm on to your tricks."
You could just get rid of the for-profit medical industry entirely and then there would be no incentive to over treat patients.
Yes. Hence the rest of my comment. I should've probably put a "/s" at the end. :)
Yes, it's clear why it's legal and necessary to some extent. In a for-profit system, a doctor's office or hospital, every procedure or test the doctor can order (and have the patient pay for) will generate profit. Doctors have an incentive to order as many tests as possible. I assume that most doctors are somewhat honorable and won't abuse this too much, but they'll probably still err on the side of ordering as many tests as possible not necessarily because of profits, but because more tests gives them more information.
Meanwhile, in a for-profit system, an insurance company will generate the most profit by agreeing to as few tests and procedures as possible. So, they will have an adversarial relationship with doctors and will try to arrange as few tests and procedures as possible. My guess is that the average insurance company is less ethical than the average doctor, so they're probably more likely to refuse to allow tests that are actually medically necessary.
In a sane system, there would be a neutral referee, the government, who would resolve disputes and severely punish any actor in the system that was behaving badly. But, AFAIK that only rarely happens in the US, where the idea is that the "invisible hand of the free market" will magically make it all work.
This would conceivably be true for car repair as well. A mechanic is incentivized to order as many repairs as possible for a car.
So why don’t they?
The answer is many-faceted, but the main ones are (a) professional ethics, (b) reputation, and (c) second opinions which kinda feed into b.
Any provider whether doctor/mechanic/wedding photographer/whatever is also incentivized to serve their customers well by selling them only things that truly benefit them.
We don’t need insurance companies in all those other industries to prevent providers from using an infinite-billing hack to generate infinite money.
Great example, mechanics are notorious for ripping people off.
Doctors do not directly profit from ordering tests. They get paid whether they order a test or not.
You want to know who profits from over testing? Quest Diagnostics.
https://bergermontague.com/quest-diagnostics-pay-1-79-million-settle-false-claims
These guys literally defrauded the government, but everyone points their fingers at poor people, doctors, liberals, ethnic minorities, lgtbq people, ect. The problem is corrupt businesses and their CEO's hoovering up as much money as they can so they can shove it up their ass.