Mark Cuban is a good dude trying to figure out tough problems. CostPlus Drugs is awesome at injecting price competition into several spaces that need it.
But healthcare is complex and simple solutions aren’t always the best solution. He had some thoughts on financing healthcare in a blog post a few weeks ago:
Hypothetically, It should look like 1955 (I picked this year because of Back to the Future :). Patients go to providers for care. Providers provide that care. Patients get a bill and if they can afford it, they pay that bill. That’s it.
The ONLY question in healthcare should be “How should care for people who can’t afford to pay for their care be paid?”
Let me reintroduce one of my favorite health economics exhibits.
As you can see the spending distribution in the US is extremely right hand skewed (really few people are really expensive!)
Here are some of the relevant numbers from the same brief:
Bottom 50% of the spending distribution in 2016 has an average spend on all healthcare utilization of $276 in 2016 dollars.
Top 1% of the spending distribution in 2016 has an average spend on all healthcare of $110,003 in 2016 dollars.
As I disclose in my health economics class, my utilization history in 2024 is pretty close to the median American. I got a flu and covid shot. I went to urgent care once. I had a dental visit. I picked up either one or two $4 generic prescriptions at Walmart and bought a 365 pill bottle of Costco brand Zyrtec plus some chicken noodle soup, tea and honey for a head cold that would not shake itself for a few days.
I’m lucky. I should see my PCP more. I am starting to get to that age. But almost any system of healthcare finance “works” well enough for me. I can do cash pay with catastrophic insurance (I am lucky to have assets). I can do the ACA with either a Gold or Bronze plan. I can do Medicare for All. I can do the current system of the state of South Carolina insuring me in a high deductible plan. Any of these systems work well enough for me.
And sure, finding ways to reduce administrative costs would be great but it would do almost nothing. For most of the over 150% Federal Poverty Line population, we already have a system of high-ish deductibles and substantial out of pocket spending that makes most day to day care and little acute episodes already not insured. People are hideous shoppers though.
The real money in the US healthcare system is for the “people who can’t afford to pay for their care be paid”
Pragmatically, almost no one can afford to pay to be in the top 1% of US healthcare spend over multiple years (many can’t do it for a day or a year as is). Being in the top 1% can be a persistent condition if you need complex biologics still on patent to keep cancer suppressed for instance. Figuring out how to pay and finance care for the top X% of the US healthcare spending distribution is a nasty ugly problem (5% of the population is 50% of the spend retrospectively). Given the level of assets/savings in the US, the X% is highly likely to be well above the top 5%. I would guess the big challenge is the top 20% to 30% but that is both a judgement call and a moral/political decision, not a technocratic one.
Yes, improving administrative efficiencies and making the system easier and more transparent to use and understand are good things that will, on the margin, likely reduce costs, but the big challenge is that the US healthcare system (hell any system in a middle or upper income country globally) is paying for care for a fairly small population and not worrying too much about paying for care for the bottom 50% of the retrospective spending distribution. That particular problem is easy.
Baud
Health expenditure for the dead is zero. #GOP
Doug
And it should not look like 1955 nearly three-quarters of a century later in any event. In 1955, if you had a heart attack, you died. If you had a big enough stroke, you died. If you got cancer, unless you were very lucky, you died. Life expectancy in the 1950s was, roughly speaking, 10 years less than it is in the 2020s.
Taking that as a desirable baseline is stupid, as a moment’s reflection should have told Cuban. (And if there was anyone between Cuban and the Publish button, they should have told him that, too.)
Those top costs? Nationalize them. The USA of the 2020s is the richest country in the history of humanity, it is the original new and improved giant economy-sized economy. Let’s act like it.
cain
@Doug: Cuban was focused on the payment and finances not actually going back to 1955. It was a baseline on how payments were being done back then.
To some extent, in India healthcare is mostly affordable with the availability of doctors quite easy to have. Today, I can’t get a doctors appointments for a few weeks. My wife can’t see a neurologist after a concussion. I mean.. it’s almost like 1955.
David Anderson
@Doug: We already mostly do nationalize the top 1% of spend between Medicare covering both old people (65+ is 3x as likely on a per-capita basis to be in the Top 1% of spend) and ESRD/ALS patients and then Medicaid for the Aged, Blind and Disabled category of eligibility.
greengoblin
There also needs to be a definition of “afford.” Is it 10% of income? 30%? How much of an impact should health care costs have before it is considered unaffordable?
NeenerNeener
In my case, “unaffordable” are the MS drugs my neurologist would like me to take. Ocrevus isn’t covered by my Med Advantage plan and is around $100k per infusion. If Harris was elected I would have had a $2000 annual cap on Keysimpta, which my plan does partially cover. But the way things are going now that cap will disappear and that medication would be $125k a year.
Cost Plus Drugs only charges $12 a bottle for generic Aubagio, which isn’t as effective anymore as it was when I started on it back in 2018, but unless Trump and RFK the lesser start messing around with what Cuban charges I can afford that. I just may end up permanently in a wheelchair.
Doug
@David Anderson: Yes, I figured we did (as I have learned from years of your posts, among other sources). We, collectively, can also afford to move down the curve some, too.
Perhaps one day there will be a Republican party that would negotiate about where the right spot on the curve is for collective action. Today is not that day.
Old Man Shadow
As a liberal, my response to your data is to say that we should put everyone in one insurance pool and it would be cheaper for everybody.
But if i try to turn off empathy and compassion and think like MAGA, I would say insurers should be able to drop expensive people and tell them to fuck off and die so shareholders can pocket the savings.
Matt
Counterpoint: Mark Cuban is one of the direct reasons we have Trump now, because the DNC worried that campaigning with too much populism would offend him.
The best thing he could do to “figure out tough problems” is invite Elmo, Bezos, and Zuck for a helicopter ride and then fly it into the nearest active volcano.
divF
@Matt: Throw in Marc Andreassen and you’ve got a deal.
Bill Hicks
I appreciate the point and it is important, but my god, that is a bad graph. There should be a title and it should explain the difference between the dotted and continuous lines. Yes, I did click through to the article, and yes, I figured out the dotted line is being used as a reference, the graph itself is a great example of bad graph labeling/titling.
H-Bob
I had an emergency room visit a few months ago (was there several hours but no procedures) — I received at least five or six different bills (hospital, 3 separate doctors, lab tests, emergency vehicle) and I have no idea what else could be coming. A patient needs to have an accounts payable department to keep up!