My analysis of the Healthcare situation.

[blackangst1]

Originally posted by: shadow9d9


In Florida, that is what we were looking at.

Have you looked at Mini med? Its a high risk pool which is what Ive been enrolled in. Maybe this will help you.

 

[BigDH01]

Originally posted by: blanghorst
I agree with your second plan -- regulation and enforced efficiencies, which would also need to include measurable results in terms of cost reductions. Additionally, eliminate loopholes like denial of coverage for pre-existing conditions and dropping people who are deemed "too expensive."

Makes no sense. Dropping people with pre-existing conditions and people who are too expensive is not a loophole, it's a drive for profit. They're doing it because it is more profitable to cover healthy people than it is to cover sick people. There isn't a law somewhere stating that private health insurance companies have to cover anyone and these companies are skirting it. They are behaving exactly as we would expect them to behave as a private agency seeking profit.

The only way to combat this is to pass a law stating that they must cover people. That would be massive government intervention into the market. This would also act in direct opposition to the private company's own self interest. The reason certain people aren't covered or dropped is because they can't be covered at a profit. To tell private insurance companies they must now cover these people is to tell them they can't earn a profit or that we will cover the difference (more crony Capitalism).

If we are going to go to that extreme, and pay for profit inefficiencies, why not just make a single payer public plan? You get the benefits of no profit overhead plus the additional benefit of having an extremely large risk pool which should reduce costs for everyone. In addition, you gain additional bargaining power to bring costs down with providers. Due to the nature of actuarial science, as well as not outlawing private additions to the public plan, the single payer public option should result in a Pareto superior alternative to the status quo and private subsidies (assuming the public plan can operate at under (cost + profit margin + small market actuarial inefficiencies) of the private players).

 

[IndyColtsFan]

Originally posted by: BigDH01
Makes no sense. Dropping people with pre-existing conditions and people who are too expensive is not a loophole, it's a drive for profit. They're doing it because it is more profitable to cover healthy people than it is to cover sick people. There isn't a law somewhere stating that private health insurance companies have to cover anyone and these companies are skirting it. They are behaving exactly as we would expect them to behave as a private agency seeking profit.

Understood, but my point here is that the rules of the game are about to change and the insurance companies, one way or another, are on the wrong side of history. They can either abide by new rules (such as discussed below), cover everyone, and not drop people for ridiculous reasons, or they can cease to exist/move to another industry.

The only way to combat this is to pass a law stating that they must cover people. That would be massive government intervention into the market. This would also act in direct opposition to the private company's own self interest. The reason certain people aren't covered or dropped is because they can't be covered at a profit. To tell private insurance companies they must now cover these people is to tell them they can't earn a profit or that we will cover the difference (more crony Capitalism).

Agreed with the bolded point, but I am not sure that they couldn't still turn a profit even if forced to cover the pre-existing condition/"too expensive" categories. Keep in mind that regardless of who pays, costs have to be reigned in. The CBO says the current plan before Congress does not achieve this objective.

If we are going to go to that extreme, and pay for profit inefficiencies, why not just make a single payer public plan? You get the benefits of no profit overhead plus the additional benefit of having an extremely large risk pool which should reduce costs for everyone. In addition, you gain additional bargaining power to bring costs down with providers. Due to the nature of actuarial science, as well as not outlawing private additions to the public plan, the single payer public option should result in a Pareto superior alternative to the status quo and private subsidies (assuming the public plan can operate at under (cost + profit margin + small market actuarial inefficiencies) of the private players).

In theory, your points are valid. Let me make it clear -- I am not opposed to a public option. I am opposed to a public option which makes insufficient provisions to reign in costs and which is intended to eventually replace all private insurers.

 

[Athena]

Originally posted by: deputc26
12. True Free market: In a massive restructuring effort the healthcare industry could be transformed into a true free market. Doing this would require strict limits on the size of medical institutions and strong antitrust regulations, these limitations would be unique to the healthcare system because the inelasticity of demand and relative scarcity of large facilities creates greater potential for anticompetitive behavior.

In other words, you accept before you begin that there can be no such thing as a "true free market" when it comes to healthcare.

 

[shadow9d9]

Originally posted by: blackangst1

Originally posted by: shadow9d9


In Florida, that is what we were looking at.

