NationStates Jolt Archive

It's a good summary of some recent research into the area, and they make some valid points. Whether I would necessarily call it overregulated...not sure. Maybe misregulated would be a better word for it. If regulation of some sort is necessary (and you'd think in the healthcare industry there's a case for it) I always like the idea of innovation-focussed, flexible regulatory agencies. Somehow that rarely ever happens to be the case.

http://www.economist.com/finance/displaystory.cfm?story_id=9407716
An unhealthy burden
Jun 28th 2007
From The Economist print edition

America's health-care market is not as unfettered as it seems
TO MANY outside the United States, America's health-care system might seem an example of capitalism at its rawest. Europeans and Canadians enjoy universal health care and cheap drugs thanks to government-run systems, the argument goes, but the market-based approach taken by the world's richest nation leaves many millions uninsured and leads the rest to pay the highest drugs prices in the world. Such doubts are sure to be reinforced by this week's release of Michael Moore's “Sicko”, a much-trumpeted new film on health care that bashes the free-market Yankee model even as it praises the dirigiste alternative north of the border.

So is America's health system really red in tooth and claw? Hardly, according to a growing body of academic evidence. As a result of interference at the federal and state levels, health care is one of America's most heavily regulated industries. Indeed, its muddled approach to health-care regulation may act as a massive drag on the American economy—what one expert has called “a $169 billion hidden tax”.

Costing an arm and a leg
That figure comes from a path-breaking study* of a few years ago by Christopher Conover of Duke University. It looked at the many ways in which the American legal and regulatory systems affect the provision of health services and lumped them into five categories: medical torts; the Food and Drug Administration (FDA); insurance regulation; and the certification of both health professionals and health facilities. His team concluded that the overall benefit to society of $170 billion per year delivered by this system of oversight was far outweighed by the $339 billion in annual costs that it imposed (see chart). Even ignoring the cost of big federal tax breaks for employer-sponsored health insurance (which Mr Conover left out), his study estimated that the net cost of America's health regulations resulted in perhaps 4,000 extra deaths each year and was responsible for more than 7m Americans' lacking health insurance.

Building on this point, a forthcoming paper† by Michael Cannon of the Cato Institute, a libertarian think-tank in Washington, DC, investigates the biggest federal component of this regulatory burden: the FDA's oversight of pharmaceuticals. It notes that some 20 cents out of every dollar spent by consumers goes on purchases under the purview of the FDA, which it calls “one of the most pervasive federal agencies in the country.”

Citing the best evidence to date on the costs and benefits of FDA regulation, Mr Cannon argues that the agency “is too slow and demands too much testing”, ultimately harming consumers. He points out that drugs regulators can make two broad types of errors. First, they might approve a drug too quickly, only to find out after its launch that it is dangerous or even deadly. Second, they could delay the launch of a highly innovative drug by demanding onerous or unnecessary trials and thereby deny many needy patients a new therapy.

Proper regulation requires balancing these two risks, but the pitch may be queered by bureaucratic self-interest. If the regulator allows even one drug to slip through the approval process that later proves harmful to some people some of the time, a hue and cry is sure to follow. Look no further than the recent public backlash against the FDA after several deaths were linked to Vioxx, a blockbuster pain remedy made by Merck.

And yet the second (and probably bigger) risk of leaving people untreated because of restrictions on drugs rarely gets the regulators into trouble. As Mr Cannon puts it, “no FDA official has ever been fired or faced a congressional inquiry for delaying the approval of a promising new drug, however unjustified the delay.” What is more, he speculates, big drug firms may quietly acquiesce to this burdensome red tape because it acts as a barrier to entry against newcomers without the cash or lobbying power to navigate the FDA.

The FDA's caution may result in the biggest federal “tax” on health care identified by the Conover study but an even bigger component is to be found in America's distorted system of malpractice insurance, which is regulated at the state level. That is the conclusion of John Graham of the Pacific Research Institute (PRI), a think-tank in San Francisco. In a paper†† published this month, Mr Graham has taken Mr Conover's federal analysis and applied it to all 50 states. The idea is to rank which states allow Americans the greatest amount of “health ownership”.

http://www.economist.com/images/20070630/CFN571.gif

Mr Graham's analysis concludes that because regulation of health insurance and overzealous pursuit of medical torts are both typically handled at the state level, states are to blame for most of that $169 billion annual burden imposed by excessive health-care regulation (as the chart also shows). The heavy-handedness, he notes, includes groups of surgeons being denied permission to open specialist clinics because rival one-size-fits-all hospitals invoke state regulations protecting their patch. Meanwhile, enterprising “nurse-practitioners” are blocked from offering simple treatments at inexpensive clinics by state rules requiring costly supervision by doctors.

New York—a liberal bastion and home to Hillary Clinton, who in the 1990s unsuccessfully advocated a sweeping reform of America's health provision—comes out rock bottom on the PRI ranking of health freedom. That will undoubtedly please conservatives who still deride her earlier proposals for a government-run health system, which they dub “HillaryCare”. But the unstated and awkward inference of these studies will not. If America's health-care regulations are as costly as they claim, the system is merely masquerading as a free-market model and may be no better than others.

* A Review and Synthesis of the Cost and Benefits of Health Services Regulations", Christopher Conover, Duke University, July 2003.

† "Do Economists Reach a Conclusion on the Food and Drug Administration?", Michael Cannon, Cato Institute, forthcoming.

†† "US Index of Health Ownership", John Graham, Pacific Research Institute, June 2007.

What do you reckon? One piece of advice suggested by the article is the FDA being a huge impediment to both the economy and people getting medicine that can help them. So would it make sense to completely reform the thing, making testing standards for drugs less rigid and so on? Here's another article (http://www.economist.com/business/displaystory.cfm?story_id=9409230) about pharmaceutical companies rethinking the way they do business at the moment, partly due to the FDA.

It's a good summary of some recent research into the area, and they make some valid points. Whether I would necessarily call it overregulated...not sure. Maybe misregulated would be a better word for it. If regulation of some sort is necessary (and you'd think in the healthcare industry there's a case for it) I always like the idea of innovation-focussed, flexible regulatory agencies. Somehow that rarely ever happens to be the case.

http://www.economist.com/finance/displaystory.cfm?story_id=9407716


What do you reckon? One piece of advice suggested by the article is the FDA being a huge impediment to both the economy and people getting medicine that can help them. So would it make sense to completely reform the thing, making testing standards for drugs less rigid and so on? Here's another article (http://www.economist.com/business/displaystory.cfm?story_id=9409230) about pharmaceutical companies rethinking the way they do business at the moment, partly due to the FDA.

The FDA's corruption is widely known, but without it, we would likely still be getting heart attacks from our pain medication and committing suicide because of our Prozak. It's better than having no regulatory agency, but only slightly.

Still, the fact remains, the US has no universal national system, and until they do their a second-rate country.

It's a good summary of some recent research into the area, and they make some valid points. Whether I would necessarily call it overregulated...not sure. Maybe misregulated would be a better word for it.

Misregulated for sure, from what I read on the media.
Overregulated, maybe - I'll read your whole post, look up some other sources, and answer fully later.
Surely, it looks underfunded.

I'm not sure I buy his take on the FDA. Nearly all drug regulators are demonised. It seems to be a thankless job. Either too much testing or not enough - never just the right amount. Or at least we never hear about it when they get it right.

I'm not sure what he means by unnecessary trials.Second, they could delay the launch of a highly innovative drug by demanding onerous or unnecessary trials and thereby deny many needy patients a new therapy. It's not something I've ever come across, and I would have liked to have had an example. He gives an example for a drug that was not tested extensively enough, so why not the opposite?

Misregulated for sure, from what I read on the media.
Overregulated, maybe - I'll read your whole post, look up some other sources, and answer fully later.
Surely, it looks underfunded.
It's more funded than European healthcare systems.

But the unstated and awkward inference of these studies will not. If America's health-care regulations are as costly as they claim, the system is merely masquerading as a free-market model and may be no better than others.

I didn't think it would take a genius to figure this out.

What do you reckon?
Get universal healthcare, sharpish, and get people to eat less, thus reducing all of the various illnesses that this causes which are expensive and utterly pointless to do anything about, because most of the time, people will just 'reoffend', essentially.

Well as I understand aren't all the possible Democratic candidates running for President have universal health care as a policy?

Surely, it looks underfunded.
They fund it heavily so they can keep it from being a universal healthcare system.

It's a good summary of some recent research into the area, and they make some valid points. Whether I would necessarily call it overregulated...not sure. Maybe misregulated would be a better word for it. If regulation of some sort is necessary (and you'd think in the healthcare industry there's a case for it) I always like the idea of innovation-focussed, flexible regulatory agencies. Somehow that rarely ever happens to be the case.

http://www.economist.com/finance/displaystory.cfm?story_id=9407716


What do you reckon? One piece of advice suggested by the article is the FDA being a huge impediment to both the economy and people getting medicine that can help them. So would it make sense to completely reform the thing, making testing standards for drugs less rigid and so on? Here's another article (http://www.economist.com/business/displaystory.cfm?story_id=9409230) about pharmaceutical companies rethinking the way they do business at the moment, partly due to the FDA.

