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

What part of "it's their money after you give it to them" don't you understand? I thought you said that you knew something about economics.
The part where SOMEONE ELSE'S MONEY shifts the budget line! You know, one of the CORE CONCEPTS of micro-economic theory that you're so hell-bent on quoting.

Big spenders in one year were small spenders in a prior year when they were price-conscious. They will go to the hospital or doctor they're already familiar with, which is the one that was providing (in their view) the best combination of price and quality in prior years. In other areas, you might call it brand loyalty, and corporations care a lot about pleasing their customers and getting a good reputation because of it.
And your theory is based on what? They're already not price-conscious. This is already not a thing. Why do you persist in believing that it will become a thing because you give them magic money to use?

Huh? You seem to be saying that the main driving force for higher cost share is to make the optics look better for Obamacare (or the effect of Obamacare on all premiums nationally). I believe that's the case to some extent, but even I'm not that cynical. Increased cost sharing is virtually the only way Obamacare tries to bend the curve of health care costs (other than the Cadillac tax, which is effectively dead and buried).
It has nothing at all to do with ACA. It has everything to do with the claim probability distribution and the math involved. Cost-shares have been rising pretty consistently for years.

And increased cost sharing has nothing at all to do with underlying cost. It makes not one whit of difference to what the providers bill.

Of course, to the extent that such cynicism (i.e. hiding the true cost of health care from the consumer by raising deductibles instead of premiums) works, it means that consumers are less likely to alter their spending behavior because of deductibles. If they can't figure out that deductibles are important when choosing a health plan, are they really going to curb their spending because of the deductible?
What cynicism are you talking about? Nobody is hiding anything. Every ounce of medical cost is embedded in the product, either as direct cost shares or as premiums. That is how the rates are developed. There's no "hiding" anything.

It seems like you, who claim such intense knowledge of economics, should be able to piece together the trade-off between up-front uniform pricing (premium) and point-of-service cost (cost-shares) and how both of those go into product selection relative to an individual's indifference line and their budget line.
 
What? Why the hell not? I need food to live too, but it doesn't mean I can't shop around a little before going to the grocery store. Even if I'm really hungry. You're claiming things that are manifestly false.

And you are persistent in assuming things that do not reflect reality. You consistently dismiss the actual factors involved in medical treatment.
 
What does that have to do with information asymmetry? People believe lots of crazy things, and there's a lot more to health care for some people than actually getting cured. Some people are hypochondriacs and like chatting up doctors or talking about themselves. Some people like taking alternative medicines. Some people like having their spines manipulated. Who am I to say how they should spend their money? As long as they're spending their money, so at least they think seriously about whether or not it is really worth it to them.

I'm certainly not going to argue that chiropractors aren't quacks. I think it's rife with quackery. However, I know a lot of reasonably smart people who use chiropractors. I figure it must be having the same effect as therapeutic massage. Whether or not it does more harm than good to health is something I have not looked at. Certainly the absence of direct harm is not necessarily the same as being harmless. Homeopathy can kill if it is used in lieu of effective treatments for a fatal condition.

Under your plan they aren't spending their money - they're spending Other people's money.
 
Me: "Hi, is this MGH? Can, you tell me the price for a colonoscopy procedure? Uh-huh. 50-year old male, no history, non-smoker. $3,000? Can I get a DVD of the procedure? $100 extra? Ok. And what do you serve for the post-op refreshment? Oh, very nice. Is the chicken cage free? Great."

Try this:

"Hi, is this MGH? Can you tell me the price for a triple bypass because I'm having a heart attack right now, and I'd like to make sure I get the best deal."

"Hi, is this MGH? Can you tell me the cost for kidney dialysis? Don't worry, I have a whole 3 days to decide and get booked for my treatment before my kidneys shut down and I die. Plenty of time to make sure I'm saving a few more bucks!"
 
Try this:

"Hi, is this MGH? Can you tell me the price for a triple bypass because I'm having a heart attack right now, and I'd like to make sure I get the best deal."

