Health Care Transparency and CSPAN

[Inquartata]

Medical bills cause 60% of bankruptcies

Did you miss this part?

"However, Peter Cunningham, Ph.D., a senior fellow at the Center for Studying Health System Change, a nonpartisan policy research organization in Washington, D.C., isn't completely convinced. He says it's often hard to tell in which cases medical bills add to the bleak financial picture without being directly responsible for the bankruptcies.

I'm not sure that it is correct to say that medical problems were the direct cause of all of these bankruptcies," he says. "In most of these cases, it's going to be medical expenses and other things, other debt that is accumulating."

Or this?

"The study may overestimate the number of bankruptcies caused by medical bills yet underestimate the financial burden of health care on American families, because most people struggle along but don't end up declaring bankruptcy, according to Cunningham."

Yes. If you have $25,000 in student loans, a mortgage, two car loans outstanding, and then because medical bills drop another straw onto the camel's back---why, it's the medical bills alone that "caused" bankruptcy, of course!

OK, seriously, though, I don't deny the scope of the problems in our health care system. There's just no need to exaggerate that scope. Unless of course one is one of our pols, who are past masters of using fear to push policy agendas, or a media outlet, who knows that fear sells.

Why is it so expensive? One reason is administration costs.

Yes, that's one reason, I'm sure.

OTOH, many of those "administrative expenses" involve compliance with a raft of federal regulatory requirements, or flow from structural disincentives to competition, also courtesy of federal regulations.

[jeff]

That last observation would have been more compelling if were supported by the evidence from the article downunder quoted.

It says "The McKinsey team estimated that about 85 percent of this excess administrative overhead can be attributed to the highly complex private health insurance system in the United States. Product design, underwriting and marketing account for about two-thirds of that total. The remaining 15 percent was attributed to public payers that are not saddled with the high cost of product design, medical underwriting and marketing, and that therefore spend a far smaller fraction of their total spending on administration."

So, as much as it's always a fun and convenient punching bag to blame the gosh-darned gummint regulations, that isn't the case at all.

It's also worth noting that actual government programs which are equally (if not more) regulation-bound have far lower administrative costs than the private plans.

[Hauptman]

Did you miss this part?

"However, Peter Cunningham, Ph.D., a senior fellow at the Center for Studying Health System Change, a nonpartisan policy research organization in Washington, D.C., isn't completely convinced. He says it's often hard to tell in which cases medical bills add to the bleak financial picture without being directly responsible for the bankruptcies.

I'm not sure that it is correct to say that medical problems were the direct cause of all of these bankruptcies," he says. "In most of these cases, it's going to be medical expenses and other things, other debt that is accumulating."

Or this?

"The study may overestimate the number of bankruptcies caused by medical bills yet underestimate the financial burden of health care on American families, because most people struggle along but don't end up declaring bankruptcy, according to Cunningham."

Yes. If you have $25,000 in student loans, a mortgage, two car loans outstanding, and then because medical bills drop another straw onto the camel's back---why, it's the medical bills alone that "caused" bankruptcy, of course!

OK, seriously, though, I don't deny the scope of the problems in our health care system. There's just no need to exaggerate that scope. Unless of course one is one of our pols, who are past masters of using fear to push policy agendas, or a media outlet, who knows that fear sells.




Yes, that's one reason, I'm sure.

OTOH, many of those "administrative expenses" involve compliance with a raft of federal regulatory requirements, or flow from structural disincentives to competition, also courtesy of federal regulations.

A big part you're neglecting is that most of these bankruptcies occurred in spite of having health insurance. It's not like they said, "screw health insurance, I'll take my chances."

Think about; the whole idea of having health insurance is to avoid this very situation. People pay high insurance premiums for most of their lives thinking that they are protecting themselves, making a sacrifice for long term security, and just when they actually use the insurance they find out that they really had no security at all.

