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

[sunmaster14]

The medical equipment market will be dominated by large players - especially when you get up to something of the complexity of an MRI scanner.

Toshiba Cannon, Siemens, Hitachi, GE, and Philips make up about 95% of the MRI imaging market. That looks like a market with a pretty high barrier to entry and a limited number of players to me.

Less than the computer processor market. Who makes CPUs today? Intel, AMD, Apple. Wouldn't that be a shame if the MRI imaging market suffered the oligopoly driven price inflation that we've seen in the market for CPUs?

 

[sunmaster14]

No it isn't irrelevant, the highlighted portion is where the assumption is wrong for many people. Chronic illness is often a causal factor in poverty as it restricts earning potential for the person and any carers. Poverty is also associated with poor health so the people most likely to need the more expensive treatment are those who are least likely to be able to afford it.

Methinks you're trying to distract attention from your losing argument. Generally, if poor people are suffering from their poverty, the solution is to give them money to spend as they see fit. We don't really do that, unfortunately, but we do subsidize housing, food, education, and medical care for them. So, inability to pay isn't really an excuse, and it sure isn't now that we have subsidized health insurance on the Obamacare exchanges (well, except for those unfortunate few who make between 100% and 125% of the poverty line in states which didn't expand Medicaid.

Regardless, in a free market, costs would come down, so it would actually make health care more affordable to those who failed to display some foresight.

 

[Emily's Cat]

No doubt your case was very rare. Normally, though, various treatments cost less than a new Kia Forte.

"Normal" based on one study, without consideration for complications and varying circumstances. Which is exactly why medicine is highly bespoke, and not a commodity.

 

[Emily's Cat]

Methinks you're trying to distract attention from your losing argument.

Yeah... this is not the case.

 

[sunmaster14]

There are plenty of examples of holders of monopoly positions trying to screw customers. Shkreli is the most obvious recent example in healthcare.

That's one example, and his strategy relied on government regulation to suppress competition (specifically, the cost of getting FDA approval for the manufacture of a new product in comparison to the market potential). I'll note also, that Shkreli may not be the best example of a successful businessman, given that he's under federal indictment for securities fraud.

Look at the history of 19th Century robber baron capitalists for more examples.

Ah, yes, the mythical robber baron. I suppose I'll have to do my own research to find examples, amirite?

Historian John Tipple has examined the writings of the 50 most influential analysts who used the robber baron model in the 1865-1914 period. He argues:

The originators of the Robber Baron concept were not the injured, the poor, the faddists, the jealous, or a dispossessed elite, but rather a frustrated group of observers led at last by protracted years of harsh depression to believe that the American dream of abundant prosperity for all was a hopeless myth....Thus the creation of the Robber Baron stereotype seems to have been the product of an impulsive popular attempt to explain the shift in the structure of American society in terms of the obvious. Rather than make the effort to understand the intricate processes of change, most critics appeared to slip into the easy vulgarizations of the "devil-view" of history which ingenuously assumes that all human misfortunes can be traced to the machinations of an easily located set of villains - in this case, the big businessmen of America. This assumption was clearly implicit in almost all of the criticism of the period.[6]

Of course, I suppose it's just a coincidence that the US went from a country impoverished and exhausted by a calamitous civil war to arguably the most powerful economy in the world in only 50 years. Because of course the robber barons wreaked havoc across the land.

Bonded labour is another example that still occurs (particularly in India - despite it being illegal). There are other types which have similar effects, often involving moneylending and sufficient interest payments to keep the person in a debt hole and working for the lender with no other option.

That is what can occur in an unregulated free market where one group of players have vastly more economic power than another group of players.

Free markets are generally good but they do need external protections to ensure market abuses don't take place. If your theory says that they won't, then either your theory is wrong or history is wrong.

There is another option, which is that your interpretation of history is wrong. I choose that one.

Medical care is a market that would be particularly prone to market abuses.

This unsupported assertion remains to be, um, ... supported.

