20 years ago I read a story about an obstetrician in the USA.
His premiums at that time for professional negligence were $1m per year. He would have to keep paying those premiums for 18 years after his retirement.
Same for every obstetrician.
Professional fees then must be set to cover those insurance premiums.
Has that changed for the better in the USA? Seems very unlikely to be the same in Europe.
Obstetrics is obviously a illustrative case. How are the professional negligence premiums across the other specialties?
Why does the effect of the US legal system never seem to come up much in the “US healthcare is insanely expensive” discussion? Is the effect of it really not significant?
Australians are more litigious than Americans, with similar insurance costs for doctors, yet our healthcare costs are still half of the USA's.
So insurance costs may be a factor, but its doubtful that its a large factor in healthcare costs, they largest factor is by far the public vs private system.
I experienced US healthcare when I went to visit a doctor in the US for a simple (obvious) ear infection. I was charged $600 USD for a five minute consult because the doctor wanted to milk as much $$$ from me as he could, giving me lots of unrelated/pointless blood tests (which were pointless because I was flying out the next day and wouldn't get the results).
In Australia it would have been a $65 fee paid by the government, and $10 for the antibiotics, around 1/10th of the US costs.
The problem in the US is that doctors and hospitals are incentivised to give patients unnecessary tests and medication, because it inflates their bills, and they make more profit.
I've noticed the same thing happening in Australia with private vets & vet hospitals because they are less regulated. They try and talk you into a lot of unnecessary procedures, test, and drugs because they make more profit, and the industry is not where near as well regulated as healthcare.
At least with a vet you can usually shop around, when you are sick often you cannot.
> The problem in the US is that doctors and hospitals are incentivised to give patients unnecessary tests and medication, because it inflates their bills, and they make more profit.
You’re right about what happened, but not for the wholly right reasons. The hospital charged you so much because they have to also negotiate prices with insurance companies (health insurance companies are just for-profit government agencies, they don’t actually serve a market value today) and pay for those who are uninsured. There are for-profit healthcare systems of course, but that’s only part of the story.
If the cost of the doctor’s time and the medication was $100, they can now cover let’s say 3 uninsured people for $300 each then take the other $300 you paid and book that against someone going bankrupt or a difference in negotiated cost with the insurance agency.
In America we have privatized profit for the insurance companies and socialized loss. They deny a claim, book a profit, the person with the claim doesn’t get treatment, then can’t work, then needs care, and society pays for it.
Purely from a cost perspective we should just go to single payer, but we won’t do that because who is going to the the politician that causes 10s of thousands in job losses of highly paid white collar professionals?
I was effectively uninsured as a foreigner, and had to pay for it myself hoping that I'd be reimbursed by my company later.
I had a nasty ear-infection, could hardly walk, and was in no state to argue, but the nurse gave me dozens of what they said were completely "normal procedure" blood tests from their in-house lab, which the doctor would have profited from directly. I told them I was leaving the next day and wouldn't get any results if they took a day, but they ignored and persisted.
I looked at the bill later and they were for loads and loads of completely unrelated conditions, diabetes, HIV, etc... a useless waste.
It was price gouging from the doctor directly pure and simple, no insurance providers involved, but I'm sure that normally that also adds an extra layer of silly costs.
In Australia its carefully regulated what a doctor can charge, and its a different company that does any tests, or gives out medication, the doctor or company can't profit directly from sending patients off for more testing, or for prescribing medication.
The main issue is you went to a hospital for an ear infection. You are subsidizing someone who is destitute getting a bullet wound treated potentially. The solution is the urgent care clinic for these situations. You would have paid quite a lot less. My last urgent care visit cost me $50 and I walked out with a $10 prescription.
I would need to see a citation for this story. Medical malpractice/negligence premiums are very high - OBGYNs pay some of the highest rates. Just a few google searches shows that rates can exceed $200k (annually) in some locales in 2024.
So to claim in 2004 that there are doctors paying > $1m/year in malpractice insurance is at least an order of magnitude away from what casual googling discloses.
I agree that the whole system is fucked, but I would like to make sure we are working on a solid set of base facts.
I found this article [0] from the NYTimes in 2005 that highlighted a neurosurgeon who was paying >$200k/year in malpractice premiums around that time
I totally believe you could find examples of insurance products that have increased in price 4x over the last 20 years. I have a harder time believing that obstetricians were paying $1m/year in insurance premiums 20 years ago (the claim in the GP) when obstetricians make on average around $300k per year now. You'd have to believe they gross around $1.5m to net out a $300k salary, which seems unlikely.
It’s because physician compensation is only around 8% of medical costs and physician services billed are only 14%. So that’s your limit to how much reducing malpractice insurance premiums can reduce healthcare costs.
Also over the last 20 years physicians groups have mostly been bought up by private equity, so any actual savings just gets vacuumed up as their profit.
His premiums at that time for professional negligence were $1m per year. He would have to keep paying those premiums for 18 years after his retirement.
Same for every obstetrician.
Professional fees then must be set to cover those insurance premiums.
Has that changed for the better in the USA? Seems very unlikely to be the same in Europe.
Obstetrics is obviously a illustrative case. How are the professional negligence premiums across the other specialties?
Why does the effect of the US legal system never seem to come up much in the “US healthcare is insanely expensive” discussion? Is the effect of it really not significant?