And don't forget that if you have a pre-existing condition, and lose your job then you will likely never have private health insurance again. That almost guarantees financial ruin. You could work for decades, pay out enormous amounts for health insurance, then you get diagnosed for cancer, get laid off, and all that money you paid out for insurance is meaningless. You've acted responsibly, made sacrifices, paid your dues, and you're screwed; that's life, right? But didn't some insurance company make a huge profit from you being screwed? This is the big hole in employer based health insurance now that lifelong job security has all but disappeared.

That's why so many people are foolishly against any kind of health care reform because they think that everything is fine, but they're often wrong and won't realize it until it's too late.

[Inquartata]

Product design, underwriting and marketing account for about two-thirds of that total.

And you believe that these somehow are wholly independent of government regulation?!

It's also worth noting that actual government programs which are equally (if not more) regulation-bound have far lower administrative costs than the private plans.

Which ones?

[jeff]

And you believe that these somehow are wholly independent of government regulation?!

Take out "wholly" and the answer is "yes". Now, if you propose that regulation is a dominant factor in those costs, something not borne out by the quote, I'd enjoy seeing evidence for your conjecture.

Let's see: "Product design, underwriting and marketing": they have to comply with law - which specific laws or regulations do you propose add the cost? Marketing - I don't see any opportunity for government making it expensive.

Which ones?

Medicare and Medicaid have far lower administrative costs - I documented this for you some months ago.

[downunder]

OTOH, many of those "administrative expenses" involve compliance with a raft of federal regulatory requirements, or flow from structural disincentives to competition, also courtesy of federal regulations.

I'm sure this is the case. But some regulations are necessary, i.e. that there is a minimum standard of care you expect when you attend any hospital.

You haven't answered most of my points though.

You highlight imperfect competition as an issue. Obviously there is imperfect competition with hospitals as in rural areas there are monopolies and oligopolies. I would consider this more as an issue with insurance companies rather than hospitals as it is insurance companies that are counterparties to individuals that are tied by their jobs which vastly increases the transaction cost of changing insurers, limiting competition.

I must admit having never lived in the US (only Australia and England) I wasn't aware that insurance companies can be limited by state. This seems crazy, as the more people that are in an insurance scheme then the cheaper it is for everyone. Personally I haven't heard a good reason why a not-for-profit government option couldn't be set up to provide competition to insurers in the same way USPS and UPS operate.

[Inquartata]

Let's see: "Product design, underwriting and marketing": they have to comply with law

There, you've answered your own question---unless you believe that compliance with laws and regulatory requirements is somehow costless?

Marketing - I don't see any opportunity for government making it expensive.

Easier to answer this for all of them, perhaps, if I can thereby make you see what I am implying.

Do you believe that advertising has value to a commercial enterprise?

Do any government regulations prohibit or reduce the kind and amount of advertising that health insurers are allowed to do?

If their market were individuals instead of big companies, do you think advertising would be more, or less effective? Bring in more, or less revenue?

Do any federal regulations prohibit competition across state lines? Does more competition tend to raise, or lower prices? Do lower prices, ceteris paribus, tend to increase quantity demanded?

I don't work in the industry, nor for a regulatory agency. I cannot identify a subsection (b) 3-1 paragraph 112 of an Omnibus Health Insurance Act of 1982, Revision 5, if that is what you're asking. But I can tell you that all regulation adds costs, and tend to create deleterious distortions in otherwise free markets...

Medicare and Medicaid have far lower administrative costs - I documented this for you some months ago.

Well, perhaps in the same way that certain of my arguments about economics are dismissed out of hand or repeatedly "forgotten", leading to the presentation of erroneous claims over and over again, I have forgotten all about that.

[migopod]

I must admit having never lived in the US (only Australia and England) I wasn't aware that insurance companies can be limited by state. This seems crazy, as the more people that are in an insurance scheme then the cheaper it is for everyone. Personally I haven't heard a good reason why a not-for-profit government option couldn't be set up to provide competition to insurers in the same way USPS and UPS operate.

