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

[twinstead]

Well, it might be somewhat tautological, but according to my definition, coercing or tricking somebody to work for you (i.e. sell you his labor), or to buy your product, is not allowing him to do so of his own volition. The government should prohibit (or otherwise punish) the use of fraud or the use of threats by one party to induce another party into transacting.

Child labor, to the extent that the child is not mentally capable of entering into a labor transaction voluntarily, should be prohibited. Dangerous working conditions should be allowed as long as they are disclosed, or at least not fraudulently concealed. I don't see anything wrong with price gouging, or monopolies for that matter, as long as they happen naturally without government facilitation. Monopolies almost always do require government facilitation.

To me exploitation involves removing the element of volition or agency from the one being exploited. This can certainly happen through deception.

You honestly appear to believe that Laissez-faire capitalism is the way to go--more power to you. I'm skeptical

 

[sunmaster14]

Apart from the whole death being generally not a temporary state thing?

Well, according to the NICE, death is merely a reduction in quality adjusted life years (QALY) by the expected amount you had remaining. For example, according to the US social security actuarial life tables, the death of a 50 year old male only results in a reduction in expected life of 29.5 years. Since many of those are low quality (towards the end, especially), that might only be 24 QALY, which the NICE values at £720,000, or about $1 million.

Things get a little more complicated when, as almost always happens in the real world, you're not talking about certain death, but rather just a risk of death.

 

[Wudang]

Well, according to the NICE, death is merely a reduction in quality adjusted life years (QALY) by the expected amount you had remaining.

No. Absolute distortion. Show your reasoning.

 

[Aber]

The solution to a drug being too expensive for a needy person to afford is to provide a subsidy to the needy person so he can buy the drug. I see no reason why this subsidy should be provided by the drug company. Why can't a charity, or even the government, do it?

Not necessarily.

In many cases the actual cost of the drug itself is a very low proportion of the final price. The drug companies choose a sale price that they think will maximise their revenue; however if there is un-met demand because the price is too high, they could increase their revenue by dropping prices.

 

[Wudang]

And I'm sorry, I have tried several times to post something that is polite but....
how the hell can you compare the complexity of a A/C system or a smartphone to the human body? When I was at Uni I knew quite a few people who dropped out of medical degrees because of the workload and got 1st class BScs. Then the medics still have more training before they're let loose. My friends who worked in a call-centre selling smartphones got a 1-page flyer. No information asymmetry? Sure some things like the thin-layer chromatography kit I used to test for h.pylori is pretty clear. But the knowledge and experience to know what to test for? Way beyond me.
Sorry I come across as rude but I am completely amazed anyone can think anything close to this.

 

[sunmaster14]

No. Absolute distortion. Show your reasoning.

I did show my reasoning, and it's not a distortion in the slightest. How about if you show yours?

The NICE calculations value all quality-adjusted life years the same, where quality is determined by the happiness of the individual to whom it is being applied. It doesn't take into account if that person is loved by many people or a few, whether that person is good or bad, smart or dumb, productive or lazy, likely to save other people or hurt them, etc.

It's a very simple calculation, and subjective value judgments are explicitly ruled out, which is probably all you want from a government bureaucracy. In a price-based system, however, such value judgments can be incorporated implicitly. A poor person who is beloved by many can probably raise the money needed for an expensive, life-saving drug. A poor dickwad probably couldn't.

 

[sunmaster14]

Not necessarily.

In many cases the actual cost of the drug itself is a very low proportion of the final price. The drug companies choose a sale price that they think will maximise their revenue; however if there is un-met demand because the price is too high, they could increase their revenue by dropping prices.

What price to charge is a decision for the drug company to make, and presumably its marketers are aware of the price elasticity of demand.

 

[sunmaster14]

And I'm sorry, I have tried several times to post something that is polite but....
how the hell can you compare the complexity of a A/C system or a smartphone to the human body? When I was at Uni I knew quite a few people who dropped out of medical degrees because of the workload and got 1st class BScs. Then the medics still have more training before they're let loose. My friends who worked in a call-centre selling smartphones got a 1-page flyer. No information asymmetry? Sure some things like the thin-layer chromatography kit I used to test for h.pylori is pretty clear. But the knowledge and experience to know what to test for? Way beyond me.
Sorry I come across as rude but I am completely amazed anyone can think anything close to this.