 

[DavidJames]

Regardless, in a free market, costs would come down, so it would actually make health care more affordable to those who failed to display some foresight.

This unsupported assertion remains to be, um, ... supported.

Indeed.

 

[jimbob]

I was thinking mainly of the UK's history, with which I am more familiar. The industrial revolution in the UK had similar abuses. Payment in company scrip was banned due to it being a problem. Slum landlords existed, and still do so in some places.

The US wasn't the most powerful country at the end of the 19th century.

 

[twinstead]

Not everybody believes that being The Most Powerful Country In The World ^tm is the only metric for success as a nation. You can only keep that up for a short time.

 

[sunmaster14]

I was thinking mainly of the UK's history, with which I am more familiar. The industrial revolution in the UK had similar abuses. Payment in company scrip was banned due to it being a problem. Slum landlords existed, and still do so in some places.

The US wasn't the most powerful country at the end of the 19th century.

My end point was 1915 (i.e. the 50 year period of the "robber barons" from 1865-1915). Arguably, the US was the most powerful country in the world at that time.

From 1865 to 1915, US population went from 36 million to 101 million, and GDP per capita (in constant 1990 dollars) went from about $2,000 to about $5,000. Pretty much tied with the UK (not counting colonial possessions). Of course, the UK had a population of only 46 million, less than half of the US's. Germany had about 66 million. China, India, and Russia had more people, but they were mostly agrarian and impoverished. Russia even lost a war to a bunch of sandal-wearing goldfish tenders.

It's a pretty good bet that the US had the biggest economy by 1915.

 

[jimbob]

Here's another example of a cartel shafting the consumers:

http://spectrum.ieee.org/geek-life/history/the-great-lightbulb-conspiracy

Feature
Geek Life
History

The Great Lightbulb Conspiracy
The Phoebus cartel engineered a shorter-lived lightbulb and gave birth to planned obsolescence
By Markus Krajewski
Posted 24 Sep 2014 | 19:00 GMT
article opening art
Photo-illustration: Gluekit; Lightbulb: Fin Stewart

On 23 December 1924, a group of leading international businessmen gathered in Geneva for a meeting that would alter the world for decades to come. Present were top representatives from all the major lightbulb manufacturers, including Germany’s Osram, the Netherlands’ Philips, France’s Compagnie des Lampes, and the United States’ General Electric. As revelers hung Christmas lights elsewhere in the city, the group founded the Phoebus cartel, a supervisory body that would carve up the worldwide incandescent lightbulb market, with each national and regional zone assigned its own manufacturers and production quotas. It was the first cartel in history to enjoy a truly global reach.

ETA: a commenter had posted this on a blog that I was reading earlier today

 

[jimbob]

In another thread, I tried to show that some lifesaving medical procedures have inherent costs that would put them out of the reach of many people without support.

That's irrelevant. As long as the expected cost (i.e. the cost times the probability of needing to pay that cost) is within reach, that's all you need. Financial products like insurance can take care of mismatches caused by timing or bad luck. Even with the inflated cost of health care in the US, it is still well within our means to pay for it (in fact, that's actually a tautology).

No it isn't irrelevant, the highlighted portion is where the assumption is wrong for many people. Chronic illness is often a causal factor in poverty as it restricts earning potential for the person and any carers. Poverty is also associated with poor health so the people most likely to need the more expensive treatment are those who are least likely to be able to afford it.

Methinks you're trying to distract attention from your losing argument. Generally, if poor people are suffering from their poverty, the solution is to give them money to spend as they see fit. We don't really do that, unfortunately, but we do subsidize housing, food, education, and medical care for them. So, inability to pay isn't really an excuse, and it sure isn't now that we have subsidized health insurance on the Obamacare exchanges (well, except for those unfortunate few who make between 100% and 125% of the poverty line in states which didn't expand Medicaid.

Regardless, in a free market, costs would come down, so it would actually make health care more affordable to those who failed to display some foresight.

