Healthcare Fixed: No Insurance Needed, Same Doctors, 60% Less - David Goldhill

Proven Podcast

David Goldhill, founder of Sesame Care and author of 'Catastrophic Care,' joins The Proven Podcast to dissect why U.S. healthcare costs 40% of global

Key takeaways

• The U.S. pays 40% of the world's healthcare costs despite being only 3% of the population, primarily because it drives global medical innovation.
• Medical innovation is largely designed for the American market due to its willingness to pay high prices, making other countries dependent on U.S.-driven advancements.

Main topics

• U.S. healthcare spending vs. global innovation
• Impact of insurance and government payers on pricing

Notable quotes

"The quality of healthcare everywhere else on earth depends on the United States."

"We're paying 70%, 80% of the cost of innovation and getting 3%, 4%, 5% of the benefit. That's an imbalance."

Conclusion

David Goldhill argues that fixing U.S. healthcare requires moving away from insurance-driven models toward

Transcript preview

Speaker 1 (0:00) Welcome to The Proven Podcast, where we don't care what you think, only what you can prove. America pays 40 % of the world's healthcare bill. We're 3 % of the population. Today, David Goldhill, founder and CEO of Sesame, joins the show to break down why that happens, why the system is broken, and what he's building to fix it. The show starts now. Hi, everybody. Welcome back. I'm excited for this one. David, thank you for joining us. Great to be here. So for the four or five people out there who don't know who you are, could you kind of explain who you are a little bit about your background and then go from there? Speaker 2 (0:34) Please don't tell me that's 100 % of your audience. That's it. I know it isn't. But for the many people who don't know who I am, I'm David Goldhill. I'm the founder and CEO of Sesame, sesamecare.com, which is a marketplace for healthcare services. There Speaker 1 (0:50) you go. So what have you done before you got to Sesame? So people are like, all right, what are we walking into? What are your claims to fame? Speaker 2 (0:56) Well, I don't know I have any claims to fame, but I did have a long career as an entertainment executive, mostly in television. I ran television at Universal Studios. I ran the Game Show Network. I built a television network in Russia, which is now a very popular place and made a bunch, distributed a bunch of television shows, also helped. run a movie theater chain. So your classic entertainment executive goes to healthcare story. Speaker 1 (1:22) Yeah, I've heard it so many times because our healthcare system works oh so well right now. It's one of the things that you and I are completely aligned on is that healthcare is just a show. And it's my own show and I should be able to curse, but yeah, I should. So in this situation, healthcare is ridiculously broken. And I wanted to talk about that because we pay more than anyone else and we subsidize the entire world. You and I have had this conversation before we started recording. Let's get the audience kind of caught up on that when we talk about that we're subsidizing the rest of the world. Let's walk through that for them. Speaker 2 (1:55) Well, it's a little complex because it's not what we first see, right? What we first see is people around the world seem to get health care for a lot less money than we do. And many of those systems, particularly in Western Europe, feel more universal and easier to access than ours. That's terrible. Underneath it is something much more complicated, which is the United States has the only free enterprise healthcare system on Earth, where we don't control prices and we don't have hospitals and doctors as either employees of the state or owned by the state. And a lot of people think that's bad. But the interesting thing... is that's why almost all of the innovation in healthcare on earth is designed for the American market. Every innovator, no matter where they are, makes the bulk of their money selling to Americans in the American healthcare system, whether it's new drugs, which gets a lot of attention, or new devices, or new software. Even new treatment protocols tend to come from people practicing first in America. Why? Because you're free to do so. You have an incentive to do so. Even your local doctor is probably competing against somebody, so she's more likely to buy the latest equipment and get a start to that manufacturer trying to sell something. As a result of this, and again, not easy, not intuitive, basically the quality of healthcare everywhere else on earth depends on the United States. The example I like to use for my own industry is you can go to a movie theater in Brussels and you can see the latest Marvel. superhero film in a fantastic screen and a comfortable chair and great concessions and priced the same. And you can say, if you've been to a crappy movie theater in the United States, boy, the movie industry in Brussels is much better than the movie industry in the United States. And you'd be wrong because all of the capital investment, all of the risk, all of the complexity is American there. And it's even more so in healthcare. Speaker 1 (3:55) So when we have that, You know, the audience is going to say, because we hear this all the time, and for those of you catching up, I spent eight years in hospice watching people die. So regrettably, I'm very familiar with this world. They're going to say, hey, you know, the same treatment in another country costs fractions of this. Where do we dispel that? How do we face that and face that argument? Yeah, so it's Speaker 2 (4:19) very difficult. I mean, I sort of compare it a little bit to NATO. Right. Which is, you know, we're defending Europe and NATO. The European countries spend almost nothing knowing the United States is going to fundamentally be the force defending us, defending them. So what do we do? We can say we're not going to defend you, but that's not in our interests. We can say defend yourselves, but they're all relatively small. And we've never been able to figure that out in NATO. Health care, strangely enough, is a bit like NATO. The quality of care on Earth depends primarily on the American market. Just to put some numbers on it, the United States is 40 % of world health care spend. We're 3 % of world population. 