Discussion about this post

User's avatar
Max Borders's avatar

My follow-up conversation with ChatGPT resulted in:

1) What percentage of US healthcare expenditures are considered for routine care (as opposed to catastrophic care)?

Estimate: Approximately 40-50% of US healthcare expenditures are associated with routine care, while catastrophic care accounts for the remainder.

Routine care includes preventive services, regular check-ups, screenings, management of chronic conditions, and minor illnesses.

Catastrophic care includes high-cost treatments like trauma, surgeries, cancer care, ICU stays, and advanced procedures.

2) What percentage of routine care is paid through one's health insurance policy (as opposed to out-of-pocket or through one's HSA)?

Estimate: Approximately 70-80% of routine care costs are covered by insurance policies.

These costs include annual checkups, primary care visits, diagnostic tests, and screenings, often covered with minimal copays or deductibles.

The remainder is typically paid out-of-pocket or via HSAs. HSAs specifically cover a smaller share (~5-10%) due to their more selective use among Americans with high-deductible health plans (HDHPs).

3) If we were to reform US healthcare such that ALL routine care was paid out of an HSA or out of pocket, what sorts of cost savings could be realized for the system, including due to price competition?

Potential Cost Savings:

Administrative Simplification:

Routine care billing through insurance involves substantial overhead (e.g., claims processing, pre-authorizations, administrative staff). Paying directly could save an estimated 15-20% of routine care costs due to reduced administrative expenses.

Price Transparency and Competition:

Out-of-pocket payments would likely encourage price transparency and competition among providers, potentially lowering costs by an estimated 10-30%. For example:

Direct primary care clinics already show reduced costs compared to insurance-based pricing.

Providers would offer clearer pricing for routine services to attract cost-conscious patients.

Consumer Behavior Changes:

Patients spending their own money tend to use healthcare services more judiciously, potentially reducing unnecessary tests or procedures. This could reduce routine care spending by an estimated 5-15%.

Increased Efficiency:

Transitioning routine care to HSAs or out-of-pocket payments could encourage innovation, such as more telemedicine or community health solutions, further reducing costs by 5-10%.

Total Estimated Savings: Combining these factors, systemic cost savings could range from 25-50% of routine care expenditures. For the total US healthcare system, this reform might yield 10-20% overall cost reductions, depending on how effectively competition and efficiency improvements are realized.

Expand full comment
Max More's avatar

Excellent list! I was going to do something similar, so you saved me the work. I can refer people to this piece.

Expand full comment
13 more comments...

No posts