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

[Emily's Cat]

It doesn't actually mean that it was bad for the market, or even the consumer in the long run.

Because economist agree: collusion is great for the market, totally fair! I mean, explicit anti-compete agreements always create better competition resulting in a more efficient market!

 

[Emily's Cat]

So we have medical insurance. Not the current "insurance," but real insurance that covers those costs in catastrophic cases. Routine and minor care can be paid OOP in a system where people are more price sensitive and prices are lower.

Certainly a possibility. You can blame employers for the current environment.

 

[Emily's Cat]

I'm going on the principle that each human being is of equal worth, and the fairest distribution is to give one $5,000 check per person. Sure, the unhealthy person will have greater medical expenses, and won't be able to use any of that $5,000 for other expenses (or to save it for future ones), but that's life. The unhealthy person is far more likely to dip into the catastrophic coverage that is provided (or subsidized), so he is getting more (on an expected value basis) anyway. More importantly, in terms of real health care resources, the unhealthy person is allocating more to himself (if he chooses - it's always a choice). And he is getting them, for the most part. So, I'm not seeing the problem. Everybody is still incentivized to use less health care resources, which is what matters most.

There's the rub - a very large portion of the people in your schema are incentivized to use more services. You've just given them $5K to use for medical stuff... relatively minor, voluntary things that they would either have 1) passed up altogether or 2) combined with other needs and had only one office visit, they're now more likely to go see a doctor about. There's a really good reason that almost all medical insurance has deductibles. Giving everyone $5K of up-front coverage will increase utilization for people who have lower need.

Yes, the reason is that people are irrational about health care - liberals more than most. They think that just because health care has a more direct and visible impact on health that it is different from other areas of the economy (which also can and do impact health in material ways).

Well... you know, having it pretty clear that for portion of the population it's literally an impact on their life (as in they die without it) or the life of a loved one, does tend to incite compassion in most humans, regardless of their political persuasion.

Actually, my point was that it was not bespoke at all. My nephew had AEL, which is a rare form of AML (especially in children), but differs only in its prognosis (worse) but not in its treatment. Every procedure my nephew had, every drug, every test, was completely mundane and routine.

Every thread and piece of fabric, every sewing machine used to create a custom tailored suit is completely mundane and routine. The suit is still bespoke. That's what you keep missing, even though I've tried to make this clear. It doesn't matter that each element in the treatment plan is replaceable. The PLAN itself is bespoke - the combination of treatments and tests used was unique for your nephew. A different person is highly unlikely to have had the same SET as he did. That's what makes it bespoke. That's what bespoke means.

Doesn't matter. Lots of things are not evenly distributed, including skill, education, and experience on the production side, and needs and preferences on the consumption side. The market handles these uneven distributions pretty well generally. Or at least better than a central planning committee composed of political hacks could do.

The market handles normal distributions pretty well. It doesn't actually handle compound pareto distributions all that well. In fact, left to a perfectly free market, the tail of that compound distribution simply doesn't get served at all. There's not enough money in it unless you have some sort of risk-sharing schema in place.

 

[sunmaster14]

There's the rub - a very large portion of the people in your schema are incentivized to use more services. You've just given them $5K to use for medical stuff... relatively minor, voluntary things that they would either have 1) passed up altogether or 2) combined with other needs and had only one office visit, they're now more likely to go see a doctor about. There's a really good reason that almost all medical insurance has deductibles. Giving everyone $5K of up-front coverage will increase utilization for people who have lower need.

As is happening more and more frequently with you, you have completely misunderstood what I wrote or proposed. Except for the first $1,000, the money is the consumer's money to do with as he wishes.

Well... you know, having it pretty clear that for portion of the population it's literally an impact on their life (as in they die without it) or the life of a loved one, does tend to incite compassion in most humans, regardless of their political persuasion.

Where's the compassion for the coal miner who trades life expectancy for money? Or the children who have to live in a dangerous neighborhood because their parents can't afford a nicer home? Or the family which operates an old beater with bald tires and no airbags because they can't afford anything better? The list is endless. People trade time and money for well-being, quality of life, health, and mitigated risk of death all the time, as well as, and especially, vice versa. There is nothing exceptional about health care. This is particularly true given all of the transactions that fall into the category of health care these days (one sixth of the US economy!) like nursing home care, physical therapy, and mental health treatment.