Have you looked at Mini med? Its a high risk pool which is what Ive been enrolled in. Maybe this will help you.

"These plans provide basic coverage but are not designed to help with catastrophic expenses"

Luckily, we just moved back to NJ which has to cover pre-existing conditions. My wife is a teacher who is taking care of our 2 year old and will go back to work in the near future. We'll be fine now... however, i have compassion for other people and want change.

 

[deputc26]

Originally posted by: Athena

Originally posted by: deputc26
12. True Free market: In a massive restructuring effort the healthcare industry could be transformed into a true free market. Doing this would require strict limits on the size of medical institutions and strong antitrust regulations, these limitations would be unique to the healthcare system because the inelasticity of demand and relative scarcity of large facilities creates greater potential for anticompetitive behavior.

In other words, you accept before you begin that there can be no such thing as a "true free market" when it comes to healthcare.

I see where you are coming from but I disagree; government regulation and the existence of a true free market are not mutually exclusive as evidenced by the airline industry. If we take "true free market" to mean zero government involvement then what we really have is anarchy. Players in the free market "play" in the context of government established rules in all industries, though to be fair there would be much stronger regulation than is received by most industries.

I do agree however, that there will never be a "true free market" that covers ALL citizens of America sufficiently.

 

[BigDH01]

Originally posted by: blanghorst

Originally posted by: BigDH01
Makes no sense. Dropping people with pre-existing conditions and people who are too expensive is not a loophole, it's a drive for profit. They're doing it because it is more profitable to cover healthy people than it is to cover sick people. There isn't a law somewhere stating that private health insurance companies have to cover anyone and these companies are skirting it. They are behaving exactly as we would expect them to behave as a private agency seeking profit.

Understood, but my point here is that the rules of the game are about to change and the insurance companies, one way or another, are on the wrong side of history. They can either abide by new rules (such as discussed below), cover everyone, and not drop people for ridiculous reasons, or they can cease to exist/move to another industry.

The only way to combat this is to pass a law stating that they must cover people. That would be massive government intervention into the market. This would also act in direct opposition to the private company's own self interest. The reason certain people aren't covered or dropped is because they can't be covered at a profit. To tell private insurance companies they must now cover these people is to tell them they can't earn a profit or that we will cover the difference (more crony Capitalism).

Agreed with the bolded point, but I am not sure that they couldn't still turn a profit even if forced to cover the pre-existing condition/"too expensive" categories. Keep in mind that regardless of who pays, costs have to be reigned in. The CBO says the current plan before Congress does not achieve this objective.

If we are going to go to that extreme, and pay for profit inefficiencies, why not just make a single payer public plan? You get the benefits of no profit overhead plus the additional benefit of having an extremely large risk pool which should reduce costs for everyone. In addition, you gain additional bargaining power to bring costs down with providers. Due to the nature of actuarial science, as well as not outlawing private additions to the public plan, the single payer public option should result in a Pareto superior alternative to the status quo and private subsidies (assuming the public plan can operate at under (cost + profit margin + small market actuarial inefficiencies) of the private players).

In theory, your points are valid. Let me make it clear -- I am not opposed to a public option. I am opposed to a public option which makes insufficient provisions to reign in costs and which is intended to eventually replace all private insurers.

No matter what we do, prices are going to have to be controlled. If we leave it as status quo, prices are going to be controlled by reducing demand. The insurance companies basically do this already by rejecting people for pre-existing conditions or eliminating people from policies when possible. Although many wouldn't give it this label, this is rationing. We currently ration by telling some people they can have nearly everything up to a certain dollar amount and others that they can have nothing.

However, insurance companies cannot continue to do this lest they run the real risk of insurance failure. As prices and premiums continue to rise and more people are removed from the pool, the individual price paid by the remaining members becomes prohibitively high. If we "stay the course," you'll likely see insurance companies covering and paying less. They will start to ration their care in the same way it would be rationed under a public plan. Rationing by eliminating the sick from the pool can't continue forever (without resorting to moral arguments), nor is it the most efficient alternative. Considering that most people in the US that don't have any medical insurance work, it is in society's best interest to keep them healthy and productive, from a Pareto standpoint anyway. I think most objections to a public plan are almost entirely ideological.