Actually the state-lines restrictions can be a good thing in some respects under current health insurance regulations, since regulations vary by state. Without federal regulations, any insurer is generally bound by the regulations of the state where they're headquartered, and without federal standards they'd all just move to the states with the most lax regulations available.

Mostly the reason why a not-for-profit government option can't be set up is because of the senate cloture rules and massive amounts of money spent by health insurance lobbies on senators.

[Inquartata]

I'm sure this is the case. But some regulations are necessary, i.e. that there is a minimum standard of care you expect when you attend any hospital.

Why is this "necessary", as a thing imposed by fiat instead of negotiated in the market?

You highlight imperfect competition as an issue. Obviously there is imperfect competition with hospitals as in rural areas there are monopolies and oligopolies.

You feel that an insufficient threshold of customers to sustain a firm constitutes "imperfect competition"?

Here, I am at home and thus have a selection of texts at hand. Let us see how imperfect competition is defined. ( I choose "Economics" by Paul Samuelson, in the hopes that the use of a fairly liberal and activist economist will allay suspicions that I am somehow trying to stack the deck.

"Definition: 'Imperfect competition' prevails in an industry or group of industries wherever the individual sellers are imperfect competitors, facing their own nonhorizontal dd curves and thereby having some measure of control over price."

Now, presuming that we are looking at some small rural hamlet with insufficient residents to support even a single hospital---does a nonexistant firm have "some measure of control over price"?

it is insurance companies that are counterparties to individuals that are tied by their jobs which vastly increases the transaction cost of changing insurers, limiting competition.

Exactly!

And in America, this attachment of insurance to firms, not individuals, is the direct result of government regulation and tax policy tracing back to WWII and the wage and price controls then prevalent. It was intended precisely to limit worker mobility by raising the cost of changing jobs ( and hence insurers ); to guarantee a stable labor force. The need for this, if ever there really was one, has long since vanished---but the distortive regulations and tax policies linger on, as is the wont of such things.

I must admit having never lived in the US (only Australia and England) I wasn't aware that insurance companies can be limited by state. This seems crazy, as the more people that are in an insurance scheme then the cheaper it is for everyone.

Yes, indeed. The limits trace to the same source: The perceived need to minimize, if not eliminate, frictional unemployment in a labor market squeezed by the absence of large numbers of workers due to the war.

Personally I haven't heard a good reason why a not-for-profit government option couldn't be set up to provide competition to insurers in the same way USPS and UPS operate.

These are not direct competitors, however. The USPS enjoys a statutory monopoly on the delivery of first-class mail. True, UPS competes in package delivery, as does Fed Ex and some other, smaller firms. I would give you a cost comparison, but UPS seems to require you to have an account in order to get prices...

In any case, USPS consistently runs a deficit. I'm not sure that's a great model.

[Inquartata]

Actually the state-lines restrictions can be a good thing in some respects under current health insurance regulations, since regulations vary by state. Without federal regulations, any insurer is generally bound by the regulations of the state where they're headquartered, and without federal standards they'd all just move to the states with the most lax regulations available.

Meh, you mean the way all the auto, life and casualty insurers have done?

[I_luv_saber]

Actually the state-lines restrictions can be a good thing in some respects under current health insurance regulations, since regulations vary by state. Without federal regulations, any insurer is generally bound by the regulations of the state where they're headquartered, and without federal standards they'd all just move to the states with the most lax regulations available.

I know in some other industries it doesn't matter where the company is headquartered. They must comply with the laws of the state they are operating in. Why would that be so hard? Why does it matter if I'm buying from a company in, oh let's say Texas, because it's cheaper? As long as they are conforming to California laws and must still answer to the California Insurance Commissioner, why does it matter?

[jeff]

There, you've answered your own question---unless you believe that compliance with laws and regulatory requirements is somehow costless?

