CBO: Obamacare costs revised downward, again. Finds lower than expected premiums.

[Emily's Cat]

If the large buyer completely dominates the market, then it isn't a competitive market. It will distort cost-benefit feedback from the end consumer. In particular, if the government is involved, you don't get cost-benefit feedback from the end consumer at all. What you get instead is politics, which tends to favor those who are the noisiest or most well-connected.

Just for consideration, I think that a lot of medicine cannot be a free market ever. It's a monopoly on the part or the manufacturer. In many cases, those manufacturers exploit tacit coercion in order to command a significant portion of the buyer's surplus from the negotiation.

If the choice is between bankrupting oneself to afford the drug and getting to stay alive or not getting the drug and dying... I'm not really sure that's a valid exercise of agency. Kind of like if you have a choice of killing your dog while a gun is pointed at your head and staying alive, or letting your dog live and being shot... that's not really a "choice" to kill your dog, is it?

 

[Emily's Cat]

although I will note that future generations will probably be a lot wealthier than people alive today (putting aside the negative effects of global warming), so maybe we should give more weight to the welfare of those presently alive.

I don't understand your reasoning for this. Why would current poverty translate to greater weight given today? I suspect I'm missing a piece of this.

 

[Emily's Cat]

Sorry been rather busy and my tendency to abruptness surfaced.
Briefly there exist mechanisms for patients and doctors to report how medicines work. This is taken sufficiently seriously that practically any reported side effect is recorded and will be on the leaflets which accompany the medicine. A nice crib sheet for hypochondriacs.
There are bureaucrats in the process but primarily the selection of treatments is by experts with a very big emphasis on being evidence-based and a lot of reaching out. Unlike the politicians who prefer debunked economic theories. There's a decent and reasonably sized article on wk which shows the scope of the assessment.

The methodology that NICE uses is actually pretty good and objective. My company has actually applied that approach to create a drug tiering schema that's based on the relationship between cost per course of treatment and QALY (Quality of Life Years Remaining). If QALY is very high, then it's a good deal even if the cost is very high. If QALY is very low, it's a bad deal even if it's a cheap drug. Things like antibiotics have nearly infinite value, because they're typically very inexpensive but the literally keep people from being dead which is, as one might expect, a pretty high measure of the quality of future life span .

 

[Emily's Cat]

You could do that same unfunny, ignorant and completely disingenuous analysis in every other market too. The idea that health care isn't amenable to free market dynamics is a liberal fallacy. Even if I were to grant that emergency health care transactions require government intervention (and I don't, there are many markets for emergency services which work quite well) that still leaves 98% of health care consumption available for free market reform.

I know we've had this discussion before jimbob. The fact that you keep recycling the same old tripe is not encouraging.

I'm a big proponent of free markets. I'm also a health actuary. I personally don't think that health care can work with free market dynamics.

At its heart, a free market assumes that both parties can be knowledgeable about the transaction. Not that both parties are knowledgeable, but that they can be. That's not the case in health care. The vast majority of medicine is not reasonably knowable by an average person. It is unreasonable to think that an average person can make fully informed decisions about their health care and the appropriate cost to them for that service. The amount of knowledge required is huge (thus ages of schooling to become a doctor).

In addition to the extreme disparity in information, you've also frequently got time limits that preclude the patient's ability to do independent research. Often the patient is incapacitated and unable to even begin researching whether that ER doc should have done that particular procedure or a different one. Even if not incapacitated, expecting a cancer patient to do research on the various treatment options available to him, do the price comparisons among many different oncologists and cancer treatment centers, let along anesthesiologists and surgical centers... well, it's simply unreasonable. It's why doctors exist in the first place - so that they can give expert advice on a complicated topic.

In that case, the people setting the price hold all the cards. It's reasonable to expect some oversight to be in place to prevent exploitation of that information and urgency gap.

 

[sunmaster14]

Just for consideration, I think that a lot of medicine cannot be a free market ever. It's a monopoly on the part or the manufacturer. In many cases, those manufacturers exploit tacit coercion in order to command a significant portion of the buyer's surplus from the negotiation.

