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March 1, 2010

The return of the wrong box
Posted by Teresa at 06:45 PM * 190 comments

Two law professors, Tom Baker of the University of Pennsylvania and Peter Siegelman of the University of Connecticut, have proposed a way to encourage adults between the ages of 19 and 29 to buy health insurance: bring back the tontine.

Someone should tell them that tontines are a plot device masquerading as a financial instrument.

This otherwise goofy proposal makes slightly more sense once you realize it was published under the auspices of the Cato Home for Strayed Objectivists Institute. Those guys are so kinky for “market solutions” that they’re still pushing for the privatization of Social Security, even after the financial crisis made it clear that their preferred solution would have been a catastrophe.

The Invisible Hand of the Marketplace: guaranteed to give you hair on your palms.

Addendum:

I just realized there’s something I forgot to explain the first time around:

Some auto insurance plans have a provision that’s similar to this tontine scheme: if you’re a very safe driver, as measured over a set amount of time, you’ll eventually get back some of the money you’ve paid for your insurance. However, safe driving is to some extent under the control of the individual who’s insured. Health problems aren’t perceived that way.

The only scenario in which healthy young adults are going to foresee themselves needing expensive medical care is if they’re randomly unlucky. If that happens, they’ll need insurance, but they won’t get back their extra bit of money. If they don’t get unlucky, they’ll get back that bit of money—a tiny payoff, in the relatively far future—but they’ll be out the much greater cost of their insurance, and they’ll have to start paying for it right now. Since both of those outcomes are outside their control, the rebate isn’t an incentive.

In the meantime, young adults who genuinely believe they aren’t going to need expensive medical care are not going to be moved by an offer to repay them some small fraction of their premiums a couple of years on down the road. If they don’t think they need medical insurance, they’ll save a lot more money by not buying it at all.

Comments on The return of the wrong box:
#1 ::: Shinydan Howells ::: (view all by) ::: March 01, 2010, 08:01 PM:

Tom Baker? Really?

Because, you know, this is exactly the kind of thing that Four would pull if he could get away with it.

#2 ::: Jim Macdonald ::: (view all by) ::: March 01, 2010, 08:02 PM:

The tontine was was also one of the random solutions in Murder on the Zinderneuf.

#3 ::: Keith Kisser ::: (view all by) ::: March 01, 2010, 08:14 PM:

Are all meetings at the Cato Institute presided over by Tina Turner and involve lots of spiked shoulder pads? Because every libertarian solution that comes out of that place slips straight down the slope into the Thunderdome.

#4 ::: Dave Weingart ::: (view all by) ::: March 01, 2010, 08:43 PM:

I thought a tontine was a type of French pastry?

#5 ::: Matthew Daly ::: (view all by) ::: March 01, 2010, 09:04 PM:

But this is what happens in car insurance, right? I get a 5% rebate specifically because I am a "safe driver" who wasn't drawing from the pool.

#6 ::: P J Evans ::: (view all by) ::: March 01, 2010, 09:13 PM:

Do they have a clue how the tontine worked in all those novels they're confusing with real life?

#7 ::: Avram ::: (view all by) ::: March 01, 2010, 09:19 PM:

If you read down to the end of the interview, you'll see that Baker has some inkling of why this is a bad idea, but doesn't really understand health care enough to realize the extent of the problem:

There are things I am worried about, and this is something that my wife has told me about many times, is I'm concerned that someone may not go to the doctor if they're close to the end of the period. And they are looking at that 1,000 or $2,000 bonus that'll be for them, if they just don't go to the doctor for the next few months. And that I do worry a little bit about.

To phrase this another way: Baker's scheme would encourage 19-29-year-olds to make choices that are potentially damaging to their health. Like not getting checkups (for 12 years!) or not asking a doctor if that new birthmark with irregular edges and spots is something worth worrying about. These are choices that not only have nasty effects for the chooser, but also can result in higher costs for the insurance company later on.

Oh no, wait, I know how this turns out! The insurance companies institute a new policy, stating that if you avoid the doctor and thereby incur higher health care costs, they can deny your claim.

#8 ::: Teresa Nielsen Hayden ::: (view all by) ::: March 01, 2010, 09:24 PM:

Matthew Daly, that depends on your policy and how your insurer administers it.

P J Evans, I suspect that all they can see is that a tontine structure gives potential customers a financial incentive (however slight) to buy insurance they don't think they're going to need or use ... which reminds me of something I left out of my initial entry. Back in a sec.

#9 ::: MacAllister ::: (view all by) ::: March 01, 2010, 09:27 PM:

I'm still sort of bitterly contemplating the particle with the title note about how you can either do arts in the US, or you can have a credit rating, but seldom both, unless absolutely nothing ever, ever goes wrong.

*sigh* It's not unrelated.

#10 ::: Kevin Riggle ::: (view all by) ::: March 01, 2010, 09:38 PM:

Dammit, Professors, the individual mandate is a market solution. People like you give capitalism a bad name.

Government is a tool -- there are some services which it really is most efficient at providing. It's no more inherently evil than a market is inherently good.

Matthew Daly @5: And you see how well that works. Or at least my parents definitely had their car insurance agent tell them, "Well, you know if you make a claim your insurance rates are likely to go up..." At that point it's not insurance, it's protection money.

#11 ::: P J Evans ::: (view all by) ::: March 01, 2010, 09:44 PM:

10
I've deliberately not filed claims for incidents, because it was going to cost me a lot less money if I pretended nothing happened.

#12 ::: Stephen Frug ::: (view all by) ::: March 01, 2010, 09:49 PM:

I ask the collective wisdom of the readers here: what's the best story featuring a tontine? (Since the Wikipedia article TNH links has a handy list of them...)

#13 ::: Wesley Osam ::: (view all by) ::: March 01, 2010, 09:57 PM:

I've always thought of tontines as something invented expressly to provide a motive in detective novels. This has colored my ideas about how these things were sold to customers.

"Act now, and we guarantee that, in the event of your murder, the company will engage the services a supercilious English aristocrat to conduct the investigation!"

"Do I get to choose the aristocrat in advance?"

"Sorry, no. Could be Albert Campion, could be Hamilton Cleek. Actually, to be entirely honest, if business is bad you might end up with Bertie Wooster. And sidekick valets cost extra--we've had to hire them on separate contracts since they passed Bunter's Law."

#14 ::: CaseyL ::: (view all by) ::: March 01, 2010, 10:33 PM:

Stephen - Well, there's the book Teresa referenced, "The Wrong Box." I never read the book, but I did see the 1966 movie based on it. That was many decades ago, but I distinctly remember laughing so hard I rolled around on the floor. Had a wonderful cast, with Michael Caine, Ralph Richardson... and I could swear Glynnis Johns played Caine's love interest, but she's not listed as a cast member on IMDB, so perhaps not.

#15 ::: Teresa Nielsen Hayden ::: (view all by) ::: March 01, 2010, 10:34 PM:

I have added the missing bit, and so can now say to P J Evans that I don't think they thought about it, beyond identifying the tontine as a potential market solution.

I also don't think their reasoning ran in that direction. I think they're trying to come up with reasons why federal health care is unnecessary, and it can all be handled by private enterprise* and individual choice. The 19-to-29 segment thus presents a problem: how do you motivate them to buy health insurance? That's a tough question when you're ideologically limited to "market solutions." While contemplating it, they hit upon the tontine, and decided it was an answer to the problem of healthy, underpaid 22-year-olds not wanting to spend a significant fraction of their total income on insurance.

This is the mindset of not-very-good high school debate: all answers are created equal. They don't have to work in the real world. They just have to be made of legitimate English sentences, and not contain fatal self-contradictions.

______________________
*In an unconstrained state of nature, untroubled by government regulations, a human-populated biosphere will automatically generate giant insurance companies.

#16 ::: P J Evans ::: (view all by) ::: March 01, 2010, 10:39 PM:

Teresa, all I can say about ideas from the Cato Home for the Mentally Beweildered is 'Oy!'

Now I think I'm going to go revise the 'Skew' sock I've been knitting to include the short rows on the ankle ... it's easier than trying to understand not-very-bright politicians. Also more productive.

#17 ::: Joel Polowin ::: (view all by) ::: March 01, 2010, 10:39 PM:

The M*A*S*H episode "Old Soldiers" involved a tontine, and was pretty good.

#18 ::: Teresa Nielsen Hayden ::: (view all by) ::: March 01, 2010, 10:41 PM:

CaseyL: Yes, Michael Caine and Ralph Richardson; also Peter Cook, Dudley Moore, and Peter Sellers.

#19 ::: Nona ::: (view all by) ::: March 01, 2010, 10:52 PM:

Funnily enough, I belong to this demographic, would love to get health insurance so I don't bankrupt my family if I get hit by a bus, and cannot get health insurance because I was treated for anxiety four years ago and am therefore radioactive to insurers. Note that I would cheerfully pay for anxiety-related treatment out-of-pocket; I just want to get a checkup once a year and be covered if I get cancer or something. But no.

#20 ::: eric ::: (view all by) ::: March 01, 2010, 11:07 PM:

I wonder what kind of market solution would work to allow someone (just out of that coveted 19-29 age group) who's kid is on their second bout of brain* cancer to have insurance if he had to change jobs or take a sabbatical to care for her.


#21 ::: John Mark Ockerbloom ::: (view all by) ::: March 01, 2010, 11:15 PM:

"I've deliberately not filed claims for incidents, because it was going to cost me a lot less money if I pretended nothing happened."

For property insurance (home, auto, etc.) it's definitely not in your interest to file small claims. They'll usually land you in a worse risk category that will have you paying back what you were compensated (and sometimes quite a bit more) over the following years.

It still makes sense to file the big claims, though. For small losses, it's best to self-insure, if you can, with a crisis savings account. In many cases, raising the deductibles on your policy will save you enough in premiums to go a fair bit towards funding this crisis account. (I was quite surprised how much difference there was between my auto insurance company's quote for a $250 deductible vs. a $1000 deductible.)

I realize this is easier for some to do than others. Also, health insurance is a very different kind of product from property insurance (and indeed, from most other products). A fair number of the more nonsensical "free market" objections to health care reform are based on the assumption that buying health coverage is not significantly different from buying, say, groceries.

#22 ::: eric ::: (view all by) ::: March 01, 2010, 11:18 PM:

* there's a technical name which I know and is very similar to many other similar names, none of which I could spell without copy and paste. It's not the most curable, it's not the worst, but there really aren't odds when it comes back.

#23 ::: heresiarch ::: (view all by) ::: March 01, 2010, 11:18 PM:

I do believe that Tom Baker doesn't actually know how insurance pooling works. Observe:

Because insurance is a magical transformation device that allows us to shift money from times when we don't need it very much, to times when we do need it very much.

Well, no. If that's all it was, people would just put their insurance premiums in a bank account and pay out of that fund when they got sick. For the vast majority of people, a long, crippling illness will cost more money to treat than they could possibly save in their entire lifetime. Rather, insurance is a magical transformation device that allows us to shift money from individuals who don't need it very much to individuals who do, and we all benefit because we can't tell in advance which of those two groups we will end up in. Here again the conservative tendency to screw oneself over for fear of inadvertently helping someone else out floats to the surface like a turd in a punchbowl.

#24 ::: heresiarch ::: (view all by) ::: March 01, 2010, 11:23 PM:

Kevin Riggle @ 10: "It's no more inherently evil than a market is inherently good."

Given that they hold the inherent goodness of markets as something very like gospel, I don't think Cato scholars would find that a particularly persuasive analogy.

#25 ::: Laura ::: (view all by) ::: March 01, 2010, 11:30 PM:

Not a tontine, but not regular health insurance, either, is Xtreme Sports Insurance, targeted to skiers and others who are young and healthy (and may therefore have decided against paying for regular health insurance). It's not for sick people (or preventive medicine), it's for broken legs or collarbones or whatever. Each injury has a specific reimbursement amount. Interesting.

#26 ::: Jon Baker ::: (view all by) ::: March 01, 2010, 11:44 PM:

I thought a tontine was a bottle of whiskey put aside by a buncha army buddies, for the last survivor to drink.

#27 ::: Diatryma ::: (view all by) ::: March 01, 2010, 11:52 PM:

What made me buy health insurance, back when I had it: it was dirt cheap and covered just about everything*. Now that I'm no longer a grad student and cannot get that seriously awesome insurance, I'm a bit more worried about bankrupting my parents, but when friends talk about COBRA and say it's only three hundred dollars a month and I'm living on eight hundred a month, it's not a tough choice.

*this is not a realistic option for most insurers, I think. But boy do I miss it.

#28 ::: Nona ::: (view all by) ::: March 02, 2010, 12:01 AM:

Diatryma, you know what's funny? I'm considering going back to school, in part, because doing so would get me access to health insurance I can afford and can't be blacklisted from; the only trouble is that I left school in the first place because of the anxiety. So. Here I am.

It's quite possible that my generation, which seems to have much higher rates of early diagnosis for mental illness than our elders (not to mention ADHD and autism) is going to have a much harder time *getting* health insurance whether we want it or not. Insurers don't much like covering people with chronic conditions, after all.

#29 ::: Summer Storms ::: (view all by) ::: March 02, 2010, 12:10 AM:

Teresa @ 15: In an unconstrained state of nature, untroubled by government regulations, a human-populated biosphere will automatically generate giant insurance companies.

Best. Line. Ever. Would make a wonderfully snarky sigline, too (properly attributed, of course).

#30 ::: Earl Cooley III ::: (view all by) ::: March 02, 2010, 12:25 AM:

The Tontine Macoute is who you toss your last cinder block at in the dark after an earthquake.

#31 ::: Bruce Cohen (SpeakerToManagers) ::: (view all by) ::: March 02, 2010, 12:35 AM:

Cato, eh? Health insurance delenda est.

#32 ::: Lee ::: (view all by) ::: March 02, 2010, 12:53 AM:

heresiarch, #23: Your description of insurance pools is how it's supposed to work, and how it did work back when insurance was a new concept. Today, a better description would be that insurance is a magical transformation device that allows us to siphon money from the pockets of the lower-end upper class, middle class, and working poor into the pockets of insurance company executives and stockholders, while paying out the bare minimum in claims to which the company can be legally forced.

And the main reason this has come about is that insurance companies are allowed to issue stock, which immediately converts policyholders from clients (assets) to claimants (liabilities), while the company's primary responsibility is to make money for the stockholders. I don't know how to fix this except by banning insurance companies from issuing stock and requiring them to balance their budgets on the profits they make from investing premiums, after legitimate claims have been paid.

#33 ::: Diatryma ::: (view all by) ::: March 02, 2010, 12:55 AM:

Nona, I sometimes think about going back to school-- everyone mentions it when I talk about the jobsearch-- in spite of the fact that I left with a Master's because a PhD was definitely the wrong path. If I discover a strange and sinister lump, I will find some way to get back on my grad student insurance.

Weirdly, I'm still listed as having it. When I had to get a TB test a few weeks ago, I called around, tried to find a place that would give me one, compared prices a bit, and then found that I'm still in the system. If I move before they bill me, it might just be their loss.

#34 ::: Bjorn ::: (view all by) ::: March 02, 2010, 12:59 AM:

Re: Avram #7, if someone at the Cato "worries a little bit" about aspects of one of their ideas, that's a sign for any non-libertarian to really try to find a faster way to those hills than running. Which is otherwise the normal reaction to any Cato Institute idea.
A former co-worker was an all-out libertarian, we had loud, stand-up arguments sometimes. It confused the heck out of some people that we were best friends and still are.

#35 ::: abi ::: (view all by) ::: March 02, 2010, 01:29 AM:

Thing is, we had a "no claims bonus" thing in our health insurance when we moved to the Netherlands.

Remember that Dutch health insurance is mandatory, and prices are quite firmly controlled by the government (with help for people who can't afford the rates). The standard rate is not affected by age, state of health, or anything else.

So the insurance companies scramble to compete on "extras", either more insurance (how many sessions of physio? how much will be paid if your children need braces? do you want a private room in the hospital?) or (formerly) some kind of price break. The favored one was a rebate at the end of the year if you didn't have too many elective procedures. It wasn't much, but then how much can you rebate on 100-odd Euro per month?

This flavor of competitive advantage was phased out last year. I don't actually know if the quite visible* hand of the government was involved, or if it proved too much hassle for the insurance companies to administer.

-----
* it's bright orange and only moves after extensive debate

#36 ::: Summer Storms ::: (view all by) ::: March 02, 2010, 01:43 AM:

Lee @ 32: I like your idea.