Every thread and piece of fabric, every sewing machine used to create a custom tailored suit is completely mundane and routine. The suit is still bespoke. That's what you keep missing, even though I've tried to make this clear. It doesn't matter that each element in the treatment plan is replaceable. The PLAN itself is bespoke - the combination of treatments and tests used was unique for your nephew. A different person is highly unlikely to have had the same SET as he did. That's what makes it bespoke. That's what bespoke means.

It wasn't bespoke. The same chemotherapy drugs were used in the same sequence with exactly the same monitoring for infection and the like that is done for everybody (and even people with different diseases). The dosage is proportional to surface area, which is computed by a formula based on height and weight. Every pediatric hematologist oncologist in the country would have done exactly the same thing.

What you're missing is that a huge part of the cost of his treatment was the cumulative cost of all of those little pieces of fabric and sewing machines, not the dedicated attention of an experienced professional. For a tailored suit, you're paying the huge premium for the dedicated service of a professional tailor, not for the materials. That wasn't the case for my nephew's treatment. I haven't seen the actual bills, but my educated guess is that the cost of personalized attention by doctors and nurses was a small fraction of the total. You're mostly paying the amortized cost of the facilities and the machines and the testing labs, and the development cost of the drugs and the various medical devices, all with enormous markups because, well, each person in the chain can get away with it.

And that's the main point. There was little to differentiate one hospital from another, or one doctor from another. Some doctors had better bedside manners than others I suppose. One hospital had better kids' programs on their TVs than another. One hospital had more convenient parking, and the other had a Ronald McDonald House on campus. Yet, there was no difference in cost. The only way that's possible is if the consumer doesn't care about cost. Without that end consumer price-conscious discipline, there is far less price discipline imposed on any of the other elements in the chain.

If there were a free market, there is no doubt in my mind that the cost would have been bid down by a ton, especially if it were bundled together. We probably could have negotiated a $250,000 cost, and then hospitals, knowing they were in competition would have driven harder bargains on the costs of tests and equipment, etc., driving down cost for everybody who uses those same elements.

The market handles normal distributions pretty well. It doesn't actually handle compound pareto distributions all that well. In fact, left to a perfectly free market, the tail of that compound distribution simply doesn't get served at all. There's not enough money in it unless you have some sort of risk-sharing schema in place.

The free market developed insurance products because they met a consumer need. These are purely financial products. It would probably work even better if instead of giving you unlimited medical treatment for your illness, they just give you an adjuster determined sum of money and let you spend it as you see fit. They do this if your house burns down or your car gets totaled. I don't think there would be much of a difference if we actually had a free market in health care.

 

[Skeptic Ginger]

Nonetheless, it is not easy to make a convincing case that job gains have lagged since the President signed the health insurance law. and yet the Republicans keep repeating it is some big job killer.

 

[Emily's Cat]

As is happening more and more frequently with you, you have completely misunderstood what I wrote or proposed. Except for the first $1,000, the money is the consumer's money to do with as he wishes.

As has been happening consistently in this thread, you've taken a stance on a subject of which you know very little, and have assumed that all of your assumptions are reality... and have continuously discounted and ignored the expertise of people who actually do know what reality is.

It wasn't bespoke. The same chemotherapy drugs were used in the same sequence with exactly the same monitoring for infection and the like that is done for everybody (and even people with different diseases). The dosage is proportional to surface area, which is computed by a formula based on height and weight. Every pediatric hematologist oncologist in the country would have done exactly the same thing.

Please provide evidence that the exact same approach with the exact same drugs and exact same sequence is what is used for everyone else who has the same condition. Because I'm about 97% certain that you're dead wrong. I'm about 99% certain that you're just making wild assumptions because you think they make sense to your brain, then you're assuming that your assumptions are the only way it can possibly be... even though you actually don't know a single thing about this topic.

Your assumptions are not reality.

