Originally Posted By: sini
“While what you say regarding consumers not being fully informed is true - it does not *need* to be true.”

Can you elaborate on this point? My understanding is if consumer is detached from the price of the treatment, and insurer operates on percentage margins, then by covering new and expensive treatments they are able to push overall costs up and by doing so increase their profit in absolute numbers without increasing efficiency of profit extraction. The only downward pressure is consumers having to pay higher insurance premiums, but with employer paying most of it, pressure is very minimal.

In traditional sense market would operate along the following decision-making lines – Treatment A(expensive) and Treatment B(affordable) are available. If I pay directly and I can’t afford treatment A, then I will go with treatment B. This puts market pressure on Treatment A to lower price to better compete with Treatment B. This is not how the system currently operates – Treatment A is picked every time, insurers pass the cost to employer who absorbs it into labor costs, and individual consumer has very little say in going with Treatment B. In turn, if employer wants to lower coverage costs, they go with an insurance plan that covers fewer conditions, has higher deductible or lower lifetime max; but if this cheaper plan covers a specific condition, they still go with a Treatment A.

This is why I think employer-sponsored insurance-pool health care is a dysfunctional system. Single payer system would be better. So is everyone paying out of pocket (and influencing prices via market forces) with only major conditions requiring insurance.

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“Also, you have not "demonstrated" that such a system contains cost. You have made that assertion, but have made no inroads in modeling such a scenario where that occurs. Large scale systems where this style of intervention has been implemented have failed without exception.”

This is not a falsifiable argument, as such it is invalid. See: No True Scotsman fallacy.

If I bring up examples of any other First World country, you will claim (and have in the past) that scale is too small. If I bring up other US-based cases, such as VA or Active Military health care, you will claim it is too different.

Formally: ‘US health care’ is not ‘Other health care’ for all healthcare that is not ‘Other health care’ is not falsifiable as defined.

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I am not denying that R&D will be affected. While I don’t think effects will be as drastic as you propose, I don’t want to focus our debate on this, and will concede that it will be reduced and leave it ‘reduced’ unspecified.

‘Silver lining’ of my plans is that under single payer employers will be largely free from providing health insurance, as such normalizing labor costs over part and full time. It will also lower overall employment costs, assuming that US is not an outlier and health care costs under single-payer drop to around 10%GDP observed in every other single-payer country. Additionally it will allow greater labor mobility, lessening ‘bennies lock-in’ and will afford more business creation, freeing individuals from concerns of finding individual health coverage.


#1: Insurance

Your understanding is not particularly incorrect so much as it is incomplete. Most insurance plans have payment limits, which certainly influences choices and influences price.

I think your model of how insurance works is also slightly off, insurance companies do not want to pay more for the sake of paying more. In fact, their adjusters work extremely hard to work at paying less or nothing wherever feasible. Typically they charge as much in premiums as the market will bear, match benefits against their risk model and set limits and conditions accordingly, then work at minimizing their expenditure any way they can. Alternatively, consumers can negotiate with health providers based on the total pool of insurance available. Contrary to what some people seem to think - health care costs are in fact negotiable in most cases.

But lets step back for a second.

First to get a handle on this topic, we need to understand the purpose of insurance in a free market. The simplest way to put this, is to say that insurance exists to turn unpredictable costs into fixed costs. In a free society, the insurance providers with the best models that let them charge the least in premiums for the maximum possible protection will garner the most customers and generate the most profits.

If we understand this, we can quickly see how govt meddling with things can only cause chaos and add distortions to the calculations of the insurance providers which are forced to include govt in their calculations. One quick and simple example of a million possible: govt requiring plans to cover "substance abuse". The vast majority of people are at 0% risk of spontaneously contracting a bad case of "substance abuse" requiring treatment. However their premiums will now necessarily reflect not just the cost of turning their risk into fixed costs, but rather they are also paying what effectively amounts to taxes on their insurance - thus making good insurance less affordable. Even more importantly, it gets insurance away from its primary purpose for existing.

Now the first thing that comes to mind is "that clause is part of Obamacare, which requires everyone to pay into the insurance pool." Insurance companies are also limited in the amount of non-payout related expenses - only 20% can go to administration costs an profit taking. So yes, under the Obamacare paradigm insurance companies now ARE incentivized to pay more in terms of absolute payouts,because that is the only way they can increase absolute profit amounts. However this sorry and sad state of affairs is the result of incompetence in politics, not anything inherent to the concept of insurance itself.

Now, going back to information regarding the consumers. An educated consumer in a free market can and should be expected to analyze the cost/benefits of a particular insurance regime.The fact that some people *choose* not to take time to evaluate both insurance, and health options is not logically a concern of anyone else. It only becomes a concern when govt decides to force the rest of us to pick up the tab for people who neglect to do so. This is a mistake of govt, and should be abolished.

Non sequitur preemption: proper safety nets are not equivalent to subsidizing poor decisions.

There is no reason a person, often in conjunction with their primary care physician, should not be able and expected to make educated decisions regarding both insurance, and health options. Thats a large purpose of primary care physicians in fact: to help people make sensible health decisions. So its not like people have to make all these decisions without assistance.

If we step back, and look at the entire picture - from a birds eye perspective of society as a whole, it should be clear that using private insurance as a delivery means for social services is silly. All it does is leave insurance providers unable to properly perform their core function: sell amortization of the cost of risk.

But thats getting into another topic.

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#2 Discussion on the viability of the single payer:

You are wayyy off base here. Talk about ignoring context and antecedents.

The reason the single payer will not work here is because it runs afoul of the laws of economic calculation. My argument is not based on disproving your assertions to thusly prove my argument; I was simply explaining to you why they will not work. You tried to say an apple was an orange, I pointed out it was an apple. You tried to say a mouse was an elephant, I pointed out it was a mouse. But it is the laws of economic calculation that prevent your system from working, explaining where your assertions actually fit into the larger scheme of things does not a fallacy create.

Next.

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You do not think it will be as drastic why? Its actually pretty easy to get a quick estimate on roughly the amount of the decrease using your model. You claim most delivery and etc costs are fixed, so the primary discretionary cost is in fact R&D which you claimed was a great portion of our overall health costs. So if our health expenditure is 18%GDP and falls to 10% GDP and our GDP is what approx 12T? Thats approx 960B less spent on health care. So where does this almost a T come from? One would have to assume the bulk would come from R&D.

Sure, the exact amount is hard to figure but a ballpark idea is pretty easy. Let say , conservatively, its at least 500B - and I think thats very conservative. Ultra conservative.

Anyhow, the thing that is hard to properly calculate is *how* it influences R&D exactly. Its not like most programs will continue - but with a small percentage of the funding. Figuring out which programs will be cut, which reduced, which kept - and the resultant loss of human progress and vitality is where it becomes impossible to determine.

You seem to think that somehow money would be magically invested in the "most efficient and valuable " products to rationally advance needed health care. In reality, I think we would simply see R&D primary focus on viagras, hair growth products, and other things that would cater exclusively to the affluent abbove and beyond govt mandated coverage. We could probably say bye bye to hard and to expensive research of niche conditions outside of curious university students.

The problem with the left, is that indeed - typically they do not want to focus on the utter devastation and chaos their policies cause. That is in fact *the* problem with the modern left. By putting on blinders and focusing laser-like on one specific issue at a time, while ignoring all the collateral damage, the modern left strangles and suffocates human development.

The left would have a lot more credibility if it cleaned up the side effects of its previously implemented policies before moving on to create new chaos and destruction.


For who could be free when every other man's humour might domineer over him? - John Locke (2nd Treatise, sect 57)