#37 ::: old ::: (view all by) ::: March 02, 2010, 04:54 AM:

I would not mind having health insurance. I would not even mind paying for health insurance if those rat bastard insurance providers would not cut me off the moment something goes wrong. Also, they cut you off, and keep all the dough you paid in anyway. How this racket is legal I have no idea.

#38 ::: Nancy Lebovitz ::: (view all by) ::: March 02, 2010, 05:05 AM:

I don't know what the best tontine in popular fiction is, but I enjoyed Costain's The Tontine.

#39 ::: ajay ::: (view all by) ::: March 02, 2010, 05:38 AM:

13: tontines aren't the only thing apparently invented solely to provide a motive in detective novels. The 1925 Administration of Estates Act appears in Dorothy Sayers' "Unnatural Death". (I won't go into details because it might spoil the plot. Wikipedia has a good summary.)

The Bush-era tax cuts were memorably described as the "Throw Momma From The Train Act of 2001" (http://www.pkarchive.org/column/53001.html) because they gave would-be inheritors a strong motive (half the estate) to make sure the ageing relative didn't make it to 2011.

And longevity swaps (aka mortality swaps) pay out depending on the lifespan of a relatively small defined population, such as the pensioners of a single company; which means that you could take a massive punt and ensure it paid off by, say, pottering round Florida and shooting the right few septuagenarians. (Possible Carl Hiassen plot?)

#40 ::: Charlie Stross ::: (view all by) ::: March 02, 2010, 06:07 AM:

The Cato institute never cease to amuse me; I'd just like to refer anyone who hasn't already seen it to Andrew Sullivan's blog, where he digs up a quote from that well-known communist Friedrich Hayek's "The Road to Serfdom" ... enthusiastically endorsing state-provided healthcare.

(That's St Hayek of Libertopia, alright? I'm not really calling him a commie. Just sayin'.)

#41 ::: chris ::: (view all by) ::: March 02, 2010, 07:36 AM:

Today, a better description would be that insurance is a magical transformation device that allows us to siphon money from the pockets of the lower-end upper class, middle class, and working poor into the pockets of insurance company executives and stockholders, while paying out the bare minimum in claims to which the company can be legally forced.

No company will sell a good product if it can make more money selling a bad one. This explains modern insurance, subprime loans, Fox News, and why we need the FDA.

Relatedly, no company will treat its employees well if it can make more money treating them badly. The overarching principle is the same: competition will eliminate the companies that are inefficient, and in this case, "efficient" is a synonym for "ruthless".

Workers' compensation laws, for example, exist because it is more efficient to just fire the guy whose arm got ripped off in an industrial accident, and then you don't have to worry about him anymore. Democratically, we decided we didn't like that market solution.

#42 ::: inge ::: (view all by) ::: March 02, 2010, 08:26 AM:

Teresa #15: The 19-to-29 segment thus presents a problem: how do you motivate them to buy health insurance?

What Nona #19 says: If it's affordable, reliable and easy to use, people will buy it.

The two insurances I have never gone without are health insurance and liability insurance -- both premiums are a low price for not risking to have one's whole live go down the drain on one instance of bad luck.

I had a slipped disk when I was 26, which needed MR to get diagnosed correctly and PT to fix, and not getting it diagnosed and treated might have left me with a paralysed leg. And then there are the accidents, and the infections which needed antibiotics -- not much of a doctor's time to tell you, "yes, it's bronchitis, take these according to that schedule", but a good return of investment not to have it become pneumonia or play around with antibiotics and guesswork.

With car insurances, the reasonable thing to do economically is a lot easier calculated than with health insurance, and it is extremely unlikely that premiums will rise out of "affordable" into "have to get car in cheaper insurance category" range. The whole health insurance issue would look a lot different if you could buy a body that required less maintenance or could, in a pinch, borrow your friends' as needed. (There's a short story here. Has it been written?)

#43 ::: Josh Jasper ::: (view all by) ::: March 02, 2010, 08:58 AM:

The great this about this (from a libertarian perspective) is that it has no means of getting young poor people insured by anything like a public subsidy. Sure, they'd like to get in on that insurance gamble action, but most poor people, young or old, will not be able to afford insurance anyhow.

All this does is provide a benefit for the young and relatively healthy, and kill of a few of them who'll skip seeing a doctor when they normally would have if they had insurance. Insurance costs will continue to rise because insurance companies are run by evil bastards, and poor people will continue to not get insurance.

#44 ::: Glenn Hauman ::: (view all by) ::: March 02, 2010, 09:10 AM:

On the bright side, a tontine is a step up from the usually prescribed and thinly disguised Ponzi schemes.

#45 ::: legionseagle ::: (view all by) ::: March 02, 2010, 09:33 AM:

Why not revive the Deodand ? Once the principle of deodand has been reinstated, a health insurance company which could be proved to have caused the death of a human being for, eg, refusing health insurance for a condition subsequently proved to have been properly covered would be liable to forfeit the value of the object causing death (viz. a health insurance company) to "pious public uses" (viz. health care for those unable to afford insurance).

#46 ::: Rob Rusick ::: (view all by) ::: March 02, 2010, 09:41 AM:

heresiarch @23: For the vast majority of people, a long, crippling illness will cost more money to treat than they could possibly save in their entire lifetime. Rather, insurance is a magical transformation device that allows us to shift money from individuals who don't need it very much to individuals who do, and we all benefit because we can't tell in advance which of those two groups we will end up in.

Oh... like hedging against the risk of losing money in the stock market with a collection of stocks which have don't all share the same risk! (Voiced as Mr.Burns getting the point of health insurance.)

I was recalling an episode of Barney Miller which featured a tontine. I couldn't find a detailed description of it online. What I recalled was that of the two surviving members, the older man wanted to commit suicide (I've lived a full life) so his cousin could have the money to take care of his medical problems.

Tontines in popular culture.

#47 ::: Rob Rusick ::: (view all by) ::: March 02, 2010, 09:42 AM:

D'oh! One of my links was already in the original post...

#48 ::: ajay ::: (view all by) ::: March 02, 2010, 09:47 AM:

45: I thought you were going to suggest that the health insurance company itself would become deodand. That would be an interesting approach to the corporate manslaughter problem - the offending company becomes nationalised and run as a non-profit.

#49 ::: legionseagle ::: (view all by) ::: March 02, 2010, 09:57 AM:

ajay@ Well, unless the health insurance company had another one to contribute, that's what would have to happen, yes.

#50 ::: legionseagle ::: (view all by) ::: March 02, 2010, 09:58 AM:

ajay@ Well, unless the health insurance company had another one to contribute, that's what would have to happen, yes.

#51 ::: ctate ::: (view all by) ::: March 02, 2010, 11:02 AM:

Stephen @ 12:

Not a tontine in the technical sense, but part of the basic setting of Lawrence Block's fine mystery novel A Long Line of Dead Men involves a sort of cousin organization to one. (It's a somewhat later novel starring Matthew Scudder, and as such is inherently a touch spoilery about earlier parts of the series, but it's readable standalone and IMHO doesn't much ruin further enjoyment of the series to read out of sequence. NB not all of the books in the series are like this. Excellent, excellent series, by the way; highly recommended if you enjoy crime fiction and haven't yet discovered Block.)

#52 ::: Caroline ::: (view all by) ::: March 02, 2010, 11:12 AM:

Nona @ 19, last night while I couldn't sleep, I read this comment and the following exchange with Diatryma, and absolutely despaired. I felt like I should never have sought treatment for anxiety and ADD while in grad school; if I don't get a job that offers group insurance after I graduate, those diagnoses will make me completely radioactive. I felt like I'd made a fatal error in strategy in playing the insurance game. I survived without treatment for years; why couldn't I have just kept sucking it up?

Instead of posting that as a comment, I went to sleep. When I woke up this morning, I realized that if it hadn't been those diagnoses, it would have been something else. It's only the stigma against mental health issues that makes me feel like it's my fault for "being weak" and seeking treatment. If, say, I'd had a nasty-looking mole removed that turned out to be cancerous, even if the cancer hadn't spread -- I'd be just as radioactive with a diagnosis of melanoma. It could be anything.

It's not that I made a mistake by seeking treatment; it's that there is no way to win.

In some ways, health insurance already is a tontine. If I have insurance and use it, I will almost certainly have to pay more, maybe a lot more, in the future. It's not an explicit payout for not using insurance, but it's still very real.

For right now I've got grad student insurance. Because I can legally marry my partner, I can get on his insurance as a spouse when I graduate, if I need to. Beyond that? I'll just have to hope -- that things work out, but mostly that the health insurance system gets fixed.

#53 ::: Mary Aileen ::: (view all by) ::: March 02, 2010, 11:57 AM:

Stephen Frug (12): I thoroughly enjoyed Thomas Costain's The Tontine, but since it's the only such I've read, I can't really say it's the best.

(And on reading the rest of the thread I see that Nancy Lebovitz beat me to it at #38.)

#54 ::: Graydon ::: (view all by) ::: March 02, 2010, 12:28 PM:

Caroline @52 --

The point about insurance is that it only works if two things are true; there has to be a significant chance you won't need it, and the folks calculating the odds have to do it correctly (or they go broke, or they charge way too much, and go out of business if they have less incompetent competition.)

Insurance does not and cannot work for medical care, because you will need it. Perhaps not this year (though you should be getting a checkup...) but you will.

(Some people are claimed to live perfectly healthy lives then drop dead without warning. A business model based on unicorns would make just as much sense. Fire insurance, on the other hand, works pretty well because the great majority of houses do not burn down.)

Government spending should not be measured by cash return, nor, strictly, by total expenditure, but by "what did you get for that money?"; health care is a perfect example of something where what matters is maximizing the result for expenditure. (Which is why, for instance, there are "did you get your flu shot? It's free!" nag adds all over the subway in Toronto every fall; it costs much less to run the ad and the free clinics than it does to treat cases of the flu.)

As far as calculating the odds goes, an honest actuary would not want to be in the health insurance business. It's almost impossible to make money if that is what you're really doing.

(Note that what Abi reports isn't an insurance system; it's a regulated price system, like Ontario has for dentists (only without the support for the impecunious) which will also work, but it's no more a free market than it is Hildegarde of Bingen.)

#55 ::: ajay ::: (view all by) ::: March 02, 2010, 12:45 PM:

54:"Insurance does not and cannot work for medical care, because you will need it."

Yes, but the amount you will need and the time you'll need it are highly variable and unpredictable.
You could say the same thing for car insurance. I don't know anyone who has a car who hasn't had it damaged or have it break down at some point. Doesn't mean that insurance isn't a good idea. Insurance, like much of the financial industry as much about shifting and redistributing payments over time as it is about doing so over the population.

I mean, what do you think about life insurance? That's insurance that pays out when you die. By your theory, there's no way that should work! Everyone dies!

I feel a bit guilty picking on you, because you're a supporter of state health care and so am I. It's far more efficient and fair than any insurance system.

But your argument about insurance doesn't work.

#56 ::: ajay ::: (view all by) ::: March 02, 2010, 12:45 PM:

54:"Insurance does not and cannot work for medical care, because you will need it."

Yes, but the amount you will need and the time you'll need it are highly variable and unpredictable.
You could say the same thing for car insurance. I don't know anyone who has a car who hasn't had it damaged or have it break down at some point. Doesn't mean that insurance isn't a good idea. Insurance, like much of the financial industry, is as much about shifting and redistributing payments over time as it is about doing so over the population.

I mean, what do you think about life insurance? That's insurance that pays out when you die. By your theory, there's no way that should work! Everyone dies!

I feel a bit guilty picking on you, because you're a supporter of state health care and so am I. It's far more efficient and fair than any insurance system.

But your argument about insurance doesn't work.

#57 ::: Paula Lieberman ::: (view all by) ::: March 02, 2010, 12:49 PM:

My father outlived his life insurance policy... he was 90 or older and the policy provider sent him a large check, saying it was not going to continue insuring someone his age....

#58 ::: Teresa Nielsen Hayden ::: (view all by) ::: March 02, 2010, 02:05 PM:

Is there anyone who's had to rely on their insurance company who doesn't hate them?

MacAllister @9: Never doubt that they're related. I know way too many people working in the arts who, short of a major miracle, will never have a decent credit rating again.

Mike Ford had major health problems from his teens onward, and was forever being harassed by collection agencies. One of the tricks for getting in touch with him was knowing that if you phoned, he'd quietly pick up his receiver, but wouldn't speak unless you identified yourself as someone he wanted to talk to. He didn't like being troublesome, but he had to have a phone, and collection agencies specialize in making life impossible.

Eric @20, is that the situation you're in? If so, I'm truly sorry, and I hope your source of insurance is a decent employer.

#59 ::: Graydon ::: (view all by) ::: March 02, 2010, 02:08 PM:

ajay @55 --

The argument works just fine.

Firstly, the amount of medical care you will need and the time you will need it are _not_, precisely, unpredictable; there's a minimum amount and a maximum separation for it. (The annual physical, with its associated tests; the seasonal vaccinations; the remarkable consistency with which people as a statistical mass tend to injure themselves.) What's unpredictable is when you're going to develop an expensive condition (age is an expensive condition), and whether or not you're going to develop something really expensive.

This is similar to the case of life insurance, where there's the pleasant consistency of actuarial distribution; while the event is certain, so, in a statistical sense, is the timing. This allows accurate pricing.

In theory, you could do cost shifting to cover surprising medical expenses, apply the power of a large purchaser to lower the costs of regular care, and generally manage the resource distribution problem through an insurance model.

We don't live in theory; you can't keep something exhibiting market behavior is there isn't the option of not buying the thing for which there is the nominal market. (This is a problem with food, too; our hosts have written about the reliability with which supermarkets in poor areas charge more, for example.) Once you lose the market behavior, you get something nasty.[1]

Which is precisely the case with car insurance; it, too, is a gigantic scam, brought on in large part by clever legislative capture and mandated insurance. The approach taken in British Columbia (and some other Canadian provinces) is to make your car insurance a function of your driver's license. Much -- damn near order of magnitude, much -- cheaper. Works just as well.

Besides a certain amount of regulation (quite intense in Ontario, I would expect it to vary by state in the US), the thing that keeps life insurance a market is that you don't have to buy it. (Indeed, if you're in late middle age and affluent, you probably shouldn't; there are more productive things to do with the money.)

That isn't true of health care. You will need it, predictably, and soon.

[1] Anybody using 'socialism' as a pejorative is actively in favour of the nasty thing.

#60 ::: Temporarily anonymous ::: (view all by) ::: March 02, 2010, 02:15 PM:

chris@41: No company will sell a good product if it can make more money selling a bad one. [...] no company will treat its employees well if it can make more money treating them badly.

Very off-topic, but the universal generalization struck a wrong note. I've had the perhaps unusual privilege of working for for-profit companies that were founded and run in large part so that the founders could fund work they were interested in and work with people they wanted to work with. Yes, they liked making money, and yes, compromises sometimes had to be made, but it's possible for money to not be the single ultimate criterion.

[Temporarily anonymous to avoid the temptation to dive into company specifics. Is there a better way than a bogus email address to post as "Don't mind being known by the ML moderators but don't want to be tied to my 'all posts by' list."]

#61 ::: Constance ::: (view all by) ::: March 02, 2010, 02:19 PM:

#38 ::: Nancy Lebovitz ::: (view all by) ::: March 02, 2010, 05:05 AM:

Reading Costain's The Tontine in h.s. was my first acquaintance with the word and concept.

Love, C.

#62 ::: Graydon ::: (view all by) ::: March 02, 2010, 02:24 PM:

Temp @60 --

Behaving decently is unlawful for American public companies; they are legally required to maximize immediate shareholder return.

(The Canadian version requires the directors of a corporation to act in that corporation's best interest, at just about that level of detail. Makes for some entertaining legal cases, but does not (thankfully) mandate profit maximization.)

The guy who runs Costco (I think it's Costco) has to represent to his board every year about how the shareholders are actually, really, we swear, being well served by his insistence on paying a living wage.

#63 ::: David Harmon ::: (view all by) ::: March 02, 2010, 02:33 PM:

Caroline #52: It's not that I made a mistake by seeking treatment; it's that there is no way to win.

That's the natural effect of allowing a for-profit corporation to play gatekeeper for a basic human need (health care). It works like a casino -- despite the lure of the "jackpot", the reality is that you're not allowed to keep winning against the house.

#64 ::: eric ::: (view all by) ::: March 02, 2010, 02:43 PM:

Teresa@58 -- Not me, but a dear friend. And thankfully, he's got great insurance and a company that not only bent over backwards, but managed this year to raise the lifetime limit on their health insurance group policy.