The human body is complex, but it's not like there is an upgrade cycle that you have to keep up with. It doesn't change. Even diseases don't change. I used to be something of a computer whiz 20 years ago. Now, I feel like a fish out of water. I used to be able to make simple repairs on my car. Now I have no clue and simply have to trust the auto repair guy (or get a second opinion).

There's not a lot of subjectivity left in the medical field, actually. Using a battery of test results (or symptoms - which, by the way, can be better observed by oneself than explained to a 3rd party), I've found that it is almost always possible to do as good a job as a typical doctor in diagnosing a disease or determining the best treatment using the information on the internet. Or at least sanity check what he says. Frankly, the only thing keeping primary care physicians in business is that the government has anointed them the gatekeepers for prescription drugs and other medical procedures.

As for how hard it is to become a doctor, I don't know about the UK, but in the US, the best and the brightest are not attracted to clinical medicine. Research, sure, but not clinical work. There's an old joke that goes like this. Q: "What do you call the guy who graduated last in his class at medical school?" A: "Doctor."

 

[Wudang]

It doesn't change.

Yes it does. There are even whole branches of medicine : eg geriatrics. And 32 years later I'm still a programmer though I've moved from IBM/360 assembler to Linux and java webservices.

Even diseases don't change.

Evolution c.f MRSA and many diseases are still poorly understood e.g. scleroderma.

As for how hard it is to become a doctor, I don't know about the UK, but in the US, the best and the brightest are not attracted to clinical medicine.

I didn't say "best and brightest" - I said people looking to graduate with a medical degree : M.D ChB in this case which means anyone looking to be a G.P.

 

[jimbob]

Sunmaster, do you believe that exploitation is a real thing?

I'm beginning to think he does not

Of course. But in a free market where transactions are voluntary, I don't think it is. Sure, markets aren't perfectly free, and not everybody is acting out of their own volition, but it's close enough. Invariably, when you see exploitation in the market, it's because of some collaboration between a corporation and government. A corporation is really not capable of exploiting anybody without the government's help.

That's just silly.

If I own a town, and you happen to be born there, I could make it so that you couldn't leave without owing me more money than you have (I own the roads out, and charge you more than you have to use them). I could then keep you in effective servitude.

All it needs is for one of your ancestors to have had the misfortune to end up in the clutches of me or my ancestors and you are stuck until there is governmental intervention.

In the specific case of the Southern US, all it could have taken would be for your ancestors to have been slaves, and thus having very few options where they started out.

Luckily, we do have laws, and governments do recognise that economic power is real, and can be abused.

To refine the question, are you saying that prior to government intervention, child labor, monopolies, price gouging, dangerous working conditions, etc didn't exist?

Well, it might be somewhat tautological, but according to my definition, coercing or tricking somebody to work for you (i.e. sell you his labor), or to buy your product, is not allowing him to do so of his own volition. The government should prohibit (or otherwise punish) the use of fraud or the use of threats by one party to induce another party into transacting.

Child labor, to the extent that the child is not mentally capable of entering into a labor transaction voluntarily, should be prohibited. Dangerous working conditions should be allowed as long as they are disclosed, or at least not fraudulently concealed. I don't see anything wrong with price gouging, or monopolies for that matter, as long as they happen naturally without government facilitation. Monopolies almost always do require government facilitation.
To me exploitation involves removing the element of volition or agency from the one being exploited. This can certainly happen through deception.

Your preferred model was tried in the 19th Century. There is a reason why it was rejected in the US as well as my country.


How do you come to the highlighted conclusion?

Local monopolies are perfectly able to be set up without governmental support. Look at what happened in company towns, and where slum landlords had all the available land. Look at parts of India and Bangladesh where people are still kept in poverty traps. They have no resources, and are lent just enough money to buy food and the raw materials to sell to their creditors. They have no way out.

 

[Emily's Cat]

You must have missed the post where sunmaster recognized the existence of what he defines as exploitation, and said that it was not ok. What sunmaster's post about death really means is that you and Emily's Cat define exploitation more broadly than he does.

But I suspect that you will both agree that exploitation includes at least his definition. And I suspect that you will both agree that what he defines as exploitation is not ok.

It's a matter of nuance. I define most of sunmaster's explanation as fraud, not as exploitation.