Full context added, and additional highlighting.

Someone could simply have lacked the foresight to have been born to rich enough parents. Maybe because they were impoverished as a result of segregation.

The median net worth of renting households in 2004 was $4k. You can't do much with that and any children are going to struggle to get an education to get a well-paying job (some will).

How much money do you propose to give to the poor, and where will it come from.

I suspect that your proposed system will either reinvent insurance as it is, or fail to work.

Meanwhile, the UK has a lower proportion of its GDP expended on public healthcare than the US.

 

[jimbob]

From the thread where I linked my spoilered analysis of cost, and where this was rehashed last time:

How so? In a free market, if enough people choose not to buy commodity x because it's too expensive, then the price of commodity x has to come down.

July 25, 2009, 5:07 PM
Why markets can’t cure healthcare


There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office; and very, very few people can afford to pay major medical costs out of pocket.

This tells you right away that health care can’t be sold like bread. It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either — they’re not in business for their health, or yours.
(...)
... health care just doesn’t work as a standard market story.

http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/

and this:

How so? In a free market, if enough people choose not to buy commodity x because it's too expensive, then the price of commodity x has to come down.

Exactly: "In a free market."

Health needs are not a free market: customers cannot choose not to buy unless they want to be (or watch their family be) ill or die (or be ill and then die).

They can only negotiate price.

There is no reason for a price to 'come down'.

Please read the link to price discrimination^WP. Price in captive markets is proportional to the cudstomer's ability to pay, not to cost of service. There is no incentive to decrease costs in these markets.

 

[jimbob]

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.

Why? Here's a wiki page, with some examples -


https://en.wikipedia.org/wiki/Cartel#Examples

there are others, some against employees rather than customers. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation


Whether they are sustainable in the long term is a different matter, and irrelevant to the question, as a lot of these have been broken up by direct governmental action.

Why should healthcare, with a captive market, and high barriers to entry into many fields be any different?

ETA:

Less than the computer processor market. Who makes CPUs today? Intel, AMD, Apple. Wouldn't that be a shame if the MRI imaging market suffered the oligopoly driven price inflation that we've seen in the market for CPUs?

Odd you should mention that:

https://en.wikipedia.org/wiki/DRAM_price_fixing

 

[sunmaster14]

Full context added, and additional highlighting.

Someone could simply have lacked the foresight to have been born to rich enough parents. Maybe because they were impoverished as a result of segregation.

Lack of foresight means not making sure one is insured for catastrophic expenses. For the people who can't afford even insurance, there are various welfare programs, including, of course, Medicaid (which I would restructure, but it exists nonetheless).

The median net worth of renting households in 2004 was $4k. You can't do much with that and any children are going to struggle to get an education to get a well-paying job (some will).

People spend out of income. Not so much out of assets. Low net worth might actually be a consequence of extravagant spending (usually is actually).

How much money do you propose to give to the poor, and where will it come from.

$5,000 per person per year for health care. Any unused portion up to a maximum of $4,000 could be kept. Medicaid would only cover catastrophic expenses above $5,000 per person (or perhaps starting a little higher).

I suspect that your proposed system will either reinvent insurance as it is, or fail to work.

It doesn't reinvent anything. If the problem is poverty, and poverty equals a lack of money, then the solution is to give people a minimum income. Not so much to provide them subsidized consumption, which distorts the market. My proposal does recognize that people may need some encouragement to spend money on the right things, hence the modest social engineering part, but I try to shy away from that stuff as much as possible.

Meanwhile, the UK has a lower proportion of its GDP expended on public healthcare than the US.

So? British people aren't as fat as Americans either. Also, they aren't paying the lion's share of the cost of medical progress like Americans are.

 

[sunmaster14]

Why? Here's a wiki page, with some examples -


https://en.wikipedia.org/wiki/Cartel#Examples

there are others, some against employees rather than customers. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation


Whether they are sustainable in the long term is a different matter, and irrelevant to the question, as a lot of these have been broken up by direct governmental action.

