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

[sunmaster14]

Should be would be could be...can you give an example were such was/might be realized?

Cosmetic surgery. Corrective eye surgery (LASIK). Hair transplants. The inflation-adjusted price of these things have dropped while the quality has improved rapidly. What distinguishes these things from other areas of the health care market? Only that they're not typically covered by insurance, which makes consumers price-conscious.

Plenty of real-world examples here in the US where specific circumstances allowed no such thing to happen.

Really? Care to list a few?

 

[sunmaster14]

Yes, loads of (unconventional) theory and ignoring real life examples that wouldn't happen if the theory was right.

What real life examples? Nobody has presented one except for emergency care situations, which represents something like 2% of all spending on health care. And of course emergency situations arise in all markets, and those markets have mechanisms to deal with them. Even in airline travel, where customers have demonstrated a preference for lower costs over better customer service, airlines make accommodations for emergency situations. They even have special bereavement fares and policies for people who need to travel on sudden notice because of an illness or death in the family. This is something the market has provided for spontaneously. No government intervention needed.

 

[Emily's Cat]

I'm not sure why you keep veering into pedantry. If I wanted to, I bet I could out-pedant you when it comes to economics and finance. It has been my profession for over 20 years after all.

I have skepticism in this regard. You've completely misrepresented the concept of a commodity, as well as market efficiency. Those aren't next-level ideas. Those are basic fundamental aspects of economic theory. I'm NOT an economist, but I do understand what those terms imply, as well as what they don't.

 

[sunmaster14]

I have skepticism in this regard. You've completely misrepresented the concept of a commodity, as well as market efficiency. Those aren't next-level ideas. Those are basic fundamental aspects of economic theory. I'm NOT an economist, but I do understand what those terms imply, as well as what they don't.

You seem to like to accuse your interlocutors of knowing less than you do, or of being wrong, but without anything to back it up. Looking back over your posts, I see little evidence, and even less logic. Nothing but assertions that you're right, and I'm just wrong, wrong, wrong. My posts, on the other hand, are very substantive and stand unrebutted. How about if you put your vaunted experience and knowledge to the test, huh?

 

[sunmaster14]

I have skepticism in this regard. You've completely misrepresented the concept of a commodity, as well as market efficiency. Those aren't next-level ideas. Those are basic fundamental aspects of economic theory. I'm NOT an economist, but I do understand what those terms imply, as well as what they don't.

Oh, by the way, I would like to see you explain what those terms imply. Because I think it is you who don't understand them. You seem to be particularly confused about what an efficient market is. As far as commoditization, I think I have already made the case that you were confused about what I (and most economists) meant.

 

[Emily's Cat]

Sure, it's no big deal to me. I'm on my 3rd in the space of two years anyway, since my first retired (in large part due to Obamacare), my second was from the same group, but I decided to move to a new group that was more convenient. Actually, technically, I'm on my fourth because I saw somebody else first at my new place and then was switched. I get along with everybody. I'm not picky.

Would you be okay with seeing a completely different doctor for each visit, with no advance notice?

Most people would NOT be okay with that, by the way.

 

[Emily's Cat]

With real price transparency and price-conscious consumers, real competition will lead to these bundled services becoming subject to unbundled price pressures. Why not? The cost of the whole should be closely tied to the sum of the parts. It will be in a commoditized market.

Ahh... so do you think it's reasonable to assume that we'll reach a point where the end consumer gets to go through and pick and choose every screw, every valve, every window, every specific build item that goes in to their automobile?

 

[Emily's Cat]

Cosmetic surgery. Corrective eye surgery (LASIK). Hair transplants. The inflation-adjusted price of these things have dropped while the quality has improved rapidly. What distinguishes these things from other areas of the health care market? Only that they're not typically covered by insurance, which makes consumers price-conscious.

Their distinguished from other services because they are 100% elective! They are not at all medically necessary. There's no choice between death and treatment, no choice between significantly reduced quality of life and treatment. They're luxury goods. They're twinkies. They're jewelry.

 

[Emily's Cat]

You seem to like to accuse your interlocutors of knowing less than you do, or of being wrong, but without anything to back it up. Looking back over your posts, I see little evidence, and even less logic. Nothing but assertions that you're right, and I'm just wrong, wrong, wrong. My posts, on the other hand, are very substantive and stand unrebutted. How about if you put your vaunted experience and knowledge to the test, huh?

I provided you links to some basic info about what constitutes a commodity. It's easy to find on the internet. It's easy to find in any intro level economics book. Your posts are "substantive" in that you've said a lot of words. But if you look back at your posts, they're almost all based on suppositions and assumptions. So now, you're simply assuming that your assumptions are fact!