40 % of world health care spend. No other country matters. Systems we talk about as being equivalent of 3%, 4 % of world health care spend, they're almost insignificant. So the U.S. is driving. The most important thing in healthcare, which is the quality and level of care, innovation. And innovation, finding new treatments, new cures, is what healthcare is about. We drive that. But we do it by bearing very, very high prices and all of the risk and reward of investment. It's been a tough nut to crack. Speaker 2 (5:34) I'm sorry, let me just stop there. Yeah, so I Speaker 1 (5:37) think, you know, we talked about it before, you know, one of the great things about having the off-record calls is we go back and forth and we say things that we probably shouldn't say, but it makes it fun. But it's Speaker 2 (5:46) not Speaker 1 (5:46) recorded. One of the things... you know, we talked about is like, yeah, we can reverse this. You know, we can sit there and say, you Speaker 2 (5:51) know Speaker 1 (5:51) what, we're not going to be 40%. We're not going to spend all that money. Not a problem. We're just going to let all of our people die. And we're like, well, we're not going to do that because no one else is going to kind of step up and take that role. If we stop cutting the funding collectively across the world, it just drops because we're so used to this. I think it's a byproduct of what we did after World War II. We said, listen. I don't care who you are, where you are in the world. We're going to make sure that you can ship anything from one side of the planet to the other side of the planet. And we're going to protect the oceans. We're going to make sure you can do that. That was the idea of us. Be a part of us. We're going to protect that. We're going to go against communism. We're going to, ooh, here we are in America. We're going to do this. And we changed that for the entire world. But we've done that, as your point is, to NATO or to medicine, that we've stepped into the role of like, hey, we're going to take the hit here. We're going to pay all of this. And we're going to do all this because we want this certain level thing. But we are at a point where the market doesn't fit that anymore because going in and going and getting a pill somewhere else costs a dollar. Here it costs $1,200. That system is creating this head bunny. And there's a specific reason about that. And I'd love for you to talk about why the system is completely and utterly broken and kind of how you're trying to fix it. Speaker 2 (6:59) Yeah, so... Speaker 2 (7:02) On the one hand, it's a great thing that America benefits more from medical innovation than anyone else, so therefore it pays more than anyone else. Not a great thing we're paying 70%, 80 % of the cost of innovation and getting 3%, 4%, 5 % of the benefit, maybe 10 % of the benefit. That's an imbalance. The question is, can you solve for one problem, which is Americans are paying way too much for health care? without undermining this other great thing, which is we're the engine of world healthcare progress. And just to be clear, because some people often confuse this, it's not that everything is invented in America, far from it. It's that everything is invented for America. So researchers all over the world, their business model is we'll sell to the Americans because that's where we'll get 60, 70 % of our profit from. And if we can then sell to the British and all the rest. So the issue becomes exactly as you frame it, which is, can we get at this one thing, which is as... people were paying too high a price. And the impact on healthcare, on our finances, on people's affordability, on the choices they have to make in their lives, has become enormous, as you would expect when something went from 4 % to 5 % of GDP to almost 20 % of GDP in three generations. It's extraordinary. So this is a problem we have to solve without destroying the engine of... If we just go to a sort of socialist system, a British-style system, a Canadian system, we'll simply destroy the engine of innovation. There'll be no profits that are innovation. And without American profits and innovation, there won't be any. So we can't do that. What can we do? And so the argument that I think I and others have made is that we can bring market forces into a lot of things in healthcare that bring competition. Speaker 2 (8:50) around buying and selling and can drive price down. I mean, you know, there may be an argument that that pill should be $1,200 that first year when it's saving lives. Kind of hard to make that argument if you're out 10 years and there should be competitors. And that's something where... Yeah, we talked Speaker 1 (9:07) about this before. And it was like, the first pill cost $9 million. The second pill cost a penny. The problem is the first one to get it right costs nine because it took all the research and the studies and doing all that. I think where we'll get pushback is the idea like, well, yeah, it should cost everyone. They should also burden a great deal of this. They should pay for some of those costs. And how do we shift that? Because I don't think it's just, again, I don't think it's just a medical issue. It's