#65 ::: Temporarily anonymous ::: (view all by) ::: March 02, 2010, 02:59 PM:

Graydon@62:

Without arguing with you, I'll note that "for profit" needn't imply "public".

#66 ::: dcb ::: (view all by) ::: March 02, 2010, 03:00 PM:

heresiarch @ 23: "Here again the conservative tendency to screw oneself over for fear of inadvertently helping someone else out floats to the surface like a turd in a punchbowl."

That's it. Absolutely. Seriously, I've never seen it put so succinctly: the conservative tendency to screw oneself over for fear of inadvertently helping someone else out - that's the whole conservative (over here, Conservative) position in a nutshell: they would rather support a policy that would be bad for them (or bad for the financial position they aspire to), than one which might (in the real world, as opposed to the fantasy world in which they are a multi-millionaire) help them, but (horror) might help someone else, someone undeserving (because of course, if you're deserving, you would have pulled yourself up by the bootstaps, been proud of it, and not need the help, of course).

#67 ::: heresiarch ::: (view all by) ::: March 02, 2010, 03:00 PM:

Lee @ 32: "Your description of insurance pools is how it's supposed to work, and how it did work back when insurance was a new concept. Today, a better description would be that insurance is a magical transformation device that allows us to siphon money from the pockets of the lower-end upper class, middle class, and working poor into the pockets of insurance company executives and stockholders, while paying out the bare minimum in claims to which the company can be legally forced."

If only the problem with healthcare was the malice of insurers; that would be an easy problem to fix. It's actually worse than that. The reason why insurance companies have pioneered such lovely new practices as "recission" and "pre-existing conditions" is because over the last several decades the absolute cost of care has skyrocketed, and they've been unable to pass that cost entirely onto their policy holders. Pharmaceutical and medical device manufacturers have been pumping out a constant stream of newer and more expensive treatments for everything from brain cancer to Restless Leg Syndrome, and the only bar to getting those treatments into use is beating a placebo in trials they run themselves. That's the cost-driver in the system, the source of the crippling burden of increasing health care costs--insurance companies are just the middlemen, passing the burden along. (Minus their customary fee.)

#68 ::: Bruce Cohen (SpeakerToManagers) ::: (view all by) ::: March 02, 2010, 03:04 PM:

ajay @ 55:
I mean, what do you think about life insurance? That's insurance that pays out when you die. By your theory, there's no way that should work! Everyone dies!

Reminding me of an SF novel written sometime in the 1950s about an interstellar insurance company troubleshooter one of whose cases involves a species who die and then are resurrected frequently; something the agent who signed the life insurance contract for the entire species didn't notice. Anyone remember the title or author?

#69 ::: Erik Nelson ::: (view all by) ::: March 02, 2010, 03:16 PM:

Teresa at #15:
*In an unconstrained state of nature, untroubled by government regulations, a human-populated biosphere will automatically generate giant insurance companies.

--But I thought that in an unrestrained state of nature life was nasty, brutish and short, in which case you wouldn't need long-run sorts of things like health insurance anyhow.

#70 ::: Kelly McCullough ::: (view all by) ::: March 02, 2010, 03:16 PM:

Teresa @ 58,

Depends on what you mean by "had to." I had a couple of knee surgeries a few years back that made the difference between being able to take long walks on a regular basis without needing to break out my cane and slowly becoming less and less mobile. I probably could have continued to limp along as I had before getting insurance through my wife's faculty job, but that would not have been a good or pleasant alternative. My wife has had some similar though not precisely analogous treatment.

I'm currently rather fond of our insurance, but it's a State University plan that basically can't refuse new faculty or their families, it's in a part of the country that still votes mostly Democratic and has a strong thread of progressive values, our local hospital is Mayo affiliated, and spending a decade completely uninsured is still pretty fresh in my memory.

That said, given the opportunity I'd opt for single payer health care over private insurance tomorrow even if that might mean some downgrading in our personal health care situation because A) it's better and cheaper for everyone in the aggregate and B) it's the right thing to do.

#71 ::: Graydon ::: (view all by) ::: March 02, 2010, 03:17 PM:

Temp @65 --

It certainly doesn't.

I have remarked before, at what might well have been tedious length, about how the two Canadian airlines that are not unpleasant to fly with are Porter and WestJet, which are private and employee-owned, respectively. I don't think that's an accident.

#72 ::: David Dyer-Bennet ::: (view all by) ::: March 02, 2010, 03:18 PM:

The market solution seems totally obvious -- forbid health care charity. This is a perfect model of modern governmentally-imposed market solutions, since it consists entirely of a new government regulation.

And, in the long run, the invisible hand will make it work. Societal standards will change so that people will in fact understand that they have to buy health insurance if they possibly can. Problem solved.

Of course, it might be a kind of rough few generations in there.

#73 ::: Earl Cooley III ::: (view all by) ::: March 02, 2010, 03:45 PM:

Anyone who takes Medicare away from me will put me in an untenable situation where I don't have anything left to lose.

#74 ::: Charlie Stross ::: (view all by) ::: March 02, 2010, 03:57 PM:

Graydon @71: as a further datum, note the existence of the John Lewis Partnership in the UK -- a large department store chain, mostly employee-owned (all the store staff are shareholders). It's expanding and competitive in the market, provides reasonable value for money and excellent service to its customers, and -- oddly -- the shareholders do not queue up at AGMs to demand that the management screw the employees.

US (and to a lesser extent) UK laws on corporate governance are b0rked, badly, in a direction hostile to the public interest.

#75 ::: David Dyer-Bennet ::: (view all by) ::: March 02, 2010, 04:26 PM:

Heresiarch@23: It's interesting to watch people who allegedly believe in social networks and helping others and a generally non-individualistic society take a group of people consistently voting against their self-interest and for their principles, and try to somehow model it as bad behavior.

Suggesting it's because of fear of helping people is a pretty good effort, actually; I admire it.

(Of course, the fact that lots of us find the principles they support objectionable is the underlying issue.)

#76 ::: David Dyer-Bennet ::: (view all by) ::: March 02, 2010, 04:29 PM:

Earl@73: Yes, that's a place where things would get the wrong kind of interesting very quickly. One of the reasons that relatively local government is good is that it puts the leaders within striking distance of the people they piss off.

Luckily, seems like everybody is opposed to messing with Medicare -- especially any sort of government involvement :-).

#77 ::: Nona ::: (view all by) ::: March 02, 2010, 04:40 PM:

I realized that if it hadn't been those diagnoses, it would have been something else. It's only the stigma against mental health issues that makes me feel like it's my fault for "being weak" and seeking treatment. If, say, I'd had a nasty-looking mole removed that turned out to be cancerous, even if the cancer hadn't spread -- I'd be just as radioactive with a diagnosis of melanoma. It could be anything.

Yeah, I felt a lot better about the whole thing once I came to understand that-- I'm in the same position as anyone with, say, diabetes, except that it's my brain rather than my pancreas that needs lifelong care. But it does still leave me in an unfortunate position. I've finally got to the point where the idea of going to therapy again only makes my heart try to climb out of my chest a little, so I think I'm ready, and honestly, Blue Cross Blue Shield can go fuck itself.

(Oh, and I never even mentioned my favorite part. I live in one of the few states that actually passed a law prohibiting insurers from denying coverage to people with preexisting conditions. So, of course, instead I've been wait-listed for ten months, presumably so they can see if I actually require any medical care during that period; based on the research I've done since then, I now know that any policy I am offered will be prohibitively expensive. So, again, insurers of the world: y'all can go right to hell.)

#78 ::: David Harmon ::: (view all by) ::: March 02, 2010, 04:43 PM:

Earl Cooley III @#73: Not to mention all the folks (including me) for whom cutting off their publically-funded meds will result in a "psychiatric excursion". Personally, I'm not as badly off as some (no psychotic episodes) but even so, treating mental disorders is a matter of public interest.

#79 ::: Kelly McCullough ::: (view all by) ::: March 02, 2010, 04:45 PM:

David @ 75, I suspect it has something to do with the fact that many of us see this not as voting for principals so much as voting for individuals who pay mouth service to those principals while not in fact governing in a manner that seems to have any real world connection to said principals. I don't agree with many conservative principals, but then I don't see much evidence that the representatives of the ostensibly conservative party do either.

#80 ::: Toni ::: (view all by) ::: March 02, 2010, 04:51 PM:

Teresa #58 "Is there anyone who's had to rely on their insurance company who doesn't hate them?"

I hate to gloat, but my insurance co. is Kaiser-Permanente of Oregon-Washington, and I love it. The care is excellent, co-pays are cheap ($15), tests and labs are no-pay (the emphasis is on prevention), and absolutely everyone there is courteous and kind.

Yeah, they lose money, but as I understand it, somewhere in the background is a foundation that makes up the difference every year.

#81 ::: Kelly McCullough ::: (view all by) ::: March 02, 2010, 04:51 PM:

Actually, that last was overbroad and I suspect that is just one of a grab bag of reasons.

#82 ::: Mary ::: (view all by) ::: March 02, 2010, 04:52 PM:

heresiarch @ 67:

I think you make the key point. How do we conrol costs when demand is effectively infinite?

If you are sick or injured, you want to try everything that might work, regardless of cost. It's nice if there's a treatment that's $200/year and helps 100% of the time, but what if the only treatment option is $20,000 /year and only helps 10% of the time? If nothing else works? I want it! Or if you give me the choice between a wooden leg for a few hundred dollars or a sophisticated prosthesis for, let's say, a few hundred thousand. Who isn't going to want the sophisticated prosthesis? Or the organ transplant, or the difficult surgery, or whatever? (Or even just an expensive treatment for depression?)

We all want these things, and we all want them so badly and parents want them for their kids even more desperately.

This limited supply/infinite demand drives the cost of private health care up and up and up. And the only way it wouldn't do the same for public health care is unpopular rationing.

I understand that in most of Western Europe the compromise is "Rationed health care for all; better health care for those who can afford it." And in practice, that's the system we have in the US too, since Emergency Room care is available for everyone. It's just that the rationing in our "rationed care" is much stricter.

I think the European model is a lot better than what we've got, but ultimately when demand is effectively infinite, any system will have a lot of unsatisfied demand...

(It occurs to me that it's the opposite of the problem with selling electronic files, where it's the supply that's effectively infinite due to easy copying, and you get costs driven down toward zero for pirated copies... Either way, unregulated markets probably aren't good at handling these extremes...)

#83 ::: Andrew M ::: (view all by) ::: March 02, 2010, 05:03 PM:

Am I the only person who thinks that, though they say this is a tontine, it isn't really very like a tontine at all? In a real tontine only one person - the last person left alive - gets the money. In this proposal everyone who doesn't claim gets the money.

I suppose this could provide a kind of motive for murder, in that if I killed a lot of other non-claimants I could increase my share, but that's not proper to tontines; it applies to any shared asset. The reason why genuine tontines provide such a strong incentive to murder is that if I'm not the last person standing I get nothing.

#84 ::: Graydon ::: (view all by) ::: March 02, 2010, 05:09 PM:

Mary @82 --

Demand isn't actually infinite for health care.

(The real bottleneck is "there are only so many people who can do this at all"; this is another area heavily susceptible to automation.)

Many people aren't what you'd call happy about it but do manage to be philosophical if their doctor says "sorry, we've done all we can." Many other people don't necessarily expect the best possible care, and will accept good-enough care.

Money is a form of rationing. It's just a good way to abstract any consideration of fairness or the public good out of the discussion before "who gets what?" comes up. Since contagion isn't class-conscious, it's an unsuitable form of rationing for medical concerns.

Doing the whole care system on a not-for-profit basis would help a great deal. Most of the serious work is being done by people on salary at the present time anyway; there's no obvious value-add to the quality of care from the profit extraction.

Ultimately, there isn't going to be very much that can't be fixed. (There are people walking around Toronto who had skeletal bone regenerated as adults. It's still experimental and awkward and clunky, but, hey, progress.) We're in the nasty complex don't really know what we're doing phase, like steam power between Watt and about 1850. While cutting edge capability will remain expensive, the capability/cost point tends to drop; sometimes it drops like a rock.

Which is another reason to push for open, process-of-science health care; there are only so many people with capabilities to solve some of these problems. Partitioning them into non-communicating groups isn't as useful as it could be.

#85 ::: Paul Duncanson ::: (view all by) ::: March 02, 2010, 05:15 PM:

Andrew: The original form of the tontine paid annual dividends with shares being redistributed among survivors as investors died. It's only later that the last survivor getting all the money variant came along and spawned a million plots.

#86 ::: Mary ::: (view all by) ::: March 02, 2010, 05:22 PM:

Graydon @ 84:

Well, I did say "effectively infinite" not "actually infinite" -- but how many people in how many health care contexts would say "money is no object," if they could? How many people are willing to -- and in fact do -- spend everything they have on health care? Think how many health care bankruptcies there are! Granted, that's a sign that our system is messed up, but it's also a sign that people are willing to bankrupt themselves for health care! That is effectively infinite demand.

I completely agree with you that money is also a form of rationing. Our sytem right now rations care by saying the poor get hardly any. But Americans like to believe, even if they are poor, that they won't always be, and that it is in their power to get rich, so they don't mind this system as much as a rationing system where they have no control over how much care they get (except indireclty through voting.)


#87 ::: Elliott Mason ::: (view all by) ::: March 02, 2010, 05:40 PM:

Mary @86 said: I completely agree with you that money is also a form of rationing. Our sytem right now rations care by saying the poor get hardly any. But Americans like to believe, even if they are poor, that they won't always be, and that it is in their power to get rich, so they don't mind this system as much as a rationing system where they have no control over how much care they get (except indireclty through voting.)

The other form of rationing we have right now is what one's insurance will pay for -- which makes me livid when I hear 'conservative' voices trying to fearmonger about how under Obamacare "a government bureaucrat will get between you and your doctor." Right now an INSURANCE company bureaucrat gets between me and my doctor quite regularly, and I at least have some hope in hell that a government one will be more accountable.

And will, if some of the current stuff goes through, actually look at evidence-based measures testing how effective, and COST-EFFECTIVE, a given procedure is. When I was giving birth to my daughter, there were several incredibly cheap measures that are PROVEN to lead to far better outcomes (especially for uncomplicated primipara situations), that I was forbidden to have, because (a) my insurance refused to cover them, since they're 'not medically necessary', and (b) when I called the hospital ahead of time to ask how much it would be out-of-pocket, so I could consider just paying cash to get them, i was told that they could not possibly tell me how much it would cost, because all their prices are pegged to which insurance company's discounts they're using. They do not OFFER them for cash. I finally browbeat the woman into admitting that if I got my doctor to order it and then my insurance didn't cover it, there would BE a price eventually, but she couldn't give me any idea what ballpark it might be in.

For those curious, I was interested in an 'aquadural' warm tub of water for labor pain relief, and a birthing stool for vertical pushing positions. My insurance wouldn't pay for the use of either, although the hospital offers them ... but they'd have been peachy-keen pleased to pay for me to be induced and give birth via C-section, even if that led to many expensive complications.

The only sane reason I can conceive that people of good will oppose putting a preference for evidence-based treatment regimes into place is them not trusting 'the data', or the (elite, eggheaded, wrongminded) people who generate the data. And I trust scientists -- and the process of science -- more than politicians, as well as trusting govt. bureaucrats a damn sight farther than insurance company ones.

#88 ::: Lee ::: (view all by) ::: March 02, 2010, 06:15 PM:

David, #75: The point you've missed here, loudly and awkwardly, is that all principles are not created equal. You are, in fact, making the same class of argument that leads J. Random Citizen to believe that his or her "gut feelings" on a subject are just as valid as the opinions of specialists with decades of actual experience. If "voting to support your principles" were all that mattered, I still wouldn't be allowed to vote at all.

I would also like to reiterate, once again, something that I think is getting seriously (and deliberately) obscured from much of the health-care discussion in general. At present, America does not have a HEALTH CARE system. What we have is a medical profits system, and the people who reap those profits -- which can be rightfully considered blood money -- are fighting tooth and nail to keep it that way. Any proposal which focuses on health INSURANCE rather than health CARE is only going to be part of the problem.

#89 ::: David Dyer-Bennet ::: (view all by) ::: March 02, 2010, 06:31 PM:

Lee@88: No, actually I'm pointing out that when the real disagreement is about the principles, that's what should be talked about, rather than finding ways to portray the people as stupid, ignorant, or whatever. Since America is a democracy, you either have to convince them that their principles are wrong, or else manage a revolution so their principles don't matter. Constantly telling them that their principles are stupid may well be why they have such an emotional rejection against "elites" at this point.