"Hi, is this MGH? Can you tell me the cost for kidney dialysis? Don't worry, I have a whole 3 days to decide and get booked for my treatment before my kidneys shut down and I die. Plenty of time to make sure I'm saving a few more bucks!"

And, are aiming to save someone else's money anyway, as catastrophic coverage above $5k is covered according to Sunmaster14's preferred system.
 
What exactly do you consider to be an argument?

An argument isn't just contradiction. An argument is a connected series of statements intended to establish a proposition. Argument is an intellectual process. Contradiction is just the automatic gainsaying of anything the other person says.

Well, considering that I quoted exactly what you've said... here's your opportunity to actually set me straight instead of just complaining about it.

No it isn't. ;)

I do not enjoy wasting my time repeating something that I have clarified several times in the thread, but here goes. Each calendar year, each person gets $5,000 credited to their bank account. It is their money to keep. Except that, if at least $1,000 wasn't spent on health care during the year (as documented by receipts that providers should, ..., um, provide), then the balance of the $1,000 not spent, is refunded to the government. As for practical implementation of the refund, I suppose it can work like a tax, or perhaps a reduction in the next year's allotment.

The purpose of the $5,000 is not necessarily to provide somebody with $5,000 worth of health care. It is to provide them with $5,000 of means. This policy combines the ideas of a minimum income, an economic stimulus, and a means to purchase health care if needed, all in one package.

Note that money is not a real resource, but rather an accounting method for allocating real resources. Giving people money is not wasteful. Using real resources non-optimally is wasteful. Paying somebody to dig a hole and fill it back in again is wasteful. Simply giving them the same amount of money and not requiring them to waste their labor is not. Although it might prove to cause waste as a consequence because it might incentivize people to not do useful work that they otherwise would do, at least it doesn't force them to not do useful work.

Read again - I didn't say they were a free market, I said they were consumer driven health care. And at the end of the day people do not shop around. If they don't shop around when given someone else's money already, why would they suddenly begin to shop around when you give them even more of someone else's money?

Because it is their money. If you can't agree that it is their money, then there's no point in continuing. That is so fundamental to economics, and to my lived experience, that if we can't agree on that, then we may as well converse in ancient Greek (which I can't read or write, by the way).

And people do shop around when it is their money they're spending. I've seen it with my own eyes in those circumstances that you claim would never happen. I've seen a rich investment banker and his wife decide on saving $17,000 by staying in network for the wife's ovarian cyst surgery rather than going to the premier doctor in the area (who was out of network). Even though, it was an extremely difficult surgery, and the wife's fertility hung in the balance.

I don't think you understand what an HSA-qualified health plan looks like. The cost sharing is not little.

See, this is one of those obnoxious remarks you throw in from time to time. I don't believe you do think I don't understand. It would be completely incongruous for somebody (i.e. me) to understand the finer points of the tax code and of Obamacare, as I have demonstrated time and again, and yet not understand that in order to have an HSA, you need a so-called high deductible plan (which isn't even all that high a deductible). I've had one in the past, although I don't have one now, but I do have a lot of money in an HSA which I have yet to use.

Getting to the point, however, how does having an HSA enhance cost-sharing? It does the opposite. By allowing somebody to pay for what little cost-sharing they have with tax-free money rather than after-tax money, doesn't that mitigate the pain of paying with your own money? And of course the savvier people who have some financial means aren't even going to use their HSAs to pay for incidental expenses in the near-term. They'll let it grow tax-free just like you do with your IRA or 401(k).

Yes, you've given examples of elective, non-necessary, luxury services. Which is not at all the same as cancer care or life-saving surgery. For reasons that seem very, very obvious to me.

By your definition, most health care is elective, non-necessary, luxury service. Even cancer care is elective. May be non-necessary (depending on the prognosis), and can be luxury (depending on the treatment). If I have 6 months to live, is it necessary to use an expensive drug to get an extra month? I don't think so. If it is not necessary, then isn't it a luxury? If there is a cheap drug that gets the job done but has some unpleasant side effects, is it necessary that I get the more expensive drug which doesn't have such side effects? If I need quadruple bypass surgery within the next 3 months, or I am likely to die, do I need to pay extra in order to have it done next week rather than next month?