This was answered by downunder: the regulatory requirements are that they must actually provide the care for which they are contracted. I don't see a problem with that. Imagine if the industry didn't have to be forced under penalty of law to actually provide contacted services?

This is your conjecture, remember. If you have evidence that government regulations are a dominant or even significant factor in the overhead costs of private insurance, then bring them out. Otherwise, you're merely guessing - which proves nothing at all. EDIT: actually, you're not even guessing, you're only suggesting which is even less probative.

Easier to answer this for all of them, perhaps, if I can thereby make you see what I am implying.

Do you believe that advertising has value to a commercial enterprise?

Okay, let's play "Irrelevant or Leading Questions". First one: yes.

Do any government regulations prohibit or reduce the kind and amount of advertising that health insurers are allowed to do?

You tell me. Are there?

If their market were individuals instead of big companies, do you think advertising would be more, or less effective? Bring in more, or less revenue?

The question is wrong, since the market is both individuals and big companies. Even withing big companies there are (sometimes) choices of insurer one can elect.

But why don't you answer your question, since you're trying to lead it somewhere. Also: WTF does that have to do with government regulation?

Do any federal regulations prohibit competition across state lines? Does more competition tend to raise, or lower prices? Do lower prices, ceteris paribus, tend to increase quantity demanded?

Yes and n: it's also the case that big companies offer the same insurers in many states. So there are restrictions on insurance competition - which I would happily see removed (but not at the cost of letting regulatory oversight disappear, which is the concern), but I didn't have to switch from United Health Care when I came to AZ. The same choices were available to me in NJ and AZ.

I don't work in the industry, nor for a regulatory agency. I cannot identify a subsection (b) 3-1 paragraph 112 of an Omnibus Health Insurance Act of 1982, Revision 5, if that is what you're asking. But I can tell you that all regulation adds costs, and tend to create deleterious distortions in otherwise free markets...

You say "add costs" without the other side of the coin, "provide benefits and may be essential".

You're using a generality - and generalities do not always apply - to avoid answering a straightforward question. If regulatory requirements on the insurance industry are onerous, you should be able to identify some effects. If not, then you can tell me all regulation adds costs and I'll just say that the statement is not probative.

Well, perhaps in the same way that certain of my arguments about economics are dismissed out of hand or repeatedly "forgotten", leading to the presentation of erroneous claims over and over again, I have forgotten all about that.

The problem about your arguments about economics is that you present a particular version of economics which is not universal as the One True System of Economics, when it is nothing of the sort. I just read a profile on Paul Krugman in the current New Yorker and it provides a very striking proof of how the free-market ideological slant is far from being accepted truth in economics. Read it, Inq . It's short, to the point, and eye opening.

Let's put it this way: any argument made here that macroeconomics are accepted in economic thought to mean that Friedman-style laissez faire free market capitalism are "the truth" is without any validity whatsoever. I don't know if that's minority or majority opinion in economics, but it's very clear that it's not close to "consensus". I will continue to dismiss out of hand any representation of economics that says economics must be in Miltie's image, because that's the appropriate response.

[Inquartata]

This was answered by downunder: the regulatory requirements are that they must actually provide the care for which they are contracted.

Nice esquive, but I am penalizing you for an abnormal fencing action.

Once again: Are you saying that government regulation does not impose costs on the businesses regulated?

You tell me. Are there?

If the companies cannot compete across state lines, can they advertise across state lines? If not, is this a restriction?

The question is wrong, since the market is both individuals and big companies. Even within big companies there are (sometimes) choices of insurer one can elect.

Very well. If their market were individuals as well as big companies, would their advertising likely be more, or less effective?

Although, if insurance detached from the employer, as I am suggesting would improve our system, the market would no longer include companies. Apart from any which might buy insurance for top executives as part of their pay packages.

So there are restrictions on insurance competition - which I would happily see removed (but not at the cost of letting regulatory oversight disappear, which is the concern),

Good.

but I didn't have to switch from United Health Care when I came to AZ. The same choices were available to me in NJ and AZ.

