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Subject: A potentially valid criticism of the ACA rss

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I heard a partial story on NPR today about the so-called "Death Spiral" criticism of the ACA (yes, contrary to popular belief, NPR does do stories that can be critical of liberal policies). This consists of the theory that the uninsured who will be motivated to sign up for subsidized health care will be the already sick, which will actually drive insurance costs up. The insurance ponzi scheme (private or public) requires that there are enough healthy people paying in and not taking out that the sick are able to get health care. Healthy people who are loathe to even kick in the premiums that are offset by subsidies aren't going to sign up until they have to.

This does seem to be a weakness that can only be alleviated by Universal Health Care where everyone is, sure I'll say it, forced to pay into a National Health Insurance Fund. That is, if you care to insure the uninsured. If you are of the mind that you are not your brother's keeper, at least as far as using the government to do so, then no plan will satisfy you.
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Chad Ellis
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I've been posting about this since the ACA was proposed in its current form, and it's a fairly classic economic problem. Healthcare insurance has a big problem with information asymmetry. Most famous examples of information asymmetry favor the seller, e.g. the used car problem which is the foundation of lemon laws. In this case it's the buyer -- you and me -- who knows whether he or she is healthy or likely to get pregnant or otherwise likely to be an above-average or below-average consumer of healthcare.

One of the reasons shifting healthcare purchase to employers actually made some sense is that it partially addressed the lemon problem. It has its own problems, of course, and it's likely that nothing short of universal coverage will truly address it.
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Shushnik wrote:

The ACA is not a liberal policy. It is a shitty compromise. It is middle to right in form, which is exactly where the Democratic party sits right now.

Of course NPR is advocating a Universal Health Care system. That's actually liberal.


Actually, the second paragraph was my conclusion of the part of the story I heard. I don't know if NPR drew the same conclusion. The only left-leaning I detected in the story was little jab they threw out that States who were fighting the exchanges and were going to try and obfuscate the program for those who would use use it would make the problem worse.
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The problem with the sick and the uninsured, is that hospitals cannot refuse them emergency care. So without preventative care, their health problems could become serious problems which they will still get care at hospitals at a large rate of cost that is absorbed into the health care system.
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MWChapel wrote:
The problem with the sick and the uninsured, is that hospitals cannot refuse them emergency care. So without preventative care, their health problems could become serious problems which they will still get care at hospitals at a large rate of cost that is absorbed into the health care system.


Yeah, this is the other classic problem with healthcare. A free-market solution for any good or service requires a willingness to let people do without it -- or, alternatively, to provide only a very limited floor such that only the desperate (or uninterested) would choose it.

Since we're clearly not willing, as a society, to let people bleed out in the street we get a horrible outcome for people outside the system -- their care costs more (e.g. emergency rooms), they avoid preventative care that has a positive expected return and while "the rest of us" end up paying for it we also insist that they pay for it, which often results in bankruptcies and/or wasteful use of court and civil enforcement resources.
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MWChapel wrote:
The problem with the sick and the uninsured, is that hospitals cannot refuse them emergency care. So without preventative care, their health problems could become serious problems which they will still get care at hospitals at a large rate of cost that is absorbed into the health care system.


Absolutely, it's totally screwed up. We have made an ethical stand with the Emergency Medical Treatment and Labor Act that people have to receive treatment (as you say, after it has escalated beyond the preventable phase), but it was an unfunded mandate which meant that the costs got transferred back to us through multiple layers of profiteering. The problem is that the opponents to Government Subsidized health care LIKE profits and don't want the middle men to have to negotiate prices for treating the uninsured.

We either expand/enforce insurance or we turn away the uninsured, the current system of paying for the uninsured by inflated health care costs is unsustainable.
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I'm sure I don't have a complete grasp of the situation, and the politics involved, but I thought that a better plan would be to let people enroll in Medicare/Medicade (I get those two mixed up) on a sliding scale.

Oh sure, it's far from perfect, but it's already up and running, and established throughout the country. If the uninsured and underinsured were allowed to enroll with a sliding scale (which also has it's problems, I know), it could potentially bring some more money into the system. It's not exactly universal healthcare, but I wonder if it would have been less of a nightmare than Obamacare.
 
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photojenic wrote:
I'm sure I don't have a complete grasp of the situation, and the politics involved, but I thought that a better plan would be to let people enroll in Medicare/Medicade (I get those two mixed up) on a sliding scale.