If the choice is between bankrupting oneself to afford the drug and getting to stay alive or not getting the drug and dying... I'm not really sure that's a valid exercise of agency. Kind of like if you have a choice of killing your dog while a gun is pointed at your head and staying alive, or letting your dog live and being shot... that's not really a "choice" to kill your dog, is it?

Actually, people make these kinds of choices all the time. They just don't realize it in such stark terms. I've had friends who drove on bald tires because they were too cheap to buy new ones (or otherwise drove a car in unsafe or less safe condition). From the perspective of expectation value, they were clearly placing a very low value on their lives. Taking a job as a coal miner similarly involves trading health for money. Or living in a bad neighborhood.

In most cases, tradeoffs in health care are not any different from tradeoffs in other areas of life. They're falsely perceived as different, which is why we are where we are I guess.

 

[Shalamar]

I'm a big proponent of free markets. I'm also a health actuary. I personally don't think that health care can work with free market dynamics.

At its heart, a free market assumes that both parties can be knowledgeable about the transaction. Not that both parties are knowledgeable, but that they can be. That's not the case in health care. The vast majority of medicine is not reasonably knowable by an average person. It is unreasonable to think that an average person can make fully informed decisions about their health care and the appropriate cost to them for that service. The amount of knowledge required is huge (thus ages of schooling to become a doctor).

In addition to the extreme disparity in information, you've also frequently got time limits that preclude the patient's ability to do independent research. Often the patient is incapacitated and unable to even begin researching whether that ER doc should have done that particular procedure or a different one. Even if not incapacitated, expecting a cancer patient to do research on the various treatment options available to him, do the price comparisons among many different oncologists and cancer treatment centers, let along anesthesiologists and surgical centers... well, it's simply unreasonable. It's why doctors exist in the first place - so that they can give expert advice on a complicated topic.

In that case, the people setting the price hold all the cards. It's reasonable to expect some oversight to be in place to prevent exploitation of that information and urgency gap.

So.. How would one use a free market health care system when one is having a heart attack? Would I be able to shop and choose my doctor or hospital to make sure I get the best bang for my buck?

It seems that not advocating for a free market health care system makes one a filthy evil liberal communist.

Perhaps we should do trickle down health care? Give health care only to the elite, and the rest of the health care will trickle down to the unwashed masses?

 

[sunmaster14]

I don't understand your reasoning for this. Why would current poverty translate to greater weight given today? I suspect I'm missing a piece of this.

Because future generations will be wealthier due to the labor and ingenuity of those generations which came before. So they're benefiting economically from our work. If we soil the planet a little bit while we're doing that work, it should come out of their benefit. They're still net winning to us having been around.

 

[sunmaster14]

I'm a big proponent of free markets. I'm also a health actuary. I personally don't think that health care can work with free market dynamics.

At its heart, a free market assumes that both parties can be knowledgeable about the transaction. Not that both parties are knowledgeable, but that they can be. That's not the case in health care. The vast majority of medicine is not reasonably knowable by an average person. It is unreasonable to think that an average person can make fully informed decisions about their health care and the appropriate cost to them for that service. The amount of knowledge required is huge (thus ages of schooling to become a doctor).

I disagree. I think I'm far more clueless about buying a new smartphone or dishwasher, getting my car or house fixed than I am about deciding on the right treatment for some ailment. The world is amazingly complex now, and so there is a market for people who facilitate information flow and help consumers to make good choices. Health care isn't any different.

In addition to the extreme disparity in information, you've also frequently got time limits that preclude the patient's ability to do independent research. Often the patient is incapacitated and unable to even begin researching whether that ER doc should have done that particular procedure or a different one. Even if not incapacitated, expecting a cancer patient to do research on the various treatment options available to him, do the price comparisons among many different oncologists and cancer treatment centers, let along anesthesiologists and surgical centers... well, it's simply unreasonable. It's why doctors exist in the first place - so that they can give expert advice on a complicated topic.