What you're missing is that a huge part of the cost of his treatment was the cumulative cost of all of those little pieces of fabric and sewing machines, not the dedicated attention of an experienced professional. For a tailored suit, you're paying the huge premium for the dedicated service of a professional tailor, not for the materials. That wasn't the case for my nephew's treatment. I haven't seen the actual bills, but my educated guess is that the cost of personalized attention by doctors and nurses was a small fraction of the total. You're mostly paying the amortized cost of the facilities and the machines and the testing labs, and the development cost of the drugs and the various medical devices, all with enormous markups because, well, each person in the chain can get away with it.

Lol - for the bolded part... the cost of materials for a bespoke item may, or may not be a significant part of the cost. In the case of a suit, the labor outweighs the materials. For other items, that's not the case. The relationship of [expert advisement designing a custom approach] to the [cost of materials needed to deliver the custom approach] is completely irrelevant to whether or not the approach is bespoke or commoditized.

Once again, you've demonstrated a profound lack of understanding of what constitutes a commodity.

Regarding the highlighted section... there's the rub my friend. You're making assumptions, lots and lots of assumptions, because they "feel right" or "seem right" to you, based on your complete lack of understanding of the health care and insurance system and how they work. Just because you assume it doesn't make it true!

And that's the main point. There was little to differentiate one hospital from another, or one doctor from another. Some doctors had better bedside manners than others I suppose. One hospital had better kids' programs on their TVs than another. One hospital had more convenient parking, and the other had a Ronald McDonald House on campus. Yet, there was no difference in cost. The only way that's possible is if the consumer doesn't care about cost. Without that end consumer price-conscious discipline, there is far less price discipline imposed on any of the other elements in the chain.

Unless your nephew was using Medicare or Medicaid, the highlighted part is patently untrue. Profoundly, completely, and ingorantly untrue.

If there were a free market, there is no doubt in my mind that the cost would have been bid down by a ton, especially if it were bundled together. We probably could have negotiated a $250,000 cost, and then hospitals, knowing they were in competition would have driven harder bargains on the costs of tests and equipment, etc., driving down cost for everybody who uses those same elements.

Lol, your lack of doubt doesn't make it real! There's no doubt in the mind of a religious zealot either. Lack of doubt is not equivalent to fact.

The free market developed insurance products because they met a consumer need. These are purely financial products. It would probably work even better if instead of giving you unlimited medical treatment for your illness, they just give you an adjuster determined sum of money and let you spend it as you see fit. They do this if your house burns down or your car gets totaled. I don't think there would be much of a difference if we actually had a free market in health care.

Hmm. Yeah, again you're working from a pile of completely false assumptions. Health insurance STARTED as a lump sum indemnity products. There's a reason why they aren't the standard.

 

[jimbob]

Are you suggesting that if the UK had the levels of obesity that the US has, it would start spending 16% of its GDP on healthcare? If so, you are barking. If not, it is a red herring.

Not the only factor, but it is an example, yes. Culture is different. Racial demographics are different. And then there is the implicit subsidy the US health care market provides to the world. I have told you many times in the last two years that you are comparing apples to oranges. And yet you persist. Whatever. I realize that I'm not going to change your mind. I'm doing this for lurkers mostly.

OK You're barking.

Obesity is a worse problem in the US, but smoking and alcohol are worse in the UK. The differences aren't as great as you make out.

The US doesn't subsidise healthcare for the rest of the world. It has failed to deliver adequate healthcare for a sizable proportion of its most vulnerable citizens, which is somewhat different.

Would it be more profitable to invent a drug that can get round a patent on viagra, or to develop a vaccine for malaria?

OK You're barking.

Great argument. Also, a Rule 12 violation.

Obesity is a worse problem in the US, but smoking and alcohol are worse in the UK. The differences aren't as great as you make out.

Actually, this is not true when one considers the most at-risk age cohort. Yes, smoking in the US has come down a lot, but smoking rates used to be much higher a generation ago. It is unclear whether alcohol consumption is good or bad for health at the median levels of consumption. It certainly mitigates coronary disease, which is still one of the most common and expensive diseases to treat. In any case, there are just such vast lifestyle, cultural, and demographic differences that comparisons are difficult to make. We have way more babies born to teenage mothers for example (young mothers are at risk for low birth-weight babies), as well as fewer abortions for unhealthy fetuses. We also have a higher foreign born population, and for many reasons which I won't go into, they have worse health than non-immigrants.