Oh sure, it's far from perfect, but it's already up and running, and established throughout the country. If the uninsured and underinsured were allowed to enroll with a sliding scale (which also has it's problems, I know), it could potentially bring some more money into the system. It's not exactly universal healthcare, but I wonder if it would have been less of a nightmare than Obamacare.


This is where we are going to end up. Basically the death spiral will kill private insurance companies until we have a single payor system with the Feds.
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Laudwic wrote:

This is where we are going to end up. Basically the death spiral will kill private insurance companies until we have a single payor system with the Feds.


Hmmmm...I disagree. On a sliding scale, but not mandatory. That way private insurance companies would still be inspired to offer competitive packages to companies, and companies to offer insurance to offer insurance to attract employees.

Nevertheless, I think that whatever plan is offered to the public should be the ONLY plan open to Congress. They are public servants, and shouldn't get super ultra golden insurance just because they are politicians. Humph!
 
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TheChin! wrote:
This does seem to be a weakness that can only be alleviated by Universal Health Care where everyone is, sure I'll say it, forced to pay into a National Health Insurance Fund. That is, if you care to insure the uninsured. If you are of the mind that you are not your brother's keeper, at least as far as using the government to do so, then no plan will satisfy you.

That is the goal of the individual mandate and the penalties for not getting insurance.
 
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Chad_Ellis wrote:
I've been posting about this since the ACA was proposed in its current form, and it's a fairly classic economic problem. Healthcare insurance has a big problem with information asymmetry. Most famous examples of information asymmetry favor the seller, e.g. the used car problem which is the foundation of lemon laws. In this case it's the buyer -- you and me -- who knows whether he or she is healthy or likely to get pregnant or otherwise likely to be an above-average or below-average consumer of healthcare.


This is true, but it's also worth noting that there's major information asymmetry working in favour of the seller (insurance companies) as well, since most actual healthcare costs are not public information.
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TheChin! wrote:
This consists of the theory that the uninsured who will be motivated to sign up for subsidized health care will be the already sick, which will actually drive insurance costs up.


While this may be true, this also assumes that this trend doesn't have either a ceiling or a potential reduction in costs over the long haul. And that's a problem for the argument because if one provides better access to preventative care and/or "maintenance" care before an illness or condition becomes really expensive to treat, then the treatment is just about always cheaper over the long-term. Which means that there may be a momentary spike in costs due to the increased risk, which eventually settles down due to access to better care.

It's also worth noting that the cost of insurance is more closely tied to the cost of care, given that companies will now be required to spend a minimum percentage of their revenues on patient care. Our insurance system has also become a massive discount program because the insurance companies have negotiating power and information we do not have as individuals. The "list price" for care is often at least double, and frequently more, than the cost paid by an insurance company of size. So these people that are currently uncovered may simply be shifting their health care spending away from non-discounted care (or more moderately discounted care) or from various public programs to insurance that offers them better coverage.

So yeah, it's a problem. But it's often made out to be something that just keeps costs rising and rising. Which they shouldn't - they should plateau.
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perfalbion wrote:
TheChin! wrote:
This consists of the theory that the uninsured who will be motivated to sign up for subsidized health care will be the already sick, which will actually drive insurance costs up.


While this may be true, this also assumes that this trend doesn't have either a ceiling or a potential reduction in costs over the long haul. And that's a problem for the argument because if one provides better access to preventative care and/or "maintenance" care before an illness or condition becomes really expensive to treat, then the treatment is just about always cheaper over the long-term. Which means that there may be a momentary spike in costs due to the increased risk, which eventually settles down due to access to better care.

It's also worth noting that the cost of insurance is more closely tied to the cost of care, given that companies will now be required to spend a minimum percentage of their revenues on patient care. Our insurance system has also become a massive discount program because the insurance companies have negotiating power and information we do not have as individuals. The "list price" for care is often at least double, and frequently more, than the cost paid by an insurance company of size. So these people that are currently uncovered may simply be shifting their health care spending away from non-discounted care (or more moderately discounted care) or from various public programs to insurance that offers them better coverage.

So yeah, it's a problem. But it's often made out to be something that just keeps costs rising and rising. Which they shouldn't - they should plateau.


There is a dichotomy tho.

For procedures where you don't have choice/time to plan, it can be much more expensive without insurance (10x or even 20x!)

Meanwhile, for procedures where you do have time to plan, the cost is equivalent to insurance (usually not cheaper tho). I've read some stories of hard negotiators getting lower prices but they sounded atypical (going to several anesthesiologists and negotiating for the lowest cash payment for example).
 
