Don't like Obamacare? Here's an alternative

Solidus · Aug 31, 2009

Mach;

Mach said:
"What's wrong with spending on someone who is sick? Is getting people healthier going to mean more work productivity and more consumer spending, just in industries other than health care?"

Nothing is wrong with spending more on sick people, I'd just prefer it was more of the sick person's money than the current (and proposed) arrangements. The positive externalities are trivial compared to the benefit the sick person receives directly.

Mach said:
"Health care makes more money, the more sick you are. How realistically is competition between the big 7 going to change that...they all benefit. Expensive may be the right, good choice. It's expensive to sell a product using loss leader, but you still model it to get net benefit, maybe it's a similar concept."

You're conflating insurance with care. Health insurance makes less money the more sick you are (more claims), health care (doctors, hospitals, etc.) make more. If the big 7 were competing directly for consumers then they would indeed have an incentive to price pre-existing conditions as a "loss leader".

Mach said:
"I mean private insurance has a legit concern if people don't have insurance with them and pay premiums, and only sign up for insurance when they find they need a big insurance payout..i.e. they get home owners on a burning house. That's legit issue. This can be addressed in a few was other than simply never allowing pre-existings to be covered."

Agreed, guaranteed issue exacerbates adverse selection. Again, pre-existing conditions are covered, just at higher premiums. An individual mandate is also a solution to adverse selection, although heavy handed.

Mach said:
"Then again, each year my premiums go up, often 10-20% or more. But a person just joining pays the same..right now the system is set up to encourage new applicants and shift cost to the people that have been there a while."

Are you suggesting that new applicants pay lower premiums than existing customers? Is this an age issue (new applicants are younger)? Do you have any other evidence that supports this anecdote (that premium increase are not across the board)? It's my understanding that everyone is facing premium increases not existing customers in favor of new applicants.

Mach said:
"Wait, that's what insurance does, not me. What I meant was that doing so eliminates the above "buying insurance when your home is on fire" issue."

My mistake, I assumed you also included community rating (which many of the proposals do); you had not made any reference to community rating. If there is one pool and a mandate but still price discrimination (higher risk = higher premium) than the problem is almost solved. What happens when the premium is "too expensive"? This is where I normally suggest "write them a check". However, with one pool you still lose out on competition and it's benefits.

Mach said:
"That happens now to some degree, or through gov. programs, and neither solve the issues that are being presented in the general health care debate. Excessive cost for relatively less benefit, subsidizing big business with small/individuals, having to pick a job or stay with a job, for medical insurance, and so on."

That's my point. Right now instead of simply "writing a check" the government attempts to circumvent the market with the various unintended consequences that you noted. If we moved to a simply "write them a check" method (like food stamps), then many of the problems you noted would be solved.

Mach said:
"Specifically that those with pre-existing conditions, and no continuation of benefits, find it hard or impossible to get affordable, or any, coverage."

Again, pre-existing conditions are expensive (they consume more health care resources). It is not the fault of the market that their condition is expensive (more expensive than they are willing / able to pay). A single pool with a mandate does not solve the issue of expense. Unless you start to add community rating in which case see my previous post.

Mach said:
"Correct. Government can do anything, some good, some bad, suggesting government=bad, is nonsensical, and usually related to political rhetoric."

It is trivial to note that "some bad" is the more prevalent outcome even when the stated purpose is "some good", that's the nature of unintended consequences. The suggestion isn't government = bad. The suggestion is government < the market as a method of resource allocation. Implementing laws, maintaining order, are a few examples of things the government does well that are not merely resource allocation.

Mach said:
"Profit-driven markets with no rules (in some particular area), are demonstrably bad (in any useful sense of the word)."

First, rarely are they "bad" (topic for another thread). Secondly, "no rules" is not what's being advocated. Minimal is the term, which you and I would obviously define differently.

Mach said:
"Ah, good that you bring it up, because the proportion of representation in government is staggeringly aligned with business, not consumers. Acting as though it's 50/50 would be fallacy. That's why I don't."

Neither do I. Again, I was noting that "industry" is not synonymous with "the market". I was not saying that "industry" is balanced with "consumers" when it comes to legislative influence. Your concern, however, begs the question ... If government legislation is aligned against consumers why are we giving government more power over health insurance and health care?

Mach said:
"Sadly, they wouldn't need to lobby things in their favor, because they could freely do those things in their own favor without it."

Again, we were discussing the state restricting consumers. How could health insurers restrict consumers ability to form pools without state intervention?

Mach said:
"Markets can function well if they self-regulate, government is not needed ideally, but in for-profit, there is no motivation to self-regulate, hence, government."

Don't be absurd; there's an obvious motivation to self-regulate with the profit motive, repeat business. If consumers don't like your service or the manner in which you provide it they will go elsewhere and tell their friends. That's the fundamental part of competition.

Mach said:
"Yes, tied to one business, and the business size, both of which I consider problems."

Again, solved by moving people to the individual market.

Mach said:
"It doesn't. ... If individual is mandated, that problem with go away entirely, I agree on that part."

Again, I'm advocating moving EVERYONE to the individual market. No more big businesses vs. small business that way, every individual purchases their insurance directly from insurance companies. An individual mandate is not what I'm advocating (although I would compromise on it's inclusion).

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Cassandra;

Cassandra said:
"They say that politics is the art of the possible and I realize that the current reform plan will end up being yet another patch on what is, without doubt, a sinking ship. If a public option will lead to a highly regulated single payer system, then I say Hurrah!"

And I say "oy vey!". If you want single payer ... advocate single payer, not some back door around the democratic process.

Cassandra said:
"Is there anyone who can justify the fact that hospital care costs for all patients have grown from $28 billion to $650 billion in 35 years despite the fact that there is a 35% decline in the number of hospital beds, no meaningful increase in total admissions and a 50% decline in average length of stay? High tech equipment has made many procedures less invasive, recovery times are shorter, pharmaceuticals more effective. M.R.I.'s have been around for years, they are ubiquitous in the U.S.. Has the cost come down?"

I emphasized the parts that answer your own question in regards to increasing hospital care costs. Overall increased use of high tech procedures and equipment accounts for 50-65% of increases in health care expenditures. [1]

Cassandra said:
"Any discussion of "competition" and "markets" that focuses on insurance , misses the boat. The cost of care is a runaway train and our hybrid system is incapable of confronting the fact. Insurance has just become a vehicle through which people ask the wrong question. They ask, "What is my share?" not, "how much does hospital A charge, versus hospital B. Do I really need this procedure? Is this price gouging? Can I have this procedure done less expensively, elsewhere?"

Agreed. Moving to a system where consumers face a larger portion of health care costs will get people asking all of those important questions; instead of leaving it up to the insurer or the government to decide. Simply regulating more information won't push people to make those cost-benefit decisions.

J

[1] Third party payment in health care (part 3): Technology drives cost growth|KeithHennessey.com

Don't like Obamacare? Here's an alternative

Solidus

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