Is it really the same company, or is it like Blue Cross/Blue Shield: A group of state-specific companies under the umbrella of a "trade federation"?

You say "add costs" without the other side of the coin, "provide benefits and may be essential".

We can discuss that, but in this particular Socratic exercise I am concerned with getting at what you think about costs.

( I wonder whether Socrates ever had to deal with evasive answers, defiant refusals to answer, and denials that his questions were legitimate in the first place? )

You're using a generality - and generalities do not always apply - to avoid answering a straightforward question.

Whereas you're using...

If regulatory requirements on the insurance industry are onerous, you should be able to identify some effects.

Well, there're those overhead costs which you keep reminding me are higher than those of Medicare...

If not, then you can tell me all regulation adds costs and I'll just say that the statement is not probative.

Right. As opposed to answering.

OK, I'm abandoning the exercise. Sigh.

The problem about your arguments about economics is that you present a particular version of economics which is not universal as the One True System of Economics, when it is nothing of the sort.

I thought you said you'd studied economics?

Is Krugman denying that the laws of supply and demand work? That there are no market equilibria? That any of the basic fundamentals of the science are wrong?

No. Like all other economists, he challenges the implications of the little niggling details at the margins of the science, the ones which do not involve questioning the major premises. And that's just macroeconomics; in microeconomics, the level of agreement is very broad, and extends even to most normative matters.

I'm sorry, but that fact that you find one guy who disagrees with maybe 2% of macroeconomic theory does NOT mean that there's no consensus on anything and that one justly can reject any tenet of the entire discipline with which one disagrees, including the other 98%.

If you mean to continue doing this, there is no point in going on.

You can certainly argue Keynesianism vs monetarism, Chicago vs Austrian, or whatever. You can certainly argue that different economist recommend different approaches to problems and have differing views on normative questions. But this is NOT the same as saying, for example, that because economist A disagrees with economist B on health care that economist A would therefore say that health care is a public good, and therefore it is. Nor can you correctly argue that no question can be answered because there's disagreement on a few questions, or that question X cannot be answered because you can find an economist who departs from the consensus on question Z...

[Hauptman]

It was discussed in previous threads that the market is not always capable of remedying all corporate deficiencies.

This is clear in cases that involve human life; the market can punish the company for failed service, but it cannot provide any remedy to the person who lost their life. Regulations that provide for minimum standards are the best alternative.

That also assumes that the market really can punish a company. In many cases there is sufficient anonymity of the underlying supplier that they often will shut down, and re-open under a new name in a matter of days with no serious impact. We also see the problem with oligopolies where true competition doesn't always occur and we see implicit (and sometimes explicit) collusion to set prices and standards. The "market" is far from a perfectly functioning entity much to the chagrin of many economics.

[jeff]

Once again: Are you saying that government regulation does not impose costs on the businesses regulated?

No. I'm saying that this observation has little to do with the conclusion you're trying to draw, nor with the report downunder cited

Are regulatory costs 100%? 10%? 2% of administrative costs? Are they the reasons for higher costs in US private plans than the ones they are compared to or is it other reasons? It's your conjecture - give evidence rather than change the topic to "does it add any cost at all?"

downunder links article on studies by McKinsey, and one published in the NEJM, describing higher costs in the US. You claim the higher costs are due to regulation even though there's nothing suggesting that. The NEJM article states "Conclusions The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system."

Seeing a set of data for the first time, you invented from whole cloth the reason it MUST be true, based on your beliefs. It MUST be regulatory costs! (The skeptical Inq that challenges others on every unproven statement would give this short shrift)

They reaffirm that private insurers have higher costs than public ones: private insurers retained $46.9 billion of the $401.2 billion they collected in premiums. Their average overhead (11.7 percent) exceeded that of Medicare (3.6 percent) and Medicaid (6.8 percent)

These reports use GDP without qualm.