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mightygodking wrote:
Chad_Ellis wrote:
I've been posting about this since the ACA was proposed in its current form, and it's a fairly classic economic problem. Healthcare insurance has a big problem with information asymmetry. Most famous examples of information asymmetry favor the seller, e.g. the used car problem which is the foundation of lemon laws. In this case it's the buyer -- you and me -- who knows whether he or she is healthy or likely to get pregnant or otherwise likely to be an above-average or below-average consumer of healthcare.


This is true, but it's also worth noting that there's major information asymmetry working in favour of the seller (insurance companies) as well, since most actual healthcare costs are not public information.


Granted, but that's a very different problem. The asymmetry in the customer's favor creates a classic lemon problem which ends up pricing insurance out of reach of healthy young people (among other problems). The market has an easier time addressing the information advantages held by the insurers.
 
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Chad_Ellis wrote:

Since we're clearly not willing, as a society, to let people bleed out in the street


    Oh, this isn't merely a moral dilemma, we're every bit as concerned with untreated tuberculosis in the streets as well. The well-being of the entire populace is dependent upon some level of health care being provided regardless of social status. Like it or not we're all inter-connected, and economic productivity plummets in the face of a damaged work force.

    I agree though, this is a crappy half-measure that continues to keep American companies at a disadvantage in a global economy.

             S.


 
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maxo-texas wrote:
Meanwhile, for procedures where you do have time to plan, the cost is equivalent to insurance (usually not cheaper tho).


For the average person? I'd be very surprised if that were true. Providers are under no obligation to release pricing information, comparison shopping can be hard, and negotiating is not many people's forte.

I can see that this would be true for some, but not across the board.
 
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perfalbion wrote:
maxo-texas wrote:
Meanwhile, for procedures where you do have time to plan, the cost is equivalent to insurance (usually not cheaper tho).


For the average person? I'd be very surprised if that were true. Providers are under no obligation to release pricing information, comparison shopping can be hard, and negotiating is not many people's forte.

I can see that this would be true for some, but not across the board.


Well... in my case, I just asked. I didn't do any hard negotiations.

"what would you charge me to do 'X'" without insurance? And they gave me bids. Their behavior matches what I've heard and read elsewhere.

But as I said, if you don't have time to do that, you can be grossly over charged-- the false "rack rate" used as a benchmark for standard 90% discounts to insurance companies.

A friend of mine- at the same facility- paid about $200 less for a colonoscopy and polyp removal in 2012 than I did *with* "good" insurance.

She did it on their schedule- had to wait 9 weeks instead of getting in right away and she had to be there at 8am instead of 9am for me. Otherwise seemed identical.
 
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The only economically feasible solutions to the healthcare problem, given what society won't accept, is to go for single payer, or to liberalize the market so much that the price of care goes on freefall. Now, the difficulty is moving towards either alternative.


Having the most expensive healthcare in the world means that there's a bunch of people getting ridiculous profits out of providing it. To bring the prices down we can either increase productivity and demand, or make a lot of those people far poorer. Given how politics work, Obama hoped for the first one, but I think it'd have been in society's best interest to go for the second.
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bjlillo wrote:
perfalbion wrote:
maxo-texas wrote:
Meanwhile, for procedures where you do have time to plan, the cost is equivalent to insurance (usually not cheaper tho).


For the average person? I'd be very surprised if that were true. Providers are under no obligation to release pricing information, comparison shopping can be hard, and negotiating is not many people's forte.

I can see that this would be true for some, but not across the board.


What has happened with the price of LASIK or breast augmentations over the years? We should be able to check and see what the results of competition and semi-open pricing are on medical procedures with that info.

Edit:

Found some stuff on LASIK:

Quote:
After rising for several years, LASIK prices seemed to stabilize from 2006 to 2012, as shown by these average LASIK costs-per-eye charged at a single price — meaning no extra charges were added on for new technologies:

2006: $1,950
2007: $2,099
2008: $2,105
2009: $2,140
2010: $2,150
2011: $2,124
2012: $2,159

In comparison, LASIK in 2002 cost $1,550-$1,600, and by October 2003 the price had risen to $1,710. At the end of 2004, the price was a little more than $1,800, and in 2005 it was $1,965. These averages take into account procedures performed at surgeon-owned laser centers, institutions and corporate laser centers.

Keep in mind that earlier prices do not reflect new technologies of wavefront analysis and laser-created flaps, which have been in widespread use only in recent years.


LASIK has gotten better and remained the same price for a pretty long period of time.


I think a good approach would be to require them to quote the average and 1 S.D. prices for a set of a few hundred medical procedures as well as a consumer poll for satisfaction and outcome.