When I broke my arm a few years ago, I had the choice of going with a less experienced doctor and having the surgery done right away versus waiting a week to get a more experienced doctor. I chose the less experienced doctor. I wasn't facing a difference in price, but time = money for me and for everybody else.
 
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Try this:

"Hi, is this MGH? Can you tell me the price for a triple bypass because I'm having a heart attack right now, and I'd like to make sure I get the best deal."

Coronary bypass surgery is the best example you can come up with on short notice? Pretty funny. Because people usually have to wait for weeks or months for coronary bypass surgery in the UK. See here.

How long will I have to wait for surgery?

The length of time you'll have to wait to have coronary artery bypass graft will vary from area to area.

Your GP or cardiac surgeon should be able to tell you what the waiting lists are like in your area or at the hospital you've chosen.
Ideally, you should be treated within three months of the decision to operate.



"Hi, is this MGH? Can you tell me the cost for kidney dialysis? Don't worry, I have a whole 3 days to decide and get booked for my treatment before my kidneys shut down and I die. Plenty of time to make sure I'm saving a few more bucks!"

Kidney dialysis is a recurring need (twice weekly I believe). Plenty of time to shop for the best price in the long run. Also, you can do it in a hospital, in a doctor's office, or at home. Plenty of options for the cost-conscious.
 
And, are aiming to save someone else's money anyway, as catastrophic coverage above $5k is covered according to Sunmaster14's preferred system.

For the catastrophic coverage, the misalignment of incentives is no worse than what we have now (and I have given some reasons why it's better actually). But the $0-$5K range is the sweet spot where pricing pressure can have beneficial effects which spread throughout the whole system.

I wouldn't necessarily lump in chronic care (like dialysis needed for failed kidneys) in with catastrophic care. I wouldn't want to leave those people in the lurch, but I think there's ways of designing things so they have considerable skin in the game and have an incentive to be frugal.
 
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.
Well since we're chucking qualifications around: I have a BSc(hons) in psychology specializing mainly in human information process though largely around written language.
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.



What should I expect to learn from this?

Absolutely nothing.
 
An argument isn't just contradiction. An argument is a connected series of statements intended to establish a proposition. Argument is an intellectual process. Contradiction is just the automatic gainsaying of anything the other person says.



No it isn't. ;)

I do not enjoy wasting my time repeating something that I have clarified several times in the thread, but here goes. Each calendar year, each person gets $5,000 credited to their bank account. It is their money to keep. Except that, if at least $1,000 wasn't spent on health care during the year (as documented by receipts that providers should, ..., um, provide), then the balance of the $1,000 not spent, is refunded to the government. As for practical implementation of the refund, I suppose it can work like a tax, or perhaps a reduction in the next year's allotment.

The purpose of the $5,000 is not necessarily to provide somebody with $5,000 worth of health care. It is to provide them with $5,000 of means. This policy combines the ideas of a minimum income, an economic stimulus, and a means to purchase health care if needed, all in one package.

Note that money is not a real resource, but rather an accounting method for allocating real resources. Giving people money is not wasteful. Using real resources non-optimally is wasteful. Paying somebody to dig a hole and fill it back in again is wasteful. Simply giving them the same amount of money and not requiring them to waste their labor is not. Although it might prove to cause waste as a consequence because it might incentivize people to not do useful work that they otherwise would do, at least it doesn't force them to not do useful work.



Because it is their money. If you can't agree that it is their money, then there's no point in continuing. That is so fundamental to economics, and to my lived experience, that if we can't agree on that, then we may as well converse in ancient Greek (which I can't read or write, by the way).

And people do shop around when it is their money they're spending. I've seen it with my own eyes in those circumstances that you claim would never happen. I've seen a rich investment banker and his wife decide on saving $17,000 by staying in network for the wife's ovarian cyst surgery rather than going to the premier doctor in the area (who was out of network). Even though, it was an extremely difficult surgery, and the wife's fertility hung in the balance.