Fraud: the crime of using dishonest methods to take something valuable from another person

Exploit:
1) to use (someone or something) in a way that helps you unfairly
2) to make use of meanly or unfairly for one's own advantage

Beyond that, yes, sunmaster defined it out of existence - he seemingly says that the removal of volition or agency constitutes exploitation... but coercion doesn't count as removal of volition or agency, and as long as death is the only other option, there's still a choice. <insert skeptical smiley here>

 

[Emily's Cat]

And I'm sorry, I have tried several times to post something that is polite but....
how the hell can you compare the complexity of a A/C system or a smartphone to the human body? When I was at Uni I knew quite a few people who dropped out of medical degrees because of the workload and got 1st class BScs. Then the medics still have more training before they're let loose. My friends who worked in a call-centre selling smartphones got a 1-page flyer. No information asymmetry? Sure some things like the thin-layer chromatography kit I used to test for h.pylori is pretty clear. But the knowledge and experience to know what to test for? Way beyond me.
Sorry I come across as rude but I am completely amazed anyone can think anything close to this.

I couldn't figure out a polite way to address that either. I opted for the "ignore it and move on" approach

 

[Emily's Cat]

What price to charge is a decision for the drug company to make, and presumably its marketers are aware of the price elasticity of demand.

How well does price elasticity work for a necessary, non-commodity good in a monopoly situation?

 

[Emily's Cat]

There's not a lot of subjectivity left in the medical field, actually.

this is so completely amazingly wrong I don't really know what to say.

Here's something to chew on. In the developer side of smartphones, there are pretty well documented best practices. There are almost no standards of practice in medicine because almost every situation is unique in at least one aspect, and there are multiple ways for a condition to present and progress.

 

[jimbob]

That's exactly what I needed! Thank you for providing better wording for me .

Ziggurat... That's the tradeoff that twinstead was talking about, that's the situation I'm talking about.

The current situation is one in which a cure exists. The drug companies have a large range of possible prices, and have chosen prices that maximize their profit. That price point is one that means many people will die because they can't afford it. The drug company could make a profit with a lower price and help many people live... but they have chosen a price that maximizes their profits at the expense of lives.

The assumption that is usually made is that drug companies are justified in setting such incredibly high prices, because they need the money for R&D. They need that money so they can go on to invent other drugs. Twinstead objected to that viewpoint. You objected to Twinstead's objection.

Thus we have a disconnect. Your position (based on recent posts as I understand them) is that it's better to have a cure that some people can't afford than to have no cure at all. At face value, I agree with you - it is trivially true.

The problem is that this isn't what's being compared. This isn't what twinstead was opining on, and it's not what I've been talking about. It's such a trivial element of the situation that I didn't even realize that's what you were talking about.

I'd say it is more clear-cut than that. The suggestion isn't that drugs companies need large profits, it's the idea that if the US system was more cost-effective, somehow the pace of research would falter and there is an unstated assumption that sufficient amounts of this research would be on essential treatments, not what's most profitable.

Here it is:

The supposed free ride incudes allowing our healthcare providers to use their bulk buying power to negotiate good prices with the drugs companies as opposed to preventing this with legislation.

Right. To somebody who understands economics, that's called getting a free ride. If the US did the same thing, investments in medical R&D would dry up because investors would know that, even in the unlikely event they create a blockbuster drug, their profit would be constrained by politics.

It also includes not spending about 30% on administration and marketing.

Administration and marketing is the cost of having a free market with competition. You could say the same thing about other areas of the economy. A lot of money could be saved if we only had one car company, or one computer software company, or one smartphone company. Think about all of the duplicated effort in creating iOS and Android. Or Apple OS and Windows. The average corporation in the developed world spends over 10% of revenues on sales and marketing. Microsoft spends close to 20%. Marketing is an important part of a free market. It seems like a waste of resources, but it both informs the consumer and provides a platform for competition. In fact, studies have shown that in markets where advertising is restricted, prices are higher than in markets where advertising isn't restricted (in apples to apples comparisons).

 

[jimbob]

How well does price elasticity work for a necessary, non-commodity good in a monopoly situation?

You define it away as not being necessary. And it can't be a monopoly because

Monopolies almost always do require government facilitation.

Despite there being lots of evidence from history that this isn't the case.