Or at least convince them that pragmatic compromise is often a better way to run a government than standing on principle.

I'd even help you on either of those approaches; we may not completely agree, but we certainly don't completely disagree.

#90 ::: Schizohedron ::: (view all by) ::: March 02, 2010, 06:36 PM:

Rob @ 46: That Barney Miller episode is how I learned what a tontine was as a child. Odd the places one picks things up.

Jon Baker @ 26: Similar to your idea, and the M*A*S*H episode "Old Soldiers": I recall reading in an issue of the comic magazine Eerie or Creepy a story about the members of a WWI air squadron who enter into a pact: The last flyer alive drinks a toast from a special bottle of wine to his fallen fellows. Eager to survive and claim it, the man who opens the bottle at the beginning of the story had been "improving his odds" with his own guns—a fact known to the man he shot down earlier that day to claim the wine . . . who also left his comrade a note explaining that he was onto his little game, and, before his final mission, that he'd taken the precaution of injecting the wine with poison. . . .

#91 ::: P J Evans ::: (view all by) ::: March 02, 2010, 06:39 PM:

89
It would be a change for the better if they'd actually stand on their principles, instead of only talking about doing so.
(Being honest about their actions and inactions would also help. When they do stuff and deny doing it, and we find out that they lied about it, the bad impression tends to be extended to all their colleagues.)

#92 ::: Mary ::: (view all by) ::: March 02, 2010, 07:29 PM:

Elliott Mason @ 87:

That's completely outrageous. It's weird to even charge separately for a birthing stool or an "aquadural." They don't charge you separately for the stirrups, do they? That kind of equipment should just be "overhead". (But not literally over head, one hopes...)

A government controlled system would probably have a few egregious irrationalities in it like that, but at least people would all be complaining about them to the same place, instead of a bunch of different companies each with their own insanities.

As for them not being able to tell you what it would cost, I'm not surprised. I've asked before and never been able to find out, and I've also been shocked before when bills arrive. ($1400 for an x-ray and a shot of morphine, only half covered by insurance? It was a dislocated and joint and I ended up relocating it myself -- I don't think they should've charged me at all!)

#93 ::: Elliott Mason ::: (view all by) ::: March 02, 2010, 07:38 PM:

Mary @92 said: That's completely outrageous. It's weird to even charge separately for a birthing stool or an "aquadural." They don't charge you separately for the stirrups, do they? That kind of equipment should just be "overhead".

They charge separately because of our 'fee-for-service' (or specifically, fee-for-procedures) system. Having the room and all the things that 'come standard' in it is one charge; everything else that is used and either used up (absorbent pads, medications, IV tubing/needles) or needing to be cleaned and restocked afterwards (the tub, stool, some other things) is billed separately, and may be rejected separately by the insurance. The stirrups are physically part of the bed, not that we used them; that's highly disrecommended nowadays. Of course, so is pushing on your back in the lithotomy position, which was the only option I was permitted, but my feet were up in the air, not in stirrups.

What counts as 'standard' in any particular situation is the result of long negotiations between the providers and the insurers, and some insurers (like mine) have a blanket denial on any 'optional extra' that isn't noted as 'medically necessary' ... those words, of course, being exceptionally open to interpretation. What your doctor says you need does come into it, somewhat, but might need to be argued for after the fact (and the first denial).

There are many reasons I am, in theory, for reforming how docs are paid across the board. One suggestion is to put them on salary, prorated across patients seen or hours worked or something, instead of by procedures performed, as that latter (our current system) not only balloons costs, it gives doctors a financial incentive to over-treat, even when it's useless or counterproductive.

#94 ::: Marilee ::: (view all by) ::: March 02, 2010, 07:57 PM:

Teresa Nielsen Hayden, #58, "Is there anyone who's had to rely on their insurance company who doesn't hate them?"

Yes, I'm quite fond of my Medicare Advantage plan run by Kaiser Permanente Mid-Atlantic. My premium did go up $7 this year, but that's not enough to get incensed about. I've generally gotten really good care from them, considering how sick I am.

#95 ::: Mary Aileen ::: (view all by) ::: March 02, 2010, 08:09 PM:

I'm rather fond of my insurance. Not so much the company--although I haven't had any particular problems with them--but of the fact that it exists. I didn't have $80,000+ for my first surgery, in 2005. Nor did I have howevermuch the other four after that came to. But, with one exception*, all I had to pay for each one was the $35 copay. My routine visits and multiple ongoing prescriptions are relatively cheap, too. And the only hassle in 20+ years was with physical therapy for tendinitis, which ended up being fully covered. So no real complaints--but I am very conscious of how lucky I am.

*darn surgeon didn't tell me he didn't take my insurance until after the fact

#96 ::: heresiarch ::: (view all by) ::: March 02, 2010, 08:13 PM:

David Dyer-Bennet @ 75: "It's interesting to watch people who allegedly believe in social networks and helping others and a generally non-individualistic society take a group of people consistently voting against their self-interest and for their principles, and try to somehow model it as bad behavior."

It is bad behavior. There's nothing inherently noble about voting against one's self-interest; the nobility comes in when one is voting against one's self-interest in favor of the interests of society as a whole. Which is quite selfish too, actually: it's just a recognition that you're personally better off when society as a whole is better off.

There's a principle behind voting against one's self-interest out of fear of helping others: it is fairness, twisted so far as to become an inverse of itself.

"Suggesting it's because of fear of helping people is a pretty good effort, actually; I admire it. "

If you have an alternate suggestion as to why the Southern Strategy was so successful at killing social welfare initiatives (as so perfectly captured in Reagan's "strapping young buck buying T-bones with food stamps" and Cadillac-driving welfare queens), then please, do tell.

Mary @ 82: "How do we conrol costs when demand is effectively infinite?"

That's been true forever, though. What's changed is the range and price of treatments--you can sink a lot more money into (arguably) effective cancer treatments than you could hundred, or even twenty years ago. Of course, we find that a lot of those fantastically expensive treatments often don't return better results at all, but even so: there's been a substantial increase in how much money can be effectively spent on treating disease.

This isn't necessarily a bad thing: people have to buy something, and I'd rather spend 20% of my income on staying alive longer than on car payments. It's the waste, the inequity, and profiteering that piss me off.

David Dyer-Bennet @ 89: "Constantly telling them that their principles are stupid may well be why they have such an emotional rejection against "elites" at this point."

If you want to talk about anti-elite bias, then first please explain to me how scholars employed at one of the better-funded think tanks on the US aren't elites.

#97 ::: Elliott Mason ::: (view all by) ::: March 02, 2010, 09:17 PM:

heresiarch @96 said: There's a principle behind voting against one's self-interest out of fear of helping others: it is fairness, twisted so far as to become an inverse of itself.

Specifically, it's a fairness instinct (which we all have) that is expressed via zealous punishment of misdeeds, whether real or imagined, rather than fostering of goodness. If the only tool available to someone wound up about injustice is the Hammer of Righteous Smiting, they're going to smite.

It's been shown again and again with various government programs that far more money is spent on ferreting out and punishing cheaters than would be lost to a basic level of fraud -- witness the hoops applicants for unemployment are required to jump through, and CONTINUE jumping through.

Or the fact that people on SSI disability are required to periodically prove they're still disabled, even if their disability is congenital blindness. Used to be they'd mail you a letter every 3-5 years insisting that you provide a doctor's letter or other relevant proof of the non-abatement of your disability. Note: the blind did not receive a letter any different than that sent to, say, people with chronic back injuries, so they had to take their mail to a friend and ask them to tell them what the letter said.

Ptui. The amount of sheer effort (never mind money) we end up forcing people to go through, just in attempts to ENSURE that NO ONE will EVER receive benefits they're not richly entitled to, is staggering.

#98 ::: Paula Lieberman ::: (view all by) ::: March 02, 2010, 10:51 PM:

#88 Lee
The medical insurance business is ghoulish parasitism...

#99 ::: Lee ::: (view all by) ::: March 02, 2010, 10:55 PM:

Elliott, #97: I used to work for a company whose head honcho was like that. As far as I could tell, his entire philosophy -- of company policy, and of life itself -- was based on the deep-rooted suspicion that somewhere, somehow, somebody was GETTING AWAY WITH SOMETHING. If my department supervisor hadn't been both much more reasonable and willing to act as a shield for his people, I doubt I would have lasted there very long.

Now, since people are talking about the idea of standing up for one's principles, I should also mention that:

1) I got called on the carpet and threatened with firing because I came in 5 minutes late twice in one month. One of my co-workers came in at least 15 minutes late almost every day for at least a year, but was never called on that behavior.

2) The company had a "retirement plan", in the shape of an annual profit-sharing distribution (later converted to a real 401k). However, that distribution was tied to the employee's salary, as a percentage of salary; at my pay level, the percentage was something under 10%, while at his it was close to 100%.* That wasn't illegal, but it was a deep perversion of the principle behind profit-sharing, and was definitely "getting away with something".

3) Every year, in January or February, he'd hire a salesman, although he did a lot of sales work himself as well. And at the end of the year, just before the holiday bonuses (and profit sharing) were distributed, he'd lay the salesman off. He did that for 5 straight years. It's on the same maturity level as the guy who breaks up with his girlfriend every year right before Christmas, and then makes up with her after Valentine's Day. But that trick backfired on him eventually; the company was bought out by a big corporation, and they fired him... right before the holidays. (And there was much rejoicing.)

It used to be that people like him were a relative minority, both in business and in politics. I do not believe that to be the case any more. These people aren't "voting their principles," they're voting their hate. They'd rather do without themselves than see poor people, or people of color, or liberals, get any improvement in their lives.

* How do I know this? My department supervisor thought the big boss was pretty scuzzy, and occasionally he'd say something to me. Never directly, but he knew I was intelligent enough to put two and two together if handed the pieces at slightly different times.

#100 ::: Patrick Nielsen Hayden ::: (view all by) ::: March 02, 2010, 11:08 PM:

Graydon, #62: "Behaving decently is unlawful for American public companies; they are legally required to maximize immediate shareholder return."

I hear this asserted a lot, and I've also heard a fair number of people who appear to be familiar with the law saying that it's a bullshit oversimplification.

I also note that, whether or not it's true, claiming that it's true serves to let a lot of people off the hook who would otherwise be considered, by the exercise of normal human common sense, to be guilty of some pretty bad things.

So I'm suspicious of the truth of this assertion.

#101 ::: Summer Storms ::: (view all by) ::: March 02, 2010, 11:42 PM:

Mary @ 86: Well, I did say "effectively infinite" not "actually infinite" -- but how many people in how many health care contexts would say "money is no object," if they could? How many people are willing to -- and in fact do -- spend everything they have on health care? Think how many health care bankruptcies there are! Granted, that's a sign that our system is messed up, but it's also a sign that people are willing to bankrupt themselves for health care! That is effectively infinite demand.

Actually, if you don't have much money to begin with, it doesn't take much in the way of medical bills to bankrupt you. And it isn't really always a matter of CHOOSING to bankrupt oneself, either.

Say you have health insurance through your employer, and you pay "x" amount per month for it. Say it only covers certain things (which is true in most cases) and also it only pays a certain percentage of some of those costs, and involves a deductible (again, true in most real-life cases). Let's say that deductible is, oh, two grand. That's $2000 you're on the hook for paying if you need medical care that year.

And then let's say you break your leg, a simple fracture. It isn't as though you can really choose not to have this treated. And it isn't as though a simple fracture costs enormous amounts of money to treat. But say you don't really make a whole lot of money, so you don't exactly have hundreds or thousands of dollars lying around in your change jar to pay the portion of the costs that your insurance won't pay. You want to walk, you want to be able to work and be productive in the future; hell, you want to not be in pain right now. So you have the fracture treated. It isn't a choice; it's a necessity.

And furthermore, let's say that while you are waiting for that fracture to heal, you wind up with a blood clot in your leg. Now you get to add hospital time to the list of things you need but can't really afford. This all started with a broken leg, and who in their right mind skips treating a broken leg just because of cost, especially if they actually do have insurance? And a blood clot, well, those can kill you if left untreated. And they're not uncommon after suffering a broken bone. Who do you know that's willing to die of an easily-treated complication from a fracture?

So you get it all treated, and after a few weeks, you're up and around and walking again. You're alive, you can work again, you get to go on with your life. Only, there's this small matter of a couple of thousand dollars that you owe, and you don't have it. And maybe your kid or your spouse incurred some injury or illness or whatever that same year, one that similarly had to be treated, and so as a family there's maybe three to five grand owing. And you don't have it, and in the current economic climate you're not going to have it anytime soon.

That $2000 to $5000 can be enough to drive some people, some families, over the brink to bankruptcy. And it can come from something as minor as a broken leg, a case of appendicitis, or even a raging ear infection in a child. Should people in that situation - employed, insured, but just not sitting on a bunch of extra money - opt NOT to have medical treatment for these injuries or illnesses? Additionally, I'll note that it costs money to die from those conditions, too, or at least to be cremated/buried. (Not to mention the loss of income, if the person who dies had been earning an income for the family.) And that can bankrupt a family as much as anything else can.

#102 ::: Paula Helm Murray ::: (view all by) ::: March 03, 2010, 12:52 AM:

Summer Storms, that is exactly what keeps me awake at night.

After two years and a month, I finally got a position. The problem is that it is "Seasonal" and classed as a three to five month position, which means no insurance is offered.

On one hand, our family doc is a good provider and has been keeping me in blood pressure medicine for the duration. ON the other hand, I'd like to get a physical and I'd like for my husband to do the same. But at about $70 just to walk into the office and then the unpredictible pricing of any tests, nevermind, it can wait. No, it HAS to wait.

#103 ::: Dave Bell ::: (view all by) ::: March 03, 2010, 04:46 AM:

There are days when I don't want to read this blog.

Again, I am reminded that too many of my friends are in one of those barely civilised lands, ruled at the whim of barbarians.

If I were a resident of the USA, with my medical history I would be dead, and my family bankrupted, several times over. And there's nothing extreme about any of it.

Modern medical science is able to recognise chronic problems which, in past generations, we didn't even know existed. It is able to treat them, so that people such as Charlie Stross and I will not die from the accumulated damage due to high blood pressure (it possibly killed my mother's father, long before he retired).

There are totally new conditions that can be recognised and treated. We've talked more about the variations in brain chemistry than most people do. And we know how ill-advised bureaucratic restriction, driven by the fears of politicians, can shut down a productive mind until a basic A-to-B medical journey of exploration has been re-made in tedious detail.

The Cato Institute are the brain-dead lobotomized zombies of unrestrained greed. If you want to tell them that good healthcare makes everyone more prosperous, they won't listen. There is a difference between wanting more, and wanting everything, and they want everything.

They don't care that Van Gogh lived in poverty, when they can have his sunflowers for their very own.

Men die, cattle die, and these bastards don't even deserve naming on their grave markers.

#104 ::: ajay ::: (view all by) ::: March 03, 2010, 05:12 AM:

86: The demand for health care really isn't infinite - this is just a right-wing canard.

(A duck? A duck with one wing?)
(Quiet, Serge.)

It's not a good that people consume for fun. I don't pay for my health care, and I assure you I don't consume very much of it, because going to the doctor or the hospital isn't actually fun; at best it alleviates pain or discomfort, but it's not something I'd do to pass the time. Look at people who actually do have unlimited access to health care - the very rich and/or very well insured. Do they consume unlimited amounts? No.

(Mind you, what good does have infinite demand? If I gave out free cinema tickets, I wouldn't be able to give out an infinite number, because there are only so many hours in the day!)

101 deals very well with the "people bankrupt themselves for medical care so demand must be infinite" story so I'll just say "this".

#105 ::: Wirelizard ::: (view all by) ::: March 03, 2010, 06:54 AM:

Like Dave Bell @ 103, every time the incredibly FUBAR'd American "health care" system comes up for discussion, here or elsewhere, I'm not sure I really want to read the thread...

Currently I pay exactly zero for my public health care, as I don't earn enough to put me over the threashold for monthly premiums - and when my income does go up, those premiums are incremented to income, so it's never an unreasonable amount. Learning about COBRA and other American inventions has been an interesting tour of a particularly horrifying chamber of horrors, let me tell you.

I've heard too many horror stories of Americans being denied routine care - one blog post I happend to read sometime in the last year or so was a women talking about her very-premature 3rd child; she'd been sent home a day or so after the birth while her new daughter was kept in Infant ICU; she arrived one day to visit her daughter to find a insurance company rep (with no medical training at all) attempting to tell the doctor in charge of this woman's case that, regardless of his medical opinion, it was time to discharge the baby because the "health" plan had maxed out the amount of Infant ICU it would pay for... and the doctor had just finished a series of tests on the permie's lungs that indicated that no, she wasn't ready for discharge yet.