Related to ideology, I actually consider myself to be a Libertarian (Libertarian Left). My goal would be liberty maximizing moreso than anarchism. The market might be the Libertarians favorite tool, but it doesn't necessarily exclude collectivist intervention. The market is basically a tool to maximize liberty wherever possible, and the ultimate expression of this is the perfect market. A perfect market should reduce profits to what basically amounts to the marginal cost of production, as can be illustrated through several different sequential and simultaneous games involving market players adjusting price and quantity (Bertrand, Cournot). It is in this perfect market that we should find most efficiency and perhaps greatest liberty. However, in both these games, the perfect market, and several theories that describe utility and externality, we impose fairly rigid assumptions and conditions. That doesn't mean something like perfect price competition or the perfect market shouldn't be sought. Those particularly relevant to healthcare are the requirement for no externalities, no barrier to entry, rationality, and perfect knowledge. While no transaction costs are one of these prerequisities (therefore, no taxes), it is likely small in comparison to the other factors. The government has done much to ensure that taxation when it comes to medical treatment is low (health insurance premiums aren't taxed, deductibles, etc). The issues I focus on tend to be symmetric information, rationality, and no externality.

When you visit a doctor, you are immediately at a huge information disadvantage. Doctors endure several years of intensive medical training after being screened for their superior cognitive abilities. My knowledge of the product they are selling (both in terms of effectiveness, necessity, and cost) is far below their's. If I were to seek a second opinion, there is no way for me to be sure that this is more or less accurate than the first, or if one of the doctors is trying to sell me expensive diagnostics that I do not need. When dealing with insurance, I don't have easy (or any?) access to my insurance company's actuarial tables to see how much I'm paying over or under what my risk would warrant. That would put me at a personal disadvantage if I had to shop for insurance as an individual.

Rationality is always a hotly debated topic. Surely, the utility function regarding your own health drastically changes in the face of a life threatening or severe illness or disease. Although this doesn't break the requirement above, it certainly sets it apart from more conventional markets, say commodities. It makes for relatively inelastic demand. I'm still willing to pay for healthcare even as prices increase exponentially as the alternative could be death. Healthcare is also one of those areas where sometimes no decision is made at all. It's entirely possible that after a car accident or injury to the head that I might not make a decision at all to engage in a transaction. That does break the above.

The no externality requirement is a little more debateable. One could certainly argue that any time I purchase an item, I'm creating a negative externality. I'm increasing demand and thereby raising prices for everyone else. I would postulate that the primary difference here is that it is the choice to not participate in the market that hurts everyone else. With regards to health insurance, everyone is better off if everyone engages the market. In traditional markets, if demand falls then price decreases, but in insurance it is the opposite. If only a few people demand health insurance, the cost is extremely high. Also, because of the perverse rationality involved in healthcare, people without insurance will almost always accept care even knowing that they can't afford it. That negative externality is pushed to people who can (in our present form, those with health insurance). That further distorts the market.

My personal concern for individual liberty here also causes me to embrace the idea of high labor mobility (as well as low barrier to entry). Being insured as efficiently as possible increases one's ability to change companies or perhaps start their own business. Having public universal care certainly lowers the barrier of entry into markets, and therefore creates a more perfect market. It is my hope this will spur more entrepreneurship and encourage small business growth.

This went on for longer than intended, I'm simply frustrated by the fact that most people who oppose UHC on ideological grounds usually aren't looking at the larger picture at hand. This is not a typical market where market optimal is found with simple free market principles. Forcing everyone into the same risk pool might decrease your transactional liberty, but it gives you even more liberty in return in my estimation. It certainly encourages new players into other markets and increases labor mobility. It just seems to be a liberty optimizing solution.


A related problem that needs to be corrected is the number and composition of doctors in the US. We need to increase the supply of doctors and reduce the costs of education, and thereby hopefully reduce the ratio of specialists to GPs.

 

[blackangst1]

Originally posted by: shadow9d9

Originally posted by: blackangst1

Originally posted by: shadow9d9


In Florida, that is what we were looking at.

Have you looked at Mini med? Its a high risk pool which is what Ive been enrolled in. Maybe this will help you.

"These plans provide basic coverage but are not designed to help with catastrophic expenses"

Luckily, we just moved back to NJ which has to cover pre-existing conditions. My wife is a teacher who is taking care of our 2 year old and will go back to work in the near future. We'll be fine now... however, i have compassion for other people and want change.