It's an enormous load of horse-hockey.

Even ignoring the cost of big federal tax breaks for employer-sponsored health insurance (which Mr Conover left out), his study estimated that the net cost of America's health regulations resulted in perhaps 4,000 extra deaths each year and was responsible for more than 7m Americans' lacking health insurance.


The phrase here reveals the bias of the article, in that apparently the author does not even consider the possibility that such tax breaks are net beneficial to the economy: is it not possible that the federal tax breaks allow for increased access to health care, that increased access to health care results in higher productivity in workers, or to decrease prices of goods yielding higher sale rates than would otherwise occur? These may or may not be true, but they seem precluded from consideration in the article.


Citing the best evidence to date on the costs and benefits of FDA regulation, Mr Cannon argues that the agency “is too slow and demands too much testing”, ultimately harming consumers. He points out that drugs regulators can make two broad types of errors. First, they might approve a drug too quickly, only to find out after its launch that it is dangerous or even deadly. Second, they could delay the launch of a highly innovative drug by demanding onerous or unnecessary trials and thereby deny many needy patients a new therapy.

Proper regulation requires balancing these two risks, but the pitch may be queered by bureaucratic self-interest. If the regulator allows even one drug to slip through the approval process that later proves harmful to some people some of the time, a hue and cry is sure to follow. Look no further than the recent public backlash against the FDA after several deaths were linked to Vioxx, a blockbuster pain remedy made by Merck.


And for all that, they don't mention, quite deliberately, the fact that the two kinds of errors are mutually exclusive and inversely related. By raising the threshold of what qualifies as a success, you naturally do two things simultaneously: you admit fewer successes, and you ensure that those successes are more successful. By lowering your threshold, you increase the number of "successes", and you also increase the likelihood that some drugs worked purely by random chance. The fact that the article doesn't put this fact in fairly simple form: "The Cato Institute believes you are so ill-informed about statistics that they'd like you to believe that we can lower the standards of testing and not have more drugs like Vioxx that are either not beneficial or directly harmful, and in fact labels this 'benefiting the patient'." suggests precisely where the author's loyalties lie.


New York—a liberal bastion and home to Hillary Clinton, who in the 1990s unsuccessfully advocated a sweeping reform of America's health provision—comes out rock bottom on the PRI ranking of health freedom. That will undoubtedly please conservatives who still deride her earlier proposals for a government-run health system, which they dub “HillaryCare”. But the unstated and awkward inference of these studies will not. If America's health-care regulations are as costly as they claim, the system is merely masquerading as a free-market model and may be no better than others.


Forgive my ignorance in the matter, what in the Sam Hill is "patient freedom"? How exactly am I free to choose between different providers when my spleen is currently awaiting reentry into my body, for instance, or when my arm has been crushed in a compactor? This kind of sarcasm in fact cuts to the heart of the debate, because it reveals a fundamental point: we can't expect the healthcare system to obey the same market rules of behavior governing peanut butter because healthcare is not purchased in the same manner as healthcare. In point of fact, it's not purchased in a manner consistent with market economics at all: if I'm in life-threatening circumstances, does anyone in their right mind think that, just like if the Jiffy gets too expensive, I'm going to stop buying and sew my liver together myself? Or that I'm going to have the ambulance drive around town to get the best bargain from the various emergency rooms in the region? No, I and everyone else pick medical care based on urgency and proximity, which is why in a "market" system the market reacts in a manner consistent with any inelastic good, in that they charge whatever the hell they damn well feel like, because they know I can't afford not to pay whatever my circumstance. Given the non-market nature of the choice, I for one don't see why I should have to suffer the effects of market pricing structure.

The simple fact is that we have the most free healthcare system in the industrialized world however much it is regulated. We spend more on taxes and private payments to the healthcare system than any other nation on earth. We also have one that is by far one of the worst systems in the world as measured by common measures such as infant mortality, life expectancy, etc. We are also putting companies like GM out of business because, while they pay their workers directly for health insurance, Toyota doesn't have to because the government does for them, hence they can charge lower for a higher-quality vehicle. Given these facts, why exactly am I supposed to be afraid of socialized medicine?

Well as I understand aren't all the possible Democratic candidates running for President have universal health care as a policy?
Faux healthcare. They want to force the businesses to have full and overreaching insurance for all of their employees instead of inching out of it year by year.

It's a good summary of some recent research into the area, and they make some valid points. Whether I would necessarily call it overregulated...not sure. Maybe misregulated would be a better word for it. If regulation of some sort is necessary (and you'd think in the healthcare industry there's a case for it) I always like the idea of innovation-focussed, flexible regulatory agencies. Somehow that rarely ever happens to be the case.

http://www.economist.com/finance/displaystory.cfm?story_id=9407716


What do you reckon? One piece of advice suggested by the article is the FDA being a huge impediment to both the economy and people getting medicine that can help them. So would it make sense to completely reform the thing, making testing standards for drugs less rigid and so on? Here's another article (http://www.economist.com/business/displaystory.cfm?story_id=9409230) about pharmaceutical companies rethinking the way they do business at the moment, partly due to the FDA.
Unfortunately, that article only covers the tip of the iceberg. Even higher costs for healthcare are the result of overpriced health insurance companies and the American penchant for suing doctors which creates excessively high malpractice insurance. Healthcare should not be a for profit business!!

The phrase here reveals the bias of the article, in that apparently the author does not even consider the possibility that such tax breaks are net beneficial to the economy: is it not possible that the federal tax breaks allow for increased access to health care, that increased access to health care results in higher productivity in workers, or to decrease prices of goods yielding higher sale rates than would otherwise occur? These may or may not be true, but they seem precluded from consideration in the article.
You're grasping at straws. All it says is that he didn't consider the costs of the tax breaks, which are a seperate matter. That he called them "costs", rather than "effects" had to do with the fact that he was in fact talking about costs in the sentence.

But if you really want, we can say "all the rules, regulations and institutions except the federal tax breaks are doing more damage than good". Doesn't change a whole lot, except that now you can do some research and write an article on it to justify that position.

And for all that, they don't mention, quite deliberately, the fact that the two kinds of errors are mutually exclusive and inversely related.
If you don't realise that, then they wouldn't expect you to be reading this article in The Economist. Considering that this article is from the "economic focus" section, you can forgive them for not spending much time on explaining the theory of Type I vs Type II errors.

Forgive my ignorance in the matter, what in the Sam Hill is "patient freedom"?
You know, I quite deliberately included the references in my quote. But nevermind...
http://special.pacificresearch.org/pub/sab/health/2007/IHOP/2007_Index_Healthcare.pdf
wHat IS “HealtH ownerSHIp”?
[...]
the U.S. Index of Health Ownership is the first effort to measure the degree to which individuals, be they patients, health professionals, entrepreneurs, or taxpayers, “own” the health care in their states. It quantifies how state laws and regulations affect the liberty of citizens involved in state government health plans (primarily Medicaid), the private health-insurance market, and the provision of medical services. In addition, the Index assesses the effect of medical tort on people’s freedom to engage health services.
Forgive formatting and spelling I just copied and pasted from the pdf file.

How exactly am I free to choose between different providers when my spleen is currently awaiting reentry into my body, for instance, or when my arm has been crushed in a compactor?
That's why you make the choice before the incident occurs, for example by choosing a particular healthcare insurance which offers particular treatment plans and provisions.

In point of fact, it's not purchased in a manner consistent with market economics at all: if I'm in life-threatening circumstances, does anyone in their right mind think that, just like if the Jiffy gets too expensive, I'm going to stop buying and sew my liver together myself?
I can't make peanut butter. But if a peanut butter gets too expensive, I go and buy a different brand. I don't see how that's any different from choosing to go to a different doctor or sign up to a different insurance plan.

Market economics is the study of doing the best you can by allocating the resources available to you and trading some (or all) of them for something else. I don't see the contradiction, to be honest.

Given the non-market nature of the choice, I for one don't see why I should have to suffer the effects of market pricing structure.
You're aware though that "non-market choice" is pretty much an oxymoron, right? It can in fact be represented as a market, as can any other interaction based on choice and trade - even if you don't like it.

But if you're trying to make the case for nationalised healthcare (which has little to do with the article, by the way), then you're saying someone else should have to suffer the effects of market pricing structure. Because it doesn't go away, you just change who pays for it.

We are also putting companies like GM out of business because, while they pay their workers directly for health insurance, Toyota doesn't have to because the government does for them, hence they can charge lower for a higher-quality vehicle.
You should probably leave GM out of this. They're a crap company because of crap management, not because the yellow floods are coming to get defenseless Americans armed with their free healthcare.

Given these facts, why exactly am I supposed to be afraid of socialized medicine?
Who says you should be? Any policy has winners and losers.

You're basically arguing against something I haven't said. The points I made with the article are these:
1) The current system is not a free market system.
2) The current system is no good.
3) The regulations and authorities in place right now all cost more than they actually return in benefit. That means (and the relationship is 100% clear) that getting rid of them would actually improve society's position.
4) That implies that the people who make the regulations are apparently not very good at it.
5) That is supported by the example of the FDA in particular, which has the choice between weighting Type I and Type II errors but only ever faces punishment for erring on one side.

