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

[jimbob]

I don't understand your response. The second quote isn't even me. Did you confuse me with a different poster perchance?

Ah, I was agreeing with you in a snarky manner - pointing out that Sunmaster14 seems to think that monopolies require "governmental facilitation".... Which is far from reality.

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.

Sunmaster14, you seem happy with monopolies that happen naturally, what's your view about cartels? What is there to prevent medical cartels?

 

[sunmaster14]

Ah, I was agreeing with you in a snarky manner - pointing out that Sunmaster14 seems to think that monopolies require "governmental facilitation".... Which is far from reality.



Sunmaster14, you seem happy with monopolies that happen naturally, what's your view about cartels? What is there to prevent medical cartels?

It seems to me that cartels don't work. They either can't prevent cheating among themselves, or they can't prevent competitors from arising. Inevitably, a cartel member who finds a way to make a better product, or a cheaper one, will have an incentive to undermine the rest of the cartel. To the extent OPEC has worked as a cartel (and it mostly hasn't), it is because the Saudis are, by far, the lowest cost producer, and they maintain a capacity buffer which they can use to discipline wayward cartel members. It is very costly for the Saudis to do this, however. It's doubtful that their strategy has maximized profits for themselves.

 

[Emily's Cat]

Okay, let me set you straight on this, since you're clearly just pulling numbers out of... well someplace not particularly well illuminated.

In the commercial health care market (non-Medicare, non-Medicaid, non-Military)...

In any given year,

• Approximately 20% of all insured individuals have exactly zero claims.
• Approximately 35% of claims are for preventive and routine care. This attributes to just under 40% of insured individuals.
• The remainder are acute incidents (colds, short-term illnesses, injuries) and chronic care.
• The 20% most health-burdened insureds generate over 80% of the total cost of care for all insureds
• The 5% most health-burdened insureds generate about 5% 50% of the total cost of care for all insureds

So, at the end of the day, 35% of the services provided *might* be able to be classed as commoditizable, if it weren't for the fact that there are no medical standards of practice. And that 35% of claims is only about 27% of the actual cost of care.

Your claim that 95% of the costs are on "commoditizable" services is so far wrong that it's nothing more than wishful thinking about a subject on which you are uninformed.

Please note the typo above, corrected. That's a heck of a fat-fingering right there!

 

[Emily's Cat]

And you seem to have a poor understanding of what the term "commoditizable" means. I don't see how the data you've presented is in any way relevant to my claim.

What exactly do you imagine it to mean?

 

[Emily's Cat]

Ah, I was agreeing with you in a snarky manner - pointing out that Sunmaster14 seems to think that monopolies require "governmental facilitation".... Which is far from reality.

I see now, thanks for clarifying!

 

[jimbob]

A paraphrase, "It cannot happen in theory, even though it's quite common in practice"

ETA: Re: Post #262

It seems to me that cartels don't work. They either can't prevent cheating among themselves, or they can't prevent competitors from arising. Inevitably, a cartel member who finds a way to make a better product, or a cheaper one, will have an incentive to undermine the rest of the cartel. To the extent OPEC has worked as a cartel (and it mostly hasn't), it is because the Saudis are, by far, the lowest cost producer, and they maintain a capacity buffer which they can use to discipline wayward cartel members. It is very costly for the Saudis to do this, however. It's doubtful that their strategy has maximized profits for themselves.

Added quote.

There are plenty of cartels that have worked until discovered and then broken up by governmental action

 

[sunmaster14]

What exactly do you imagine it to mean?

It means a service or product that is easy to substitute or compare across a large number of suppliers. For example, a hired car is commoditizable. I don't care who the driver is, subject to certain minimal criteria (e.g. not blind, not a maniac), and he doesn't care who I am (also subject to minimal criteria regarding cleanliness and amount of luggage). This is in contrast to a customizable or bespoke service.

A hospital bed is a hospital bed, for the most part. And a blood test is a blood test. An x-ray is an x-ray, also for the most part. And 99 out of 100 radiologists will read it the same way. It doesn't matter much who the provider is and who the patient is. Yes, there are some doctors who are better than others. They're either smarter or more experienced or more diligent, or may have particular expertise with your type of ailment. Some have better bedside manners and make patients feel more comfortable or confident. And patients will choose a doctor or a hospital based on those factors, as well as the recommendations of others, but also based on price. At least in a free market. In the "market" we have, price mostly doesn't enter into the equation.

 

[jimbob]

And you seem to have a poor understanding of what the term "commoditizable" means. I don't see how the data you've presented is in any way relevant to my claim.

How do you turn acute care into a commodity? A commodity is something where there are lots of providers, all supplying essentially the same thing so the key differentiating feature is on price. The price can fluctuate dramatically as demand outstrips supply, or when new supply comes onstream, and supply outstrips demand. One classic example is the Pork Cycle.

The high-cost parts of healthcare can't be turned into a commodity, as they are highly specialised, and tuned to the individual - every case is different.