See, this is one of those obnoxious remarks you throw in from time to time. I don't believe you do think I don't understand. It would be completely incongruous for somebody (i.e. me) to understand the finer points of the tax code and of Obamacare, as I have demonstrated time and again, and yet not understand that in order to have an HSA, you need a so-called high deductible plan (which isn't even all that high a deductible). I've had one in the past, although I don't have one now, but I do have a lot of money in an HSA which I have yet to use.

Getting to the point, however, how does having an HSA enhance cost-sharing? It does the opposite. By allowing somebody to pay for what little cost-sharing they have with tax-free money rather than after-tax money, doesn't that mitigate the pain of paying with your own money? And of course the savvier people who have some financial means aren't even going to use their HSAs to pay for incidental expenses in the near-term. They'll let it grow tax-free just like you do with your IRA or 401(k).



By your definition, most health care is elective, non-necessary, luxury service. Even cancer care is elective. May be non-necessary (depending on the prognosis), and can be luxury (depending on the treatment). If I have 6 months to live, is it necessary to use an expensive drug to get an extra month? I don't think so. If it is not necessary, then isn't it a luxury? If there is a cheap drug that gets the job done but has some unpleasant side effects, is it necessary that I get the more expensive drug which doesn't have such side effects? If I need quadruple bypass surgery within the next 3 months, or I am likely to die, do I need to pay extra in order to have it done next week rather than next month?

When I broke my arm a few years ago, I had the choice of going with a less experienced doctor and having the surgery done right away versus waiting a week to get a more experienced doctor. I chose the less experienced doctor. I wasn't facing a difference in price, but time = money for me and for everybody else.

Even in the US, giving about 200-million adults, $5k each adds up to real money. "You spend a billion here and a billion there and soon you are talking real money". It would be a stimulus package ( a point that you seem to vacillate on) but that isn't what you want for a healthcare system. You are trying to control two completely independent systems with one tool.

Your last paragraph highlights our point that healthcare doesn't behave like a commodity for most people, most of the time.

In addition, you still haven't explained how someone shopping around for physiotherapy is going to reduce the cost of kidney dialysis.

There is a reason why you haven't. Because it won't.
 
You also haven't explained how the following can survive in a market where the customers have good information:


  • Homeopaths (if done according to their doctrine, utterly useless, if not, potentially dangerous as well)
  • Chiropractors (utterly insane doctrine, risk of severe harm if done according to their doctrine, and no better than conventional physiotherapy at the best)
  • Bach flower practitioners (seriously??)
  • Acupuncture (good as a placebo, risk of harm)
  • Chelation (don't go there - *really* bad idea)
  • Faith healing (useless)
  • Rekki (ditto)

As a very small subsection of the quack doctrines - just the ones that I can name in a couple of minutes.

If information asymmetry wasn't a problem, none of these would have a market.
 
Even in the US, giving about 200-million adults, $5k each adds up to real money. "You spend a billion here and a billion there and soon you are talking real money". It would be a stimulus package ( a point that you seem to vacillate on) but that isn't what you want for a healthcare system. You are trying to control two completely independent systems with one tool.

I have not vacillated on whether it's a stimulus package. It is one. It just isn't one for health care, except for that $1K of conditional money which is a direct subsidy.

Of course, in terms of net "cost" to the government, it's not really as large as it sounds. There are already 96 million Americans on Medicaid and Medicare out of a total of 320 million. Even before Obamacare, a substantial number (around 80%) of the rest had tax-subsidized health care through their employers, a subsidy that avoided 12.4% in social security taxes on wages up to $118,000, 2.9% (or 3.8%) of Medicare taxes on wages without any cap, and of course federal income taxes ranging from 15% to 39.6% on wages without any cap. So, you're talking about an extra 224 million x $5K of outlay, netted with the tax subsidy, which is about $250 billion. So maybe you're talking about a net increase of spending in the range of $870 billion. Of course, a lot of that comes back in the form of taxes on increased economic activity, as well as lowered prices for health care which means lower spending for Medicaid and Medicare. So, the economic stimulus is material in an $18 trillion economy, but nothing that would cause inflation I think.