 

[Emily's Cat]

Oh, by the way, I would like to see you explain what those terms imply. Because I think it is you who don't understand them. You seem to be particularly confused about what an efficient market is. As far as commoditization, I think I have already made the case that you were confused about what I (and most economists) meant.

No. You have not made the case. You've claimed cars are a commodity.

 

[jimbob]

No. You have not made the case. You've claimed cars are a commodity.

Which is why car makers never spend any money on advertising and branding, as it would be a complete waste of resources in a commoditized market as resources are better spent in reducing the costs*... cars are just differentiated on cost and more costly ones get priced out of the market.




*There is a lot of pressure on cost but that is not necessarily passed on to the customer. Some luxury brands sell better if the price is raised.

 

[sunmaster14]

Would you be okay with seeing a completely different doctor for each visit, with no advance notice?

Most people would NOT be okay with that, by the way.

Strawman. Why would his happen? Would my doctor keep trying to gouge me every time I made an appointment? I used to have an auto mechanic that I liked (before I refreshed all of my cars) and would use frequently. He didn't do that. I have a housekeeper who cleans my house once per week. She doesn't do that. I have a guy who mows my lawn every week and plows my driveway in the winter. He doesn't do that. Do you think doctors would abandon customer service in a free market? Would patients switch back and forth just to save a few bucks? Maybe, but if they did, it's because they preferred the money to the continuity.

 

[sunmaster14]

Ahh... so do you think it's reasonable to assume that we'll reach a point where the end consumer gets to go through and pick and choose every screw, every valve, every window, every specific build item that goes in to their automobile?

You've completely missed the point, which is that there are competitive pressures all along the production chain. The ultimate consumer doesn't have to know anything except the price and desirability of the final product. But the people in the chain are both producers and consumers at each stage. They have to know and care about the price, if the ultimate consumer enforces price discipline from the top. Their competition will result in lower prices for each screw and valve, and that will lead to lower end product prices (which are needed because the final consumer cares about them).

 

[sunmaster14]

Their distinguished from other services because they are 100% elective! They are not at all medically necessary. There's no choice between death and treatment, no choice between significantly reduced quality of life and treatment. They're luxury goods. They're twinkies. They're jewelry.

And knee surgery isn't? Or taking an expensive drug with less side effects rather than a cheap drug with more severe side effects? Or getting a fancy, schmancy MRI instead of one on a 20 year old machine? Or the vast, vast majority of spending on health care? The most expensive drugs and medical technology didn't even exist 10 years ago, yet somehow the human race survived.

You're making two mistakes. First, you're assuming that every health care expenditure is a matter of life or death. Second, you're assuming that people don't put a finite value on the avoidance of death.

 

[sunmaster14]

I provided you links to some basic info about what constitutes a commodity. It's easy to find on the internet. It's easy to find in any intro level economics book. Your posts are "substantive" in that you've said a lot of words. But if you look back at your posts, they're almost all based on suppositions and assumptions. So now, you're simply assuming that your assumptions are fact!

Everything is a combination of a perfect commodity and a perfect non-commodity. There are no perfect commodities and no perfect non-commodities in the world, so everything has aspects of each. Your point is purely pedantic, and I think, designed to derail the discussion and distract from your inability to distinguish the health care market from any other well-functioning and efficient market.

An antibiotic is a commodity. And yet, it has non-commodity aspects. There are different antibiotics, but even among the same antibiotic, there are different brands, which may or not have different levels of impurities or effective concentrations, and there are different dosage levels. Drug manufacturers may try to differentiate their antibiotic in various ways. They are fighting it being treated as a pure commodity, so they non-commoditize it a little.

Prescribing an antibiotic could be a commodity service. There is little variation in treatment protocols once a bacterial etiology is determined for some set of symptoms. It is ripe for commoditization. Of course, the doctors will fight it because they like earning $50 for a 5 minute consultation. Regardless, a commodity is something for which the consumer sees a great deal of substitutability or fungibility and therefore focuses more on price. I have no doubt that most medical services would be seen this way by consumers if they were paying for it directly.

 

[sunmaster14]

No. You have not made the case. You've claimed cars are a commodity.

Well, a car is a commodity. I own a 2011 Honda CR-V. There are probably 100,000 copies of it in the US, modulo some options and the color. When I bought it, I called up 10 dealers and asked for their best price. I told them what trim I wanted and what options, and which things I was flexible about. I didn't give a crap about which dealer sold me the car. All I wanted was the best price, which I got. It turns out, even their inventory didn't matter. They all shared inventory anyway, so if one dealer had an opal sage one, with this or that option, and the guy with the best price didn't, he could just get it from the guy who did within a couple of days.

