American healthcare did a fuckery
My fellow Americans, I regret to inform you that our beloved health insurance industry has done a major fuckery. I know this is hard to believe, given the probity and honor we associate with our fine insurance companies, but the evidence is incontrovertible.
Back in 2019, the Trump administration ordered insurers and hospitals to start disclosing their prices, despite tens of thousands of comments filed by employers, insurers and hospitals objecting to the proposal.
This is one of those pox-on-all-your-houses/you-can’t-get-there-from-here situations. The Trump admin wanted to continue the fiction that the blame for America’s worst-in-class health care was the result of bad market dynamics. Without transparency on pricing and service, employers can’t shop for plans, hospitals can’t know if they’re getting a bad deal from insurers, and sick people are denied information needed for effective bargaining.
That’s all true, as far as it goes. The stubborn, remarkable opacity of American health-care pricing is an enormous source of mischief. Two patients receiving the same procedure, medicine or service might see bills that are thousands of dollars apart, at the same hospital, delivered by the same personnel.
Without price transparency, patients can’t know if they’re getting ripped off. But if you know that the hospital charged the person in the next bed $3 for the Tylenol tablet that you got charged $300 for, you can go to the hospital billing department and say, basically, “Oh, come the fuck on — seriously?” and maybe get $297 knocked off your bill.
That’s why insurers and hospitals don’t want price transparency. Hospitals don’t want insurers to know that they’re getting gouged, and insurers don’t want their competitors to know that they’ve cut sweetheart deals that are being subsidized by eye-popping profits extracted from their rivals.
Ending those practices will make marginal improvements to US healthcare, but only marginal ones. The problem with health-care isn’t that it’s an imperfect market — it’s that we treat it as a market at all. Markets may help organize and allocate discretionary goods and services, but the core of healthcare is not discretionary.
Fundamentally, an unconscious person in cardiac arrest being loaded into the back of an ambulance cannot send a price-signal by shopping for a hospital emergency room and directing the driver to take them there. Even less extreme examples — cancer treatment, insulin, a sick child, a broken bone — do not lend themselves to market dynamics.
Health care always turns into a planned economy. The only question is: who plans it? Right now, we have a monopolized health-care supply-chain, with a handful of companies controlling insurance, hospitals, pharma, pharmacy benefit managers, hospital beds, powered wheelchairs, etc. Each of these sectors is locked in a death-battle with the others, fighting to shift profits from one balance-sheet to the other — but no matter which one wins, the rest of us lose.
There’s a reason that Americans pay more for worse health outcomes, and why American medical professionals get paid less for worse working conditions, than their counterparts abroad. A hospital chain and an insurance company might be well-matched for negotiating power and thus able to arrive at an equilibrium that lets both of them thrive — but workers and patients are disorganized and atomized, and we’re easy pickings for both insurers and hospitals.
Sure, hospitals and insurers fight over us, but the prize they’re seeking is the right to drain our wallets — not the right to win our business through excellence. They are not our champions, they are our tormentors, and whichever one wins, we lose.
Back to transparency. Despite the tsunami of bad-faith objections to publishing prices, the Trump admin enacted the rule, because the rule was key to the pretense that the market for health-care could be fixed — while the alternative was that it should be abolished and subsumed into a single-payer system, like the ones that every other rich country with successful healthcare use.
The insurers and hospitals switched tactics: they simply ignored the rule. Months went by. Deadlines passed. The prices remained a secret, or were publishing in incomplete form, or in obscure formats that couldn’t be readily understood or compared. The Biden admin threatened the sector with fines and public draggings, with increasing severity as the stalemate continued.
Then the insurers switched tactics. Over the summer, the nation’s mammoth insurance companies began dumping enormous amounts of price-data — and I do mean enormous. Humana dropped 400 billion prices in 500,000 CSV files totaling 600TB.
https://developers.humana.com/Resource/PCTFilesList?fileType=innetwork
That pales in comparison to the dumps from Unitedhealthcare — a private-equity backed behemoth that scooped up dozens of smaller companies — whose 250TB dump of 100,000,000,000 prices:
https://transparency-in-coverage.uhc.com/
[Image ID: Alec Stein’s chart showing the scale of the insurance pricing dump.]
All told, the industry has produced more than a trillion prices. Writing on Dolthub, Alec Stein contextualizes this unimaginably large dump: larger than English Wikipedia, the Library of Congress, Libgen, and all of Netflix — combined:
https://www.dolthub.com/blog/2022-09-02-a-trillion-prices/
Where did all this data come from? The insurers are breaking out prices by “who’s paying, who’s getting paid, what they’re getting paid for, plus some extra fluff to keep track of versioning,” combining all of these to produce generally meaningless distinctions that only serve to chaff the data so it can’t be readily parsed.
This is pure malicious compliance, a monopolist’s version of work-to-rule whereby they follow the letter of the law in a way that is clearly designed to frustrate the spirit of the law. Stein — who works for Dolthub, and wants to highlight the power of its database product — has thinks we can still wrangle all that data.
He proposes reducing the amount of data by 99% by eliminating extraneous metadata, as well as data on rare procedures at the margins of health care. Then, he wants to parse the remaining data through “data bounties” that pay data scientists to perform specific tasks — Dolthub already did this for a smaller set of hospital data, and it worked:
https://www.dolthub.com/blog/2022-07-01-hospitals-compliance/
Then, Stein says, we can further whittle the data down by zeroing in on the 70 codes required by Medicare, and break those out by hospitals by using Medicare’s “national provider identity” codes.
All of this will be useful work. Assigning precise dollar-figures to the dysfunction of a commercialized healthcare sector is a necessary-but-insufficient precursor to creating a sensible universal system. Likewise, this data will be useful for the the DoJ and FTC when they block future mergers and unwind existing ones.
You can help! Stein wrote custom scrapers for each insurer’s dumps and posted them to Github, and you can scrape the data yourself:
https://github.com/alecstein/dolt_datascience/tree/master/transparency_in_coverage_filesizes
As useful as all of this will be, don’t take your eyes off the prize. America has the worst-performing, most expensive healthcare in the rich world. Fixing it means more than tinkering in the margins with price transparency. Health is not a market — it’s a human right.
[Image ID: Ticker-tape parade for presidential candidate Richard Nixon in New York in 1960.]