Feel free to attack those points. But you're wasting your time attacking the author's style or supposed bias, or going off on a tangent about how sociology is superior to microeconomics.

Healthcare should not be a for profit business!!
You can argue about the price of health insurance, but let it be said that pricing health insurance is probably just about the most complicated thing you can do short of brain surgery. I for one can't claim to know whether or not the prices are fair (other than that economic theory would suggest it). What I do know is that insurance is very definitely not a "out of the goodness of my heart" business, and if people can't make some money from doing it, the few who'd dare go there wouldn't last very long.

You can argue about the price of health insurance, but let it be said that pricing health insurance is probably just about the most complicated thing you can do short of brain surgery. I for one can't claim to know whether or not the prices are fair (other than that economic theory would suggest it). What I do know is that insurance is very definitely not a "out of the goodness of my heart" business, and if people can't make some money from doing it, the few who'd dare go there wouldn't last very long.

Then remove the gamble.

Make the cost of healthcare a charge, rather than a premium, and base it on yearly costs. You end up with the same 'probability' calculation built in (because not everyone gets sick), but you only pay the real price, rather than an inflated profit-margin slapped on top of long odds.

I can't make peanut butter. But if a peanut butter gets too expensive, I go and buy a different brand. I don't see how that's any different from choosing to go to a different doctor or sign up to a different insurance plan.


If you don't see how it is different, you probably shouldn't be involved in a discussion at this level.

Healthcare is a captive market. Faced with the choice of getting screwed by the system, or just turning around and saying 'no, I think I'll let my children die', people have no real choice.

You don't HAVE TO have peanut butter.


But if you're trying to make the case for nationalised healthcare (which has little to do with the article, by the way), then you're saying someone else should have to suffer the effects of market pricing structure. Because it doesn't go away, you just change who pays for it.


And they pay less, overall.


1) The current system is not a free market system.
2) The current system is no good.
3) The regulations and authorities in place right now all cost more than they actually return in benefit. That means (and the relationship is 100% clear) that getting rid of them would actually improve society's position.


I would like to question your logic. And when you present some, I will.

3) is not the only (or even most logical) result of 1) and 2) in your equation.

Then remove the gamble.

Make the cost of healthcare a charge, rather than a premium, and base it on yearly costs. You end up with the same 'probability' calculation built in (because not everyone gets sick), but you only pay the real price, rather than an inflated profit-margin slapped on top of long odds.
I'm not sure I follow you.

I'm not sure I follow you.

I rest my case.

Healthcare should not be a for profit business!!

American capitalism says otherwise. In fact, if they could charge for breathing air, they would.

Healthcare is a captive market. Faced with the choice of getting screwed by the system, or just turning around and saying 'no, I think I'll let my children die', people have no real choice.
What "system"? The only ones proposing something everyone has to make deals with are the proponents of one nationalised healthcare provider! The idea is that you can make choices between different providers of healthcare, be they different doctors, different hospitals or different insurance companies.

We all have to buy food too. That doesn't mean that buying food can't or shouldn't be done on a marketplace.

And they pay less, overall.
Which would be the only legitimate argument for it. Whether it is the case, I don't know. That would require some serious cost-benefit analysis (and would end up being biased anyways because on an issue like this it'll be hard to find an unbiased researcher in the first place...and even if you could (s)he wouldn't be able to do his or her job in peace).

What we do know is that the current way of doing things can be improved.

3) is not the only (or even most logical) result of 1) and 2) in your equation.
It's not an equation, it's a list. They don't necessarily have to imply each other. 1) is the argument from the first paragraph. 2) is common knowledge. 3) is implied later in the article by the cost-benefit analysis of various parts of regulations and institutions in the healthcare sector. If the costs of something outweigh the benefits of it, then by stopping it you'd necessarily end up with a net gain.

I can't make peanut butter. But if a peanut butter gets too expensive, I go and buy a different brand. I don't see how that's any different from choosing to go to a different doctor or sign up to a different insurance plan.
Let's say your employer has a deal with peanut butter manufacturers. But even then, the peanut butter gets too expensive. You look around, but even the cheapest peanut butter outside what your employer has discounts on is more expensive than what they sell. And I'm pretty sure all doctors cost about the same, especially those that take the same insurance.

But if you're trying to make the case for nationalised healthcare (which has little to do with the article, by the way), then you're saying someone else should have to suffer the effects of market pricing structure. Because it doesn't go away, you just change who pays for it.
Everyone pays for it and everyone gets to use it. Making it both cheaper and more encompassing.


You should probably leave GM out of this. They're a crap company because of crap management, not because the yellow floods are coming to get defenseless Americans armed with their free healthcare.
A large, large chunk of a company's money loss in the US is in healthcare expenses. Something their foreign competitors don't have a problem with because the US is the only first world country without nationalized healthcare. Which is why GM and other companies losing money are doing anything possible to toss out paying for their employees healthcare, and even those companies that arn't losing money but they arn't trying as hard. They are slowly working it down so the employee pays more and more of the cost of the insurance, which is in addition to paying for what insurance doesn't cover.

I rest my case.
Rather than doing that, you could just restate the argument a bit more clearly. What, in your opinion, is the difference between a premium and a charge? Whose costs are we talking about? And if we're removing the gamble, how come there are still probability calculations being done?

What "system"? The only ones proposing something everyone has to make deals with are the proponents of one nationalised healthcare provider! The idea is that you can make choices between different providers of healthcare, be they different doctors, different hospitals or different insurance companies.

We all have to buy food too. That doesn't mean that buying food can't or shouldn't be done on a marketplace.


I don't 'have to' buy food. But, even if you are a doctor you'll still need medical care.


Which would be the only legitimate argument for it. Whether it is the case, I don't know. That would require some serious cost-benefit analysis (and would end up being biased anyways because on an issue like this it'll be hard to find an unbiased researcher in the first place...and even if you could (s)he wouldn't be able to do his or her job in peace).

What we do know is that the current way of doing things can be improved.


Whether it is the case, you don't know? It's been repeatedly shown to be the case, so I have to wonder why you are presenting material in an arena you have managed to ignore.


It's not an equation, it's a list. They don't necessarily have to imply each other. 1) is the argument from the first paragraph. 2) is common knowledge. 3) is implied later in the article by the cost-benefit analysis of various parts of regulations and institutions in the healthcare sector. If the costs of something outweigh the benefits of it, then by stopping it you'd necessarily end up with a net gain.

There is no 'common knowledge'.

Plus, 3) is utter wank, and makes no logical sense. By that 'logic' (and this time I'm doing you the favour, at least, of describing it as such - and you should consider it a big favour) we should remove policing and the military.

Rather than doing that, you could just restate the argument a bit more clearly. What, in your opinion, is the difference between a premium and a charge? Whose costs are we talking about? And if we're removing the gamble, how come there are still probability calculations being done?
What I got from it was to instead of running it on an ad hoc basis, it should be run on a yearly overview of the total costs of the system.

Rather than doing that, you could just restate the argument a bit more clearly. What, in your opinion, is the difference between a premium and a charge? Whose costs are we talking about? And if we're removing the gamble, how come there are still probability calculations being done?

If you can't grasp the difference between profit-inflated gambling odds, and an actual cost-of-service pricing scheme, then I have no way to make the materail accessible to you.

What "system"? The only ones proposing something everyone has to make deals with are the proponents of one nationalised healthcare provider! The idea is that you can make choices between different providers of healthcare, be they different doctors, different hospitals or different insurance companies.

We all have to buy food too. That doesn't mean that buying food can't or shouldn't be done on a marketplace.Yes, but there are different types of food. You can't really opt for radiotherapy instead of heart surgery.

If, say, there is a peanut famine and there aren't enough peanuts to go around this year. Then the market's intial response is to simply raise prices until enough people have been priced out of the market so that supply roughly equals demand. And if you can't have peanut butter you can always have chocolate spread instead.

However, I doubt if there were a heart surgeon shortage (maybe there was a fire at a heart surgeon convention or something) you would advocate letting all the poor who need heart surgery die, and treat the richest in priority.

I personally would prefer a system of rationing in this case rather than market forces. Treat by need rather than by wealth eg. treat the person who needs heart surgery within the month rather than the person who needs heart surgery within two months.

I don't 'have to' buy food. But, even if you are a doctor you'll still need medical care.
You have to consume food, just like you have to consume medical care. The point is that if you have the choice where to get it from, it empowers you relative to the provider and/or environment.

Whether it is the case, you don't know? It's been repeatedly shown to be the case, so I have to wonder why you are presenting material in an arena you have managed to ignore.
No, what has been shown is that the governments in other countries with national healthcare schemes spend less on healthcare per person than the US. While useful information, that's hardly rigorous evidence. That's why I'm saying that before we can say "yes, introducing a nationalised healthcare scheme is better than what is around at the moment" there would have to be a huge cost-benefit analysis involving comparing all the financial costs, opportunity costs and anything else that might have to be spent or given up with the benefits provided by it. If you have access to such a study, feel free to present the material. If you don't, then that's not clear evidence.

