In order to make healthcare in the US cost less, something that is currently being paid for has got to go away.
This is some super back of the napkin stuff. I'm just looking at each aspect of the healthcare industry and estimating how much inefficiency (profit) there is to eliminate by looking at the margins of the largest player in that industry.
Anthem financials: https://finance.yahoo.com/quote/antm/financials/ - $20B profit on $92B revenue. Assuming this is roughly the same as other insurance providers in the $967B industry, there's ~$200B in savings.
Pfizer financials: https://finance.yahoo.com/quote/PFE/financials/ - $42B profit on $53B revenue. The pharmaceutical industry in the US is $935B so there's another ~$750B in savings. We're at $950B now.
HCA healthcare (largest hospital system in the US): https://finance.yahoo.com/quote/HCA/financials/ - $18B profit on $47B revenue. Hospitals are also at ~$1T, so there's another $380B in savings.
So there's $1.2T in savings. There are surely other parts of the US healthcare industry I'm missing but there's also a lot to be saved by vertically integrating everything.
Anthem financials: https://finance.yahoo.com/quote/antm/financials/ - $20B profit on $92B revenue. Assuming this is roughly the same as other insurance providers in the $967B industry, there's ~$200B in savings.
Anthem is an HMO, not "just" an insurance company. They tend to make higher margins specifically because they're more cost efficient and correspondingly have more profit, so extrapolating from that is somewhat misleading.
But even using your numbers, $200B is not "the problem" here -- that's around 5% of the money being spent, and because of the nature of insurance tends to scale down with other costs and remain at the same percentage of the then lower absolute costs when other costs are reduced.
Pfizer financials: https://finance.yahoo.com/quote/PFE/financials/ - $42B profit on $53B revenue. The pharmaceutical industry in the US is $935B so there's another ~$750B in savings. We're at $950B now.
People still want Lipitor and Zoloft, so that's all still there unless you regulate drug prices, which you can do or not independent of single payer (but that has its own problems).
And you can't just write off all profits as "we don't need that let's get rid of it" -- it's just measuring risk adjusted reward on capital. To have a hospital you have to put down millions of dollars to buy MRI machines and everything else, which then gets paid back with interest over a period of years. If it's private that comes from the investors and then the "profit" is their interest on the investment. Making the hospital "public" doesn't deprive you of the need to raise money to pay for equipment and then pay interest on it, unless you're going to pay 100% of the costs up front out of taxes in year zero -- and deprive the taxpayers of the interest they would have collected on the same money in the meantime.
But if the federal government is the one borrowing that money from itself (the Fed), it is much cheaper.
Then you're assuming that an entity that gets all the money it asks for at low interest rates is going to spend it efficiently and not have that cause price inflation. This is the opposite of what we see in practice when we e.g. subsidize student loans.
You're also then taking on all of the risk that the investors had been. You could pay millions of dollars and then lose it to anything from an act of terrorism to having bought a million dollar piece of equipment (or five thousand of them in five thousand hospitals) that then become obsolete overnight when someone releases a phone app that can replace it. But when that happens and you bonded against the government's credit, there is no filing bankruptcy to clear the debt, you still owe all the money even if what you bought with it is now worthless.
Comments
This is some super back of the napkin stuff. I'm just looking at each aspect of the healthcare industry and estimating how much inefficiency (profit) there is to eliminate by looking at the margins of the largest player in that industry.
Anthem financials: https://finance.yahoo.com/quote/antm/financials/ - $20B profit on $92B revenue. Assuming this is roughly the same as other insurance providers in the $967B industry, there's ~$200B in savings.
Pfizer financials: https://finance.yahoo.com/quote/PFE/financials/ - $42B profit on $53B revenue. The pharmaceutical industry in the US is $935B so there's another ~$750B in savings. We're at $950B now.
HCA healthcare (largest hospital system in the US): https://finance.yahoo.com/quote/HCA/financials/ - $18B profit on $47B revenue. Hospitals are also at ~$1T, so there's another $380B in savings.
So there's $1.2T in savings. There are surely other parts of the US healthcare industry I'm missing but there's also a lot to be saved by vertically integrating everything.
Anthem is an HMO, not "just" an insurance company. They tend to make higher margins specifically because they're more cost efficient and correspondingly have more profit, so extrapolating from that is somewhat misleading.
But even using your numbers, $200B is not "the problem" here -- that's around 5% of the money being spent, and because of the nature of insurance tends to scale down with other costs and remain at the same percentage of the then lower absolute costs when other costs are reduced.
People still want Lipitor and Zoloft, so that's all still there unless you regulate drug prices, which you can do or not independent of single payer (but that has its own problems).
And you can't just write off all profits as "we don't need that let's get rid of it" -- it's just measuring risk adjusted reward on capital. To have a hospital you have to put down millions of dollars to buy MRI machines and everything else, which then gets paid back with interest over a period of years. If it's private that comes from the investors and then the "profit" is their interest on the investment. Making the hospital "public" doesn't deprive you of the need to raise money to pay for equipment and then pay interest on it, unless you're going to pay 100% of the costs up front out of taxes in year zero -- and deprive the taxpayers of the interest they would have collected on the same money in the meantime.
TANSTAAFL.
But if the federal government is the one borrowing that money from itself (the Fed), it is much cheaper.
Then you're assuming that an entity that gets all the money it asks for at low interest rates is going to spend it efficiently and not have that cause price inflation. This is the opposite of what we see in practice when we e.g. subsidize student loans.
You're also then taking on all of the risk that the investors had been. You could pay millions of dollars and then lose it to anything from an act of terrorism to having bought a million dollar piece of equipment (or five thousand of them in five thousand hospitals) that then become obsolete overnight when someone releases a phone app that can replace it. But when that happens and you bonded against the government's credit, there is no filing bankruptcy to clear the debt, you still owe all the money even if what you bought with it is now worthless.