Well, it might be somewhat tautological, but according to my definition, coercing or tricking somebody to work for you (i.e. sell you his labor), or to buy your product, is not allowing him to do so of his own volition. The government should prohibit (or otherwise punish) the use of fraud or the use of threats by one party to induce another party into transacting.

Child labor, to the extent that the child is not mentally capable of entering into a labor transaction voluntarily, should be prohibited. Dangerous working conditions should be allowed as long as they are disclosed, or at least not fraudulently concealed. I don't see anything wrong with price gouging, or monopolies for that matter, as long as they happen naturally without government facilitation. Monopolies almost always do require government facilitation.
To me exploitation involves removing the element of volition or agency from the one being exploited. This can certainly happen through deception.

 

[jimbob]

I just remembered that I had composed a long response to your posting of this once before, but I don't think I ever posted it. Here it is, in all of its glory:

(Despite having putting a cap in Abel, Cain ain't so capable.)


Barriers to entry: Why are these high in health care? Anybody with a medical degree can hang out a shingle. There are probably a lot of areas where you don't even need an advanced degree: Elder care, transport, consulting. Just holding hands at the nursing home is a valuable health care service. The bigger stuff hardly has unusually high barriers to entry. A group of doctors can build or buy a medical imaging center for an investment of $1MM. Get the government out of the way, and you could actually have scans read by radiologists in India. How much does a hospital cost in comparison to a car factory or a semiconductor fab?

We tried unregulated healthcare - it was a disaster. The FDA prevented a Thalidomide tragedy in the US.

The two examples you have given (the car industry and the semiconductor industry) are industries that do have significant barriers to entry.

Information Asymmetry: Why is there something magical about health care versus, say, buying a car (especially a used one) or a smartphone or a house? I have little idea how a smartphone works these days, but I feel I can learn about a disease (diagnosis, treatment, prognosis) in a matter of minutes on the internet. Where is the kind of asymmetry that you have when buying a used car (or getting service on a car) or a house? The seller may know about hidden problems with a car or a house, or the auto service center may lie about what your car needs, but what could the health care provider do to deceive you? Is he going to lie to you about your test results? It's difficult for him to lie about what those results mean or what to do about them. That stuff is easily available on the internet for free, and it's always recommended to get a 2nd opinion for anything serious. Furthermore, there are doctor and hospital ratings sites all over the internet. If you can make a good decision about which hotel to stay in or which restaurant to dine in based on consumer feedback, I think the same should be true for choosing a provider or a course of treatment.

Your argument is silly.

An unscrupulous doctor could easily state that unnecessary treatment is needed just to get the money. They could recommend more expensive treatments rather than what they'd consider the best choice.

A dentist in my town was recently struck off for stating that patients needed fillings when they didn't - it was a nice little earner for him. The patients had little idea about that.

If I buy a house from someone and they have mislead me I can sue, depending on contract law. If a doctor gives me bad advice and I die, I can't sue.

Read the real-life example that Emily's Cat gave

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.

A smartphone, however, will meet minimal standards of functionality, and you can change it after your contract has expired, or upgrade beforehand or simply buy another and they all probably cost less than a single trip in an ambulance in the US.

Bad decisions aren't reversible: In most cases, they are. You try physical therapy for a while, and it doesn't work, so you go to a different therapist. Or you try medicine or surgery. I'll grant that you better think long and hard before you ask a surgeon to lop off your penis because you always wanted to be a woman. But even that isn't irreversible these days.

There are plenty of situations where they are. And the most important ones are the ones where bad decisions aren't reversible.

Consumers don't have lots of time to shop around: If you're lying in the street unconcious and bleeding to death because you just got hit by a bus, then, yes, getting the best deal is not your first priority. But that's what catastrophic insurance is for, or perhaps a prepaid urgent care plan. The funeral industry has successfully sold people on prepaid funerals and plots of land because most people understand that their loved ones will be susceptible to being ripped off while in a highly emotional state. As for 95% of health care decisions, you have plenty of time. Even in the case of a cancer diagnosis, there are generally days or even weeks of discussion and research before deciding on an action plan. And there is nothing stopping you from switching providers in the middle of treatment.

I am struggling to be polite here - but that isn't how most humans behave when they or their loved ones are under mortal threat.