Much as Canadians might complain about our health care, I cannot imagine some random bureaucrat from the health ministry or hosipital administration showing up outside an ICU to tell the docs who to discharge, I really can't...

Likewise, the billboards for hospitals I see when I visit the States... in a sane and rational system, hospitals do not need an advertising budget, FFS.

#106 ::: Mary ::: (view all by) ::: March 03, 2010, 08:01 AM:

Summer Storms @ 101: And it can come from something as minor as a broken leg, a case of appendicitis, or even a raging ear infection in a child. Should people in that situation - employed, insured, but just not sitting on a bunch of extra money - opt NOT to have medical treatment for these injuries or illnesses?

They can't. And that is precisely my point. That is exactly why the health care market is so distorted, and why there is nothing to keep prices from rising indefinitely. Because no matter how much those treatments cost, people will pay for them.

ajay @ 104: 86: The demand for health care really isn't infinite - this is just a right-wing canard.

Look, I think my comments so far should've made it clear that I am 1) not right wing and 2) in favor of European-style single payer health care. If I'm repeating anyone's talking points, it's Ira Glass's, from this episode of This American Life. Okay? No need to be so defensive. I've been lurking here for about five years, and just because I don't post often, doesn't mean I'm the enemy.

I've never even heard anyone on the right making this point. Because what I'm saying is that free market solutions suck in a "market" like this. Prices go up forever.

I'm posting because I'm hoping to turn the conversation in what seems to me a more productive direction. Health care is a hard problem. I'm trying to point out what's hard about it.

Okay, let's all agree that we don't like the current system or the people fighting to keep it. But what would the ideal system look like? How do we tackle this? How do we allay Americans' fears about rationing when the reality is that some kind of rationing is inevitable? How do we do this in the face of the persistent national myth that anyone can get rich, ergo anyone can get health care under the current system? Where do we draw the line between the $200 hundred percent effective procedure and the $20K ten percent effective procedure?

I don't have great answers. I'd just like to hear the people of Making Light discuss the questions.

It's not a good that people consume for fun. I don't pay for my health care, and I assure you I don't consume very much of it, because going to the doctor or the hospital isn't actually fun; at best it alleviates pain or discomfort, but it's not something I'd do to pass the time.

This is completely beside the point.

#107 ::: Graydon ::: (view all by) ::: March 03, 2010, 08:16 AM:

Charlie @74 --

Yup. Also, various Co-ops of various sizes; the most obvious Canadian retail one is MEC, Mountain Equipment Co-op, but there are bunches, including the per-province farmer's ones.

In a number of respects, Tommy Douglas is due more statues than he's got.

Mary @86 --

People chose to die rather than expend savings and pauperize their expected survivors, too. Nor do I believe my family is unique in having had a devil of a time getting elderly relatives to seek care, and that was under the Canadian system where it wasn't going to be a significant out of pocket.

For-profit health care is evil and wrong.

Profit-maximization as a goal or a behavior is evil and wrong.

Believing that you yourself are better, more deserving, or less sinful than other people is evil and wrong.

Embodying all three of those evil and wrong principles in a health care system that costs twice as much per amount of delivered care than doing it without those principles being involved is inevitably evil and wrong. (And there's a lot of capacity to suck up demand if you remove the for-profit, because it's costing you twice as much that way.)

Patrick @100

Anything that will fit in a comment here will be an oversimplification.

However, the guy who runs Costco really does have to make that assertion to his board; or, at least, it gets made, and I doubt he's doing it for fun. The various folks who ran AMD while I was working there really did have to make decisions based on profit this quarter and next, in preference to longer term anything. (One hears of, but cannot confirm, "no financing until you fire people" conditions. Not anyone specific, not "close an unprofitable business unit", but "it's not cost cutting unless you're firing people".)

So I don't think that assertion about a legal requirement for profit maximization lets anybody off the hook; I think it calls into question the viability of a political system in which either not enough people want to, or it is not possible to, change the law to produce effective corporate governance so that evil deeds are not the most profitable ones.

#108 ::: inge ::: (view all by) ::: March 03, 2010, 08:28 AM:

Mary #86: Strongly depends on the individual and their situation. My family has a dislike of doctors and genetically good health, so any suggestion of treatment that is less than rock-solid with a twenty-year track record of success is met with getting out of the doctor's office fast. (I notice myself doing the same thing.) That with money being no object. And it's my observation that this is how *most* people handle it -- the older they get, the more so.

Elliot #97: It's been shown again and again with various government programs that far more money is spent on ferreting out and punishing cheaters than would be lost to a basic level of fraud

ISTR that the opposite is true when it comes to going after tax evasion.

#109 ::: Elliott Mason ::: (view all by) ::: March 03, 2010, 08:37 AM:

Graydon @107 said: One hears of, but cannot confirm, "no financing until you fire people" conditions. Not anyone specific, not "close an unprofitable business unit", but "it's not cost cutting unless you're firing people".

There was an interesting article in Newsweek last week describing recent research that shows that layoffs are unprofitable, full stop. Regardless of why they were done, firing people has a short- and long-term negative effect on share price, and worse on productivity and innovation.

I wonder how long it'll take management to LEARN from this and change their behavior.

(Amusingly, while googling for the article to link in here, the first four hits were about recent layoffs at Newsweek, because their corporate masters are trying to make themselves more profitable.)

#110 ::: inge ::: (view all by) ::: March 03, 2010, 08:51 AM:

Elliot: I wonder how long it'll take management to LEARN from this and change their behavior.

Never, if the reward structure considers only low short-term expenditures. The effect of insecurity, bad morals and low productivity hide in the "money in" row of the account book, and hardly show up in the "money out" one.

#111 ::: Patrick Nielsen Hayden ::: (view all by) ::: March 03, 2010, 09:21 AM:

Mary #106, thanks for clarifying. I think some of the defensive reactions you got the first time around spring from the fact that a lot of people on the right really do like to suggest that if health care was freely available to all, everybody would avail themselves of far more than they need. Which is of course silly. The citizens of other First World countries do not run around getting gratuitous extra colonoscopies just for the swank of it.

You weren't saying this, and you're certainly not making right-wing arguments. You're trying to shine a light on some of the genuine fiscal difficulties entailed in getting the US from where it is right now to a place where health-care availability and sane cost-containment are both on improving curves, rather than degrading ones. (Difficulties which are, of course, exacerbated by political and cultural reality. The US could have single-payer tomorrow if we simply fired the current citizenry and replaced them with a more sensible lot.) I appreciate your efforts.

#112 ::: ajay ::: (view all by) ::: March 03, 2010, 09:56 AM:

106: echoing PNH - didn't mean to imply that Mary actually was a right-winger, just that the "infinite demand" argument is one the right wing seems to use quite a bit. It's not true; a "free health care" policy would have very different effects on consumption than a "free Ferraris" policy.


#113 ::: David Dyer-Bennet ::: (view all by) ::: March 03, 2010, 10:10 AM:

ajay@112: VERY different, I suspect, yes.

Ferraris have two uses -- as sports cars, and as Veblen goods. Making them free destroys the second use, though I suspect it would take a while for the cachet to wear off. I don't really know how good they are as actual sports cars; I'm not a sports car expert in the first place, and have never driven a Ferrari.

#114 ::: Patrick Nielsen Hayden ::: (view all by) ::: March 03, 2010, 10:32 AM:

Graydon, you and I are certainly in agreement that a lot about the current system is immoral and unviable.

But while I agree as a point of fact that according to the current rules, managers of publicly-traded companies have a legal responsibility to "maximize shareholder value," I also know that this isn't universally interpreted as a command to look only at the immediate bottom line. Lots of publicly-traded companies do good deeds pro bono, or invest in long-term projects with payoffs years away. I'm far from saying the rules that exist are a good thing, but I'm very suspicious of way this legal obligation gets trotted out by the stupid and greedy managers of stupid and greedy companies as a "my hands are tied" defense.

#115 ::: OtterB ::: (view all by) ::: March 03, 2010, 10:35 AM:

PNH @111 The US could have single-payer tomorrow if we simply fired the current citizenry and replaced them with a more sensible lot

Heh. Giving a whole new meaning to "vote the bastards out." We have met the enemy, and he is us.

TNH @58. I have mixed feelings from the time I needed insurance most. We were with an HMO, which I will never do again given a choice, because they seemed to keep switching doctors on us and I didn't care for some of them at all and felt trapped. OTOH, I had an emergency C-section due to a life-threatening complication, my daughter spent 3 weeks in the neonatal ICU and then another month in the hospital a few months later; I'm fine and she has developmental issues unrelated to the excellent care she received. And we are not bankrupt, and in fact I never even saw a hospital bill, nor do I recall having to fight for anything she really needed.

We had another, even better insurance a few years later, that covered speech and PT and OT for my daughter without a whimper. All in all, I can't complain.

#116 ::: Daniel Boone ::: (view all by) ::: March 03, 2010, 11:17 AM:

What angers me to the point of apoplexy (which reminds me, I better go buy some more $3.00-each blood pressure pills) is the set of reform concepts under which the insurance no one will currently sell me at any price (because of my pre-existing conditions) will become "available" at an unregulated price I still won't be able to afford. Only now, it looks as if I'm going to be assessed a punitive tax for the privilege of not buying it.

Which is so manifestly stupid, I'm still having trouble believing it's the leading reform proposal. Unless something has changed in the last couple of weeks; I haven't been keeping current.

Near as I can tell, the mostly likely outcome to me of the current reform efforts is that I'll be paying more money in taxes while remaining an uninsured self-employed person, buying meds out-of-pocket and delaying checkup visits because, although I can handily afford the doctor time, I don't have the money for the lab bills.

Compared to that, a tontine still sounds stupid ... but not really a whole lot more stupid.

#117 ::: Graydon ::: (view all by) ::: March 03, 2010, 11:37 AM:

Patrick @ 114 --

Sometimes it's stupid and greedy managers, yes.

But it often is people who are not so much stupid and greedy as who don't see themselves as able to fix the system, so they might as well go along with it.

The "even 2% relative reproductive advantage is total replacement pretty quickly (as such things go)" results are from the 1930s; nothing has displaced those results since. Only with people, it's not on the thousand generation scale, because people can and do (some of them, sometimes) act to maximize what I might as well call social fitness. Money, prosperity, and perceived relative success all interact with social fitness. So if you've got a "being something of an unfeeling bastard is systemically rewarded" (which it certainly is; tying bonuses to single quarter quarterly results would do it all by itself, and it has help), you get, in one or two or three generations, a norm of being an unfeeling bastard in management positions because social norms get replaced when people grow up and consider normal what was normal when they were having their formative experiences.

So that "maximize shareholder value" thing functions as a systemic constrain on how difficult it is to be a good boss; under the "the purpose of a system is what it does" rule, that's (one of the things) it's for.

Which is my point in bringing it up; the social norms assume a pervasive lack of empathy and fellow-feeling. You can buck the trend, but it'll cost you.

In that context, doing the right thing and taking care of everybody with an egalitarian universal not-for-profit health care system is going to be a mighty tough sell, because it not only has to swim upstream against all the "but we're making so much money!" opposition, it requires a whole lot of people to go "wait, maybe me being an unfeeling bastard is a bad thing". This is kinda tough to do.

#118 ::: ajay ::: (view all by) ::: March 03, 2010, 11:45 AM:

What angers me to the point of apoplexy (which reminds me, I better go buy some more $3.00-each blood pressure pills) is the set of reform concepts under which the insurance no one will currently sell me at any price (because of my pre-existing conditions) will become "available" at an unregulated price I still won't be able to afford. Only now, it looks as if I'm going to be assessed a punitive tax for the privilege of not buying it.

But you'll get a federal subsidy to help you afford it, if you're earning less than 400% of the poverty line. Also, the insurers won't be allowed to take your pre-existing conditions into account when they set the level of your premium, so you shouldn't end up paying any more than other people of your age. (That's according to the proposal that passed the Senate.)

#119 ::: Daniel Boone ::: (view all by) ::: March 03, 2010, 12:05 PM:

Ajay #118: "Also, the insurers won't be allowed to take your pre-existing conditions into account when they set the level of your premium..."

That's interesting news. At the particular moment when I last bestirred myself to look at the details, the mandatory purchase was in but there weren't any pricing restrictions on the table. And although insurance for people with pre-existing conditions was to be available, it was expected that the conditions would be considered in deciding which pricing pool to dump us in, making the availability pretty theoretical. If that ends up getting fixed, it will be good news.

I was aware that there were to be some subsidies, but the amounts I've heard sound pretty token-ish compared to the COBRA-sized insurance costs I'm expecting. But no, I haven't done enough research to put numbers to those impressions, and it's very possible I misapprehend the proposals (not to mention the fact that we still dunno what will actually get passed).

#120 ::: paul ::: (view all by) ::: March 03, 2010, 12:31 PM:

Even the modified version of infinite demand, though, is kinda misplaced. Sure, there's a push for more expensive treatments, but it's mostly in a context of treatments that don't actually work or where relative effectiveness can't be proven. In other areas (see, for example, clot-busters) things that are cheaper and equally (or more) effective take over the market like gangbusters.

So perhaps shorter me: this wouldn't be a problem if we could replace our current population of doctors with ones who actually cared about (and were compensated according to) the medical effectiveness of treatments. Which is a little easier than replacing the population of patients.

#121 ::: Earl Cooley III ::: (view all by) ::: March 03, 2010, 12:46 PM:

One step would be to criminalize seminars where doctors are taught how to game the system.

#122 ::: Patrick Nielsen Hayden ::: (view all by) ::: March 03, 2010, 12:57 PM:

There's a lot of misinformation being broadcast about the plan. Some of it (most of the right-wing criticism) is simply crazy. Some of it, including some of the harsher criticism from the left--notably that coming from the FireDogLake crowd--is based in reality but may be a little alarmist. I believe that the claims that insurance will be unaffordable for the poor or unemployed, and that the penalties for not buying insurance will be draconian, have been shown by people like Paul Krugman (not exactly an apologist for the Obama administration) to be overblown.

I'm not an expert in the details, I'm just someone who's read a lot of the arguments and who has found the people who say the existing bill is hugely worth passing (even if imperfect) to be more convincing than those who say it should be trashed. Even though I respect a lot of the people in the latter camp.

#123 ::: Andrew M ::: (view all by) ::: March 03, 2010, 01:14 PM:

Paul Duncanson@85: thanks, that's very illuminating. Even so I don't think the present proposal is very like a tontine, really.

#124 ::: heresiarch ::: (view all by) ::: March 03, 2010, 01:59 PM:

Mary @ 106: "I'm posting because I'm hoping to turn the conversation in what seems to me a more productive direction. Health care is a hard problem. I'm trying to point out what's hard about it."

I think there's a confusion about the meaning of "infinite"--some people are taking it to mean that each person will consume an infinite amount of health care if possible, when I think you mean that people are willing to spend an infinite amount on curing an actual illness. Is that correct?

A better word might be "inflexible." If you're sick, you'll pay what it takes to get healthy. If you're already healthy, you're not going to spend money just for kicks. In other words, health care costs are not something people have much power over either way.

Graydon @ 107: "However, the guy who runs Costco really does have to make that assertion to his board; or, at least, it gets made, and I doubt he's doing it for fun."

I believe that's because every year there's a minority share-holder law suit to that effect. The problem, I think, is that shareholders expect CEOs to focus on short-term profits and sue them if they don't, and so they must. Companies incentivize short-term profit, and so employees have to do so. It seems to me to be a problem of American investment and corporate culture more than it is a legal problem.

@ 117: "So if you've got a "being something of an unfeeling bastard is systemically rewarded" (which it certainly is; tying bonuses to single quarter quarterly results would do it all by itself, and it has help), you get, in one or two or three generations, a norm of being an unfeeling bastard in management positions because social norms get replaced when people grow up and consider normal what was normal when they were having their formative experiences."

No argument; but what you're talking about there is corporate culture, not legal structure.

#125 ::: heresiarch ::: (view all by) ::: March 03, 2010, 02:23 PM:

This CBPP report has this to say about the subsidies:

Under the bill, families and individuals with incomes between 133 and 400 percent of the poverty line (between $24,350 and $73,240 for a family of three in 2009) would receive premium credits to help offset the cost of insurance premiums for coverage they purchase in the new health insurance exchanges. The amounts these households would have to pay for premiums would be based on a sliding scale, under which households’ premium contributions would be set at 4 percent of income for households at 134 percent of the poverty line and would rise to 9.8 percent of income for those at 300 percent of the poverty line. The maximum amount that households would be required to pay would remain at 9.8 percent of income for those with incomes between 300 and 400 percent of the poverty line.