There is no 'common knowledge'.
Look, the current healthcare system in the US is no good. It costs too much and it provides too few people with too few benefits. Can we or can we not agree on that?

Plus, 3) is utter wank, and makes no logical sense. By that 'logic' (and this time I'm doing you the favour, at least, of describing it as such - and you should consider it a big favour) we should remove policing and the military.
Huh?

This (http://books.google.com.au/books?id=b3_8Tapt2MYC&dq=brown+campbell+cost+benefit+analysis&pg=PP1&ots=C5_88RhWb5&sig=Ogvnla0-cLCGaXl_gpEDvtLVSis&prev=http://www.google.com.au/search%3Fhl%3Den%26q%3Dbrown%2Bcampbell%2Bcost%2Bbenefit%2Banalysis%26meta%3D&sa=X&oi=print&ct=result&cd=1) was my textbook for the Cost-Benefit Analysis course at uni. It's really pretty good. What I'm trying to suggest is that you read up on what exactly a cost-benefit analysis is when it is done by an economist. You'd be wrong if you assumed we're just talking dollars changing hands here.

What I got from it was to instead of running it on an ad hoc basis, it should be run on a yearly overview of the total costs of the system.
Insurance premiums aren't set on an ad hoc basis, rest assured. It's part of the finance industry, and if you price things on an ad hoc basis there, you get strung up on some tree.

So I suppose there would be one big authority which knows the total costs, which then charges the cost divided by the number of people? That would just be taxes, not an insurance.
Or would it divide the cost according to who caused what? Then that's even more difficult to stomach for sick poor people than insurances.

If you can't grasp the difference between profit-inflated gambling odds, and an actual cost-of-service pricing scheme, then I have no way to make the materail accessible to you.
Now you're just being silly.

You have to consume food, just like you have to consume medical care. The point is that if you have the choice where to get it from, it empowers you relative to the provider and/or environment.

But the choice where to get medical care is limited to (1) do you have the money and (2) do you have the correct insurance, which leads back to number 1. Let's not get into (3) is there medical care you need provided in your area, which goes back to 1 and 2.

I personally would prefer a system of rationing in this case rather than market forces. Treat by need rather than by wealth eg. treat the person who needs heart surgery within the month rather than the person who needs heart surgery within two months.
Ideally you'd have something like that. Hence why I said in the OP that some regulation is probably desirable (though in this case a subsidy is the case in point).

Look, I'm not one who advocates treatment based on wealth. It's one of the two areas in which I actually think that government-sponsored subsidies are to some degree necessary (not just because of my personal moral ideals but also because of the massive externalities involved), the other being access to education.

The thing is that I don't believe that nationalised healthcare is a particularly good way of solving the problem. I think it's a way that's easy to sell to voters, which is why it's so popular, but we don't know much else about it when compared to the possible alternatives.

You can argue about the price of health insurance, but let it be said that pricing health insurance is probably just about the most complicated thing you can do short of brain surgery. I for one can't claim to know whether or not the prices are fair (other than that economic theory would suggest it). What I do know is that insurance is very definitely not a "out of the goodness of my heart" business, and if people can't make some money from doing it, the few who'd dare go there wouldn't last very long.
Bill Clinton states the obvious (http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/14/BAG7BP8VJV3.DTL):

Like a patient professor trying to break down a complex issue for his students, Clinton used a plethora of statistics, and a touch of humor, in his indictment of the current state of American health care.

He said the United States spends 16 percent its national income on health care, compared with 11 percent in Canada and Switzerland, the countries with the next highest spending. That gap represents $800 billion a year, he said.

Yet the United States ranks only 37th in the world in overall health care, insures fewer of its citizens and pays more for its drugs, Clinton said.

Nearly a third of U.S. health care spending goes to administrative costs, the highest in the world, he said.

"We're letting the health insurance financing tail wag the health-care dog," he said.

Clinton, who has spent much of his post-presidential years working to address the worldwide AIDS epidemic, said American taxpayers spend $10,000 a year for AIDS treatments that cost $3,500 in other countries.

He mentioned the pharmaceutical industry's opposition to importing cheaper, generic drugs from Canada.

He said the industry wants people to believe that "if you take it when it crosses the border, you will immediately drop dead. It's the same medicine. (Canadians) don't drop dead," he said to laughter. "They've developed generic immunity, an immunity to cheap drugs."
Someone is pocketing a pile of money and it is not going into the healthcare for Americans.

Bill Clinton states the obvious (http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/14/BAG7BP8VJV3.DTL):


Someone is pocketing a pile of money and it is not going into the healthcare for Americans.
Bingo, it is going into the health insurance industry's CEOs' golden parachutes and the paychecks of lobbyists that stop the FDA from certifying drugs from Europe and Canada for years or letting us import Canadian drugs or letting the government negotiate for cheaper drugs, which is what Canada does.

Clinton's turning into a fine ex-president.

the U.S. Index of Health Ownership is the first effort to measure the degree to which individuals, be they patients, health professionals, entrepreneurs, or taxpayers, “own” the health care in their states. It quantifies how state laws and regulations affect the liberty of citizens involved in state government health plans (primarily Medicaid), the private health-insurance market, and the provision of medical services. In addition, the Index assesses the effect of medical tort on people’s freedom to engage health services.

I knew you guys would get around to quantifying freedom.

Now, in the Canadian system, I can go into any clinic or hospital in Canda and get treatment for any illness I may have for free. They are legally obligated to provide me with the goods and services for free. (this is a bit of hyperbole, as some elective treatments and certain drugs aren't covered)

Now, in a free market system, I couldn't do that, unless I actually owned the entire health industry. But here in Canada, I can.

So, what's my Index of health ownership? Pretty high, I should think.

I knew you guys would get around to quantifying freedom.

Now, in the Canadian system, I can go into any clinic or hospital in Canda and get treatment for any illness I may have for free. They are legally obligated to provide me with the goods and services for free. (this is a bit of hyperbole, as some elective treatments and certain drugs aren't covered)

Now, in a free market system, I couldn't do that, unless I actually owned the entire health industry. But here in Canada, I can.

So, what's my Index of health ownership? Pretty high, I should think.
Yup. Just like she said. :)

(bolding mine)

Still, the fact remains, the US has no universal national system, and until they do their a second-rate country.

not their, they're like they are, not their.....like we own a second rate country.....

You're grasping at straws. All it says is that he didn't consider the costs of the tax breaks, which are a seperate matter. That he called them "costs", rather than "effects" had to do with the fact that he was in fact talking about costs in the sentence.

But if you really want, we can say "all the rules, regulations and institutions except the federal tax breaks are doing more damage than good". Doesn't change a whole lot, except that now you can do some research and write an article on it to justify that position.

And in context, it is clear that the author considers the tax breaks to add to rather than detract from the "costs" of healthcare. The fact that this might not be the case is not even considered. Which lends credence to the creeping suspicion that the remainder of the article's estimations of cost were done in a similar manner: ignore the ways in which healthcare benefits the economy, such as a childhood innoculation against, say, the mumps preventing an office outbreak that crashes productivity 20 years later. The causal logic is plain, but the costs and benefits are fuzzy because we don't usually even try to measure things like the expected costs of a mumps outbreak. Which is why many economists ignore them, and skew the data.


If you don't realise that, then they wouldn't expect you to be reading this article in The Economist. Considering that this article is from the "economic focus" section, you can forgive them for not spending much time on explaining the theory of Type I vs Type II errors.

Really. Then pray tell how else do you explain the Cato Institute's logic in their statement? In what other way could increasing the likelihood of another thalydamide drug being released be considered a uniformly net beneficial act by the federal government, unless they really want you to forget that you can't make drugs more available without also increasing the risk?


You know, I quite deliberately included the references in my quote. But nevermind...
http://special.pacificresearch.org/pub/sab/health/2007/IHOP/2007_Index_Healthcare.pdf

Forgive formatting and spelling I just copied and pasted from the pdf file.


Ah, well thank you for clearing matters up for me. Now, I will move on to the next question: what in the Sam Hill does "patient freedom" even effect? I, like many people I suspect, don't really care how much choice I have in healthcare; in point of fact, fewer options is usually better, because the technical details of 3 different programs are difficult enough to understand, much less the technical details of 15. What I really care about is having access to healthcare when I need it. One program that provides that well is vastly superior to an infinite choices between systems that ask me to guess what my odds of needing healthcare are, asking me to pay on the basis of that estimation, and then finding all kinds of ways of making me pay-as-I-go anyway when I actually do require healthcare, which is a fairly concise description of the current insurance system.

Seriously Leon, judging a healthcare system based on its "freedom" is like buying a car based on whether or not you get to pick the kind of motoroil the salesman puts in to keep the car running: it expands choice, but choice is completely tangential to the purpose behind which I am purchasing the good.


That's why you make the choice before the incident occurs, for example by choosing a particular healthcare insurance which offers particular treatment plans and provisions.