If the companies cannot compete across state lines, can they advertise across state lines? If not, is this a restriction?

UHC, CIGNA, Aetna compete across state boundaries. I would prefer that all carriers compete in all markets. That would require removing industry exemption from anti-trust laws, so we're removing regulations on the one hand while adding regulations with the other.

Very well. If their market were individuals as well as big companies, would their advertising likely be more, or less effective?

Choice is good. I don't argue against it. However, this has nothing to do with the papers downunder linked. Why are we more expensive in administrative costs than countries that offer no competition at all?

Although, if insurance detached from the employer, as I am suggesting would improve our system, the market would no longer include companies. Apart from any which might buy insurance for top executives as part of their pay packages

That's exactly what I want. A universal health care system detached from the employer. That's not what you are recommending, but you see we get that from my preferred solution just as with yours.

Good.

I am pro-competition, under a regulatory framework that protects consumers. I oppose permitting unlimited competition if customers in State A are governed by rules in State B that lowers consumer protection to the least protective rules.

Is it really the same company, or is it like Blue Cross/Blue Shield: A group of state-specific companies under the umbrella of a "trade federation"?

Big Rule in debate and cross examination: never ask a question if you do not know the answer. I can't speak for all, but CIGNA, MetLife, Aetna, and UnitedHealthcare are companies, not federations of companies. It is NOT the case that there is no cross-state competition and that insurers do not compete across state lines

We can discuss that, but in this particular Socratic exercise I am concerned with getting at what you think about costs.)

Hell no. Costs without benefits are a stacked deck, and one is worthless without the other. Costs>benefits=bad. Costs<benefits=good. Costs alone are useless. Stop me if I use too-advanced concepts

I'm not letting you set the terms of discussion to let you stack the deck.
Also our system has costs that you would ignore if you only count regulatory costs. Much of our costs are due to HMOs requiring providers and clients to preauthorize, reauthorize, and re-submit bills before they'll deign to pay.

Open-ended discussion leading to truth is good. Leading questions structured to provide only one answer are not.

( I wonder whether Socrates ever had to deal with evasive answers, defiant refusals to answer, and denials that his questions were legitimate in the first place?

To which of us are you referring? The one who defiantly refuses to point to any specific health care cost provided by regulation and then says that the question isn't valid? Sheesh.

Whereas you're using...

I'm doing nothing of the sort.

I'm asking you to justify your claim that health care administrative costs are higher in the US because of government regulations compared to countries with government programs!. If our costs are big enough to be seen with the naked eye, you should be able to point to them. If not, either they don't exist or they're too small to be significant.

I know that there are regulatory costs. I don't think they are the main contributors to our higher costs (or "socialist programs" would cost yet more). If it's regulatory cost then how do you explain that we cost more than countries with more regulation?

Well, there're those overhead costs which you keep reminding me are higher than those of Medicare...

Where is your evidence that those overheads are due to regulatory requirements? This is circular reasoning: "there are regulatory costs is because of higher administrative costs, and there are higher administrative costs because of regulatory burdens"

Right. As opposed to answering.

OK, I'm abandoning the exercise. Sigh.

I thought you said you'd studied economics?

Is Krugman denying that the laws of supply and demand work? That there are no market equilibria? That any of the basic fundamentals of the science are wrong?

No, and neither am I nor have I done so at any time. That's not the conversation we're having, so put the strawman away. And I have studied economics and get it Just Fine. It's more heterogeneous in thought than you like to portray it. To disagree with you is not the same as being unschooled in economic principles.

No. Like all other economists, he challenges the implications of the little niggling details at the margins of the science, the ones which [i]do not involve questioning the major premises. And that's just macroeconomics; in microeconomics, the level of agreement is very broad, and extends even to most normative matters.