Even a lot of the lower-cost parts are not amenable to commoditization, as they involve acute treatment. By their nature, these are time-critical and unpredictable, so shopping around on price is not going to happen - people will tend to go to the most convenient accredited provider. If they have had a bad experience with that one, they might move doctors but that is still not commoditization.

 

[sunmaster14]

How do you turn acute care into a commodity? A commodity is something where there are lots of providers, all supplying essentially the same thing so the key differentiating feature is on price. The price can fluctuate dramatically as demand outstrips supply, or when new supply comes onstream, and supply outstrips demand. One classic example is the Pork Cycle.

The high-cost parts of healthcare can't be turned into a commodity, as they are highly specialised, and tuned to the individual - every case is different.

Even a lot of the lower-cost parts are not amenable to commoditization, as they involve acute treatment. By their nature, these are time-critical and unpredictable, so shopping around on price is not going to happen - people will tend to go to the most convenient accredited provider. If they have had a bad experience with that one, they might move doctors but that is still not commoditization.

Well, that's what the argument is about. I disagree that health care is not mostly commoditizable. By mostly, I mean the vast, vast majority of the goods and services upon which health care dollars are spent. You and everybody who supports single payer health care keep bringing up this red herring example of somebody who just had a heart attack and needs to be rushed to the closest hospital. Well, sure, the 2% of the market that emergency room services represent, might be problematic. But it's not problematic for the rest. Nor are the problems with emergency care insurmountable. One can purchase emergency care insurance, or negotiate the prices for emergency services before they are needed.

The bottom line is that single payer health care advocates always claim that the health care market is somehow different from all other markets. I strenuously disagree.

 

[jimbob]

Well, that's what the argument is about. I disagree that health care is not mostly commoditizable. By mostly, I mean the vast, vast majority of the goods and services upon which health care dollars are spent. You and everybody who supports single payer health care keep bringing up this red herring example of somebody who just had a heart attack and needs to be rushed to the closest hospital. Well, sure, the 2% of the market that emergency room services represent, might be problematic. But it's not problematic for the rest. Nor are the problems with emergency care insurmountable. One can purchase emergency care insurance, or negotiate the prices for emergency services before they are needed.

The bottom line is that single payer health care advocates always claim that the health care market is somehow different from all other markets. I strenuously disagree.

It's not a red herring, as the costs have a Pareto type distribution, and the high costs are going to only be a small fraction of the total number of cases yet account for most of the costs born by insurers whoever is paying for the country's healthcare.

Some form of collective payment (ether taxes or insurance) is inevitable, so this is where the problem is, and where it won't be able to be turned into a commodity.

In fact it might be bad to turn the easy stuff into a commodity, as someone still has to pay for the expensive treatment centre, which is going to have higher costs than Easy-Hospital (due to the higher investment needed for the more complex cases).

 

[Spock Jenkins]

Really? What reason would I have to claim treatment for a non-existent back problem?

It would be of no benefit, and take time and effort on my part, possibly with added discomfort.

That's because you're wired normally. Others would say that they need to claim treatment for a non-existent back problem to support their workman's comp claim for which they are being paid to not work while insuring their job is there when they feel like going back to work. Meanwhile, they are taking side jobs for cash. Or just enjoying the leisure time.

I'm sure a quick google search would provide video evidence gathered by insurance investigators showing individuals with bad back claims doing all sorts of activities that a person with a bad back likely would not be able to do.

 

[Emily's Cat]

It means a service or product that is easy to substitute or compare across a large number of suppliers. For example, a hired car is commoditizable. I don't care who the driver is, subject to certain minimal criteria (e.g. not blind, not a maniac), and he doesn't care who I am (also subject to minimal criteria regarding cleanliness and amount of luggage). This is in contrast to a customizable or bespoke service.

A hospital bed is a hospital bed, for the most part. And a blood test is a blood test. An x-ray is an x-ray, also for the most part. And 99 out of 100 radiologists will read it the same way. It doesn't matter much who the provider is and who the patient is. Yes, there are some doctors who are better than others. They're either smarter or more experienced or more diligent, or may have particular expertise with your type of ailment. Some have better bedside manners and make patients feel more comfortable or confident. And patients will choose a doctor or a hospital based on those factors, as well as the recommendations of others, but also based on price. At least in a free market. In the "market" we have, price mostly doesn't enter into the equation.

Okay, see here's where you're off a little bit with respect to health care. Sure, a bed might be a bed... but none of those items is independent. You can't choose the bed from Swedish and the x-ray from Evergreen and the anesthesiologist from Children's for your surgery. They're bundled, and the bundles aren't fungible.

That would be like saying that cars are commoditized because a window is a window and a valve is a valve. Sure, the pieces are all the same kind of pieces, but they're not put together in the same way.

 

[jimbob]

That's because you're wired normally. Others would say that they need to claim treatment for a non-existent back problem to support their workman's comp claim for which they are being paid to not work while insuring their job is there when they feel like going back to work. Meanwhile, they are taking side jobs for cash. Or just enjoying the leisure time.

I'm sure a quick google search would provide video evidence gathered by insurance investigators showing individuals with bad back claims doing all sorts of activities that a person with a bad back likely would not be able to do.