Once again, I disagree that any of that is unique to health care. Only 2% of health care spending is on the ER, so even if you're right that emergency treatment isn't amenable to free markets (and I disagree about that too; it's possible to make these decisions beforehand - hence insurance) that leaves 98% which is.

By the way, if my air conditioning conks out during a heat wave, I kind of have the same problem getting it fixed in an emergency situation. Worse, actually, because probably a lot of other people require air conditioning repair services at the same time. Somehow, we've gotten by without regulating air conditioning repair.

 

[Ziggurat]

Wow. No.

Option A: Applying X now will save a near-definite Y lives.
Option B: Not Applying A now means that Y lives will nearly-definitely perish... but maybe someday (and there's no guarantee) some new Q might be invented, and that Q could maybe (not certainly) save more than Y lives over the course of future history.

Preferring Option A is NOT synonymous with preferring that more people die. Not in any way. Not even a little bit. Even with a bunch of rhetoric and semantic games rubbed all over it, it isn't synonymous at all.

There really is nothing more to be said on this topic.

Those are not the options I presented, and those are not the options Twinstead presented.

If you don't want to talk about what twinstead talked about or what I talked about, fine. You really don't have to, there's no obligation. But don't talk about something else and pretend that it's what I talked about. It isn't.

 

[jimbob]

If we had an actual free market, then most of these problems would disappear. First of all, in a free market there are no barriers to entry, and this assumption holds up particularly well in the case of health-care where anyone can start a local business. All of this competition means lower prices for you (and lower profits for business). Second, consumers are informed (no asymmetries); they're not swayed by silly superstitions and they don't need something like ten years of training. Moreover, bad decisions are perfectly reversible and consumers have lots of time to shop around. Third, indivisible benefits and costs: not happenin' here. When other people get sick and die, it's on them. Some people -- yes, I'm talking about communists -- like those two old white guys in the video -- will complain about how much is lost in "worker productivity" on account of days missed due to tooth aches and chest pains. Well, boohoo. Fourth: the children. It's actually better if fewer kids see doctors because it toughens them up. It's like my doctor says, "what doesn't kill you can only make you stronger." This may sound counter-intuitive to you. If it does sound counter-intuitive, then you're stupid, and you need to get your "duh-face" checked out... if you can. Fif: no government bureaucrats. Instead of decisions made by some poindexter in Washington who thinks he knows more than your doctor, under a free market they'll be made by some business major in Connecticut who doesn't care if he knows better than your doctor.

You could do that same unfunny, ignorant and completely disingenuous analysis in every other market too. The idea that health care isn't amenable to free market dynamics is a liberal fallacy. Even if I were to grant that emergency health care transactions require government intervention (and I don't, there are many markets for emergency services which work quite well) that still leaves 98% of health care consumption available for free market reform.

I know we've had this discussion before jimbob. The fact that you keep recycling the same old tripe is not encouraging.

OK - I haven't found your arguments convincing. Here's my commentary on the parody broken down:

First of all, in a free market there are no barriers to entry, and this assumption holds up particularly well in the case of health-care where anyone can start a local business. All of this competition means lower prices for you (and lower profits for business).

I would argue that there are significant barriers to entry into the market and rightly so. We saw what happened when there weren't - the phrase "snake oil salesmen" came from then​

Second, consumers are informed (no asymmetries); they're not swayed by silly superstitions and they don't need something like ten years of training. Moreover, bad decisions are perfectly reversible and consumers have lots of time to shop around.

Again, how do you get over the fact that there are massive asymmetries in knowledge and time. Supposing I break my leg - I am not going to be able to shop around for the best emergency doctor.​

Third, indivisible benefits and costs: not happenin' here. When other people get sick and die, it's on them. Some people -- yes, I'm talking about communists -- like those two old white guys in the video -- will complain about how much is lost in "worker productivity" on account of days missed due to tooth aches and chest pains. Well, boohoo.