So if you make less than 400% the poverty line, your insurance is capped at 9.8% of your income.

paul @ 120: "Sure, there's a push for more expensive treatments, but it's mostly in a context of treatments that don't actually work or where relative effectiveness can't be proven. In other areas (see, for example, clot-busters) things that are cheaper and equally (or more) effective take over the market like gangbusters."

No, the problem is the push for more expensive treatments when the more expensive treatments are more effective. New more effective and cheaper procedures are great when we find them, but by no means the general trend. Take organ transplants: expensive, and the only way to save someone's life if their heart gives out on them. Medical science is constantly inventing new procedures that treat illnesses where the previous treatment was "Hope." Not coincidentally, those cutting-edge treatments, taking advantage of every advance in medicine and technology, are often way more expensive. The money for those treatments represents an absolute increase in both our ability to preserve life and in how much it costs to do so.

Now all this is exacerbated by a medical industry that focuses its resources on finding profitable rather than effective treatments, and mercilessly exploits patent law to make grotesque profits. Nonetheless, the basic trend is towards our society as a whole spending a greater percentage of our income on health care.

#126 ::: P J Evans ::: (view all by) ::: March 03, 2010, 02:36 PM:

So if you make less than 400% the poverty line, your insurance is capped at 9.8% of your income.

Which still may not be affordable - most people making less than 400% of the poverty line (which is something ridiculously low) don't have that much spare money after food, shelter and transportation. The other thing is that insurance is expensive: even employer-subsidized plans can cost several hundred dollars a month to cover family members.

The current proposed penalty is something like 2.5% of your income. Guess which one people will choose ....

#127 ::: eric ::: (view all by) ::: March 03, 2010, 02:51 PM:

Wow. The numbers on that look _good_ compared to what I (and my employer) pay for what we get.

#128 ::: fidelio ::: (view all by) ::: March 03, 2010, 02:55 PM:

PNH @122 You said I'm not an expert in the details, I'm just someone who's read a lot of the arguments and who has found the people who say the existing bill is hugely worth passing (even if imperfect) to be more convincing than those who say it should be trashed. Even though I respect a lot of the people in the latter camp.

I'm not an expert, either, but I think history is on the side of the people saying "Pass it, and then work to make it better."

In 1935, the Social Security Act, PL 74-271, was passed. It got some significant tweaks in the 1939 amendments, PL 76-379, and it's been worked on off and on ever since. Some of the legislation involved has provided small tweakings of the system, and some provided major changes and additions--the passage of the 1956 Amendments, PL 84-880, added the disability programs to the retirement and survivors' benefits; the 1965 Amendments, PL 89-97, created Medicare and Medicaid. After over 70 years of the retirement benefits part of the program, most Americans are so much in favor of the concept of this program that it's labeled the Third Rail in American politics; Medicare is so popular that people who hate all government aid programs but benefit from Medicare manage to convince themselves Medicare is somehow not a government program. The disability programs catch flak from several different directions and on different grounds at different times, but most people seem to feel that the idea is not, in and of itself, a rotten one.

One of the reasons so many of the current crop of conservatives and Republicans are so perfervidly opposed to this legislation is because of the record of Social Security. We may carp about it, we may nitpick it, we may disagree about the details, but the American public, by and large, approves of Social Security and wants it to continue--even when they are afraid it won't. I see every reason to believe the same will be true of HCR--and so do its opponents.

The health insurance companies can handle some changes, but they are rightly terrified of the chance single-payer government-managed coverage, like Medicare for all, will become generally available--not just to those who are unemployed or uninsurable otherwise, but to large numbers of the American public. The public will try it, and will like it (within limits--see Social Security, above), and then...well, you can see where that goes, right?

*"PL" stands for Public Law"**, the tag that applies to all legislation passed by the US Congress and signed into law. The first number is the designator for the Congressional line-up that passed the law--we are now on the 111th Congress--the second set of digits is the numerical order of this bill--so the 74th Congress passed 270 bills previous to the Social Security Act. This has been your moment of insane legislative geekery for the day. Social Security's own website has a history of various aspects of the program, including legislative history here.

**It can also stand for Private Law, but I don't kow how those are numbered, or if the two are combined. Private Laws are rare.

#129 ::: Lee ::: (view all by) ::: March 03, 2010, 05:16 PM:

Graydon, #107: Profit-maximization as a goal or a behavior is evil and wrong.

I'm going to quibble with that, and suggest that what you probably meant to say here is that profit-maximization at the expense of all other considerations is evil and wrong. Anyone who's in business is there to make a profit, and the more profit the better... up to a point, and that point must be defined by law if ethics aren't enough. What makes it evil, in the case of the insurance industry, is that they're privileging profit-maximization over people's lives.

heresiarch, #125: So if you make less than 400% of the poverty line, your insurance is capped at 9.8% of your income.

This sounds to me very much like one more way for the middle class to get screwed. Especially the middle class in higher-cost-of-living areas, since the poverty-line figure is not tied to anything local or regional, but is static across the entire country.

(A little Googling suggests that the 2009 poverty-line figure for a family of four was around $22,000. That's more than I thought it would be -- but you can be reasonably secure on that income across much of the rural South, while anywhere in CA you'd be homeless.)

#130 ::: eric ::: (view all by) ::: March 03, 2010, 06:17 PM:

A little more googling and some rough math puts 400% of poverty significantly over the median income in all but a couple of states (NJ, Maryland and Connecticut, with Massachusetts right at 400%). That's health insurance subsidies potentially covering half or more of the population, including lots of people who probably wouldn't consider themselves all the bad off.

(Poverty Levels and Median Incomes)

#131 ::: Paula Lieberman ::: (view all by) ::: March 03, 2010, 07:04 PM:

#109 Elliott
The -appearance- matters more than the reality. The stock market is much more about perception/expectation, than reality.
One example of -perception- Two or three years ago at a Boston SPIN meeting, one of the speakers said that on the average, the salary and benefits of a software developer in India was one-quarter of that of someone in the USA in dollars... but that programmer in India was one-sixth as productive--and that did not include the additional overheard for having to deal with a time difference and language issues and such.... However, the -investment- business said, "if you don't do the work in the eastern hemisphere, you don't get venture capital or expansion funding." The were looking at the per-person costs, NOT the overall costs-to-product-delivery AND maintenance costs....

The investment business looks at the return on investment and the time period involved. They also look at the quarterly payout--pension funds particularly care about the short-term returns an maximizing them, because they're paying out every month to -their- customers....

The long-term well-being of not only a company but its employees, aren't things that the investors care about unless they have a long-term contractual comittment to the particular company/people. The investors tend to want, again, maximum return on investment in the short-term. This often means in effect looting a company--it happened with at least one of the big mattress companies, each time it got sold and bought, the selling investors made huge profits--and the buyers got a company with a worse and worse assets and income to debts and obligations ratio. The company raised product prices, and in an economy tanking, that tanked the unit sales, which caused the company to raise prices more, which cut unit sales more...

It's something of a relative of the game of when the music stops, a chair gets removed... but rather more vicious, except that it's not chair that gets removed, but rather, the debt load grows and grows as each owner looks to sell for more than they bought for, and loots the company's pension fund and degrades product quality and moves the manufacturing jobs to the locale with the least expensive per hour labor and biggest incentives.... The fact that the employees there might be poorly trained, the raw materials adulterated, and the lead time six months, isn't anything the people holding the finances care about, they only care "how much does it -cost- versus how much can we charge and how good will the balance sheet look this quarter and next quarter, so we can sell this to someone else"

That's what real estate flippers do, look for the chump to buy with misleading credit terms when credit is easy and get an inflated valuation, look for people in financial trouble looking for a buyer... the bubble burst, but the flippers got to keep their gains....

#114 Patrick
Private corporation where the owners are part of community, can do as the owners wish... until/unless someone holding financial interests decide they're not getting a high enough return on investment--which is what happened to Polartec, formerly Malden Mills. The owner wanted to keep production primarily in the USA, the investors wanted it go to to China.... the name change indicated what happened...

As for public corporations, a lot of what they do pro bono is to look good to the public and investors. I was VERY surprised the GTE Laboratories or whatever it's called these days, still exists as part of Verizon rather than having been closed down or sold or donated to SRI (the fate of the RCA Sarnoff Lab which developed television....). GTE maintained the labs, which originally were part of Sylvania Electric before Sylvania and GTE merged, mostly as "a hobby shop" to parade financiers with to impress them with the R&D facility... some stuff came out of it, but a lot of it was like Xerox PARC, "See, we're so well off we can employ Ph.Ds to play with things...." When IBM got into red ink territory, it shut down labs all over the USA, including the one in Palo Alto my brother-in-law had been working at....

Also, corporate pro bono stuff, gets tax advantages, if contributing to museums and such. It also is deductible perks for employees which helps keep employees... I got to go to a private opening of an exhibition at the Museum of Fine Arts when GTE Government Systems existed and was the sponsor of Fitzhugh Lane exhibition at the MFA... GTE got the tax benefits of contributing to a non-profit and to throw a party for employees to come to for the opening, to impress the employee and provide a perk to them and to impress the community etc. etc. Yes, it was a Good Thing, but it also had financial benefit for GTE....

As for long-term R&D, it got looked at, really and truly, in terms of Return on Investment. For defense contractors years ago, major R&D contracts all included money from the government that went with the contract, for associated research, called Advanced Technlogy Planning funding--a significant chunk of my salary got charged to such technology planning studies I performed. Corporations would toss in some of their own funds, if they felt that there would be a payoff--companies preferred someone else foot the R&D bill, however...

Borrowing money to develop things, means the borrowing cost is deductible, and the money gets paid back over time, with the expectation being from the profits from the results of the project, or other projects. Paying out of pocket for R&D the money costs -more- because of the tax laws.... yeah, I know, it sounds really screwed up, but the tax laws reward short-term expensing and borrowing for production, and long-term money-borrowing for R&D. Leasing facility, also, often carries financial rewards that facility ownership doesn't.... the result of THAT is the slash and burn approach of locating in the least expensive sites for development and production and moving when someplace else looks cheaper... some ELSE owns the facilities....

#120 paul
There are cheap things like "higher minimum daily requirement for Vitamin D" which would dramatically cut wellness costs--but drug companies and GE's medical equipment businesses don't make money from Vitamin D, or cinnamon, or people jumping up and down (higher levels of Vitamin D decrease cancer risk, decrease osteoparosis rates, and jumping up and down in place reduce osteo rates, too.... higher levels of Vitamin D also apparently lower the incidence of diabetes and some cancers.... such prevention means that people don't have to be treated with expensive drugs and procedures for those illnesses, don't get disabled and go on disability instead of continuing producing goods and services, etc. But again, that cuts the revenue of drug companies and equipment companies--and the income of surgeons....)

#122 Patrick
The existing bill is not something I like but the existing situation is an abomination, dislike is the lesser evil. What I want the Republicraps and social-Taliban "Democrats" are opposed to....

#124 heresiarch
If you're sick, you'll pay what it takes to get healthy.
Um. I remember calling up the physician earlier in the day that my father was going in for a routine checkup, and ratting my father out.... turned out he had an easily-cured infection which had been causing an incontinence problem, which he would never have mentioned to the MD (he complained about it at home, but also said "Old men....")

Then there are people who take -half- the medication, because they feel better, and don't bother with the rest of it--even though they should be taking all of it, if they don't they're helping breed more drug-resistant bacteria/viruses....

And again, the tax laws reward the short-term profit maximization--loot the company, sell it to a sucker, and move on to suck all the money out of the next company.

#125 heresiarch
Dental insurance pays half of the cost of a crown, it pays nearly the entire cost of dentures, even though from a quality of life and health perspective, the crown is a better choice....

#132 ::: nerdycellist ::: (view all by) ::: March 03, 2010, 07:19 PM:

Looks like I've priced myself out of the subsidized insurance by a couple thou, but I still make barely enough to cover my half of the rent/utilities/student loan payments in a marginally safe neighborhood close enough to work that I don't have to have a car (which I can't really afford).

Huzzah for a Union job and my Gold-Plated-Insurance then.

#133 ::: Steve C. ::: (view all by) ::: March 03, 2010, 08:01 PM:

There's a number -- call it X. X is the per capita cost of health care in the US.

Plot X. It rises. At some time in the future -- I don't know exactly when -- X hits the point that the population will demand some kind of action about the collective funding of basic health care.

It will happen. We just haven't gotten to X yet. And policymakers will disagree as to the value of X, but it will happen.

#134 ::: David Harmon ::: (view all by) ::: March 03, 2010, 08:53 PM:

Steve C #133: The public is already demanding action. The problem is that the Rethuglicans not only don't want to fix the situation, they don't want to let it be fixed.

#135 ::: TrishB ::: (view all by) ::: March 03, 2010, 09:10 PM:

heresiarch @ 23: The phenomenon you refer to was also described this way once:

In addition, the salient fact in American politics is that there are always enough people who would volunteer to live with their family in a cardboard box under a railroad bridge, and toast sparrows on an old curtain rod over an open fire, if you would only guarantee them that the people in the next box over -- black, gay, foreign, liberal, different -- don't even get the sparrow.

From an old Washington Monthly comment thread


#137 ::: Beth Friedman ::: (view all by) ::: March 03, 2010, 11:56 PM:

Teresa @58: I don't hate either of the two insurance companies I've had to deal with in the last two years (my employer switched, so I, perforce, had to as well).

Without insurance, there's a good chance I might be blind in my left eye.

A couple of years ago, I developed a hole in the retina, which manifested as a flaw in my vision. Without insurance, I might have let it go, or at least waited a while to see what happened. For a lot of people, this sort of thing does heal spontaneously, but in my case it got worse. Eventually, I had surgery, and it was repaired. The surgical bill was around $11K, of which I paid around $500. I was able to get a second opinion and the surgeon of my choice, without any hassle.

As a result of the surgery, I developed a cataract (annoying but inevitable), and last week I had surgery to repair that. I haven't seen the bill yet, but I believe it'll cost me approximately $250.

Before the vitrectomy procedure was developed, I'm told people often went blind from this condition.

#138 ::: Patrick Nielsen Hayden ::: (view all by) ::: March 04, 2010, 12:10 AM:

Paula #131 (and Graydon passim), honestly, all I'm saying is that I'm not impressed by people who use the imperative to "maximize shareholder value" as a damn excuse.

The dice are always loaded. The captain always lied. Being decent has never been easy. Fucking be decent anyway. Yes, I'd like our laws about corporate governance to be better. But meanwhile, the choices made by individual managers? They're still choices.

The fact that the world is unfair doesn't exempt you from the obligation to be fair.

#139 ::: Patrick Nielsen Hayden ::: (view all by) ::: March 04, 2010, 12:15 AM:

Several people in this thread appear to feel an urgent need to boast of their good fortune in having a not-totally-evil insurance plan.

I find I want to say very rude things to these people. I'm sure that makes me a bad person. But the braying about one's good fortune is extremely hard to take.

#140 ::: Lee ::: (view all by) ::: March 04, 2010, 12:54 AM:

Patrick, #139: Most of the people saying those things appear to be responding directly to Teresa @58 asking, "Is there anyone who's had to rely on their insurance company who doesn't hate them?" IMO, that's qualitatively different from spontaneously boasting of one's good fortune. The worst they can be accused of is (perhaps) taking a question literally that was intended as rhetorical.

#141 ::: abi ::: (view all by) ::: March 04, 2010, 01:01 AM:

Patrick@139:

Factually, Teresa did ask the question up at 58.

But more deeply, speaking as someone whose access to medical care is not institutionally screwed up, I'm with people like Dave Bell at 103. This is an agonizing thing to watch, and an even worse thing to live within. I am always a hair's breadth from a heartfelt apology because I live in a country with a sane system. It's almost inconceivable to me, after living here, how difficult it is to be in the US at this point. And the matter presents an insurmountable obstacle to ever moving back to my homeland.

Do you remember the point Neil Gaiman made in Sandman, when he said that the true torment of hell was being able to dream of heaven?

But the answer isn't—as you know when you're not feeling squashed—to resent the people who are, at the moment, squeaking by. It's to go back, once again, and club your congresscritters over the head to pass the damn bill, then fight through the changes to make it work. It's long and bitter and difficult stuff, and my first suggestion, looking at your posting time, is to get some sleep.

This is emotional and difficult ground, no lie. And we're all just about worn out with the struggle. But if we start in on our allies instead of the people who (for reasons that strain my charity, at times) are standing in the way of the solution, we'll be stuck here forever.