Your last paragraph highlights our point that healthcare doesn't behave like a commodity for most people, most of the time.

Commoditized is the term I used. Which means that I can substitute one service for the other quite easily if they differ in price or convenience.

In addition, you still haven't explained how someone shopping around for physiotherapy is going to reduce the cost of kidney dialysis.

There is a reason why you haven't. Because it won't.

Well, I also haven't explained why an apple is an orange. One reason is that I have no need to. People who are shopping around for kidney dialysis, rather than just paying whatever, will lower the price of kidney dialysis.
 
I have not vacillated on whether it's a stimulus package. It is one. It just isn't one for health care, except for that $1K of conditional money which is a direct subsidy.

Of course, in terms of net "cost" to the government, it's not really as large as it sounds. There are already 96 million Americans on Medicaid and Medicare out of a total of 320 million. Even before Obamacare, a substantial number (around 80%) of the rest had tax-subsidized health care through their employers, a subsidy that avoided 12.4% in social security taxes on wages up to $118,000, 2.9% (or 3.8%) of Medicare taxes on wages without any cap, and of course federal income taxes ranging from 15% to 39.6% on wages without any cap. So, you're talking about an extra 224 million x $5K of outlay, netted with the tax subsidy, which is about $250 billion. So maybe you're talking about a net increase of spending in the range of $870 billion. Of course, a lot of that comes back in the form of taxes on increased economic activity, as well as lowered prices for health care which means lower spending for Medicaid and Medicare. So, the economic stimulus is material in an $18 trillion economy, but nothing that would cause inflation I think.



Commoditized is the term I used. Which means that I can substitute one service for the other quite easily if they differ in price or convenience.



Well, I also haven't explained why an apple is an orange. One reason is that I have no need to. People who are shopping around for kidney dialysis, rather than just paying whatever, will lower the price of kidney dialysis.

Why in the name of the FSM would someone on dialysis bother to shop around as they know that they will be well above the $5k threshold?


http://mcdermott.house.gov/index.php?option=com_content&view=article&id=381&Itemid=62

Cost

$20.8 billion Annual cost of the Medicare ESRD program

$57.5 billion Annual Medicare costs to treat people with Chronic Kidney Disease – 28% of Medicare spending

$106,373 Medicare spending for kidney transplant per patient in the first year

$72,064 Medicare spending on a dialysis patient, per-year

$16,844 Medicare spending for a functioning transplant patient, per-year

Sources: U.S. Renal Data System 2009 Annual Data Report www.usrds.org ; http://optn.transplant.hrsa.gov ; Journal of the American Medical Association, November 7, 2007
 
Why in the name of the FSM would someone on dialysis bother to shop around as they know that they will be well above the $5k threshold?

As I said before, for chronic diseases, a coinsurance payment is appropriate. That would give an incentive to minimize cost. Catastrophic insurance is meant to cover unexpected expenses, not so much chronic conditions with high, but predictable, expense.

In any case, I found a very interesting discussion of dialysis here. It looks like although there are a wide variety of treatment options, including the far superior home treatment option, the government sort of mucked things up with the introduction of the Medicare ESRD program in 1973 that you reference in your excerpt.

Home dialysis is used significantly less in the U.S. than in some other countries. Only about 8% of the more than 400,000 dialysis patients in the U.S. are on home dialysis. In contrast, eight other countries— Australia, Canada, Denmark, Finland, Iceland, Mexico, the Netherlands and New Zealand —have home dialysis rates at or above 20%, according to a 2011 article published in the Clinical Kidney Journal.

Experts say the decline in home dialysis in the U.S. was related to the introduction of the Medicare End Stage Renal Disease Program in 1973, which paid for dialysis for nearly all Americans with ESRD. That program created a strong financial incentive for providers to maximize the number of patients who could receive dialysis treatment. So they shifted to outpatient dialysis centers.
 