Meh. Pretty weak sauce. Even that article you referenced about the Phoebus cartel actually supported my side of the argument, as the cartel ran into problems with competition (both internal and external) almost immediately. As for governmental action, I'd say this. I think it's far more likely that the government has impeded the beneficial functioning of the markets by harassing legitimate market participants with antitrust legislation and investigations, than it has improved the markets by punishing predatory behavior.

Why should healthcare, with a captive market, and high barriers to entry into many fields be any different?

Because it is anything but a captive market, with anything but high barriers to entry. You (and others here) keep suffering from tunnel vision in thinking of health care as restarting a stopped heart in an ambulance with some $1 million machine and a doctor with 20 years of training. The vast majority of spending on healthcare is rather mundane stuff that could be done almost anywhere, by any of hundreds or thousands of different people.

I note that nobody here seems to read my links, or even considers my arguments beyond what small part they think they can successfully rebut. You and Emily do this, in particular. I write hundreds (maybe thousands now) of words spread across several posts, and you quote one sentence and respond to that and try to derail back to your comfortable talking points.

Where is your consideration of the market for corrective eye surgery? Isn't that a market with high barriers to entry? You need some pretty fancy computer controlled lasers and many years of experience in ophthalmology, right? And yet, because it's a free market, undistorted by government subsidized insurance, the inflation adjusted cost has come down, even as quality has improved immensely over the last 20 years. The same is actually true for dentistry, which tends to be a freer market because insurance benefits are usually limited. And cosmetic procedures in general. And veterinary care, although technically not part of human health care.

ETA:

Odd you should mention that:

https://en.wikipedia.org/wiki/DRAM_price_fixing

That two big consumers would complain and that the government would be able to extract concessions from some big players tells me nothing. All I know is that DRAM prices have dropped by, I don't know, six orders of magnitude over the last 30 years? Not good enough for you, huh?

 

[Emily's Cat]

Lack of foresight means not making sure one is insured for catastrophic expenses. For the people who can't afford even insurance, there are various welfare programs, including, of course, Medicaid (which I would restructure, but it exists nonetheless).

So your "free market solution" to the problem of health care is to invent the same thing that already exists as a solution to the problem of health care? What are you seeing as being different?

 

[Emily's Cat]

Meh. Pretty weak sauce.

actual supported arguments and knowledge are "weak sauce" compared to your imagineering of the situation, which in part relies on a dramatic redefinition of the term commodity to mean the complete opposite of what it actually means...

 

[MikeG]

...... British people.......aren't paying the lion's share of the cost of medical progress like Americans are.

Justify this. We have superb world leading medical research companies, and file huge numbers of patents in medical research. You need to show that the USA (pop. 320 mill.) is contributing 6 times as much in terms of medical research compared with the UK (pop. 64 mill.) to justify this throw-away line. Of course, you may well be right, but you haven't justified this assertion, and I simply challenge you to so do.

 

[sunmaster14]

So your "free market solution" to the problem of health care is to invent the same thing that already exists as a solution to the problem of health care? What are you seeing as being different?

Sheesh. It's like there's no attempt to understand what I write at all. The problem I am addressing with welfare programs is poverty. Not health care. To the extent our society wants to provide a safety net, it should be done, to the fullest extent possible, by providing money to poor people. Not various subsidized services, which then cause distortions to the free market (notably overconsumption in the subsidized areas).

Do you see the difference between my preferred poverty solution and Medicaid with respect to health care services? Provide money to people with the only stipulation being that if less than $1,000 is spent on health care services, the remainder of that $1,000 be returned. Yes, it causes a modest distortion to the market, but that is my concession to the belief (partially true) by liberals in the inherent irrationality and shortsightedness of poor people.

 

[MikeG]

......So? ......

The ultimate handwave.

So, we have a better and fairer system than you, for less money. That sort of "so".