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Why Obamacare will be almost as bad as what we have.
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Author Topic: Why Obamacare will be almost as bad as what we have.  (Read 4908 times)
DavidLeoThomas
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« on: September 22, 2009, 13:30:39 EDT »

Competition.  It works great to keep costs down, quality up, and consumers happy.  Right?

... right?

Well, most of the time, yes.

If a box of cookies costs twice as much as a comparable box of cookies, I'll buy the cheaper one.  If a box of cookies is twice as good as a comparably priced box of cookies, I'll typically buy the better one.  The company that's performing better, does better and everything works out (modulo externalities).  With cookies, I don't actually know the quality of the specific cookies I'm buying, but this turns out not to matter so much - I can guess (with fair reliability) at the quality of the next batch, and the company benefits from keeping me as a customer.

The problem with health insurance is that the costs for an individual are typically low for a long time, and then become typically high.  In terms of the cookie example above, I'm paying $10/month for a box of cookies every several months and the expectation that, many years from now, I'll be able to get tens or hundreds of boxes a month without paying significantly more.  Once I'm costing the cookie-makers so much more than I'm paying them, competition does not motivate them to keep giving me good cookies - it motivates them to give me bad cookies in the hopes that I'll leave and stop costing them so much money.

Competition works when keeping and winning customers is valuable.  In health insurance, that's only true for some of the customers.  In health insurance, driving away those customers that most need the service helps the bottom line - the market incentive is for insurance companies to treat these people badly.  Competition will fix nothing.

Of course, this is checked to some degree by the threat of legal action if people are treated too poorly, and the possibility of bad press leading to loss of customers in the profitable group.  The first of these will only motivate a minimal standard of service, and may not even suffice - as high as legal costs are medical costs can top them, and the people victimized are busy dealing with whatever medical issue incurred the costs in the first place and may therefore be less likely to take action.  The other may motivate a higher standard of care, but only to the degree that it's cheaper to actually provide service than to work PR, manage the media, pay out bribes, etc - and this is assuming the profitable people care about those in the other group; if insurance is legally mandated (as proposed) and it is easy to switch plans, we might see a lot of subscribers to Young Healthy Insurance: "We're Jerks To Old Or Sick People To Save You Money".

The addition of a self-sustaining public option does not fix things.  If it has to pay for itself, it is subject to the same pressure of competition as any other insurer - pressure which pushes in a direction counter to the best interest of the consumers and counter to the public good.

The only proposals that I've seen that actually solve the problem are single-payer.  Any such system would require significant oversight - but so do the alternatives (present and proposed), and only in a single-payer system is there actually a clear way to assess the quality of what we are getting: better health outcomes for less money tends to mean the system is doing a better job.
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"America means civil liberties.  Patriotism means protecting them."
Blue Boy from Red Country
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« Reply #1 on: September 22, 2009, 22:26:17 EDT »

I whole-heartedly agree, but sadly, a single-payer system would be incredibly difficult to establish in the US, for several reasons...
  • Americans in general view discretionary income as a form of personal liberty; they also tend to be hypercritical, especially when the government is involved. Many Americans would prefer to be able to choice from many less ideal options than to simply be given an ideal option, because the former gives them a sense of freedom.
  • The Health Insurance industry - like many other industries - is so entrenched that disbanding it outright would have a dramatic (and initially problematic) effect. Even if you put politics aside, the logistics of getting everyone switched over properly to a single-payer system would be a lot.

Granted given how little has been done over the decades, some dramatic change is needed; however, I'd rather something be done than nothing. The current proposal is far more politically viable.


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DavidLeoThomas
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« Reply #2 on: September 22, 2009, 23:45:59 EDT »

I don't misunderstand the political reality;  I aim to change that reality.

Not, primarily, by posting to an internet forum, of course - but IRT has often been a good place both to clarify my ideas and refine my arguments.
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Medivh
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« Reply #3 on: September 23, 2009, 01:47:14 EDT »

The Swiss would disagree with you. Switzerland's health care system is entirely private, though regulated very heavily. Essentially, the "we're jerks to old people" plan should, if Obamacare follows the Swiss model, be illegal, and cheap and easy to contest.

This isn't to say that I think you're completely wrong, just that setting up a completely privatised universal healthcare system is not immediately doomed so much as harder to get right. It also isn't to say that I think that privatised universal healthcare is the better solution. I agree that single payer or, at the very least, private support for single payer is a better option by far.
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And if i catch you comin' back my way
I'm gonna serve it to you
And that ain't what you want to hear
But that's what I'll do
-- "Seven Nation Army", The White Stripes

So what you're telling me is that LTV's fudge factor means more than it's independent variable?
Yes...
Ihlosi
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« Reply #4 on: September 23, 2009, 08:28:58 EDT »

I agree that single payer or, at the very least, private support for single payer is a better option by far.

I'm a bit confused why "single payer system" and "public health insurance" are used synonymously. It's perfectly possible to have a public system and still have "multiple payers", e.g. like Germany does. You're still able to pick your public health insurance provider from several available ones. And then there's still a private insurance system coexisting next to the public one.
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Medivh
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« Reply #5 on: September 24, 2009, 01:39:10 EDT »

This is why I avoided that term, using "universal healthcare" to mean what you're meaning by "public health insurance". Switzerland has no public option (AFAIK) and multiple payers, but is still universal.

Why I think that single payer is a better idea than multiple payers is basically because of the same reason that DLT thinks competition is a bad idea in healthcare.
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And if i catch you comin' back my way
I'm gonna serve it to you
And that ain't what you want to hear
But that's what I'll do
-- "Seven Nation Army", The White Stripes

So what you're telling me is that LTV's fudge factor means more than it's independent variable?
Yes...
DavidLeoThomas
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« Reply #6 on: September 24, 2009, 11:15:11 EDT »

The Swiss would disagree with you. Switzerland's health care system is entirely private, though regulated very heavily. Essentially, the "we're jerks to old people" plan should, if Obamacare follows the Swiss model, be illegal, and cheap and easy to contest.

Note that I said I've not seen any proposals that deal with the issue - while the Swiss may have regulations that deal effectively with it, I don't think anyone is pushing those here.  Granted, I've not read any of the draft bills in their entirety, but I've been otherwise watching the debate closely and I've not heard anyone talking about this issue which I deem a central problem with our system.  Do you know how Switzerland addresses this problem?

As for banning the "we're jerks to old people" plan, this can raise care to some bare minimum, but is regulatorily heavy and means competition will direct innovation at how a company can better get around the regulations rather than at how they can offer better care.
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Ihlosi
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« Reply #7 on: September 26, 2009, 14:05:11 EDT »

Do you know how Switzerland addresses this problem?

Insurers are forced to offer basic health insurance to everyone without asking questions. What the basic insurance covers is also regulated.

Switzerland also has price controls on medical services. In my opionion that's the only way of making sure patients aren't billed for made-up numbers.

Then again, Switzerland has the second-highest per-capita healthcare expenses in the world (guess who's number one).
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