across the board, to your point with NATO. We have this re-dynamic. Speaker 2 (9:37) Yeah, I mean, you're exactly right. But interestingly, the point you made. is usually, this is a tough business model. Because if I've got a business where the first one costs $900 million, because I had to do all the regulatory testing and all of the applications for approval and developing the drug and all the ones that failed, and the second pill is a penny to produce, that's usually a terrible business model. Right. Lots of other industries. That's Speaker 1 (10:09) a Speaker 2 (10:09) horrible business model in health care. It works. Why does it work? Well, the reason it works is because instead of having people compete for customer business, we have third party payers pay for everything. And what do they do? They walk in and say, what's a fair price? You don't want a fair price. That's not how capitalism works. What I want is a competitive price. And there's almost no corner of health care in which we let good old fashioned competition. drive people's prices down to marginal cost. And so what should be a bad business model winds up being too good a business model. They're protected Speaker 1 (10:42) in price. And I think this is where people are like, oh, are you a Republican or a Democrat or a liberal or conservative or conservative? Are you a capitalist or you're a socialist? And whenever I get asked that, because I get asked it all the time, my answer is always, yes. Well, I'm sorry, what? I'm like, it depends on the topic. It depends on where we are. There's different structure, different folks. And we as Americans aren't capitalists or... communist or socialist or liberals or conservatives. We're all of it. It just depends on what we're talking about. And I think there's a time and a place for everything. And I think the medical environment has gotten way out of control. I've taken... Lots of clients who are doctors. We've scaled them. They're like, I can't afford this. I just, I cannot survive anymore. I've got to go to a concierge-based environment or forget it. I'm just going to do a roll-up and we're going to take all these practices together. I'm going to exit. I'm going to go buy a bunch of poros and I'm going to go flood the fleet because it's just a broken model on every level. So I think your approach to it, this idea of bringing more capitalist competition-based is viable, but I don't think the audience would fully understand that. So I have the benefit of talking to you. Can you explain? what that model is, and then in turn, why we don't think the government can do it on their own anymore. Speaker 2 (11:48) Yeah, and I think, you know, your point about being ideologically promiscuous, oh, it's okay if I call you promiscuous. Okay, don't say it too loud. But works really well in healthcare. Because what a lot of healthcare experts talk about is what's the one perfect way to pay for healthcare? Well, healthcare is 20 % of GDP. It includes things from drugs that have been in existence for... you know, 80, 90 years to miracle personalized cures that are going to be designed just for you. It includes things from the most complex surgeries to a regular checkup that involves sitting with someone for 10 minutes and talking, right? The range of human activities and goods and services in that 20 % of GDP are gigantic. And the idea that they should all be paid for the same way, should we use third-party insurance, should we use credit, is absurd on its face. Yes. Some of those things, you're going to get relatively little benefit from competition. Some of those things should be fully competitive, right? And the same way about the safety net aspect of it, right? We certainly don't want people starving in America, and we have all sorts of ways to make sure that people who don't have food get food. We have food banks, we have food stamps, we have explicit subsidies, but we don't say because of that. Michelin-starred restaurants should be paid for the same way. We're okay with a broad variety of ways of paying for barbecues and picnics and school lunches and luxury meals. That's fine. And we understand that complexity everywhere in the economy except for healthcare, where experts sit around and say, what's the one best way to pay for everything? The biggest thing I'm saying is everything shouldn't be done the same way. There are some things insurance does really, really well, which is cover you against unusual risk, something major, something rare, something. But before you say, well, every health care condition I have is unusual and rare. I had open heart surgery a couple of years ago, and the price of it was something like one hundred and twenty, one hundred and thirty thousand dollars, which is a gigantic amount of money for everybody. Right. Right. Except. My family insurance policy costs $35,000 a year. So roughly every four years, I pay for an open-heart surgery, and I guarantee you we're not using one every four years. So here's someone who had a major thing, right, that the insurance system is designed to protect, and insurance is still a terrible deal for me. And we don't like to think about those numbers, right? We don't like to do that math. It's uncomfortable to think about it, but it is why healthcare is so expensive. Speaker 1 (14:34) I think those are the numbers that are going to get the audience most excited. You and I talked about these numbers, how it's radically changed, not only in the last year, but in the last decade, in the last few decades we've been running up to it. You deep dive into this pretty intensely. Can you talk about those numbers more, about how things are changing and the numbers that a single family is trying to deal with if they're employed versus unemployed and how it's just,