That's a nice story, but here in the real world, I pick based on 1) what my job provides, which is quite the impinger upon "patient freedom" by the way but no matter, and 2) my untutored assessment of my own risk. I never pick on the basis of, say, access to ambulance service, or location of the doctor, because I can't exactly predict what ambulance company will arrive first, nor can I tell which hospital I'll be closest to when I need to be hospitalized.


I can't make peanut butter. But if a peanut butter gets too expensive, I go and buy a different brand. I don't see how that's any different from choosing to go to a different doctor or sign up to a different insurance plan.

Market economics is the study of doing the best you can by allocating the resources available to you and trading some (or all) of them for something else. I don't see the contradiction, to be honest.

I thought it would be fairly obvious: one is a trade in the standard sense of the word, and the other is a trade in the same manner a highwayman "trades" you your money for not getting stabbed, in the sense that there's a whole hell of a lot less choice being involved in one trade than another. What exactly am I going to do if the ambulance that arrives first is not a pre-authorized carrier affiliated with my insurance company, wait for the next one? What do I do if the trauma team at the hospital is not on my insurance company's list of authorized medical providers, drive myself to the appropriate emergency room? No, I tend to pick options on factors that are distinctly different from how I pick peanut butter, and therein I also pick on the basis of factors that are not accounted for nor predicted by traditional market economic study. Market theory doesn't really do a whole lot of work with one-choice, must-have markets because in spite of plain evidence, market theory predicts that those markets don't exist for any length of time. The idea that some "markets" are by definition like that doesn't enter economists darkest dreams.


You're aware though that "non-market choice" is pretty much an oxymoron, right? It can in fact be represented as a market, as can any other interaction based on choice and trade - even if you don't like it.

But if you're trying to make the case for nationalised healthcare (which has little to do with the article, by the way), then you're saying someone else should have to suffer the effects of market pricing structure. Because it doesn't go away, you just change who pays for it.

I would hardly say it has nothing to do with the article, since the article is one implicit economic condemnation of nationalized healthcare. But that is neither here nor there. Non-market choice isn't an oxymoron, although it is a bit of a misnomer. Rather, what I was saying, I thought fairly obviously, was that in some cases, a person really doesn't have a choice at all, and in industries related to those choices, market economics models very badly and, when market theory is implemented, yields disastrous results by its nature. Healthcare is one such system, because the patient has no real choice about whether or not he will or should recieve treatment, since dying in a ditch is hardly a rational alternative. Another is the food production market, where farmers for a variety of institutional and endemic reasons related to the farming trade almost never have the option of cutting back on food production.

Because market theory presupposes choice in every instance, and because sometimes real-world considerations make choice impossible, sometimes market theory badly explains and poorly predicts how people act and how markets operate. Given the fact that the healthcare system is one such instance of those real-world considerations, we might seriously want to consider dropping market considerations from our discussion period, because they reflect a model that does not describe what the heck we're talking about.


You should probably leave GM out of this. They're a crap company because of crap management, not because the yellow floods are coming to get defenseless Americans armed with their free healthcare.


Really? So American companies such as GM, Pontiac, Oldsmobile, Ford, Jeep, etc. have all collapsed purely because they were all badly managed relative to Toyota, Honda, Nissan, Mitsubishi, etc., and not because our healthcare system puts them at a systematic disadvantage. I think that if you expect me to buy this, you should be asking me for my credit card number and a small down payment by now.


Who says you should be? Any policy has winners and losers.

You're basically arguing against something I haven't said. The points I made with the article are these:
1) The current system is not a free market system.
2) The current system is no good.
3) The regulations and authorities in place right now all cost more than they actually return in benefit. That means (and the relationship is 100% clear) that getting rid of them would actually improve society's position.
4) That implies that the people who make the regulations are apparently not very good at it.
5) That is supported by the example of the FDA in particular, which has the choice between weighting Type I and Type II errors but only ever faces punishment for erring on one side.

Feel free to attack those points. But you're wasting your time attacking the author's style or supposed bias, or going off on a tangent about how sociology is superior to microeconomics.

You forgot the most important argument, one that underpins all of your other analysis: microeconomic theory explains what is going on in the healthcare system, and offers useful predictions for what we can expect will happen if we take hypothetical action x, y, or z. The sociology you deride is really an attempt the demonstrate that the above presupposition is false. Microeconomics doesn't explain what is going on in the healthcare system because microeconomics presupposes choosing between competing options, when healthcare involves no such choice. As such, healthcare doesn't fit the fracking model. If it does not fit the model, the model cannot offer meaningful assessments about how hypothetical actions x, y, or z will pan out.

Then remove the gamble.

Make the cost of healthcare a charge, rather than a premium, and base it on yearly costs. You end up with the same 'probability' calculation built in (because not everyone gets sick), but you only pay the real price, rather than an inflated profit-margin slapped on top of long odds.

Market pricing tends to approximate cost, so without interference, profit margins will equal roughly the minimum required rate of return to account for the investment made, namely the cost of providing the service. That is basic.

However, I don't quite grasp how you wish to eliminate profit by having companies total costs and charge fees retroactively. That seems just as suitable for profits (if not more considering that insurance companies will be able to calculate their costs and required returns with more accuracy).

Of course, a premium is just a matter of accounting for the assumption of risk, which would be indeciferable financially from the interest that must be charged to make up for the cost of lending in your idea.

If you can't grasp the difference between profit-inflated gambling odds, and an actual cost-of-service pricing scheme, then I have no way to make the materail accessible to you.

You are the one who lacks understanding. A premium and interest are both equal ways of accounting for the assumption of risk, and risk is a matter of cost accounting. What you are proposing is no different from the present system of premiums, save for your seemingly incoherent concept of "profit-inflated gambling odds".


For your benefit:

http://en.wikipedia.org/wiki/Risk_premium

You have a very limited understanding of economics and finance and it leads to rather incoherent posts. In the future when someone doesn't understand the economic or financial arguments you are making, try reading up on the subject you are discussing, and confirm that you are not spouting nonsense.

The issue I take with the FDA is simple: They lie.

For example, they claim that Codeine is not a painkiller. WTF?
They also claim that amylase (the enzyme in your saliva and intestines that digests sugars and starches) is not a digestive aid. Again, WTF?

There is a big list of stuff like this that I have, but I won't type it all out because I can't be arsed, you get the point, and it would be boring.

I might also point out that healthcare spending per person per year in the USA is about $4000, in Canada is $2500, and in the UK is only $1200.
Ok, so the UK system does suffer from underfunding - but the USA does seem to spend rather a lot on healthcare while still leaving about 50 million people without any health insurance at any one time. If it was a nationalised system, everyone would pay less, and nobody would be denied treatment for lack of funds.

You would all do well to put away your "all government is evil, all taxation is excessive" attitudes on this one.

The causal logic is plain, but the costs and benefits are fuzzy because we don't usually even try to measure things like the expected costs of a mumps outbreak. Which is why many economists ignore them, and skew the data.
The studies are available on the web, so feel free. I know that I was personally taught to do measure these things and incorporate everything I can. Though I suppose in something as abstract as a mumps outbreak in 20 years prevented by a tax break I admit I would probably lack the creativity to come up with it. I'd simply note in the paper or report I was writing that such events could occur but it makes no sense to quantify them since they're by definition unpredictable.

In what other way could increasing the likelihood of another thalydamide drug being released be considered a uniformly net beneficial act by the federal government, unless they really want you to forget that you can't make drugs more available without also increasing the risk?
Simply because there's not just the risk of a bad drug being released but also the risk of a good one not being released. I don't think anyone has to be particularly smart to understand that both exist and they're inversely related, so it wasn't explicitly stated like that in the article.

The point the Cato researcher is making is a good one: your strictness is essentially a weighting between Type I and Type II errors. There is some ideal weighting. However, the FDA only gets punished for one type of error but not for the other, hence their weighting will naturally be skewed away from the ideal.

What I really care about is having access to healthcare when I need it. One program that provides that well is vastly superior to an infinite choices between systems that ask me to guess what my odds of needing healthcare are, asking me to pay on the basis of that estimation, and then finding all kinds of ways of making me pay-as-I-go anyway when I actually do require healthcare, which is a fairly concise description of the current insurance system.
The idea is that the choice will allow you to get access to healthcare when you need it because the providers will have to be flexible and suit your needs if they want your business. A single nationalised system without competition on the other hand wouldn't give a toss whether you get healthcare or not, there's nothing in it for them.

Seriously Leon, judging a healthcare system based on its "freedom" is like buying a car based on whether or not you get to pick the kind of motoroil the salesman puts in to keep the car running: it expands choice, but choice is completely tangential to the purpose behind which I am purchasing the good.
Bad example. I happen to know precisely what sort of oil I want in my car. :p

That's a nice story, but here in the real world...
How you end up making your decision is your own business though. All we need to represent the decision within a framework of market-based microeconomics is a selection of choices, you to have a preference ordering of some sort (and it doesn't matter how or why you rank them the way you do) and a market in which you can exchange your money for a chosen option. As far as I can see, all three are present.