I'm sorry, but that fact that you find one guy who disagrees with maybe 2% of macroeconomic theory does NOT mean that there's no consensus on anything and that one justly can reject any tenet of the entire discipline with which one disagrees, including the other 98%

You completely mis-characterize what he said and what I said. Further, he's not just some guy, he's a Nobel Laureate, and he's not alone in rejecting free-market dogma.

I'm not saying a damned thing that Krugman hasn't said, and said better. He's pro-universal health care, pro-increased regulation on insurers to prevent them abusing consumers. He wanted a much bigger stimulus package than we got, and criticized Obama for being too timid there and wrt health care. He's pro-regulations to prevent future Enrons. He attacked Bush and the Republicans for trying to bankrupt Social Security, and for increasing economic inequality by cutting taxes on the rich. That's a hell of a lot more than "niggling little details".

If you mean to continue doing this, there is no point in going on.

That may be the case.

Nonetheless, be advised I will still contradict anyone who claims that free-market economics is the One Truth Of Economics, and that government intervention and regulation are agreed to be evil by economists, and that anyone who disagrees with them is ignorant of fundamental economics. That's simply untrue and I see no reason to acquiesce to it.

You can certainly argue Keynesianism vs monetarism, Chicago vs Austrian, or whatever. You can certainly argue that different economist recommend different approaches to problems and have differing views on normative questions. But this is NOT the same as saying, for example, that because economist A disagrees with economist B on health care that economist A would therefore say that health care is a public good, and therefore it is. Nor can you correctly argue that no question can be answered because there's disagreement on a few questions, or that question X cannot be answered because you can find an economist who departs from the consensus on question Z...

Words that did not come from me. If Economist A believes there should be universal health care, people arguing about it should stop making the false statement that economists have a consensus against it.

Geez, Inq. You challenge using GDP as a metric, even though economists do, as do observers on both left on the right. Using a quibble over a detail meaningful only to yourself to deny for years the obvious fact that our health care costs more than elsewhere. You challenged using metrics such as longevity and infant mortality, even though those are the fundamental metrics for health care quality. An attempt to deny the obvious fact that other first world countries enjoy better health care than we do. If anybody is fighting against fundamentals and obvious facts, it's not me.

[downunder]

It's like bashing my head against a brick wall.

Market failure exists in the US heathcare market in both insurance companies and hospitals. Examples include demand inducement, transaction motives vs long term care motives, moral hazard and adverse selection. None of these are to do with governmetn regulation.

Healthcare is a microeconomic issue. There is a general consensus in the field that neo-classical micro is pretty good (obviously including different measures of utility and efficiency). All this debate about Keynes vs classical vs Freidman vs Austrian are macro issues and largely irrelevant. Seriously, buy Sloman's textbook. I'll even photocopy some pages for you.

[Inquartata]

It was discussed in previous threads that the market is not always capable of remedying all corporate deficiencies.

I do not disagree, inasmuch as there ARE market failures, externalities and spillover effects.

This is clear in cases that involve human life

That has nothing to do with it.

the market can punish the company for failed service, but it cannot provide any remedy to the person who lost their life.

And government can?

What the state does, it's main legitimate purpose economically speaking, is to provide a system of laws and the means for enforcing their decisions. So those wicked corporations are punished just as wicked individuals are punished: by the law.

You may call that "regulations" if you wish.

Regulations that provide for minimum standards are the best alternative.

Why? Because THEY can "provide a remedy to the person who lost his life"? Or because the wicked corporations wouldn't dare risk violating "standards" if they see almighty profit in so doing? Or perhaps because industry won't be able to subvert the process and actually write those standards to suit themselves?

What's so "best" about that? Especially when you add the costs of all the steps on that road: formulating the standards, passing them into law, disseminating them, enforcing them, complying with them---not to mention any efficiency losses which may be involved in doing deliberately and noetically what the market does without any human help?

That also assumes that the market really can punish a company. In many cases there is sufficient anonymity of the underlying supplier that they often will shut down, and re-open under a new name in a matter of days with no serious impact.