Cool. Well seeing how we all know emergency care is given to everyone regardless of status or insurance, basic care is what people (99% anyway) are pushing for. I was just pointing it out to you.

Hope it all works out-

 

[shadow9d9]

Originally posted by: blackangst1

Originally posted by: shadow9d9

Originally posted by: blackangst1

Originally posted by: shadow9d9


In Florida, that is what we were looking at.

Have you looked at Mini med? Its a high risk pool which is what Ive been enrolled in. Maybe this will help you.

"These plans provide basic coverage but are not designed to help with catastrophic expenses"

Luckily, we just moved back to NJ which has to cover pre-existing conditions. My wife is a teacher who is taking care of our 2 year old and will go back to work in the near future. We'll be fine now... however, i have compassion for other people and want change.

Cool. Well seeing how we all know emergency care is given to everyone regardless of status or insurance, basic care is what people (99% anyway) are pushing for. I was just pointing it out to you.

Hope it all works out-

ER care does not help long term conditions including cancer. These same peopel are being canceled from their coverage by insurance companies.

 

[PricklyPete]

I enjoyed your write-up and gives plenty to ponder on. Thanks!

 

[deputc26]

Thanks Prickly Pete, BigDH01 and Blanghorst you guys seem fairly well informed and are anomalously (for forums) civil in your discussion. BigDH01 your points are compelling and your understanding of the situation certainly rivals my own but there is an underlying assumption that I find disturbing; call me an idealist but it seems like you are defending the insurance companies decisions to put profits as a higher priority than human life, I tried not get to tangled in it while writing my paper but healthcare has a massive moral component. During my MBA degree the concept that the only valid (and sustainable) business is serving the consumer's needs was repeated many times with numerous real world examples (Founding of Bank of America, founding of Wal-Mart and currently SpaceX). In an industry that handles human life as the health insurance industry does, there is not room for cold profiteering, it is dehumanizing. You cannot legislate character but character remains an important factor in the LONG TERM health of an organization, CEO's of insurance companies should have to take the Hippocratic Oath or something similar to provide legal grounds for enforcing legal unethical business practice regardless of how technically legal they are..

I guess really I'm just a little disappointed by the role that lack of moral fiber has played in driving our healthcare system to its current state. Our education system should be teaching straight priorities life>money.

 

[BigDH01]

Originally posted by: deputc26
Thanks Prickly Pete, BigDH01 and Blanghorst you guys seem fairly well informed and are anomalously (for forums) civil in your discussion. BigDH01 your points are compelling and your understanding of the situation certainly rivals my own but there is an underlying assumption that I find disturbing; call me an idealist but it seems like you are defending the insurance companies decisions to put profits as a higher priority than human life, I tried not get to tangled in it while writing my paper but healthcare has a massive moral component. During my MBA degree the concept that the only valid (and sustainable) business is serving the consumer's needs was repeated many times with numerous real world examples (Founding of Bank of America, founding of Wal-Mart and currently SpaceX). In an industry that handles human life as the health insurance industry does, there is not room for cold profiteering, it is dehumanizing. You cannot legislate character but character remains an important factor in the LONG TERM health of an organization, CEO's of insurance companies should have to take the Hippocratic Oath or something similar to provide legal grounds for enforcing legal unethical business practice regardless of how technically legal they are..

I guess really I'm just a little disappointed by the role that lack of moral fiber has played in driving our healthcare system to its current state. Our education system should be teaching straight priorities life>money.

For me, it is a moral issue. I've just found it futile to argue from a moral standpoint as many of the supposed Libertarians I discuss this with have no hesitation in dismissing human life if that life cannot afford medical care. Darwinism and all that.

I've simply constructed an economic argument that can hopefully attract people based on liberty and efficiency advantages alone. It seems that UHC seems to be beneficial when viewed from nearly every angle.

 

[deputc26]

"For me, it is a moral issue. I've just found it futile to argue from a moral standpoint as many of the supposed Libertarians I discuss this with have no hesitation in dismissing human life if that life cannot afford medical care. Darwinism and all that."

That and also a lack of commitment to acknowledging that morals definitively exist on the left is exactly why I tried to avoid it in my paper.