Do you have evidence for this? the UK has had higher levels of smoking and drinking for at least 20 years (this is from the link on my sig)

I will explain why I think your argument is barking.

The US and UK spend roughly the same proportion of their GDP on public healthcare.

The UK covers its entire population. The US covers about half its population.

You were implying that this difference could be largely explained by differences in obesity rates, which you then changed to general poor health - some of which is due to inadequate public health in the US in the first place.

Coming back to the obesity rates question.

If all the extra costs were due to obesity, then the most generous interpretation to your viewpoint is that all the obese patients in the US were on state-funded healthcare and that the obesity rate in the US was more than twice that in the UK. There is nothing to suggest that this is the case:

ETA: It doesn't matter if you change it for other health indicators. And if you do that, then why the FSM should there be so much private spending on healthcare (about equivalent to the UK's total spend as a proportion of GDP) in the US if all the expensive patients are publicly covered?

The US system is significantly less efficient.

 

[jimbob]

There doesn't seem to be much demand for a malaria vaccine. Perhaps it's because the only people who could benefit are those who have no money to pay for it. I suppose Bill Gates could rectify this problem by himself, if he thinks it's worth it. Sometimes the market doesn't give us the result we want from an ethical perspective, but it usually gives us a more optimal result from an economic perspective. If there is genuine high demand for a Viagra substitute, who am I to say that the market is wrong? A strong erection is nothing to sneeze at.

You could say that there wasn't much demand for bread in the run up to the French Revolution because the poor couldn't afford it - but that there was demand for cake. That's a pretty stupid argument.

I chose a me-too viagra because it didn't even provide a new medical treatment, just a slice of some large profits.

 

[sunmaster14]

As has been happening consistently in this thread, you've taken a stance on a subject of which you know very little, and have assumed that all of your assumptions are reality... and have continuously discounted and ignored the expertise of people who actually do know what reality is.


Please provide evidence that the exact same approach with the exact same drugs and exact same sequence is what is used for everyone else who has the same condition. Because I'm about 97% certain that you're dead wrong. I'm about 99% certain that you're just making wild assumptions because you think they make sense to your brain, then you're assuming that your assumptions are the only way it can possibly be... even though you actually don't know a single thing about this topic.

Your assumptions are not reality.


Lol - for the bolded part... the cost of materials for a bespoke item may, or may not be a significant part of the cost. In the case of a suit, the labor outweighs the materials. For other items, that's not the case. The relationship of [expert advisement designing a custom approach] to the [cost of materials needed to deliver the custom approach] is completely irrelevant to whether or not the approach is bespoke or commoditized.

Once again, you've demonstrated a profound lack of understanding of what constitutes a commodity.

Regarding the highlighted section... there's the rub my friend. You're making assumptions, lots and lots of assumptions, because they "feel right" or "seem right" to you, based on your complete lack of understanding of the health care and insurance system and how they work. Just because you assume it doesn't make it true!


Unless your nephew was using Medicare or Medicaid, the highlighted part is patently untrue. Profoundly, completely, and ingorantly untrue.


Lol, your lack of doubt doesn't make it real! There's no doubt in the mind of a religious zealot either. Lack of doubt is not equivalent to fact.


Hmm. Yeah, again you're working from a pile of completely false assumptions. Health insurance STARTED as a lump sum indemnity products. There's a reason why they aren't the standard.

Wow. You've gotten progressively less civil as your arguments have been rebutted. You don't even try to argue evidence or logic anymore. It's mostly just insults now.

And for the record, being a health insurance bean counter does not make you an expert. You're far more likely to miss the forest for the trees than somebody who actually understands economics.

 

[jimbob]

Evidence that you understand economics please

ETA: Beyond something akin to the Chicago School

 

[sunmaster14]

Do you have evidence for this? the UK has had higher levels of smoking and drinking for at least 20 years (this is from the link on my sig)

[qimg]http://www.internationalskeptics.com/forums/imagehosting/1449457226aaa61beb.png[/qimg]

I was thinking of going back a lot further than 20 years. Smoking rates in the US were above 40% in the early '70s. See here.