You do make a good point though about employers already choosing healthcare provisions for you, and personally I'm not sure whether I would agree with having such important decisions made for me.

What exactly am I going to do if the ambulance that arrives first is not a pre-authorized carrier affiliated with my insurance company, wait for the next one? What do I do if the trauma team at the hospital is not on my insurance company's list of authorized medical providers, drive myself to the appropriate emergency room?
Well, in those cases you're not exactly making choices. Once you have an accident and an ambulance has to come and get you you're not making choices, you're just experiencing their consequences. The choice is before that, when you pick an insurance company that covers you for the expenses you think you need to have covered.

Healthcare is one such system, because the patient has no real choice about whether or not he will or should recieve treatment, since dying in a ditch is hardly a rational alternative.
While you're awake, it's a choice. Once you're down for the count, as I said the choice was made earlier. And, yes, it seems like the ideal level of health insurance is pretty high for all but very healthy or very risk-tolerant people. But just because people tend to have the same reasons for coming to similar conclusions doesn't mean there's no market.

Another is the food production market, where farmers for a variety of institutional and endemic reasons related to the farming trade almost never have the option of cutting back on food production.
I'm not entirely sure what you mean. A farmer can control output quantity on many levels: by the amount of land he uses, the amount of seed, the amount of fertiliser and water and so on. And even once it's been grown he or she can still choose not to sell any amount of the produce. As far as I know there are a bunch of farmers here in Oz who have had their water allocations cut and therefore now use less land than they did previously, as a profit-maximising output decision making model would suggest.

So American companies such as GM, Pontiac, Oldsmobile, Ford, Jeep, etc. have all collapsed purely because they were all badly managed relative to Toyota, Honda, Nissan, Mitsubishi, etc., and not because our healthcare system puts them at a systematic disadvantage.
Looks like it. It would be interesting to see a comparison between non-wage labour costs in Japan and in the US.

It was different production methods combined with the oil shock which allowed Japanese firms to enter the stage initially, and since then they've generally (not so much Mitsubishi) been very good at using their experience and core competencies to do what consumers wanted them to do. American carmakers have not been able to do that as well, hence they've underperformed relative to the new market standard.

And besides, if non-wage labour costs were the determinant of success in the car industry, I wonder how there can be any European carmakers left.

The sociology you deride is really an attempt the demonstrate that the above presupposition is false.
Actually, I don't consider sociology a meaningful discipline and I never leave out a chance to mention it. That's all I meant to say with that.

I might also point out that healthcare spending per person per year in the USA is about $4000, in Canada is $2500, and in the UK is only $1200.
Ok, so the UK system does suffer from underfunding - but the USA does seem to spend rather a lot on healthcare while still leaving about 50 million people without any health insurance at any one time. If it was a nationalised system, everyone would pay less, and nobody would be denied treatment for lack of funds.
That's a non sequitur argument, don't you think? Both the situation and the government organisations are different in Canada, Britain and the US. It's not like the Federal or even the State governments in the US are particularly good at managing big organisations or projects at the moment, is it. Furthermore, we're not just talking about the operating cost comparison, but also the costs associated with introducing and implementing nationalised healthcare in the first place...a cost that would surely have to go into the hundreds of billions.

You would all do well to put away your "all government is evil, all taxation is excessive" attitudes on this one.

It has a lot to do with people thinking that "Taxation without Representation" means "WE WENT TO WAR FOR TAXES! I HATE TAXES!" attitude, without actually understanding the purposes and actual reasons for the revolution, which really had very little to do with the actual taxes, and more to do with home rule.

regulation isn't the problem. it's still ranked 37th among nations in the world. and yes, even cuba, IS better. (according to whatever the survey was based upon. i wouldn't have the slightest idea personally myself and i'm not claiming to.)

=^^=
.../\...

I've thought this for years. The biggest problem with healthcare these days is not the costs, per se, but he cost of compliance with our government. There are more people working in so-called administrative positions these days than there are as either doctors or nurses. Isn't it a big problem when the bureaucracy is larger than what it is watching? And existing government payment programs, like Medicare and Medicaid, just keep a large sum of money flowing to healthcare, so they don't feel half as guilty about raising rates. That's why I deeply distrust socialized medicine, especially if we try to do it within our existing framework.
The best solution would be deregulation. First, we must have massive tort reform for medical malpractice. Secondly, we must stop regulating HMOs and medical malpractice insurance as highly as we are. Thirdly, we must reform the FDA, and streamline its regulatory process. Even if we eliminated it, it wouldn't be entirely bad, because drug companies have a monetary incentive to market safe drugs. And finally, we must get rid of socialized payment plans that inflate the cost of healthcare.

Look, the current healthcare system in the US is no good. It costs too much and it provides too few people with too few benefits. Can we or can we not agree on that?


We can agree the system is fatally flawed. I don' agree it costs too much, although I can see that it could cost less. What I can see is that - for the amount it DOES cost, it returns far too little to anyone except vested interests.

So - yes, we can agree it is broken. Apparently, we can't agree on how.

This (http://books.google.com.au/books?id=b3_8Tapt2MYC&dq=brown+campbell+cost+benefit+analysis&pg=PP1&ots=C5_88RhWb5&sig=Ogvnla0-cLCGaXl_gpEDvtLVSis&prev=http://www.google.com.au/search%3Fhl%3Den%26q%3Dbrown%2Bcampbell%2Bcost%2Bbenefit%2Banalysis%26meta%3D&sa=X&oi=print&ct=result&cd=1) was my textbook for the Cost-Benefit Analysis course at uni.


I don't have a copy of mine.

Don't think you can defer or defeat an argument by claiming some level of expertise that you think trumps the opposition. I also studied business at uni, but apparently I have moved on to realise textbooks only reflect reality, not define it.

Now you're just being silly.

Because you can't understand the difference between speculation and charging for good or service as-provided?

Market pricing tends to approximate cost, so without interference, profit margins will equal roughly the minimum required rate of return to account for the investment made, namely the cost of providing the service. That is basic.


And totally wrong.

If you believe profit equates to just enough to cover expenses, you obviously have no realworld experience.


However, I don't quite grasp how you wish to eliminate profit


Strawman. I didn't say that, anywhere.


Of course, a premium is just a matter of accounting for the assumption of risk, which would be indeciferable financially from the interest that must be charged to make up for the cost of lending in your idea.


Where are you getting 'interest' and 'lending' from?

More strawman arguments. Not worth dignifying.


You are the one who lacks understanding. A premium and interest


Again with the interest...

...are both equal ways of accounting for the assumption of risk, and risk is a matter of cost accounting.


You think 'risk' calculations can be realistically applied retroactively?


For your benefit:

http://en.wikipedia.org/wiki/Risk_premium


Patronising, much?


You have a very limited understanding of economics and finance


I would say that this was the pot calling the mirror black.

..and it leads to rather incoherent posts.


You find my posts incoherent?

Perhaps the fault lies not in my work.

In the future when someone doesn't understand the economic or financial arguments you are making, try reading up on the subject you are discussing, and confirm that you are not spouting nonsense.

I did this at uni, and have applied it in the realworld for almost as long as the average NSG'er has been alive.

Don't waste my time with your puerile attacks. If you can't see how charging for a service could be cheaper than charging for a heavily inflated version of a risk matrix for that service, then there is no way I can make rudimentary realworld economics work at your level.

Don't think you can defer or defeat an argument by claiming some level of expertise that you think trumps the opposition.
Hehe, that's precisely what you're doing though when you're talking about your real world experience (which still doesn't explain your misunderstanding about how insurance pricing works).

I also studied business at uni, but apparently I have moved on to realise textbooks only reflect reality, not define it.
That's not a business textbook. It's an economics textbook.

That doesn't mean it defines reality either, but since we're talking about studies done by economists, and has a huge focus on non-market valuation of externalities, shadow prices and non-use values I still think you should have a look at it. When they measure the cost and benefit of regulation, they actually go about quantifying the actual benefits generated by the regulation. It's complicated work and it's not guaranteed to be 100% accurate, but overall the costs exceed the benefits by so much that the result is unlikely to change regardless of what assumptions you end up using.

Because you can't understand the difference between speculation and charging for good or service as-provided?
The whole concept of insurance is based on speculation though. If you're going to pay what the service ended up costing yourself, you're not really insured, are you.

Look, I'm sure you have a fairly coherent idea of what you mean with that idea. You just haven't gotten it across very well, hence my confusion, Vittos' confusion and TPH's speculation about what you might have meant.

It's a good summary of some recent research into the area, and they make some valid points. Whether I would necessarily call it overregulated...not sure. Maybe misregulated would be a better word for it. If regulation of some sort is necessary (and you'd think in the healthcare industry there's a case for it) I always like the idea of innovation-focussed, flexible regulatory agencies. Somehow that rarely ever happens to be the case.

http://www.economist.com/finance/displaystory.cfm?story_id=9407716


What do you reckon? One piece of advice suggested by the article is the FDA being a huge impediment to both the economy and people getting medicine that can help them. So would it make sense to completely reform the thing, making testing standards for drugs less rigid and so on? Here's another article (http://www.economist.com/business/displaystory.cfm?story_id=9409230) about pharmaceutical companies rethinking the way they do business at the moment, partly due to the FDA.