Shorter me: let's all go gently on this topic.

#142 ::: Tom Whitmore ::: (view all by) ::: March 04, 2010, 01:16 AM:

Patrick, I haven't seen anyone here who has said they have reasonable experience with health insurance say that health care shouldn't be reformed, and that this bill is probably as good as we can do right now. There are people who have said that we shouldn't pass this, but they're not the same people as those who have spoken of their good fortune, who in many cases have said this has to pass.

#143 ::: mjfgates ::: (view all by) ::: March 04, 2010, 01:34 AM:

As somebody living on the Republican Party's preferred health plan ("Don't get sick. If you do, die quickly"), I don't resent any of these people who have access to health care. I don't want them to be screwed over. I just want to be able to visit doctors too.

#144 ::: eyelessgame ::: (view all by) ::: March 04, 2010, 04:58 AM:

I've had some rightwingers tell me variants of the tontine: that we should just all have individual health insurance, where everyone buys a policy when they're 20, and that keeps the rates low. And of course everyone will buy at 20, because no one wants to die when 50 of an easily-treatable disease. And those that do, deserve to.

They really do think like that. It's amazing.

One major question that I have with that, aside from the fundamental misunderstanding of young-adult human nature, is this.

Almost everyone I know, including many folks who are quite affluent right now, had at least one period in their 20s where they were barely scraping by - prolonged unemployment or underemployment. The idea that they'd keep paying their health insurance bills in this situation is ludicrous.

If the theory is that only those people who make continuous insurance payments from their 20s onward are going to get decent coverage in their 50s+, damn but these folks don't know shit.

#145 ::: eyelessgame ::: (view all by) ::: March 04, 2010, 05:01 AM:

Oh, and a bunch of Republicans have tried to say we should be paying more for our health care by asserting we don't have "enough skin in the game".

Isn't the point of health insurance that one's entire skin is in the game?

#146 ::: ajay ::: (view all by) ::: March 04, 2010, 05:02 AM:

119 et seq: the normal caveats about taking advice on US health care from your imaginary/foreign internet friends apply, of course.
Obviously, it hasn't passed yet, but the likely outcome is the House passing the Senate bill more or less as it stands, and the Senate bill includes the sliding-scale subsidy, the mandate, and the prohibition on discriminating in price terms by sex, occupation or pre-existing condition (though age discrimination is still OK), as well as a cap on total and annual out-of-pocket expenses. Which should be good news for most people. It also includes the healthcare exchanges, but I'm not really clear what the effect of that will be (probably good, but not sure how good and for whom).

Yes, it's not great, and it'll still leave people struggling. But it should improve matters for most.

Or, if you want an entirely government-funded health care system there's always the VA. Join the Federal Service! Service guarantees healthcare!
Do you want to know more?

#147 ::: Earl Cooley III ::: (view all by) ::: March 04, 2010, 06:58 AM:

David Dyer-Bennet #76: One of the reasons that relatively local government is good is that it puts the leaders within striking distance of the people they piss off.

Yeah, it would be kind of hard to explain to TSA goons why I have a one-way plane ticket and my luggage consists of a lovingly wrapped axe handle.*

-----
*Note to the ECHELON AI: I do not have a one-way plane ticket, nor do I have an axe handle; this was merely a hypothetical and harmless example of venting.

#148 ::: Alex ::: (view all by) ::: March 04, 2010, 09:25 AM:

Of course, it is possible to have a working insurance-based healthcare system. Most of the developed world has just that. The UK is atypical in having turned medicine into a nationalised industry.

Germany, for example, has a network of insurance funds, which include non-profit ones of various kinds (church, trade union, professional etc) and a public option (Allgemeine Ortskrankenkasse - General Regional Medical Fund). Funds going in are a mix of individual contributions, employer contributions, and tax-funded subsidies. They go out to (mostly) nonprofit/mutual hospitals. You can, of course, opt out and go private, but obviously you still contribute by paying income tax. France has a similar setup; Australia and Canada, IIRC, have insurance-based systems dominated by public sector insurers.

This further confirms the upfuckedness of the US system. It's not that insurance, in itself, is the wrong idea - it's US health insurance. There are many ways to achieve national healthcare - it doesn't particularly matter which one you choose.

However, we DO know for a fact that one of the possible options doesn't work. So we mostly have negative evidence, but as Karl Popper would have said...

#149 ::: Graydon ::: (view all by) ::: March 04, 2010, 09:38 AM:

Lee @129 --

No, I really did mean, flatly, "profit maximization is evil and wrong".

Business must make a profit, in the same way that a living thing must get enough to eat. Being focused on making a better product, or on eliminating waste in the production process, or on better understanding actual market demand, or on discovering hitherto unsuspected markets, are all fine things. The instant it tips over into "how do we maximize profit?" you get something malignant.

(Given a white board, I might even be able to explain why in a convincing way, but I don't expect to be able to stuff it into ASCII.)

#150 ::: Faren Miller ::: (view all by) ::: March 04, 2010, 09:54 AM:

Mark Fiore has a fine cartoon about the political divide over the health care issue: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/03/03/fioreparachute.DTL

(I don't know *why* this doesn't come through as a real link, but it should be easy enough to use anyway.)

As a true-blue Democrat, I have to fight against prejudices that say all Repubs are either filthy rich or teabag types who wouldn't see a doctor even if they'd just sawn off their own leg, but Fiore is probably right to have his conservative be equally screwed if the bill doesn't pass.

Note on the girlfriend in "The Wrong Box", film version, mentioned way upthread: She wasn't all that well-known, to an American viewer at least, and she was a willowy brunette.

#151 ::: Lee ::: (view all by) ::: March 04, 2010, 10:43 AM:

Graydon, #149: Okay, I understand what you're saying now. I still don't agree, but I think that's a matter of individual definitions; to me, product improvement, waste-cutting, and market expansion are all forms of profit-maximizing.

#152 ::: David Harmon ::: (view all by) ::: March 04, 2010, 10:50 AM:

Lee #151: I think you need a new word, for making profits better, but not seeking absolute maximum. I propose "profit-optimizing".

#153 ::: Debra Doyle ::: (view all by) ::: March 04, 2010, 11:11 AM:

David@76, Earl@147: On the advantages of local and accessible government, I often think about what Sir Walter Scott (or, at any rate, one of the characters in his novel The Heart of Midlothian) had to say about it:

"I dinna ken muckle about the law," answered Mrs. Howden; "but I ken, when we had a king, and a chancellor, and parliament men o' our ain, we could aye peeble them wi' stanes when they werena gude bairns—But naebody's nails can reach the length o' Lunnon."

#154 ::: Graydon ::: (view all by) ::: March 04, 2010, 11:43 AM:

Lee @151 --

I think perhaps you're making a form of category error.

The koan version is to note that value is the ratio of benefit to cost, and that in an idealized-to-the-point-of-fiction market, a business is engaged in offering a value proposition to potential customers. You can increase value by increasing benefit or reducing cost.

Business activities that increase benefit or reduce cost are obviously acting to improve value, and thus making the business more attractive to customers, and thus (probably) increasing its revenue and thus its profits. The increased profits are a side effect of either increasing the value or decreasing the cost.

Profit-maximization makes the maximization of profit the goal, rather than treating profit as a side effect of value. Profit-maximization must then act to either reduce benefit or increase costs (from a customer perspective, increasing costs); in effect, this is to destroy value. It's also, usually, easier to do, especially from a dominant market position or in such businesses as banking or insurance where the costs of switching providers are high.

So while both processes (well, collections of similar systems) are concerned with profit, the results are not at all the same. (One considers profit a necessity; the other considers profit a virtue. These are intensely not the same thing.)

This ties into the observations about the "as long as those other guys don't get the sparrow", too; if you're very concerned with immutability of social hierarchy, you're going to like profit-maximization approaches, because they tend to choke out innovation, which promotes social stability.

(Innovation tends to result from high labour costs, but real competition to deliver greater value will certainly do it, too. In either case, you get unstable social hierarchies.)

#155 ::: John Mark Ockerbloom ::: (view all by) ::: March 04, 2010, 12:37 PM:

Graydon: I think we might have had this conversation before, and if it's the same one I recall, I disagree with the basic priorities.

Let's bring it down to a personal level: I currently get paid $N by my employer for doing work X. Suppose I can get $N+m for the exact same work by doing the work for someone else, or by having the temerity to ask my current employer for a raise.

Am I wrong to do either of these? I'm not changing the value I deliver, but I am increasing my "profit". I think there is *not* anything wrong with this in principle. There may be specific cases where it is, but I don't see a problem with a worker trying to maximize what they earn, *within the scope* of certain larger moral constraints. (For instance, it would be wrong for them to simply steal from the payroll rather than up their paycheck; similarly, if for some reason the person who pays them is in an unusually vulnerable position, exploiting that vulnerability to excess would be wrong.)

And if I'm a business owner, rather than a wage earner, the same situation holds. Because businesses tend to wield more power than individuals, the potential for exploitation of the vulnerable is greater, so one often has to consider profit-driven motives more critically. But in principle, I find it quite fine for them to try to increase their profits within reasonable ethical guidelines.

#156 ::: Graydon ::: (view all by) ::: March 04, 2010, 12:57 PM:

John Mark Ockerbloom @155 --

What your employer pays you isn't your profit.

Your profit is, to a first approximation, the amount of money you wind up with that you could, if you chose, accumulate as capital. (You don't have to, but you could; it's not taxes, living expenses, professional association fees, etc.) (If you're the owner of some kinds of incorporated small business in Canada, odds are you very carefully don't make a profit, because this lowers your taxes; you might pay yourself a pretty good salary, though.)

What you're doing by switching employers or seeking a raise (let's leave all other things being equal, like cost of living, length of commute, amenities, etc.) is setting a higher price for your services. (Which is where comments like "fair market value" come into things; "if you had to go on the open market for these services, they'd cost you three times what you're paying me. I consider this unjust". Asking for a raise in that situation is in effect asking your employer to stop profit-maximizing with respect to the cost you represent to them.)

Nothing wrong with that at all.

(And yes, I know you are in effect acting to raise your profit when you ask for the raise in your current position; I think treating that layer of indirection as a concrete event confuses the issue, though.)

There would be lots wrong with making setting the highest price you possibly could for your services your sole goal as an employee, or with making delivering the least amount of value (whether least hours or least effort) to your employer you possibly could without getting fired. (I've worked with people diligently pursuing both of those strategies.) Either of those would be profit maximization -- reducing benefit or increasing cost as the goal -- and either of those would be destroying value.

Destroying value is, in my view, objectionable.

#157 ::: nerdycellist ::: (view all by) ::: March 04, 2010, 01:18 PM:

I apologize, Patrick @ 139. I had only mentioned it because I'm doing relatively well and wanted to note that it's because of the GOP-hated Union. Should my job lose its union protected status, or I lose my job for any reason, I'm back down at the level I was as a part-time bookseller; can't get insurance through work, can't afford it even if my pre-existing conditions were ignored, can't afford health care at all without it. Even the "well off" are a hair's breadth away from bankruptcy and ill health.

Feel free to disemvowel anything gloaty.

#158 ::: nerdycellist ::: (view all by) ::: March 04, 2010, 01:25 PM:

Also, if I weren't living with a good friend already, I'd probably offer to marry anyone of the legally-permissible opposite gender and share my great good fortune with them. Nearly did so with my long-term roommate before we determined the taxes on her portion of my insurance would make savings from her (lousy, employer provided) plan a wash.

#159 ::: heresiarch ::: (view all by) ::: March 04, 2010, 02:42 PM:

PJ Evans @ 126: "Which still may not be affordable - most people making less than 400% of the poverty line (which is something ridiculously low) don't have that much spare money after food, shelter and transportation."

Kindly direct your eyes to the block paragraph immediately preceding the sentence you quote. In it, you will find not only a cash value for 400% of the poverty line ($73,240 for a family of three) from which you can calculate the poverty line, but you may also discover that premiums for the low end of the income distribution are substantially lower than 9.8% percent--there is a sliding scale starting a 4% of income for those at 133 percent of the poverty line. (Below 133%, families are eligible for Medicaid, or if not will receive premium credits.)

"The other thing is that insurance is expensive: even employer-subsidized plans can cost several hundred dollars a month to cover family members."

Yes, that is why there are subsidies. Quoting from the same article I already linked to: "A family of three earning about $32,000 (or 175 percent of the poverty line) would have to pay about $1,738 per year under the new bill."

1738/12=$144 a month.

Graydon @ 154: "I think perhaps you're making a form of category error."

The error is yours, I think.

"So while both processes (well, collections of similar systems) are concerned with profit, the results are not at all the same."

From what perspective? From the perspective of value, they are quite distinct. But we aren't discussing value or value-maximization. We are discussing profit and profit-maximization, and from the perspective of profit, maximization via value-creation and maximization via value-destruction are quite indistinguishable. If you wish to draw a distinction based on value, you must turn to a concept other than profit-maximization.

#160 ::: eric ::: (view all by) ::: March 04, 2010, 02:59 PM:

I find hearing about other people's insurance useful, in that "Huh, I didn't realize that mine sucked as badly as it does" sort of way.

My impression is that I've lost ground, 5% and 5$ at a time. I seem to remember a time when I had 100% employer provided, no co-insurance insurance. With me being young and healthy and not needing it then. And hearing that others have insurance that does X and their copay is less than I pay to sneeze makes me realize just how much I/we are paying for the half assed coverage that we have. (Sounds a lot why people don't talk about money, really)

I _know_ that there's slop in the system. Children's Hospital (Seattle) discounts bills 25% if you don't have insurance. Which seems to mean that they jack up the price because it's going to be disallowed back down by insurance companies. I'm guessing that that happens everywhere, you don't just see that 25% so blatantly.

I want to hear the statistics -- especially the distribution of cost of care per year, and then I'd compare it to where the yearly expected benefit from health insurance falls. I looked at dental 'insurance' once, and from the limits on it, the plan was essentially expensive prepaid dental. The premium costs were ~75% of the maximum payout. They expected people to use most of it. Health insurance is dramatically different. From my point of view, it's because the maintenance for health people has a yearly cost of less than one month's premium. What I don't know is if it's long term stuff, or if it's the stunningly expensive but rare stuff. (Or, worse, expensive and common and necessary).

#161 ::: Steve with a book ::: (view all by) ::: March 04, 2010, 03:09 PM:

Alex@148:

> The UK is atypical in having turned medicine into a nationalised industry.

This seems to have been a brilliant late improvisation by Minister of Health Aneurin Bevan. The hospitals of post-WWII Britain were a patchwork of disparate institutions of very variable quality; this diversity was quite a stumbling-block to the creation of the NHS. AN Wilson's After The Victorians quotes the following conversation with Churchill's doctor, Lord Moran, recorded in Volume 2 of Aneurin Bevan by the late Michael Foot:

BEVAN: I find the efficiency of the hospitals varies enormously. How can that be put right?

MORAN: You will only get one standard of excellence when every hospital has a first-rate consultant staff. At present the consultants are all crowded together in the large centres of population. You've got to decentralize them.

BEVAN: That's all very well, but how are you going to get a man to leave his teaching hospital and go into the periphery? [He grinned] You wouldn't like it if I began to direct labour.

MORAN: Oh, they'll go if they get an interesting job and if their financial future is secured by a proper salary.

BEVAN: (after a long pause) Only the State could pay those salaries. This would mean the nationalization of the hospitals.

The local-national question still dogs the NHS. Different local health authorities choose different policies on the use of very expensive drugs, and it's decried as a 'postcode lottery'. Bun often the NHS lays down the same rules for every authority, and it's decried as Faceless Bureaucrats In Whitehall. There's probably no way around this.

(Steve with a book likes the NHS very much, but feels that the attitude of many hospital ancillary staff, such as the ones who boredly lob forms at you at reception desks while chatting animatedly to their mates, could do with a bit of spit and polish).

#162 ::: P J Evans ::: (view all by) ::: March 04, 2010, 03:32 PM:

159
I'm going to refer you to financial analysis here:
http://emptywheel.firedoglake.com/2009/12/27/affordable-health-care/
http://emptywheel.firedoglake.com/2009/12/29/why-cant-bill-supporters-say-affordable/
http://emptywheel.firedoglake.com/2009/12/31/bill-supporters-still-cant-say-affordable/

#163 ::: guthrie ::: (view all by) ::: March 04, 2010, 03:51 PM:

Further to Alex's post #148, when I read a few articles on European healthcare, the simple fact is that there is a diversity of structures. What they have in common though is government involvement somewhere, whether making sure that the bodies carrying out the work are non-profit, or making insurance compulsory, or setting up the precise structures within which limited and effective competition can take place, or subsidising costs for the less well off.