Presumably, this is just for the greater good, as research into a me-too viagra drug that gets round patents is somehow better for human health over time than working out a system for providing known treatments for illnesses to as many people as possible​

Fourth: the children. It's actually better if fewer kids see doctors because it toughens them up. It's like my doctor says, "what doesn't kill you can only make you stronger." This may sound counter-intuitive to you. If it does sound counter-intuitive, then you're stupid, and you need to get your "duh-face" checked out... if you can.

A snarky way of putting it - but your preferred approach will have massive numbers of people who can't afford treatment. Of course, that means that heard immunity is less, so that you would be more likely to need treatment yourself.​

Fif: no government bureaucrats. Instead of decisions made by some poindexter in Washington who thinks he knows more than your doctor, under a free market they'll be made by some business major in Connecticut who doesn't care if he knows better than your doctor.

You practically made this point yourself.​

Just for consideration, I think that a lot of medicine cannot be a free market ever. It's a monopoly on the part or the manufacturer. In many cases, those manufacturers exploit tacit coercion in order to command a significant portion of the buyer's surplus from the negotiation.

If the choice is between bankrupting oneself to afford the drug and getting to stay alive or not getting the drug and dying... I'm not really sure that's a valid exercise of agency. Kind of like if you have a choice of killing your dog while a gun is pointed at your head and staying alive, or letting your dog live and being shot... that's not really a "choice" to kill your dog, is it?

Bingo.

I'm a big proponent of free markets. I'm also a health actuary. I personally don't think that health care can work with free market dynamics.

At its heart, a free market assumes that both parties can be knowledgeable about the transaction. Not that both parties are knowledgeable, but that they can be. That's not the case in health care. The vast majority of medicine is not reasonably knowable by an average person. It is unreasonable to think that an average person can make fully informed decisions about their health care and the appropriate cost to them for that service. The amount of knowledge required is huge (thus ages of schooling to become a doctor).

In addition to the extreme disparity in information, you've also frequently got time limits that preclude the patient's ability to do independent research. Often the patient is incapacitated and unable to even begin researching whether that ER doc should have done that particular procedure or a different one. Even if not incapacitated, expecting a cancer patient to do research on the various treatment options available to him, do the price comparisons among many different oncologists and cancer treatment centers, let along anesthesiologists and surgical centers... well, it's simply unreasonable. It's why doctors exist in the first place - so that they can give expert advice on a complicated topic.

In that case, the people setting the price hold all the cards. It's reasonable to expect some oversight to be in place to prevent exploitation of that information and urgency gap.

And this

 

[Ziggurat]

If the large buyer completely dominates the market, then it isn't a competitive market.

There's a word for that: monopsony.

 

[jimbob]

There's a word for that: monopsony.

He's used that word, but in the case of international markets for drugs it is inappropriate.

There are plenty of buyers in the international market.

 

[Ziggurat]

Just for consideration, I think that a lot of medicine cannot be a free market ever. It's a monopoly on the part or the manufacturer. In many cases, those manufacturers exploit tacit coercion in order to command a significant portion of the buyer's surplus from the negotiation.

The monopoly you describe applies to patented drugs, but I don't see why it would apply to non-patent drugs, and I don't see why it would apply to other health care costs such as hospital stays or physician services.
https://www.cms.gov/research-statis...onalhealthexpenddata/downloads/highlights.pdf
According to that link, prescription drugs were only about 10% of health care spending in 2014. And that includes both patented and off-patent drugs, so the percentage of health care spending on drugs subject to monopoly pricing is going to be less than 10%. Drug costs are not our primary health care spending problem.

 

[Ziggurat]

He's used that word, but in the case of international markets for drugs it is inappropriate.

There are plenty of buyers in the international market.

Sure, there are plenty of buyers, but restrictions on the import/export of drugs can still create monopsonies within countries. If, say, there's only one buyer in England, and there's only one buyer in Germany, and drugs bought in England can't go to Germany and vice versa, those buyers don't really have to compete with each other. They are still effectively monopsonies.

 

[Emily's Cat]

So.. How would one use a free market health care system when one is having a heart attack? Would I be able to shop and choose my doctor or hospital to make sure I get the best bang for my buck?