Indivisible Benefits and Costs: Not sure what Cain means here, which I suppose is part of the problem when you present somebody else's argument from 5 7 years ago instead of your own. I'll assume he means that there are negative externalities of somebody else's poor health. If somebody refuses to pay for their own insurance, for example, society will cover the cost when they get sick. That's true for serious stuff, maybe not so true when it comes to quality of life type things. In any case, how is giving these people subsidized health insurance any different than just giving them free health care when they show up at an emergency room. Where's the cost savings?

Children: Huh?

Early treatment tends to have a better prognosis and cost less. Preventative treatment often is even better.

Someone could work with a bad back but be less productive.

Someone could have TB and be unable to afford the treatment. Whilst they are slowly dying, they are infectious and they could infect many other people. Some of these then use the unregulated free market and buy a long course of antibiotics to treat the disease, but because of the lack of oversight, the bacteria has developed immunity to that antibiotic (and indeed most other antibiotics). Again, we have a model for this - India and the rest of the Indian Subcontinent. It has a sufficiently large middle class (>200-million) for there to be a market in healthcare but little effective regulation.

Bureaucrats: Under single payer, you're dealing with government bureaucrats. Under comprehensive health insurance, you're dealing with insurance company bureaucrats (although, here you would have the option of changing insurers, maybe). With less comprehensive plans, it would be just you for most health care transactions.

Under your proposed system, it would make sense for insurance companies to employ people to specifically find (spurious) reasons why treatments shouldn't be paid for. This is one thing that the ACA addressed.

People with preexisting conditions, or family histories, presumably should just find the most comfortable way to die in your preferred system.

 

[sunmaster14]

It's a matter of nuance. I define most of sunmaster's explanation as fraud, not as exploitation.

Fraud: the crime of using dishonest methods to take something valuable from another person

Exploit:
1) to use (someone or something) in a way that helps you unfairly
2) to make use of meanly or unfairly for one's own advantage

Beyond that, yes, sunmaster defined it out of existence - he seemingly says that the removal of volition or agency constitutes exploitation... but coercion doesn't count as removal of volition or agency, and as long as death is the only other option, there's still a choice. <insert skeptical smiley here>

Coercion absolutely counts as denial of volition or agency, and hence, being a necessary element of exploitation, can be exploitation. My point was that offering somebody an additional choice, which they wouldn't have had, while not removing or undermining any other choices, is not coercion and therefore cannot be exploitation.

You're the one who is attacking strawmen. Consider a scenario where a man with a wallet full of cash finds himself dying of thirst in the desert just a day's walk from safety. I happen by, and I have a gallon of water. I offer to share my water with the man, but only if he gives me the contents of his wallet. Is that "nice?" No, probably not. Is it exploitation? No.

The problem is that you twist that scenario into one where a man with a wallet full of cash finds himself walking in the desert with just enough water to make it to safety. I happen by, take his water, and then offer to give it back to him if he gives me the contents of his wallet. That is a different situation, do you agree? The key is that the man would have been better off, or at least as well off, if I hadn't shown up.

 

[sunmaster14]

How well does price elasticity work for a necessary, non-commodity good in a monopoly situation?

It works just fine, even for your strawman situation. There is nothing in this world which is both an absolute necessity and a non-commodity good.

 

[sunmaster14]

this is so completely amazingly wrong I don't really know what to say.

Try this search.

Commoditization of health care is a real thing, and it has been going on for decades. Maybe you can find examples where it's difficult to find substitutes for, say, a particularly skilled surgeon (I actually gave an example regarding a treatment for pancreatic cancer), but those would still represent a tiny percentage of health care spending. My guess is that north of 95% of spending is on completely commoditizable medical services.

Here's something to chew on. In the developer side of smartphones, there are pretty well documented best practices. There are almost no standards of practice in medicine because almost every situation is unique in at least one aspect, and there are multiple ways for a condition to present and progress.

Your smartphone example is poor because the upgrade cycle is about 2 years. What I knew about smartphones even four years ago is completely obsolete today. This is true for most purchase decisions consumers face these days, although not in health care.

As for the claim that there are almost no standards of practice in medicine, that's very silly. The vast majority of doctors are just following rulebooks and protocols that they've learned in medical school or as a resident. Expert systems, i.e. computer programs, are increasingly being used for diagnosis. Once again, you can find certain examples at the outer edge of human medical knowledge where standards of practice haven't been solidified, and where doctors are forced to use their judgment, but that represents a tiny fraction of health care spending.