Just because a 2011 Honda CR-V is not fungible with a 2015 BMW 330ix doesn't mean that the market is not completely commoditized. There are many BMW dealers to choose from. They have to compete on price. They try to distinguish themselves by offering better customer service, blah, blah, blah, but there are enough people like me, who care only (or at least mostly) about price to keep their prices from getting too far out of line with each other.

There's no reason that routine health care couldn't become like the market for car repair and maintenance. Getting a checkup could be like getting an oil change. In fact, this has already been happening. Except you go Walgreens or CVS instead of Valvoline.

 

[sunmaster14]

Which is why car makers never spend any money on advertising and branding, as it would be a complete waste of resources in a commoditized market as resources are better spent in reducing the costs*... cars are just differentiated on cost and more costly ones get priced out of the market.

I assume you're being facetious here. Just for the record, it's a rather dangerous thing to do when your arguments are so muddled. First of all, you still need to advertise that you have the best price. How would people know that you do if you don't tell them about it? Second, there is a constant battle between low cost producers trying to emphasize low price without settling for low quality and the higher cost producers emphasizing that their high quality justifies their higher prices. That's a big part of the competition going on in a commoditized market.

Which actually brings me to another point which is how strange it is that doctors don't advertise. Everybody else advertises for their services, but not doctors. By your logic, it's because doctors are already commodities. Of course, your logic is wrong. If they were commodities, they actually would have to advertise, at least to consumers, rather than insurance companies.

 

[Emily's Cat]

Strawman.

How can a question be a strawman?

Why would his happen? Would my doctor keep trying to gouge me every time I made an appointment? I used to have an auto mechanic that I liked (before I refreshed all of my cars) and would use frequently. He didn't do that. I have a housekeeper who cleans my house once per week. She doesn't do that. I have a guy who mows my lawn every week and plows my driveway in the winter. He doesn't do that. Do you think doctors would abandon customer service in a free market? Would patients switch back and forth just to save a few bucks? Maybe, but if they did, it's because they preferred the money to the continuity.

It doesn't matter what the reason is. That's irrelevant. Would you care if you got a completely different, random doctor each time you went?

Compare to: do you care if it's a different brand of eggs that gets used in your omelet each weekend? Would you notice?

 

[Ziggurat]

How can a question be a strawman?

I think he's saying that the premise of the question doesn't apply to his position.

 

[Emily's Cat]

You've completely missed the point, which is that there are competitive pressures all along the production chain. The ultimate consumer doesn't have to know anything except the price and desirability of the final product. But the people in the chain are both producers and consumers at each stage. They have to know and care about the price, if the ultimate consumer enforces price discipline from the top. Their competition will result in lower prices for each screw and valve, and that will lead to lower end product prices (which are needed because the final consumer cares about them).

You're describing competition, not commoditization. Competition exists in many areas of the economy, but not in all. Some competition is more extreme than others. Some services are highly specialized or otherwise distinguishes itself with non-commodity characteristics that produce nearly uncompetitive situations. Some services are highly tailored to the end consumer - tailored service cannot be commoditized.

Health care is predominantly a tailored service. What you experience with your doctor in your routine visit is not the same as what another person experiences. You talk about different things, you have different (and unique) concerns. Your doctor responds to your individual needs and concerns, and tailors their advice and approach to suit your specific situation.

And knee surgery isn't? Or taking an expensive drug with less side effects rather than a cheap drug with more severe side effects? Or getting a fancy, schmancy MRI instead of one on a 20 year old machine? Or the vast, vast majority of spending on health care? The most expensive drugs and medical technology didn't even exist 10 years ago, yet somehow the human race survived.

Yeah... the human race survived before we invented penicillin too... would you say that penicillin is a luxury good?

I want to just level set here. You are aware that I'm a health actuary, working for an insurance company, who has been knee-deep in the medical industry for 15 years, right? I do not know everything, by any means. There are entire areas where I know nothing at all, even about health care. But when it comes to the relationships between pricing, cost, and consumer behavior, how the system works, etc.... Well, it's kind of my job. I'm not trying to appeal to authority here, I just want to make sure you are aware that I'm speaking from experience and training on this topic - I'm not just some joe from the interwebs.

You're making two mistakes. First, you're assuming that every health care expenditure is a matter of life or death. Second, you're assuming that people don't put a finite value on the avoidance of death.

Lol. No, and no. You assumptions of my assumptions aren't accurate.