This is why information is so important. If you are looking for a role for government, there it is.

We also see the problem with oligopolies where true competition doesn't always occur and we see implicit (and sometimes explicit) collusion to set prices and standards.

And we're back to law again.

[Inquartata]

No. I'm saying that this observation has little to do with the conclusion you're trying to draw, nor with the report downunder cited

They have everything to do with it.

Are regulatory costs 100%? 10%? 2% of administrative costs?

I don't know, but I'll ask a third time: Do YOU think they are zero?

Are they the reasons for higher costs in US private plans than the ones they are compared to or is it other reasons?

Well, think about it: If the government-run system does everything the private one does, provides at least the same quantity and quality of care, but the one thing which sets them apart is that the private system must comply with a small library of regulatory mandates, then what is the most likely cause?

Yes, part of it is profit. But all of it? Not if one compares the rate of return most private concerns earn with the size of the claimed public advantage in administrative cost efficiency. So what's left?

Or maybe you have another explanation for that claimed administrative cost advantage? Mine is just a theory, after all...

downunder links article on studies by McKinsey, and one published in the NEJM, describing higher costs in the US.

Yes.

You claim the higher costs are due to regulation even though there's nothing suggesting that.

Apart from logic, you mean?

Again, what is your alternate explanation? What's McKinsey's? What's NEJM's? Do they even care to find out? Or are they just anxious to accomplish an agenda?

The NEJM article states "Conclusions The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system."

But they don't say why that gap exists. They don't particularly seem to care. They just seem to want to establish a quick bridge between situation and policy recommendation.

Seeing a set of data for the first time, you invented from whole cloth the reason it MUST be true, based on your beliefs.

So again, what's your alternative explanation? ( Doubtless a completely objective and wholly dispassionate one with no taint of "belief". )

It MUST be regulatory costs!

That's what economics says it most likely is.

What is it which leads you so vehemently to insist that it canNOT be that? That it MUST be something else, something which redounds to the disadvantage of the market, something which places state provision on a pedestal? What's you explanation?

They reaffirm that private insurers have higher costs than public ones: private insurers retained $46.9 billion of the $401.2 billion they collected in premiums. Their average overhead (11.7 percent) exceeded that of Medicare (3.6 percent) and Medicaid (6.8 percent)

And still no curiosity about why. Never mind that, let's get on with making the changes we want and trust that we'll get a good result?

These reports use GDP without qualm.

It's a fine indicator as far as it goes. I remain unconvinced that it is a perfect one which captures everything and misses nothing...

Bah, have to go. More anon.

[downunder]

Which ones?

http://video.pbs.org/video/1050712790

Taiwan, which uses a simple smartcard and a backend network to keep track of patient records, history and other stuff like allergic reaction information, payment history, prescription history, has an administrative cost of less than 2 percent

[DonnaP]

Just an FYI -

Blue Cross just got slammed for raising its rates (which BTW I don't agree with the rate hikes)..... but Medicare is also raising its rates to its subscribers 14% (yes Grandma - that means you) and even more interestingly - reducing payment rates to practioners by 21%. Hmm - I just love being a healthcare provider.........

On another Medicare note; as of December 31, 2009, an exception to the therapy caps expired and Congress has not yet acted to reinstate these. What does this really mean?? It means that right now Medicare patients who need outpatient therapy (such as Occupational therapy, Physical therapy or Speech therapy) have a dollar amount cap of $1860.00 per calendar year. OT gets $1860 and PT and Speech have to share their $1860. So if an elderly person has a life changing injury, the "exceptions" that were in place basically allowed providers to request additional funds for specific diagnoses that would need more therapy - the exceptions are now gone so once your money is gone - all your rehab costs are now out of pocket. $1860 does not go very far.... In rehab our "joke" if you will is for elderly people on Medicare to get hurt in November because then they can qualify for additional funds after January first. Can you spell "rationed" ?.........