This guy is way out of his depth.

[1] https://www.rand.org/pubs/external_publications/EP71133.html

From the graphic the insurers take in $371.6b and pay out $241.9b in medical services costs.

That’s $130b on a pointless activity that uses up physical resources that would be better deployed elsewhere in the economy.

Healthcare needs to be provided as a matter of course, and “competition” won’t improve it or control it because there is always a supply side shortage of provision.

That’s a difficult problem to solve, but solving it by forcing a huge bill on expectant mothers and cancer victims, etc in a futile attempt to control demand is not the way.

Which is why the rest of the world charts a different path.

Overall, there are lots of nitpicks with this article but my personal takeaway is: if this is the best defense people can make for the US medical insurance system then that shows how bad it really is.

The most efficient medical experiences I have had have both been ones where there were no insurance involved:

1. A USCIS surgeon, that was like 80 years old, running his own office, everything via check, on paper. Guy put more patients through per day then the big hospital systems special immigrant medical services did.

2. A specialized Eye Surgeon who did my wife's ICL eye surgery (which insurance wont cover). Ended up being the most efficient practice I've seen, every follow up and pre-surgery meeting was not separately billed. Just the surgery was. Eye Doctors / Surgeon spent a ton of time with you. And they had massive amounts of flexibility. But even the out of pocket surgery was probably less than an insurance covered surgery at a hospital.

> Your interaction with the health insurer, on the other hand, feels like a struggle against an enemy who wants to destroy you.

Exactly, the big factor driving healthcare costs is that people like expensive providers. They like the fancy plan that covers their doctor, that doesn't limit them to a community hospital. Any choice that involves retaining even the slightest market leverage is a deal breaker for many people. I think all the clever stuff we do to optimize costs and increase transparency is worth doing and helpful, but like, it will still be expensive. We want that!

Meanwhile it is not really better to go to an expensive doctor, in terms of health outcomes. So the public health problem is to stop people (and employers) from voluntarily wasting their money on healthcare, so we can use it for better stuff.

The problem is that people knee-jerk blame the one who they are giving money to. People think the teams are "Me and doctor vs. greedy insurance" whereas the reality of the situation is much more "Me and insurance vs greedy doctor".

The article mentions one example of this, which is that part of "provider costs" is actually paying for the provider to wrangle with the insurer. But even apart from such direct costs, the care is distorted in various ways in order to comply with the insurer's whims. One you hear about a lot is doctors ordering tests that likely aren't really necessary, simply to avoid having the insurer deny something later because they didn't go through all the required motions.

Another reason that "profit margin" is grossly inadequate as a measure of cost or inefficiency is that it doesn't count the actual "work" done by the companies, even though a lot of it simply doesn't need to be done. There are thousands of people with jobs in insurance companies that simply do not need to exist because most of what the industry does simply doesn't need to be done. The leeching is not just a matter of shareholder returns or executive salaries. All the salaries of everyone working for insurance companies are a form of waste. (Okay, probably not all, since even with a saner system some bookkeeping would need to be done, so if you look at the net difference it's not a total waste. But it's more than just shareholders and executives.)

A 22% decrease and a return to providers having to consider the cost implications to their patients would be a good thing.

("Return" I know a 95 year old doctor who said he still carries some guilt from keeping a poor guy in the hospital an extra night back in 1955 days because he couldn't get some blood tests done quickly enough. $5. "We only need medical insurance because we have medical insurance" ain't too far wrong)

I will say this: profit margin % is not the yardstick by which we should measure whether insurance companies are responsible for high health care costs in the US.

OTOH, this is a world where many people get yelling-and-cursing angry with a bottom-tier Post Office clerk in (say) Podunk, Montana over the latest increase in the price of 1st Class postage stamps. When that decision was made by a bunch of executives in Washington DC. Whose names the clerk doesn't even know.

Why is there always a supply-side shortage?

No, it's much worse than that. How much time and money is spent by medical providers dealing with the billing?

Arguably at least twice as much -- the insurers have economy of scale that providers can't match.

And that's before you even get to the direct time and stress impacts on the consumer from bullshit denials.

Just go look for the local debate in any country with government healthcare and look for the parties who are pushing for change and their complaints.

Then ask yourself if you really would want the current administration in charge of your healthcare... if you'd like every four years to be a coin toss for how your healthcare was going to be for the next four years.

People arguing for public health care, are you ready to say you want Donald Trump to be in charge of your health insurance instead of a private provider? (because we're not in a magical fairy land where government is efficient and agrees with everybody's priorities)