An argument isn't just contradiction. An argument is a connected series of statements intended to establish a proposition. Argument is an intellectual process. Contradiction is just the automatic gainsaying of anything the other person says.
ORLY?

http://www.internationalskeptics.com/forums/showthread.php?postid=11261510#post11261510
http://www.internationalskeptics.com/forums/showthread.php?postid=11261405#post11261405 (Still waiting on a response to this, btw)
http://www.internationalskeptics.com/forums/showthread.php?postid=11252725#post11252725
http://www.internationalskeptics.com/forums/showthread.php?postid=11247027#post11247027
http://www.internationalskeptics.com/forums/showthread.php?postid=11241474#post11241474

I will admit that I have provided a significant number of outright dismissals in the last handful of pages. In part, this is because this is my job, it is my field of expertise. In part, it's because I've gotten tired of repeating myself. Mostly, however, it's because nearly all of your approach is based on unsupported assumptions and those assumptions do not jive with reality.


I do not enjoy wasting my time repeating something that I have clarified several times in the thread, but here goes. Each calendar year, each person gets $5,000 credited to their bank account. It is their money to keep. Except that, if at least $1,000 wasn't spent on health care during the year (as documented by receipts that providers should, ..., um, provide), then the balance of the $1,000 not spent, is refunded to the government. As for practical implementation of the refund, I suppose it can work like a tax, or perhaps a reduction in the next year's allotment.

The purpose of the $5,000 is not necessarily to provide somebody with $5,000 worth of health care. It is to provide them with $5,000 of means. This policy combines the ideas of a minimum income, an economic stimulus, and a means to purchase health care if needed, all in one package.

Note that money is not a real resource, but rather an accounting method for allocating real resources. Giving people money is not wasteful. Using real resources non-optimally is wasteful. Paying somebody to dig a hole and fill it back in again is wasteful. Simply giving them the same amount of money and not requiring them to waste their labor is not. Although it might prove to cause waste as a consequence because it might incentivize people to not do useful work that they otherwise would do, at least it doesn't force them to not do useful work.
I don't like repeating myself either. But when something I've said has been misunderstood, I'm perfectly willing to rephrase it and clarify, rather than just insisting that I've been misunderstood. To my understanding, this is the first time that you have actually clarified that you're simply giving away $4000 to every person in the US, no strings attached. I personally think that's a terrible idea, but whatever. I don't think it makes a whole lot of difference though.... which leads me to your next point:
Because it is their money. If you can't agree that it is their money, then there's no point in continuing.
Yes, it belongs to them... but it is not part of their current budget line. Let's shift the context: Imagine that a total stranger walks up to you on the street and hands you $5K in cash. Is that extra $5K going to incentivize you to become a price-conscious shopper?

See, this is one of those obnoxious remarks you throw in from time to time. I don't believe you do think I don't understand. It would be completely incongruous for somebody (i.e. me) to understand the finer points of the tax code and of Obamacare, as I have demonstrated time and again, and yet not understand that in order to have an HSA, you need a so-called high deductible plan (which isn't even all that high a deductible). I've had one in the past, although I don't have one now, but I do have a lot of money in an HSA which I have yet to use.

Getting to the point, however, how does having an HSA enhance cost-sharing? It does the opposite.
Relative to most traditional plans in the market, HSA-qualified plans tend to have quite a bit higher deductibles. The intention of them was that if people are responsible for the entire early stages of their health care, they would become price-conscious and would shop around to get better prices from their providers. Sound familiar? And similar to you, many employers contribute to their employee's HSA accounts in order to reduce the financial burden on their employees, with the theory that if it's their money, they'll work extra hard to make sure they're getting a good deal on their health care. Again - sound familiar?

And as I said... this did not happen. People did not begin shopping around. Once in a while, maybe, but not often enough or in large enough measure to make any material difference. In fact, what we have observed is the exact opposite of what was intended with HSA-paired plans: People save money until they have enough to cover their Out of Pocket max, and then they quit paying any attention to the cost at all. They end up utilizing more service on average than someone without a well-funded HSA account.

By your definition, most health care is elective, non-necessary, luxury service. Even cancer care is elective.
Now you're getting in to word games that are really pointless and completely absurd. No reasonable person would conclude from my explanation that cancer care is an elective non-necessary, luxury service.
 

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