Ask the people who died from Vioxx if they think the FDA demanded too much testing--and that example is only one of many. If anything, private interests have too much leeway in this country, not too much regulation.

But look--your big quote cites a forthcoming paper from a guy at Cato--of course he's going to say there's too much regulation.

Hehe, that's precisely what you're doing though when you're talking about your real world experience (which still doesn't explain your misunderstanding about how insurance pricing works).


I understand how insurance pricing 'works'. What does that have to do with anything I've said?


That's not a business textbook. It's an economics textbook.


And? 'Economics' can be an aspect of 'business', no?


The whole concept of insurance is based on speculation though. If you're going to pay what the service ended up costing yourself, you're not really insured, are you.


No. Well done.

A breakthrough, perhaps?

Although - perhaps not - since you still seem to be assuming that universal healthcare without the medical insurance scam we have in this country, automatically turns into 100% 'user pays'.

Wait a minute....

You do realize that health insurance is a financial hedge and not a lending service right? If a financial institution covers the cost of health coverage and then collects that plus the costs of the service, they are lending, and the lose the right to call themselves "insurance".

You may have grounds to sue your university for breach of contract, but I don't know how you file a grievance against the "realworld". (Unless you went to Realworld University)

http://en.wikipedia.org/wiki/Hedge_%28finance%29

No. Well done.

A breakthrough, perhaps?

Why does health insurance exist if simply borrowing the money costs less?

Although - perhaps not - since you still seem to be assuming that universal healthcare without the medical insurance scam we have in this country, automatically turns into 100% 'user pays'.

Who else would?

Ask the people who died from Vioxx if they think the FDA demanded too much testing--and that example is only one of many. If anything, private interests have too much leeway in this country, not too much regulation.
That's what I mean though. If there was a new drug that would actually save people's lives, any minute spending in trials is wasted time and people will end up dying too or at least suffering more than they have to. But that won't make it into the media to anything like the same extent. The FDA chooses between those two bad outcomes and tries to do the best...but its judgement is skewed by the fact that they only end up getting punished for one type of mistake. It only makes sense for them to be as strict as possible in order to minimise the fallout against them.

But look--your big quote cites a forthcoming paper from a guy at Cato--of course he's going to say there's too much regulation.
True. Though that's an ad hominem argument; if there's something wrong with the paper you should probably go and find it.

And? 'Economics' can be an aspect of 'business', no?
Mmmmh, I'd be hesitant to agree with that. I'm doing a dual degree, one in Business Management and the other in Economics. They're really very different disciplines with very different philosophies and mindsets.

But that doesn't matter in this case specifically. Cost-Benefit Analysis is an actual area of economics (though the name is being misused occasionally) that involves trying to find out what the costs and benefits of a given option are both to the stakeholders and to society as a whole and both in terms of market prices and in terms of the actual effects including shadow pricing and externalities.

So when the guy comes up with a study saying that the costs of regulation (both in terms of administering them and in terms of the damage they do for example in preventing great new drugs coming onto the market sooner) exceed the benefits of it, then that is a pretty important statement that can't be dismissed out of hand.

Although - perhaps not - since you still seem to be assuming that universal healthcare without the medical insurance scam we have in this country, automatically turns into 100% 'user pays'.
Well, strictly speaking even in a private health insurance setup there's some chance that your procedure is so expensive that the insurance uses the money other people gave to it to pay for your healthcare. In a nationalised system that would be the same principle.

The thing I actually am worried about with nationalised healthcare is that
a) it's a massive, massive task to actually set up and I never hear about any concrete plans or costings to do so
b) the US government is not very good at running big organisations, partly because the rulers tend to put party cronies in every nook and crannie
c) the US is still one of the most innovative places for advanced medicine and if you need really, really top-of-the-line surgery it's still the place to go...the government marching in there will just end up doing damage to that
d) considering the bureaucratic effort required to run a scheme like this it'll be likely that patients lose choice and end up being told where to get their healthcare

I'm quite ready to believe that the poorest, who now have no or next to no healthcover would benefit greatly from it. I'm not so sure that the middle class (which makes up the majority of the population, afterall) would. From a purely utilitarian standpoint, it's not proven to be a good option, and without any of the Democratic candidates actually coming forward and presenting a really nice, well-costed and detailed plan on how to make it happen I can't support it. Not that it matters since I'm not in the US anyways. :p

You do realize that health insurance is a financial hedge and not a lending service right? If a financial institution covers the cost of health coverage and then collects that plus the costs of the service, they are lending, and the lose the right to call themselves "insurance".


I wonder what you think you are talking about.

Oh wait - I think I've debated with you before. Unless I'm mistaken, you're the one who kept talking about 'prices' in a utopian communism model.

The problem might simply be that you can't divorce your perspective from whatever is immediately apparent wherever it is you are.

Example - why you keep on going on about insurance, i don't know.


You may have grounds to sue your university for breach of contract, but I don't know how you file a grievance against the "realworld". (Unless you went to Realworld University)

http://en.wikipedia.org/wiki/Hedge_%28finance%29


Cute.


Why does health insurance exist if simply borrowing the money costs less?


Becuase insurance is a protected industry in the US?

And - again, what are you talking about? Who is borrowing what, again?


Who else would?

I don't think much of your criticism of my understanding of economics, if the phrase 'economy of scale' doesn't register on your radar.

So when the guy comes up with a study saying that the costs of regulation (both in terms of administering them and in terms of the damage they do for example in preventing great new drugs coming onto the market sooner) exceed the benefits of it, then that is a pretty important statement that can't be dismissed out of hand.


Maybe, maybe not. In strict terms, both policing and a military would fail to be ecost-effective by the same measures.


Well, strictly speaking even in a private health insurance setup there's some chance that your procedure is so expensive that the insurance uses the money other people gave to it to pay for your healthcare. In a nationalised system that would be the same principle.


Where are you getting these 'prices' from? What 'insurance' are we talking about here?

Both might turn out to have absolutely zero relevence to a nationalised healthcare model.

That's the problem with current 'universal health' plans... all they really try to do is shift a little bit of the burden, they make no actual attempt to fix a horribly broken model.


The thing I actually am worried about with nationalised healthcare is that
a) it's a massive, massive task to actually set up and I never hear about any concrete plans or costings to do so
b) the US government is not very good at running big organisations, partly because the rulers tend to put party cronies in every nook and crannie
c) the US is still one of the most innovative places for advanced medicine and if you need really, really top-of-the-line surgery it's still the place to go...the government marching in there will just end up doing damage to that
d) considering the bureaucratic effort required to run a scheme like this it'll be likely that patients lose choice and end up being told where to get their healthcare


It doesn't have to be government. It just has to be regulated by something external, for which governmental oversight might be the ideal.

Also - I just have to point out - creating a nationalised healthcare model doesn't mean n more private healthcare, or the complete abolition of medical imnsurance industries - it just makes them one alternative.


I'm quite ready to believe that the poorest, who now have no or next to no healthcover would benefit greatly from it. I'm not so sure that the middle class (which makes up the majority of the population, afterall) would. From a purely utilitarian standpoint, it's not proven to be a good option, and without any of the Democratic candidates actually coming forward and presenting a really nice, well-costed and detailed plan on how to make it happen I can't support it. Not that it matters since I'm not in the US anyways. :p

As I said - no one is really trying to fix the problem at the moment.

If we had such a model as I conceive, the poorest would be guaranteed cover, everyone would be guaranteed a minimum standard of service, and costs go down per capita.

On top of that, the 'middle class' market can also finance medical coverage privately, and - if the laissez faire model holds true - the prices of permia should be considerably lower, because they are no longer covering every possibility in their payment.

It's a good summary of some recent research into the area, and they make some valid points. Whether I would necessarily call it overregulated...not sure. Maybe misregulated would be a better word for it. If regulation of some sort is necessary (and you'd think in the healthcare industry there's a case for it) I always like the idea of innovation-focussed, flexible regulatory agencies. Somehow that rarely ever happens to be the case.

http://www.economist.com/finance/displaystory.cfm?story_id=9407716


What do you reckon? One piece of advice suggested by the article is the FDA being a huge impediment to both the economy and people getting medicine that can help them. So would it make sense to completely reform the thing, making testing standards for drugs less rigid and so on? Here's another article (http://www.economist.com/business/displaystory.cfm?story_id=9409230) about pharmaceutical companies rethinking the way they do business at the moment, partly due to the FDA.

Wait! This is news? I figured this out a very long time ago. About as long as my girl has been knocked up.

Unfortunately, that article only covers the tip of the iceberg. Even higher costs for healthcare are the result of overpriced health insurance companies and the American penchant for suing doctors which creates excessively high malpractice insurance. Healthcare should not be a for profit business!!

I agree with you entirely.

I wonder what you think you are talking about.

Oh wait - I think I've debated with you before. Unless I'm mistaken, you're the one who kept talking about 'prices' in a utopian communism model.

The problem might simply be that you can't divorce your perspective from whatever is immediately apparent wherever it is you are.