It seems that not advocating for a free market health care system makes one a filthy evil liberal communist.

Perhaps we should do trickle down health care? Give health care only to the elite, and the rest of the health care will trickle down to the unwashed masses?

I can't tell if your post is aimed at me (in response to what I wrote) or if it's using my post as a springboard.

 

[jimbob]

Sure, there are plenty of buyers, but restrictions on the import/export of drugs can still create monopsonies within countries. If, say, there's only one buyer in England, and there's only one buyer in Germany, and drugs bought in England can't go to Germany and vice versa, those buyers don't really have to compete with each other. They are still effectively monopsonies.

Except it doesn't work like that - they might be locally dominant providers of healthcare, but they are not dominant buyers as far as a multinational corporation is concerned.

I also am under the impression that the NHS model is pretty rare. Insurance-based systems are more common.

 

[Emily's Cat]

Because future generations will be wealthier due to the labor and ingenuity of those generations which came before. So they're benefiting economically from our work. If we soil the planet a little bit while we're doing that work, it should come out of their benefit. They're still net winning to us having been around.

Ahh.

Sure, I suppose, as long as we don't soil it so much that those future generations really aren't able to live here I guess. I mean, if we muck it up so much that we create a desert of the whole world, maybe there won't be so much benefit from us economically?

 

[jimbob]

I heard a comic say that the reason why the free market works when they want to go to the restaurant is the same reason why they don't want an unfettered market in healthcare.

 

[Emily's Cat]

I disagree. I think I'm far more clueless about buying a new smartphone or dishwasher, getting my car or house fixed than I am about deciding on the right treatment for some ailment. The world is amazingly complex now, and so there is a market for people who facilitate information flow and help consumers to make good choices. Health care isn't any different.

Hmm. I don't think I've ever seen dishwashers presented as being a more complex decision than a cancer treatment option If nothing else, I'm gonna go out on a limb and say that the consequence of selecting the wrong smartphone is a bit less disastrous.

Once again, I disagree that any of that is unique to health care. Only 2% of health care spending is on the ER, so even if you're right that emergency treatment isn't amenable to free markets (and I disagree about that too; it's possible to make these decisions beforehand - hence insurance) that leaves 98% which is.

By the way, if my air conditioning conks out during a heat wave, I kind of have the same problem getting it fixed in an emergency situation. Worse, actually, because probably a lot of other people require air conditioning repair services at the same time. Somehow, we've gotten by without regulating air conditioning repair.

No, it's not unique, but it's far more common in health care. And not just ER. I'll share a personal anecdote here, by means of illustration. Several years ago I had a uterine fibroid that was undiagnosed. It hemorrhaged, and I nearly bled to death. ER gave me fluid to keep me alive, but really only stabilized me. I had 4 weeks in which to decide on a course of treatment that ranged from full hysterectomy to embolization, all of which had different costs, different recovery times, and different impacts on my fertility, as well as how much risk I had if I were to become pregnant. I had four week in which to try to decide whether I wanted to have kids in the future, how long I would be out of work for recovery, and how much I could afford... as well as find the proper doctor to do the work (including possibly a surgeon), book the procedure, and arrange for a blood transfusion (with all the decisions about risk that go with that). I have more medical knowledge than your average bear, and at the end of the day, there was a whole lot that I just did whatever my doctor told me to do. I ended up choosing myomectomy because it was the only one that gave me the option to have kids and had a moderate recovery time. As for which surgeon, which anesthesiologist, which hospital, etc? I did what I was told. I didn't question - the amount of research would have been prohibitive, and I didn't have either the time or the emotional bandwidth to deal with it all. I was a bit more concerned about not being dead, as well as making arrangements for my family just in case something went wrong on the operating table.

I'm inclined to think that being hot is maybe a slightly less critical decision.

 

[Emily's Cat]

Those are not the options I presented, and those are not the options Twinstead presented.

If you don't want to talk about what twinstead talked about or what I talked about, fine. You really don't have to, there's no obligation. But don't talk about something else and pretend that it's what I talked about. It isn't.

How is that not what you were talking about?