You can't know in advance when something truly exceptional will happen and raise costs but you can look a your history and say what you have been charging.

I suspect it would put downwards pressure on prices.
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bjlillo wrote:
What has happened with the price of LASIK or breast augmentations over the years? We should be able to check and see what the results of competition and semi-open pricing are on medical procedures with that info.


LASIK's come down, but not the way you might have expected. When I had my surgery, I spent a total of about $5500 total nine-ten years ago which included follow-up visits (and was performed by a doctor with some patents licensed to the LASIK company). I could have gotten it for about $4500 from a "regular" eye surgeon or about $2500 from a "chop shop" where they do nothing but those procedures (and usually have higher risks than other options). Today, the average price is around $2K/eye.

But this gets to one of the issues involved with the market. If Dr. X offers to do procedure Y for $Z, and Dr. Q offers to do it for $Z/2, how do you confirm that the two are offering the same service at the same quality? And what do you do if the procedure goes badly and you need additional care? Or you just have normal complications and need additional care?
 
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bjlillo wrote:
How do you make those decisions with any other service?


Referrals, the BBB, etc. Problem is, the "real" data for medical procedures is usually held by medical boards that don't report complaints, resolutions, etc.

It's not impossible, but it's certainly harder with health care.
 
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I don't think that the combination of rising premiums, growing co-pays, and lower coverage levels makes that true anymore.
 
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You don't need LASIK. You don't need breast augmentation.* You don't have a free market unless you can not buy.

*(I'm reminded of that cute Ohioan who really, really didn't need the augmentation some unscrupulous surgeon gave her for free--or rather, as cheap advertising--risking her life while advertising.)

Point:
Most medical care isn't like these voluntary procedures. Your risk of death probably goes up with either of them (no procedure is better than even the best procedure; wearing glasses means you always have some eye protection).

If you don't get regular checkups and treat routine risk factors (cholesterol, pre-diabetes...) you are going to get a disease that will cost boatloads of money and lost income. Why do we have "routine" risk factors? Whole different issue!

(Not that the tragedy-of-the-commons criticism isn't valid.)
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Tall_Walt wrote:
You don't need LASIK. You don't need breast augmentation.* You don't have a free market unless you can not buy.


Actually, even for medical procedures that are completely necessary, you can have a market when there are multiple sources of the procedure and quality/cost information is transparent to the patient. Markets often result in buyers paying less for something than their actual valuation of the item in question.
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fizzmore wrote:
Actually, even for medical procedures that are completely necessary, you can have a market when there are multiple sources of the procedure and quality/cost information is transparent to the patient. Markets often result in buyers paying less for something than their actual valuation of the item in question.

And you have the time to choose. And you have the knowledge to choose. Does any insurance system let you choose after you get the disease? No. Straw man.

bjlillo wrote:
Tall_Walt wrote:
You don't need LASIK. You don't need breast augmentation.* You don't have a free market unless you can not buy.
*(I'm reminded of that cute Ohioan who really, really didn't need the augmentation some unscrupulous surgeon gave her for free--or rather, as cheap advertising--risking her life while advertising.)

Point:
Most medical care isn't like these voluntary procedures. Your risk of death probably goes up with either of them (no procedure is better than even the best procedure; wearing glasses means you always have some eye protection).

If you don't get regular checkups and treat routine risk factors (cholesterol, pre-diabetes...) you are going to get a disease that will cost boatloads of money and lost income. Why do we have "routine" risk factors? Whole different issue!

(Not that the tragedy-of-the-commons criticism isn't valid.)

The point, that you apparently missed by a mile, was to look at medical procedures that insurance does not pay and which consumers pay for directly. ...

The point which you missed is that the conditions needed for a free market choice--freedom to not buy; knowledge of value; time to make a considered choice--are missing in the critical care market.

Your reasoning about the voluntary medical procedure business is entirely valid. No argument. It's just totally not applicable to critical care. In critical care the mantra is, "OHMYGODSAVEMEILLSIGNANYTHING!!!!"

Now, if such signatures (actual and implicit) were judicially invalid, you'd have a point. And Katy-bar-the-door of hospital emergency rooms. They'd close. You'd die in an accident while they verified insurance and got the verification in writing. If they were allowed--otherwise, they'd just declare themselves not-a-hospital, legally.

All any public corporation does is maximize profit. Nothing else. No other morality. But they're quite good at maximizing profit. And, as long as a level playing field includes screwing claimants, I want any insurance company I invest in to screw claimants. Sorry: I can't fix the world; I have enough trouble looking out for myself.
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