I will explain why I think your argument is barking.

The US and UK spend roughly the same proportion of their GDP on public healthcare.

The UK covers its entire population. The US covers about half its population.

You were implying that this difference could be largely explained by differences in obesity rates, which you then changed to general poor health - some of which is due to inadequate public health in the US in the first place.

I was implying no such thing. I gave obesity as an example of a difference between Americans and British. I didn't say it largely explained the difference. I didn't even say that cultural or lifestyle choices largely explained the difference. Frankly, I think the difference is largely due to our crazy 3rd party payer system which imposes no price discipline, but, at least provides a benefit to the world in terms of supercharging incentives for further medical research and development. But even if we had the British equivalent of the NHS, I suspect we would still spend more on health care per capita because of lifestyle choices and demographics.

Coming back to the obesity rates question.

If all the extra costs were due to obesity, then the most generous interpretation to your viewpoint is that all the obese patients in the US were on state-funded healthcare and that the obesity rate in the US was more than twice that in the UK. There is nothing to suggest that this is the case:

[qimg]http://www.internationalskeptics.com/forums/imagehosting/1449457226e064f350.png[/qimg]

Once again, you're attacking a strawman. My claim is that you're comparing apples to oranges, and you are. I've said it many times. Furthermore, and this has always been my main point, if the US adopted the British system, we, as well as the entire world, would suffer from reduced investment in medical research and development.

 

[sunmaster14]

Evidence that you understand economics please

ETA: Beyond something akin to the Chicago School

If anybody who has read even a fraction of my posts believes that I don't understand economics, then I submit that such a person does not understand economics. Yes, I may be an arrogant bastard, but that's just how it is.

 

[jimbob]

I was thinking of going back a lot further than 20 years. Smoking rates in the US were above 40% in the early '70s. See here.



I was implying no such thing. I gave obesity as an example of a difference between Americans and British. I didn't say it largely explained the difference. I didn't even say that cultural or lifestyle choices largely explained the difference. Frankly, I think the difference is largely due to our crazy 3rd party payer system which imposes no price discipline, but, at least provides a benefit to the world in terms of supercharging incentives for further medical research and development. But even if we had the British equivalent of the NHS, I suspect we would still spend more on health care per capita because of lifestyle choices and demographics.



Once again, you're attacking a strawman. My claim is that you're comparing apples to oranges, and you are. I've said it many times. Furthermore, and this has always been my main point, if the US adopted the British system, we, as well as the entire world, would suffer from reduced investment in medical research and development.

I know that's your contention, but you haven't given anything remotely convincing as an argument. You also seem to confuse "refute" with "state a contrary position".

 

[jimbob]

The US smoking figures in the 1970s are not any higher than the UKs

https://www.ons.gov.uk/peoplepopula...lletins/adultsmokinghabitsingreatbritain/2014

Main points

19% of adults in Great Britain currently smoke, down from a peak of 46% in 1974 when the series began. Among smokers, the average consumption was 11.4 cigarettes a day – the lowest daily cigarette consumption since the series began, the peak being in 1976 at 16.8 cigarettes a day.

I haven't found tables of graphs yet, but given the last 20-years, any difference in health (and cost) burden will fall disproportionately on the UK not the US.

 

[lobosrul]

It wasn't bespoke. The same chemotherapy drugs were used in the same sequence with exactly the same monitoring for infection and the like that is done for everybody (and even people with different diseases). The dosage is proportional to surface area, which is computed by a formula based on height and weight. Every pediatric hematologist oncologist in the country would have done exactly the same thing.

That's funny. There is a local radio ad campaign here for a cancer treatment hospital that drones on about how everyone is different and they customize treatment for each patient. They could be liars though, truth in advertisement laws being what they are in the US.

And that's the main point. There was little to differentiate one hospital from another, or one doctor from another. Some doctors had better bedside manners than others I suppose. One hospital had better kids' programs on their TVs than another. One hospital had more convenient parking, and the other had a Ronald McDonald House on campus. Yet, there was no difference in cost. The only way that's possible is if the consumer doesn't care about cost. Without that end consumer price-conscious discipline, there is far less price discipline imposed on any of the other elements in the chain.