By contrast what I have read of the US system makes it sound like a mess where the individual is completely at the mercy of those wishing to maximise profits, at the cost of nearly twice the level of expenditure of European systems.

#164 ::: Graydon ::: (view all by) ::: March 04, 2010, 04:01 PM:

heresiarch @159 --

My original assertion was "profit maximization is evil and wrong".

I was challenged on that point; I supported the assertion with an argument -- which you appear to agree with! -- that profit maximization destroys value.

Also, from the perspective of profit, making a profit via value-creation is not the same as profit-maximization through value-destruction. It just takes some time to notice.

Profit is a necessity, not a virtue.

#165 ::: eric ::: (view all by) ::: March 04, 2010, 04:06 PM:

PJ@162: I should do those numbers for my family, but my feeling from the rough outline of the plans linked upthread is that while the 3-400% bracket might not be Affordable, it's certainly More Affordable than the null case. I think that if you took the premium cap + the out of pocket max cap per family for where I'd lie I don't think you'd hit my current premiums, which are currently shared between me and my employer. (to be sure though, I'd need to see how the deductable and out of pocket caps are set/calculated for my family size)

(the thing is though, I know of two plans, the one I had last year, which I have data for, and the one I have this year, which is a different company because the old company 'made changes to keep the plan competitive' to the old one, primarily boosting the price 10% and knocking up the co-insurance from 20-30%. I don't know what typical plans are.)

The bottom line for me is that this looks like something that's a lot better than I expect to get now if my job goes kablooie.

#166 ::: Mary Aileen ::: (view all by) ::: March 04, 2010, 04:27 PM:

I'm sorry, too, Patrick. I was attempting to answer Teresa's question at #58. Which, now that I look back at it, does look rhetorical. I was definitely not gloating, merely reflecting--in my hamfisted way--on how lucky I am. I very much hope that we can get a sane health care system in this country, so that everyone can be so fortunate.

Again, it was not my intention to step on anyone's toes, and I apologize unreservedly for having done so.

#167 ::: David Dyer-Bennet ::: (view all by) ::: March 04, 2010, 04:33 PM:

Alex@163: The government is already heavily involved in health care here, too. Medicare, a government program, covers all senior citizens (and some others), for example, and has for the last 40 years. The cost of offering health insurance to employees is tax deductible to the corporation. Drug certification is Federally mandated and monitored. There are laws about who is allowed to call themselves a doctor and practice medicine. And so forth. Insurance, including health insurance, is heavily regulated. And on and on. It's not like there isn't government involvement now!

#168 ::: Craig R. ::: (view all by) ::: March 04, 2010, 05:00 PM:

The "but at least *they* don't get a sparrow, by Ghu!" reminds me of something I saw a few days ago:

A very cogent illustration of what, during the Bush Years, was known as the "What Is *wrong* with those people in Kansas?" effect...

(Non-sequiter cartoon for 02/24/2010)

#169 ::: Marilee ::: (view all by) ::: March 04, 2010, 08:58 PM:

Patrick Nielsen Hayden, #139, Teresa asked us.

#170 ::: Daniel Boone ::: (view all by) ::: March 04, 2010, 09:14 PM:

Eric #160: "Children's Hospital (Seattle) discounts bills 25% if you don't have insurance."

At my local red-state county clinic, where I am a rare cash-paying customer, I have to queue at the co-located hospital's accounts desk to pay for my lab tests in advance. I get an instant 30% discount from their list prices for lab services, although I have several times had to ask/remind the lady at the window to apply it, because they have so few cash customers.

#171 ::: Lee ::: (view all by) ::: March 04, 2010, 09:16 PM:

David, #152: I think you're right. Graydon and I do seem (in light of #154) to be talking about somewhat different things. Profit-seeking definitely has a curve, so "optimization" is a better description.

Craig, #168: Someone elseNet posted a link to that on the artist's site, and I made the mistake of reading the comments. Boy, talk about a whole bunch of people missing the point! There were two or three repeated misinterpretations and a lot of misplaced glee.

#172 ::: Patrick Nielsen Hayden ::: (view all by) ::: March 05, 2010, 12:05 AM:

All the people who pointed out that they were just answering a question Teresa asked: Fair enough. My bad.

P J Evans, #162: I'm sorry, but I lost the ability to believe anything posted on firedoglake.com around the time that Jane Hamsher starting playing footsie with Grover Norquist. I'm sure this is unfair to (for instance) Marcy Wheeler, but Sainted Michael Harrington on a pogostick, can't we even do pissed-off left-wing oppositionalism without canoodling with poisonous right-wing slime who want to kill us?

#173 ::: P J Evans ::: (view all by) ::: March 05, 2010, 12:50 AM:

Patrick, I get ticked off at them, also. Ths constant 'action, action, action' any more is tiring just to read.

emptywheel is reasonable, though, and not of the 'you have to write/call your congresscritter Right Now' group.
She does analysis and timelines, and if you want to know what's in the data dumps, it's a good place to start.
Different mindset, different kind of comments, and there's frequently a troll-eater in addition to the Lurking Mods.

#174 ::: Linkmeister ::: (view all by) ::: March 05, 2010, 01:08 AM:

I feel like the guy who says "I only look at Playboy for the articles!" when I say that I click to Firedoglake in order to get to TBogg.

#175 ::: heresiarch ::: (view all by) ::: March 05, 2010, 05:01 PM:

PJ Evans @ 162: "I'm going to refer you to financial analysis here:"

I tend to share Patrick's estimation of FDL--they've fallen off of my reasonableness horizon on the health care bill (to the left, which is pretty hard to do). Still, those are interesting analyses. Let me address my problems with them.

First, Wheeler isn't addressing the question of whether insurance is affordable to purchase: she's looking at whether that insurance is an effective shield against medical bankruptcy in case of serious health problems. She finds that it isn't, which is a problem, but it's a different problem than insufficient subsidies. It's a problem of insufficiently high coverage.

Second, she's looking at it from the perspective of an entire family budget, and finding that the total is excessively high. But insurance is less than ten percent of that budget: if your goal is to balance the whole thing, insurance costs make for a poor lever. You can't cure poverty by making health insurance cheap. (Transportation, on the other hand...)

Graydon @ 164: "I was challenged on that point; I supported the assertion with an argument -- which you appear to agree with! -- that profit maximization destroys value."

As I understand it, your argument goes:

1. Profit maximization can destroy value.
2. Destroying value is evil and wrong.
Therefore, profit-maximization is evil and wrong.

To me, it seems evident that the term "profit maximization" includes both maximization via value destruction AND maximization via value creation. You seem to be defining it strictly as the former. You seem to see a clear distinction between profit increasing (which is presumably good) and profit maximizing (which is evil and wrong) which, I feel, you expect corporations to make. I don't see how they can possibly make that distinction, being as they are creatures blind to anything other than dollar signs.

"Also, from the perspective of profit, making a profit via value-creation is not the same as profit-maximization through value-destruction. It just takes some time to notice."

And when it is noticed, why is it noticed? Because it is negatively affecting profits. Which is just another way of saying "creating short term profits via value destruction often leads to an overall reduction of profits on a sufficiently long time line." It's all still being evaluated in terms of profits.

"Profit is a necessity, not a virtue."

To you it's a necessity. To capital, it's their reason to be.

#176 ::: P J Evans ::: (view all by) ::: March 05, 2010, 09:01 PM:

Heresiarch, she's saying that insurance can very easily eat more than 10 percent of a family's budget. Remember that taxes will take about 15 percent right off the top!
(For what it's worth: I'm being paid about 55000 a year, and my take-home pay after deductions is about 2800 a month. Which has to cover everything. Rent takes a third of that, transportation another 10 percent, food about 5 percent ... and I'm only one person, with fairly low expenses.)

As far as FDL going nuts, yes it has, although there are individual posters who are still worth reading (masaccio on economics in particular). Emptywheel had her own blog for some time after leaving 'The Next Hurrah', so she's mostly still independent.

#177 ::: Marilee ::: (view all by) ::: March 05, 2010, 09:19 PM:

P J Evans, #176, one of the advantages of having two or more in the household is that it makes the cost less. In general, single people who live alone pay more in expenses than people who live together.

#178 ::: Zarquon ::: (view all by) ::: March 07, 2010, 04:46 AM:

I just want to add that in Australia, a Tontine is a pillow.

#179 ::: heresiarch ::: (view all by) ::: March 07, 2010, 08:24 PM:

PJ Evans @ 176: "she's saying that insurance can very easily eat more than 10 percent of a family's budget."

She's not--she's saying that health care can easily eat more than ten percent of a family's budget. The way to fix that isn't to increase insurance subsidies, but to increase how much that insurance covers.

#180 ::: Graydon ::: (view all by) ::: March 08, 2010, 09:49 AM:

heresiarch @175 --

You have (moderately) mistaken my argument.

It's 1. Profit maximization *will*, without exception, destroy value. (Value is the ratio of benefit to cost; profit maximization either decreases benefit or increases cost. Value is being destroyed.)

There is no such thing as profit-maximization by value creation; value creation can (often) increase profit, but you only get the increased profit if you're doing something that (correctly!) treats profitability as a side effect. ("we will reduce waste to increase profit" reliably fails, for example. There is a year of better report numbers but no one changes what they're doing, they just defer purchases. Reducing waste, or increasing the evenness of processes, or a bunch of other things, work much more often than not _in as much as they change what people are doing_.)

It's not a symmetric situation, in much the same way as "I want to eat as much as possible" and "I want to eat a healthy diet so I can be as energetic as possible" are not symmetric situations.

And no, generally, the problem with value destruction in profit maximization is not noticed because it's negatively effecting profits; if that worked, GM would have had some time in the past 30 years realized that they needed structural change to avoid bankruptcy and done it. It's generally noticed through business failure.

Capital exists, if it exists (for most of human history it did not exist), to serve human purposes. Those purposes are often malicious from the viewpoint of (statistically) everyone. That's a problem.

#181 ::: Earl Cooley III ::: (view all by) ::: March 08, 2010, 10:13 AM:

I want to eat more steaks than I can afford, but not as many as possible. That would be bad.

#182 ::: David Harmon ::: (view all by) ::: March 08, 2010, 12:17 PM:

heresiarch #175: To me, it seems evident that the term "profit maximization" includes both maximization via value destruction AND maximization via value creation.

Alas, no. The problem is that creation requires investment -- not just money, but labor and creativity. Destruction is always cheaper up front. The root issue with this is a flaw in the very idea of money! Consider: money is meant to be a means of "universal interchange", which you can buy or sell anything for.

The problem is that for a large number of commonly accepted Good Things, that definition fails outright: It's entirely possible to destructively extract money out of any number of things, which mere money cannot recover or rebuild. This includes natural resources, historical sites and artifacts, goodwill, "community", ecologies, et cetera. The common factor is that even if all monies received were to be confiscated and rendered to the victims¹, they wouldn't buy back those resources -- those are gone.

Over time, anything of this sort will eventually be "eaten by the money system", unless it has protectors who, for whatever reason, cannot be paid off.

¹ Whoever you decide those victims are... it doesn't matter.

#183 ::: dcb ::: (view all by) ::: March 08, 2010, 12:22 PM:

Zarquon @ 178: That's a bit surreal. I guess somebody liked how the word looked/sounded and had no idea what it meant?

#184 ::: Rikibeth ::: (view all by) ::: March 08, 2010, 04:31 PM:

Earl @181, I learned that lesson in culinary school with foie gras mousse. The class next door had made it as their project, and offered up the results to my class; most of my classmates, being young, inexperienced, and not terribly adventurous, turned up their noses at it, declaiming, "Ew! Liver!"

While my chef-instructor was upbraiding them for poor manners and ignoring an opportunity to educate their palates, I scoffed up six ramekins of the stuff.

Even if I am ever again in a position to eat all the foie gras I can hold, I will stop at about half that much, because the indigestion was epic.

#185 ::: Wesley Osam ::: (view all by) ::: March 08, 2010, 07:17 PM:

Sarah Palin made a speech in Calgary this weekend. On health care, she's quoted as saying this:

The vocal opponent of health-care reform in the U.S. steered largely clear of the topic except to reveal a tidbit about her life growing up not far from Whitehorse.
“We used to hustle over the border for health care we received in Canada,” she said. “And I think now, isn't that ironic?”

Yes. Yes, it is.

#186 ::: SirOtter ::: (view all by) ::: March 14, 2010, 09:56 PM:

I've spent the past eighteen and a half years working in a couple of different capacities with folks who have disabling conditions, a large number of whom have been and are young adults with spinal cord injuries and traumatic brain injuries, mostly incurred by doing something typically dumb, given their age. Yes, young adults need insurance to cover the hundreds of thousands of dollars in medical bills rolling cars or diving into shallow water or engaging in gun fights or joining fight clubs will generate.

#187 ::: SirOtter ::: (view all by) ::: March 14, 2010, 09:56 PM:

I've spent the past eighteen and a half years working in a couple of different capacities with folks who have disabling conditions, a large number of whom have been and are young adults with spinal cord injuries and traumatic brain injuries, mostly incurred by doing something typically dumb, given their age. Yes, young adults need insurance to cover the hundreds of thousands of dollars in medical bills rolling cars or diving into shallow water or engaging in gun fights or joining fight clubs will generate.

#188 ::: SirOtter ::: (view all by) ::: March 14, 2010, 09:56 PM:

I've spent the past eighteen and a half years working in a couple of different capacities with folks who have disabling conditions, a large number of whom have been and are young adults with spinal cord injuries and traumatic brain injuries, mostly incurred by doing something typically dumb, given their age. Yes, young adults need insurance to cover the hundreds of thousands of dollars in medical bills rolling cars or diving into shallow water or engaging in gun fights or joining fight clubs will generate.

#189 ::: heresiarch ::: (view all by) ::: March 16, 2010, 08:35 PM:

(I didn't have time to reply when this thread was active, but I keep wanting to--so here it is.)

Graydon @ 180: "(Value is the ratio of benefit to cost; profit maximization either decreases benefit or increases cost. Value is being destroyed.)"

Even granting your idiosyncratic definition of value, exceptions to this rule are trivial to demonstrate. For one, profit maximization in the form of more efficient production methods can decrease costs while maintaining benefits, thereby creating value. Increasing volume can increase profit without affecting value either way; I could go on.

"There is no such thing as profit-maximization by value creation; value creation can (often) increase profit, but you only get the increased profit if you're doing something that (correctly!) treats profitability as a side effect."

That's nonsense--do you think that corporate R&D has never created anything of value, or that it treats profitability as a side effect? Obviously not. The profit motive can hinder research by ignoring profitless value increasers, or by focusing on profitable but valueless products, but there's clearly cases where both value and profit are created. The railroads were built in order to make money, and also generated tremendous value; the mechanization of the textile industry (and most other industries) increased both profit margins and (your definition of) value simultaneously. The Industrial Revolution as a whole tends to disprove your thesis.

""we will reduce waste to increase profit" reliably fails, for example."

If you draw your examples only from your personal experience in a late-stage, highly developed capitalist economy where the available value-creating/profit-maximizing (hereafter vc/pm) advances have been largely exhausted, then of course you're going to discover that increasing profit by increasing value is really tough. People preferentially select vc/pm advances, both because they tend to produce more profit than vd/pm methods and also because destroying value is far less palatable to most human beings. Thus, as the available methods of profit-maximization are used up, a larger and larger fraction of those that remain will be value-destroying. To imagine the dearth of vc/pm option available to late-stage capitalism as being indicative of all profit-maximization is a mistake: the rapid value creation taking place in, say, China is equally a product of profit-maximization.

David Harmon @ 182: "The problem is that creation requires investment -- not just money, but labor and creativity. Destruction is always cheaper up front."

(I'd just like to note how weird it is that I, pretty Marxist by any standard, am the one defending the creative might of capitalism. But so it goes.)

Sometimes it's cheaper. Sometimes it's not. Google happened to hit upon a value creation model so much better than the status quo that it could afford to pay its employees much better than average and still kick the crap out of the competition. In that case, value creation was a more efficient method of generating profit than squeezing its employees.

The difference, as I see it, is that most methods of creating value are unique to a particular historical moment and specific to a particular industry. Google's amazing search algorithm won't help GM make better cars, f'rex. Methods of generating profit by destroying value, on the other hand, are tend to be more universally applicable: cutting wages increases profit margins no matter what your business is. The managerial class, whose expertise lies in generic business, not in specific fields, are naturally attracted to the latter.

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