How does altering the charging structure affect this? If someone is claiming for a bad back, presumably they'd also be claiming for the treatment.

 

[Emily's Cat]

Well, that's what the argument is about. I disagree that health care is not mostly commoditizable. By mostly, I mean the vast, vast majority of the goods and services upon which health care dollars are spent. You and everybody who supports single payer health care keep bringing up this red herring example of somebody who just had a heart attack and needs to be rushed to the closest hospital. Well, sure, the 2% of the market that emergency room services represent, might be problematic. But it's not problematic for the rest. Nor are the problems with emergency care insurmountable.

The vast majority of dollars are NOT spent on preventive care, nor on routine care, but on acute and chronic care.

Even beyond that, I can guarantee that the care I get during my annual pelvic exam is different from what some other woman would get. The framework may be the same, but I've got a family history of endometriosis as well as having had major uterine surgery. My preventive care is not as fungible as you think it is, and it's important that my doctor know my medical history well enough to look for potential complications as they're developing.

Even my routine care isn't perfectly fungible. I've had problems with anemia and osteopoenia that make a difference in the care I get.

One can purchase emergency care insurance, or negotiate the prices for emergency services before they are needed.

I don't even know what to say to this. Ar eyou assuming that emergencies will occur somewhere near the hospital that you've negotiated a discount with? Or that you have even a tiny inkling of what that ER treatment might consist of? And what on earth makes you think that an individual is going to even be heard so they can negotiate one-off deals with a hospital? Seriously, have you ever actually used an ER before?

The bottom line is that single payer health care advocates always claim that the health care market is somehow different from all other markets. I strenuously disagree.

I'm not a single-payer advocate. I don't happen to think that's the best approach. But the health care market is different from other markets. Not all markets are commodity markets, and not all markets can flourish or even find stability in a true lasseiz faire schema. Some industries are natural monopolies, some have severe knowledge inequities, some are much more susceptible to exploitation.

Most markets fare well in a minimally regulated environment, where the government's role is limited to fraud protection. But not all. Health care is one of those "not all".

 

[jimbob]

I'm not a single-payer advocate. I don't happen to think that's the best approach. But the health care market is different from other markets. Not all markets are commodity markets, and not all markets can flourish or even find stability in a true lasseiz faire schema. Some industries are natural monopolies, some have severe knowledge inequities, some are much more susceptible to exploitation.

Most markets fare well in a minimally regulated environment, where the government's role is limited to fraud protection. But not all. Health care is one of those "not all".

I am a single player advocate, but don't think it is possible with the US system. However I think that something modelled on the Canadian system is probably a better fit for the US, as both countries used to have very similar systems.

 

[Emily's Cat]

I am a single player advocate, but don't think it is possible with the US system. However I think that something modelled on the Canadian system is probably a better fit for the US, as both countries used to have very similar systems.

I think that Switzerland's model would be a better fit. We already have that for seniors pretty much, as "Medicare Advantage".

 

[jimbob]

I think that Switzerland's model would be a better fit. We already have that for seniors pretty much, as "Medicare Advantage".

Makes sense...

 

[sunmaster14]

Okay, see here's where you're off a little bit with respect to health care. Sure, a bed might be a bed... but none of those items is independent. You can't choose the bed from Swedish and the x-ray from Evergreen and the anesthesiologist from Children's for your surgery. They're bundled, and the bundles aren't fungible.

That would be like saying that cars are commoditized because a window is a window and a valve is a valve. Sure, the pieces are all the same kind of pieces, but they're not put together in the same way.

Well, a car is a commodity, so you've undermined your whole point. Yes, lots of things come as package deals, but you can still substitute one for the other. It is a little more complicated than just comparing prices, but consumers have to do that in every other market, except buying gold I guess. Actually, even for selling gold, distributors have found ways to differentiate themselves.

 

[Emily's Cat]

Well, a car is a commodity...

No, a car is not a commodity. Cars aren't fungible. You can't swap out a BMW with a Hyundai without the consumer even noticing. Cars aren't traded as "cars" as a whole, they're traded by make, model, year, color, and options.

Maybe you're using the layman's version of commodity, as "something you can buy" as opposed to the economic meaning of the term?

wikipedia

The term commodity is specifically used for an economic good or service when the demand for it has no qualitative differentiation across a market.[1] In other words, a commodity good or service has full or partial but substantial fungibility; that is, the market treats its instances as equivalent or nearly so with no regard to who produced them. As the saying goes, "From the taste of wheat, it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist."[2] Petroleum and copper are other examples of such commodities,[3] their supply and demand being a part of one universal market. Items such as stereo systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface and the perceived quality. The demand for one type of stereo may be much larger than demand for another.

 

[Tero]

Though healthcare has the same kind of safety risks as making cars, for instance, it is still much closer to a monopoly. The costs do not vary that much from the cheapest to the most expensive, for simple office procedures (blood tests etc.). Doctor salary is dictated by the costs of med schools and the loans they have to pay off.

Not a commodity.