May I suggest reading this: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/08/one-hospital-charges-8000-another-38000/

 

[jimbob]

If anybody who has read even a fraction of my posts believes that I don't understand economics, then I submit that such a person does not understand economics. Yes, I may be an arrogant bastard, but that's just how it is.

Well your definition of a commodity is so broad as to be useless.

Other than that I could accept that you have a good knowledge of a really flawed economic theory - you keep making assertions that don't fit with real world examples (a theory that doesn't believe in cartels isn't that useful).

I would be willing to believe that the rest could be due to a fine understanding of a certain branch of economics coupled with a woeful misunderstanding about how healthcare works.

 

[Wudang]

If anybody who has read even a fraction of my posts believes that I don't understand economics, then I submit that such a person does not understand economics. Yes, I may be an arrogant bastard, but that's just how it is.

https://en.wikipedia.org/wiki/Dunning–Kruger_effect

I recommend that people who push theory-driven economic models (including but not limited to rational actor models) read as an overview
https://marketing.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=682

 

[sunmaster14]

That's funny. There is a local radio ad campaign here for a cancer treatment hospital that drones on about how everyone is different and they customize treatment for each patient. They could be liars though, truth in advertisement laws being what they are in the US.

They're really touting their doctors' and nurses' beside manner, which isn't a lie so much as subtly misleading. Many, if not most, patients care about that sort of thing.

Interestingly, there are cancer treatment hospitals which do a lot of advertising, and those that don't. Those that don't, like Massachusetts General Hospital, are the premier facilities and charge the highest prices (both list and negotiated). So much for the theory that advertising causes higher costs.

May I suggest reading this: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/08/one-hospital-charges-8000-another-38000/

I read that a long time ago. Those are list prices, and they're all over the map, which is an indication that we don't have a free market. When I wrote that the cost was the same, I meant from the perspective of the insured consumer. Cost simply played no part in my brother's decisions.

 

[sunmaster14]

Well your definition of a commodity is so broad as to be useless.

Really, what was my definition of a commodity? Perhaps you can point to it. I wonder if you would consider the definition of a durable good so broad as to be useless. Or a foodstuff. I think rather your definition is useless because literally nothing in the world would be considered a commodity. You gave oil as an example of a commodity, or at least Emily did, and I showed that according to your definition it was not.

Other than that I could accept that you have a good knowledge of a really flawed economic theory - you keep making assertions that don't fit with real world examples (a theory that doesn't believe in cartels isn't that useful).

I believe in cartels. I just don't think they're sustainable, nor particularly effective. It is possible that our economy would work better if the government got out of the anti-trust business altogether, since those areas in which it does some good are likely swamped by those areas in which it does some bad. In any case, I don't have a strong opinion about anti-trust law, although there are some famous economists who take my side of the argument (including Milton Friedman and his son David). Furthermore, it was a digression and being used by you as something of a distraction from a losing argument. The focus of Emily on the definition of commodity is a similar derailing strategy. I didn't even use the word commodity first, but rather the term commoditization, but because she has no actual arguments, she tries to use semantics as a distraction and as a platform for launching insults. I've been disappointed, to say the least.

I would be willing to believe that the rest could be due to a fine understanding of a certain branch of economics coupled with a woeful misunderstanding about how healthcare works.

And what exactly do you do for a living that makes you such an expert on healthcare? Or the US in particular? Do you even have any experience with the US healthcare system? Because from your posting history, it sure seems like you don't.

 

[sunmaster14]

https://en.wikipedia.org/wiki/Dunning–Kruger_effect

I wish I had a dollar for every person who thought he understood the Dunning Kruger effect but in fact was suffering from the Dunning Kruger effect.

I'll note that I have been working in finance for over 20 years, and I have four good friends who are full professors in economics at Harvard, MIT (2), and Yale. Between them, many of their academic colleagues whom I've met, and the investing and trading I've done, I've had plenty of opportunity to be disabused of any fallacies I might have believed in. Much more than most people here is my guess.

I recommend that people who push theory-driven economic models (including but not limited to rational actor models) read as an overview
https://marketing.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=682

What should I expect to learn from this?