Healthcare Prices
Below Is Redundant
See the main page for why it’s redundant. Just keeping it for reference.
Why Socialized Medicine is More Expensive.
Based on the interview transcript with Andy Schoonover, the core argument about high U.S. healthcare costs centers on perverse financial incentives created by the current system. Here is a summary of his key points regarding the problem and his proposed CrowdHealth solution.
Summary of the Problem: Why Prices are High
Andy Schoonover argues that the U.S. healthcare system is structured so that both the sellers (hospitals/doctors) and the buyers (insurance companies) want prices to rise, creating a powerful upward pressure with no natural market force to lower costs.
| Stakeholder | Reason for Wanting Higher Prices | Explanation from Transcript |
|---|---|---|
| Healthcare Sellers | Profit Maximization | Hospitals and medical systems, even non-profits, aim to maximize revenue. This aligns with the general desire of sellers in any market for higher prices. |
| Healthcare Buyers (Insurers) | Profit Caps Under ACA | The Affordable Care Act caps insurer profits as a percentage of premiums. To make more profit in absolute dollars, insurers need premiums to rise. Therefore, rising healthcare costs and claims are in an insurer’s financial interest. |
Schoonover simplifies this dynamic by stating: “if the buyer and the seller of a service want the price to go up, the price is going to go up.”
The CrowdHealth Model: A Proposed Solution
CrowdHealth is presented as a direct alternative that seeks to reverse these incentives.
| Feature | How It Differs from Traditional Insurance | Intended Outcome |
|---|---|---|
| Payment Method | Members pay providers directly in cash. | This eliminates insurance bureaucracy, leading to providers offering discounts of 30-60%, as they get paid immediately without administrative overhead. |
| Cost Coverage | Members pay the first $500 of any medical event. The community funds the rest, not an insurance pool. | Creates “skin in the game.” Members care about prices because they pay the first portion and rely on a community that expects fair costs. |
| Incentive Alignment | No profit motive from denying care. The company’s fee covers negotiation and advocacy services. | Aligns the company’s success with successfully funding member bills and negotiating lower prices. |
| Freedom of Choice | No networks. Members can see any doctor. | Enables shopping for care and increases competition among providers. |
Schoonover’s own story of his daughter’s $8,000 denied claim inspired this model. He claims his family now saves about $10,000 a year compared to a high-deductible ACA plan.
Important Considerations About CrowdHealth
While promoted as a solution, the model has limitations, as noted in other sources:
- Not Regulated Insurance: It is a crowdfunding community, not licensed insurance. There is no guarantee of payment, and regulatory oversight is different.
- Eligibility Restrictions: It does not accept smokers, individuals over 65, or those with certain health profiles. Pre-existing conditions have waiting periods.
- Member Responsibility: Members must often pay bills upfront and get reimbursed, which requires financial liquidity.
Only under communism is responsibility seen as a bad thing.