the U.S. Healthcare system: it is complicated, nothing is as it seems, and there are no silver bullets

I spent the moth of November (2018) diving into the U.S. healthcare system. I read over 50 long-form articles, played with a bunch of Medicare datasets, and read one book. Below are a few random thoughts from my learnings.

There is no 80/20 rule
We all know U.S. healthcare is messed up. Compared to other countries … the outcomes are not superior and the costs are higher. And no one thinks the experience is a lot of fun.

Going into my deep dive, I thought I would come away with one big thing we could do to fix healthcare. To my surprise and disappointment, I did not see any silver bullets (even ones that could never pass Congress).

Instead healthcare needs hundreds of very small improvements
There are hundreds of important things we can do to improve U.S. healthcare … but no one thing will likely have more than 5% improvement. Which means this is going to be a really hard problem to solve. Really hard.

Does the U.S. spend too much money?
On the one hand, of course it does. We spend roughly double per capita on healthcare than the next leading country (without better outcomes). On the other hand, we spend more per capita on almost everything. We live in way bigger houses, we have bigger yards, we drive bigger cars. We also spend WAY more than 2x per capita on higher education.

So if you look at the ration of healthcare/higher-education (I know this is a weird ratio, but stay with me), we are the lower spending G20 country (by a wide margin).

So do we spend too much on healthcare? The answer is still yes but it is not nearly as bad as people think.

U.S. consumers significantly subsidize European consumers
One of the most interesting things I learned about is the wealth transfer from the U.S. to other very wealthy countries. Many countries pay dramatically lower for the same drugs than the average U.S. price. That’s because these countries negotiate as one market … but also because the marginal price of a drug is essentially zero so the drug companies have a prisoner’s dilemma game to play with the countries and often make the calculation that some money is better than no money.

A simple solution to this (from the U.S. perspective) would be to create a law that drug prices to U.S. government buyers (like Medicare, Medicare, Veterans, Military, etc.) must not be higher than any price to any first world country (it would still be ok to sell drugs for low prices to poor countries in Africa … but not to rich countries in Western Europe). That means that the U.S. government would never pay a higher price for a drug than the market price. It would also mean that prices for drugs would be standardized since all other first world countries would follow suit and create the same rule. That shift would result in U.S. drug prices falling and European drug prices rising — ended the billions of dollars that the U.S. is currently transferring to Europe.

Summation: a month of deep dive, I know less than I did when I started the journey. Healthcare is complicated. Nothing is as it seems. People in it are really smart but also generally really conflicted.

Note: I had dozens of tutors but I want to especially thank Travis May (CEO of Datavant) and Joel Quadracci (CEO of Quad Graphics) for their guidance.

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