Example - why you keep on going on about insurance, i don't know.

Becuase insurance is a protected industry in the US?

And - again, what are you talking about? Who is borrowing what, again?

I didn't realize that you were making an argument for nationalized healthcare in a thread that has nothing to do with nationalized healthcare. You especially threw me off when you said you weren't trying to eliminate profit in the industry and did not correct me when I explicitly referred to "companies".

Now, if healthcare costs are assumed and collected for at some later date, they are lending. If someone has their healthcare paid for and then they reimburse the original payer at some later date, they are borrowing. No matter what entity is doing the lending, interest is a legitimate reflection of cost. This is a cost that will not be reflected when somebody purchases insurance, as payment is made when services are rendered.

Now, you then refer to some "profit-inflated gambling odds" of the risk premium. Of course, on an individual basis, profit is not cost plus some minimum rate of return, rather it is what someone can get for a service, minus what it costs to render the service. But we are not concerned with this, rather we are concerned with market pricing, and market pricing approximates cost. So "profit-inflated gambling odds" is economic nonsense.

Now I do realize that you live in the realworld and I do not, and that you are entitled to some knowledge that I am not, but here in the fakeworld, we ask that you realworlders provides some evidence or arguments for the existence of this inflated profit. After all your argument that nationalized healthcare is cheaper rests upon it.

If you believe that this inflated profit comes from government protection, then your problem is not with the insurance companies or the institution of insurance itself, but the government. If the government removes its protection, insurance companies will find a natural rate that one cannot complain about or they will be replaced by loan agencies. Since these private companies are forced to deal with cost accounting, they will be cheaper than government in all occasions, not to mention the other reasons NL has listed already.

I don't think much of your criticism of my understanding of economics, if the phrase 'economy of scale' doesn't register on your radar.

Well I understand the concept of economies of scale. But I do not understand how an economic concept can foot the bill for healthcare, or how economies of scale apply to government and not private firms.

Maybe, maybe not. In strict terms, both policing and a military would fail to be ecost-effective by the same measures.
No they wouldn't, and that's the point. Sure, they don't bring in much financial profit, but an economic cost benefit analysis would include quantifications for benefits like less crime and national security. That's what I meant to say.

Where are you getting these 'prices' from? What 'insurance' are we talking about here?
A normal health insurance. You ask for a policy, and they attempt to calculate the cost of that policy to them using functions involving the price of medical procedures and the probability that you end up needing them. And then they try to put a few dollars on top as profit if they can get away with it.

Both might turn out to have absolutely zero relevence to a nationalised healthcare model.
Not really. Any situation in which a market exists doesn't go away just because government gets involved. Medical procedures will still cost money, someone will still be footing the bill, there will still be some time value of money (read: interest) involved and there will still be "gambling" in the form of probability calculations that someone ends up needing healthcare.

That's the problem with current 'universal health' plans... all they really try to do is shift a little bit of the burden, they make no actual attempt to fix a horribly broken model.
I'm starting to think that your problem is with the fact that someone has to pay for healthcare at all. A nationalised healthcare system wouldn't make costs go away, it would only shift them (plus incur some level of deadweight loss compared to a perfectly functioning market, if such a thing exists in this case). That doesn't change regardless of what model or combination of models you come up with.

If we had such a model as I conceive, the poorest would be guaranteed cover, everyone would be guaranteed a minimum standard of service, and costs go down per capita.
That's an ideal, but I have to say I still don't understand exactly what this model is. Maybe you have to go back to Square One and explain what each of these parties does: patients, doctors, insurance companies, pharma concerns and other suppliers of medical equipment and skill, state government, federal government and taxpayers.

There is no underregulation. There is only the failures of judges to render justice in the cases brought to them.

Massive gravedig. Shame on you.

There is no underregulation. There is only the failures of judges to render justice in the cases brought to them.

Whiskey Tango Foxtrot.
How do people with under 100 posts find year old threads.

Well, the thing of it is, the insurance model doesn't work for universal health care. (Fucking obviously, if you think about it for a second, because there is no natural hedging b/c demographics and stuff).

That said, there seems to be this myth that large employers can gain better rates because they have some form of negotiation leverage when compared to an individual in the private market. This is not true. They get better rates because the individual and aggregate stop loss provisions of their pool is different when compared to the private market. As indeed is the reserves for first incurred costs.

Of course, national health care could reduce individual costs (though they would still continue to rise above the rate of 'inflation' (CPI or whatever)), but it would also entail reduction of benefits to those currently insured thru their employer - in general.

Non of this is political. It's simply a matter of actuarial science. Nobody is ripping anyone off. There are no insurance cartels, and health insurance. Like running an airline, it is not a particularly profitable business. In fact, it probably only exists in its current form owing to legacy mispricing.

Make of it what you will, but there is no magic bullet. And supposing that somehow everyone in the country can suddenly receive the best healthcare that the US is able to provide is complete fantasy.

I don't understand why the FDA, let alone the government, has the power to make certain drugs illegal or restricted. I know they want to protect us, but they are doing more harm than good at the moment.

I don't understand why the FDA, let alone the government, has the power to make certain drugs illegal or restricted. I know they want to protect us, but they are doing more harm than good at the moment.

Yeah! They really screwed us when they took drugs like Fen-phen off the market.:rolleyes:

I don't understand why the FDA, let alone the government, has the power to make certain drugs illegal or restricted. I know they want to protect us, but they are doing more harm than good at the moment.

I believe that the short answer to "why" is that the early-20th-century Progressives thought that federal-level action was necessary in order to crack down on people marketing heroin as infant cough syrup (for example,) and that said crackdown was not within the bailiwick of the already-existing USDA.

I'm not sure that I agree with the article's assertion that the FDA suffers nothing when it fails to approve drugs, or fails to approve them in a timely manner. ACT-UP raised holy heck about the sluggish approval schedule for HIV/AIDS drugs, and at least one FDA head has been replaced mid-term by a successor who promised to cut down on the amount of red tape that drug approvals have to go through.

That's a non sequitur argument, don't you think? Both the situation and the government organisations are different in Canada, Britain and the US. It's not like the Federal or even the State governments in the US are particularly good at managing big organisations or projects at the moment, is it. Furthermore, we're not just talking about the operating cost comparison, but also the costs associated with introducing and implementing nationalised healthcare in the first place...a cost that would surely have to go into the hundreds of billions.

Lol am I seeing another case of fear for big numbers? Look, even if we are so inefficient as to save only 100 dollars per person (compare to Canada's 1500 difference), we would be able to pay back hundreds of billions in 10 years. Since our country charges those spending in our federal credit card, you won't notice the hundreds of billions at all.

I don't know about you but getting universal health care for less is better than getting charge unreasonable amount of money for what we are getting.

I don't know about you but getting universal health care for less is better than getting charge unreasonable amount of money for what we are getting.

QFT. Health shouldn't be a privilidge only for the wealthy.

Unfortunately, that article only covers the tip of the iceberg. Even higher costs for healthcare are the result of overpriced health insurance companies and the American penchant for suing doctors which creates excessively high malpractice insurance. Healthcare should not be a for profit business!!

Holy Freaking Shit! I agree with CH on something.

Still, the fact remains, the US has no universal national system, and until they do their a second-rate country.Stay your tongue, we can still whip your ass with one hand tied behind our backs.:D

Yet, really if you have to examine on a more local level, as healthcare is not a power delegated to the Federal gov., thus it is a power delagated to the states. Thus, according to more strict version of the Const., any federal attempt to create a universal healthcare system would technically be illegal.

I don't know about you but getting universal health care for less is better than getting charge unreasonable amount of money for what we are getting.
Moreso than a question of aggregate numbers this is a matter of distribution. Less than half the figure people usually quote as "US healthcare spending" is actually government money, the rest is private funding. So if you shift a significant part of that to the government budget, that's not gonna be an easy task.

Look, I'm not saying that government-funded universal healthcare is necessarily a bad option. I'm just not sure that within the constraints of actually achievable results given the current structure of the government and industry, there aren't more cost-effective methods of improving things.

At the end of Obama's time in office, there is not going to be a healthcare system like some European countries have. It's gonna be another compromise, another stop-gap. And knowing that these stop-gaps in their current form are just vehicles for special interest groups to milk everyone through their connections with government departments, I think the smarter choice would be to leave these departments as limited as possible.

Yeah! Health for everybody! If we donate to the government it'll lay hands on us : making the blind see, lame walk, deaf hear, less wealth turn into more wealth, and turn just 2 doctors+ a few loaves of medicine into enough to supply thousands. Folks who don't want a cop to come, willing to fight to the death, to bind and place them in a cell if they don't pay are greedy bastards. The amount I pay for health coverage is so ridiculous I wouldn't pay it. How can these doctors be so evil they charge people to live? It's not like they need our money for their lives. No one's entitled to a comfortable lifestyle w/cars, big house, etc. Human beings deserve to be provided for medically; no one should have to suffer. That provision better come...from somewhere. But not my work. It's alright if the government takes our money. Doctors better not ask for money though. Yeah... :soap: