Health Care Costs

Although health care costs and expanded coverage strike me as inextricably tied, I don’t mind a separate thread.

True, but I never claimed that. I said, “Increased spending on minor ailments explains most of the growth.” It doesn’t take a clever, loophole-exploiting lawyer-type to get unneeded pain-killers, stimulants and antibiotics. I have uniformly heard from health policy scholars that increased spending on minor ailments has caused most of the increase in health care as a proportion of the GDP. According to the Congressional Budget Office, “about half of all growth in health care spending in the past several decades was associated with changes in medical care made possible by advances in technology,” and the use of prescription drugs is also increasing among the insured. These findings can be reconciled if most new spending goes to new procedures that treat less serious conditions, e.g., those that can reliably be treated with only prescription drugs.

Cless and Sinistral, you both attribute the cost explosion to an increase in the available procedures. If this were true, it would beg the question of why previous generations weren’t spending money on treatments that are now obsolete. For instance, modern antibiotics can be far more powerful than penicillin, but previous generations still had every incentive to buy lots of penicillin. Vicodin may be more effective than older opiates, but previous generations still had every incentive to buy those opiates. People have always been able to spend money on more health care, if they wanted to. The question is why they started doing so recently. Overly generous employer health care can help explain this. So can doctors who over-prescribe, out of fear of tort liability. 9 in 10 doctors admit to prescribing more than they believe medically necessary, out of fear of tort suits. I also think our culture favors medication for various illnesses it once did not deem illnesses, like ADD, Aspergers and minor allergies. Regardless, I agree, more procedures contribute at least a little to increased health care spending.

Cless, you may be arguing, “Now that we have procedures, we have to use them. Hopefully technology will bring down the costs.” This strikes me as unrealistic. We’ll keep developing new procedures. We don’t have the resources to try out every new procedure in every case, and it’d be inefficient to do so anyway. As Sinistral notes,

This suggests we can spend our money more efficiently to get more benefit–or that we can spend less money to get the same benefit–by better allocating money and treatments. How do we decide who gets what? Ideally, we spread out the treatments in a way that maximizes benefit to everyone.

One argument is that our benefit from a treatment dictates how much we’re willing to pay. To maximize benefit, whoever pays most should get the treatment. We let the market solve the rationing problem. The problem is that poor people can’t afford some treatments. So even if they’d benefit most, the free market wouldn’t put the benefit in the right place.

A second possibility is that the government could ration all health care as it does organs, according to a variety of factors like age, health, etc. Nothing horrifies Americans like the specter of rationing. The problem is that rationing is even worse at measuring benefit than the free market. Who needs a new hip more: a fifty-year-old with no kids, or a seventy-year-old with 50 grandkids, one of whom he cares for? Rationing will give you the same answer every time: perhaps the seventy-year-old, because he needs to care for a child. But let’s say both the fifty-year-old and the seventy-year-old have $10 million. The fifty-year-old will pay $5 million, while the seventy-year-old will pay only $250,000. Doesn’t that suggest that the fifty-year-old needs it more?

The rationing model tends to work better for vital, life-saving treatments, because anyone would pay any amount to save his life. The free market model tends to work better for quality-of-life treatments, designed to make life more comfortable. People actually weigh the benefits of such treatments against their costs, as they would any other good.

Cless, I’m guessing you prefer the rationing model, being Canadian and liberal. But rationing has its disadvantages. A better approach would try to integrate the free market wherever it better approximates benefit-per-patient. What I firmly believe we shouldn’t do, is maintain this generalized tax deduction for employer health care, which lets virtually everyone get more health care than he would be willing to pay for. If our goal is to subsidize the needy, we should do that directly, rather than subsidize everyone. We should also pass regulations limiting tort pain and suffering damages (not compensatory damages, which pay fully for the physical harm done). For every unneeded test a doctor runs to avoid tort liability, we waste resources that could be used elsewhere – either helping other patients, or stimulating non-health-related segments of the economy.

What I meant is simple: rate at which the cost of health care went up does not match the rate at which the quality of care went up. We’re spending more and more money on things and we’re not getting the same yield per unit cost. For example, some irradiation-based cancer treatments cost exponentially more than others and use new technology, but this is not validated with an improvement in survival.

In the old US system if a treatment was expensive and you didn’t have the money to pay for it (or for an insurance plan that would), you would not get the treatment. The new system won’t necessarily work that way.

Regarding 1960 vs now: health care cost less because people were being treated for less. The very concept of disease has changed. There has been an explosion of new diseases and an explosion of new treatments to go with it and these treatments did not come cheap. Back in the day, people didn’t need to go to the doctor as much because little could be done if they did. People aren’t necessarily going to the doctor more now out of paranoia, but because there are more tools available to help them with their problems. I don’t disagree about the need for tort reform, but that’s not the only piece of the puzzle. Medicine now is not medicine as it was then. You can’t make the comparison. You simply can’t. The very concepts illness and disease have evolved tremendously over time.

Rationing health care doesn’t work out like the way you describe it. I think you’re unintentionally misrepresenting the system. I personally do not like the Canadian system and people do die here, but it has more to do with corruption and mismanagement. Basically, rationing health care results in waiting lists because whoever’s in charge doesn’t want to put the money in the system. This is only a problem when there is a fixed pool of money to draw from, like in Canada. In the US, you get what you pay for. It is a lot more direct and this isn’t going to change any time soon, so people are panicking for no reason. People in Canada aren’t denied access to care because the money isn’t there. They’re denied access to care because the personnel is overloaded. Its about access to specialists, not access to funds. Edit 2: Before you say “AHA! So I’m right! The doctors are being swarmed by all these people trying to use all this free health care!”, the burden on them is not frivolous. To use an example, it takes a couple months to get results on cancer biopsies because pathologists have too many samples to process and analyze. There’s nothing frivolous about too many people having cancer and its like this across the board.

The Canadian system has plateau’d in terms of the pool of money available to pay physicians. The US system has not. Until the US system saturates, its not clear how the system will adjust itself. I don’t think the system in the US will have a problem adding in new people as long as there is a demand because the system here permits people to get something if they want to pay for it.

A criticism that was brought up against the Canadian system, and I agree with this criticism, is that you can’t pick the doctors you want (to a certain extent). In contrast, people in the US said you could. This is wrong. Depending on your insurance plan, your available pool of doctors could be extremely small and entirely depend on who your company accepts you deal with. This is something I believe should be abolished in both systems.

In terms of costs of treatments and drugs, some cancer treatments, the antibodies, cost so much that the UK is trying to ration out how that treatment is given to patients and it went to the courts. Mind you, this treatment cost 100k / year / person. They’re all the rage right now and every company is trying to tap into this gold mine. If you want to control health care costs anywhere, you have to look at the relationship between pharmaceutical companies and the health care industry.

EDIT: sorry, I’m done editing my post now (6:50).

To some extent I agree with this, but this is as much as a social attitude and training on the part of the doctor as it is exploiting medical laws by patients. This is, however, not the same thing as getting a bottle or two of unnecessary painkillers - it’s about overly defensive medical practice in the face of tort reforms and payment based on how many procedures you can cram down the patient’s throat. The congressional office quote regarding technological advancements allowing more medical conditions to be treated explicitly supports this point, so if you also see this as exploitation of health care laws, then I would agree. But again, this is not from the patient.

It also depends on what you classify as a “minor ailment” though. A visit to the ER for a bacterial infection would not cost tens of thousands dollars in 1960, while it can now.

why previous generations weren’t spending money on treatments that are now obsolete

Previous generations were spending tons of money on treatments that are now obsolete, but there was only so much that a practitioner could do. Regarding penicillin in particular, every doctor in town was prescribing it, which is why this drug is almost useless today as bacterial populations started building up immunity to it. It was also produced industrially in order to help the war effort, so costs weren’t very high either. Certain procedures were also simply not available. If you had cancer, then it was either surgery or nothing. CAT scans and MRIs weren’t even developed until the 70s and 80s. And yes, things like ADD didn’t even “exist” until relatively recently. Also keep in mind that life expectancy increased 10% since the 1960’s.

Like Sin said, it’s a bad comparison no matter how you go about it. Things are simply too different.

Now that we have procedures, we have to use them. Hopefully technology will bring down the costs

This is absolutely not what I said at any time. Procedures will only be used if they prove to be significantly better than a previous procedure. Technology will be expensive until there are industrial methods of mass-production that can bring it down. But anyway, I think we actually agree on the fact that the expansion of modern medicine is causing the rising costs - I just disagree with your implication that it is mostly an intentional act of exploitation on the patient’s side, which is a drop in the ocean compared to defensive medicine, malpractice insurance costs, and the broadening of the scope of what “medicine” is.

rationing model

This model has obvious disadvantage, but the one very effective economic advantage about it which I think trumps over everything the American system has to offer is that it gives the purchaser of drugs and procedures enormous bargaining power, and it cuts out middle man costs. It is absolutely unnecessary to have a thousand different HMOs, and organizations that organize HMOs, and so on. Not only does it reduce the purchasing power of each individual organization, it also places an administrative burden on the patient and the physician, as well as on the organization itself as it works to keep all its employees happy at their completely unnecessary job.

Tort reform would be nice in bringing down costs, but I think the idea of health care as a commodity in a free market is inherently flawed.

I think we have each said our pieces on minor ailments, tort reform, tax reform, rationing versus the free market, and the inefficiencies that medicine has developed. Perhaps we disagree at least a little less than we expected.

A separate provision of the new laws that concerns me is that which prohibits rejecting insureds for preexisting conditions. The benefits are obvious: People who are unlucky enough to get catastrophic illnesses, now get some help from society. This is especially appropriate if society helped cause those ailments – things like mesothelioma (asbestos cancer), severe asthma (exacerbated by smoky environments), etc.

On the other hand, I suspect these unlucky victims are vastly outnumbered by less sympathetic insureds. Many are obese due to excessive eating habits, develop conditions like diabetes, and need lifelong treatment. Others are just old, so that every time one ailment is fixed, they develop two new problems. These constitute the majority of the “preexisting conditions” crowd.

Their argument against denying coverage for preexisting conditions boils down to this: “Insurers should have to agree to cover me, even if they know at the outset they will lose money.” This assumes individuals do not pay for their own coverage, based on the likely costs of their coverage. Instead, individuals pay into a pool that covers all of society, and then society apportions the benefits according to need. The sad effect is that healthy people must not only pay for the genuinely unlucky, but also prop up the irresponsible ones who don’t take care of themselves, and the very old people who just keep getting sick no matter what.

This same philosophy explains why insurance companies can no longer charge the elderly five times as much for coverage as young adults, and cannot charge women more than men. Before, insurance companies charged the elderly exactly as much as the average elderly person’s coverage would cost; and charged men or women exactly as much as the average man’s or woman’s coverage would cost. It just so happens that the average elderly needs much more coverage than the average youth, and the average woman needs slightly more coverage than the average man (due partly to gynecological check-ups and maternity issues, but also to a tendency to see doctors more often than males for the same problems). Now, young people will subsidize old people, and men will subsidize women, by paying higher premiums than their personal risk entails.

So health insurance is no longer a purely private contract between an individual and a financial organization, where the individual pays the monetized equivalent of his risk to cancel that risk. Instead, health insurance has moved toward becoming a social program, wherein the healthy subsidize the unhealthy. I find this problematic. The preexisting conditions rule will weaken people’s incentive to, say, stop smoking (to avoid lung cancer) or stop eating excessively (to avoid diabetes), because now insurers must cover them regardless. The shifting of elderly costs to the youth presents a one-time windfall to the current elderly (like our politicians and their friends), who paid low rates as youths, but also get the reduced elderly rates. Why should our youth, the poorest and most innovative class, and the engine behind most new economic development, have to subsidize our elderly, the richest class, who generally have stopped working? This strikes me as wasteful policy. As for men subsidizing women, I find this less troubling. Women can’t help needing gynecological and maternity care, and men indirectly benefit. Even so, if women tend to seek treatment for ailments for which men tend to avoid treatment, it strikes me as unfair that men should have to pay for women’s extra benefit.

I think these health-care fixes create as many problems than they solve. Perhaps Congress could have limited the rule prohibiting denial for preexisting conditions to specific conditions that tend not to be self-induced, and tend not to be inevitable products of old age. The new limitations on charging the elderly more than the young strike me as utterly misguided.

You honestly think that finance is a deterrent to smoking and excessive eating? America has one of the highest diabetes and overweight population in the world, and one of the highest health insurance costs. It obviously didn’t stop anyone. Sweden has one of the lowest smoking rates in the world and it actually has socialized medicine. Their society isn’t collapsing due to people “letting loose” and actively engaging in self-destructive behaviours in order to maliciously milk money out of the government.

Would you also support charging poor people more than rich people? Based on likelihood of contracting some kind of illness, it makes sense, doesn’t it? And African-Americans more than Caucasians?

Like so many theories predicated on humans acting like purely rational actors, your ideas about the way humans think come off as completely silly when you get down into the meat of it. For example

The preexisting conditions rule will weaken people’s incentive to, say, stop smoking (to avoid lung cancer) or stop eating excessively (to avoid diabetes), because now insurers must cover them regardless.

Are you really arguing that people are going to make decisions about smoking or eating based on whether or not they’re insured? America is already the fattest country in the world, fatter than all the other countries with “universal healthcare” - and we got there regardless of our insurance issues. I would love to see some kind of data conclusively correlating the amount of insurance coverage people have w/ rising rates of obesity. Because as far as I was aware, obesity tends to be highest amongst the “lower classes” where issues like poor nutrition and cheap calories are overly abundant. The idea that someone is going to walk in McDonald’s and eat an extra hamburger or that someone will smoke an extra pack of cigarettes because “well, if he gets lung cancer who cares he has health insurance!” is just patently ridiculous. You’re talking about two things that are the product of intense psychological and physical addiction. Health coverage makes people healthier, not the other way around. In fact, in many other “universal healthcare” countries, doctors are paid out bonuses for things like getting patients to lose weight and quit smoking, rather than performing a certain number of MRIs every month. Anyway, insurance companies already charge higher rates for people that smoke or are obese, and I would have no problem with a universal system more heavily taxing people w/ those behaviors. In fact, I would downright demand it. Heavy taxation of cigarettes has shown conclusively to affect rates of smoking.

As for your arguments about the elderly, well yeah the situation sucks. But at the same time, we live in a society that seems to value respecting the elderly and taking care of them. Elderly people don’t make much money, if they make anything at all. It thus doesn’t seem fair to make them pay more than younger, more capable earners. As you said yourself, the elderly enjoyed paying subsidized rates for too long, and it sucks that we have to pick up that slack, but in the long run, if we want to make the system fairer, then we all have to pay more. Medicare and social security are predicated on the idea that most of us will be old one day, and we want to be taken care of. Paying a higher rate now when we can more easily afford it will make it easier to guarantee that coverage for us when we finally reach that point. Perhaps we should, as a society, be more willing to discuss issues like denying certain types of overly expensive treatments that do little to extend life or improve its quality to the eldery. But it’s hard to have that debate when even the slighest mention of something like this results in shouts and screams of death panels and communism. The benefit of a universal healthcare system is that it will more accurately reflect the values of the society it covers. Whereas what we have now is a system of for-profit companies dictating what procedures will and won’t be covered that, while perhaps being more “efficient”, do not accurately reflect what the society as a whole deems just or fair.

On the other hand, men receive higher salaries for the same kind of work, so making up for it elsewhere isn’t such a big deal.

-Insurance companies don’t exist to provide social benefits like you described. They exist to make money. Asserting anything otherwise is wrong.

-Yes, when you pay for insurance but don’t need it yourself, you’re essentially paying for other people. This is an extremely narrow view because there is no telling when you might need it one day. This argument is ridiculous because you stand to benefit just as much as the people who use it do. Your argument would be right if you could not claim the benefits for which you are paying. This was a problem with some insurance policies that I called fake insurance, where even if you have it, the company can turn you down when you need it because of fine print. I’m personally all for removing people from a system that are a burden as a consequence of their stupidity, but unfortunately, this becomes a slippery slope once we get passed the obvious factors of obesity and smoking. The irony is that if you were to charge people more, you’d be affecting the people who can’t afford it more and thus probably prevent them from getting care.

-I’m all for charging more for people that are at a greater risk to being a burden on the system. However, that’s not how the system worked before and its probably not the way its going to work now. Remember that 60+% of the population of the US was already on insurance and take in consideration that many of these people were on plans from their work environments. The claim that people should be charged more individually would only affect people who are not in such group / work plans and therefore disproportionately affect specific (lower) socio-economic groups. This would create problems.

-Zepp and co have made an excellent point with how behave realistically vs theoretically. When you make your arguments, you’re utterly detached from reality. People are not rational creatures and can’t be expected to behave as such. To say young people will subsidize old people is to ignore the reality that people have been doing this for decades anyway. The terms “young” and “old” are also undefined in this conversation, to the point of almost being meaningless. Your argument doesn’t really hold together because you’re not properly explaining who it is you’re talking about.

-Zepp and co are also absolutely right that universal healthcare in itself does not promote social problems and debauchery. You’re also exaggerating at how much young people have to pay for old people. You’re going to have to show me some actual data to substantiate that poor, young people will need to pay disproportionately more than old people for insurance policies. I want to see a few graphs like age groups (like 21-30 , 31-40, 41-50) vs how much they’re paying for insurance vs how much money they’re making. Since you want to make the claim that the proportion of how much who is paying for who has changed, then you need a before and after graph, or a continuum. I am not convinced anything has changed from before. Everyone’s premiums will go up regardless of who they are as a result of the new legislation, not up and down all over. You need to substantiate claims like this if you want them to be credible.

Zepp: The problem with people is not that they go to McDonald’s. To use a simplified analogy, its they eat TOO MUCH McDonald’s at a time. It is wrong to assume that fast food is responsible for the problems. There is no such thing as good and bad food. There is only food. If you eat too much, you will get fat. Realistically, people will not be taxed in proportion to how much they eat, with taxes going up dramatically when you reach a certain threshold that they shouldn’t cross. It’d be impossible to do. It wouldn’t make sense to make a linear food tax.

Yes, absolutely. Cigarette taxes have been shown to decrease both the number of smokers and the amount they smoke. See, e.g., The danger of high premiums also deters risky behavior. For instance, getting a $50 traffic ticket would be no big deal, except that it also raises your insurance premiums. This is why I don’t drive 20 mph over. Your claim that the threat of high premiums and denial of coverage “obviously didn’t stop anyone,” based on America’s high obesity rates, is a fallacy: Obesity and smoking rates would be even higher, if not for “financial deterrents.”

To put it differently, I think at-risk individuals worry they might not be able to get treatment, should they develop conditions like diabetes or lung cancer. I think that provides a powerful incentive to be healthy. Cless, you mentioned that doctors used to be more reluctant to treat patients who harmed themselves (as you put it, “hey doctor i’m feeling chest pain,” “yeah no shit it’s because you weigh as much as a baby beluga whale”). As doctors became more willing and able to treat obesity-related conditions, obesity rose dramatically. People have become aware that obesity is not the death sentence it once was, so they’re less frightened of eating. You hear regularly about cholesterol-reducing drugs, Pacemakers, etc., and there’s a reassuring effect. Limit premiums and force insurers to accept everyone, and people worry even less about the consequences of self-indulgence.

I don’t mean to push this too far. Obviously, the rise of television and video games; the transition from manual labor to sedentary desk jobs; the adjustment from rural to urban lifestyles; the explosion of fast food; and the hectic modern lifestyle that makes fast food necessary, all contribute to obesity rates as well. Europe has handled these issues better than America, and that’s why obesity rates there are low. But discounting “financial deterrents” entirely is wishful thinking. Some people with foresight actually stay healthy to avoid catastrophic costs.

I worry in those cases that higher premiums would just exacerbate the poverty that’s responsible for their poor health. So as a matter of policy, I would oppose race and poverty-based distinctions in health care.

Health coverage has increased in the last several decades. If it’s so helpful with food “addiction,” why has obesity skyrocketed? In the “bad old days” of lower coverage, people were skinny. Sure, smoking has decreased, but that’s mostly due to massive public awareness campaigns, cigarette taxes, and laws that ban smoking in public places. You’re arguing that words from a doctor deter self-destructive behavior, but the fear of being unable to buy treatment does not. I find that ridiculous. If doctor’s warnings can deter overeating, so can the fear of being unable to get treatment from a doctor.

Point me to the sentence where I exaggerated. Here is a quote from the AP yesterday: “Insurers typically charge six or seven times as much to older customers as to younger ones in states with no restrictions. The new law limits the ratio to 3-to-1, meaning a 50-year-old could be charged only three times as much as a 20-year-old. The rest will be shouldered by young people in the form of higher premiums.” This is why the new laws require everyone to get coverage: so that healthy young people have to buy coverage even though it’s priced higher than it’s worth, and insurance companies can use the excess profits to subsidize elderly coverage. This strikes me as wasteful, because young adults are the poorest but most innovative class, while the elderly are the richest and generally don’t work.

I think you’re missing the point.

Insurance companies multiply the probability that a person will need coverage times the average amount of that coverage to get an insured’s expected cost. Traditionally, the insurer charges the insured his expected cost. The average insured gets exactly what he paid for. The money going into the system equals the money coming out.

But that’s changed. Now, an elderly insured pays much less than his expected cost. Young adults make up the difference. As a result, the average elderly gets much more than he is paying for. The average young adult gets much less than he paid for, because some of his money is being diverted to pay for the elderly’s expected cost. This is redistribution, not insurance.

Your truism that “there is no telling when you might need it one day” misses the key point: Young people now pay for insurance based not only on their own risks, but also other people’s risks. The prices are higher than they would be in a purely private contract. As you phrased it, you don’t “stand to benefit just as much as the people who use it.”

You might be arguing, “We’re all going to be old someday, so we benefit from redistribution just as much as they do.” True enough, but I think it’s bad policy to move young people’s money to old people. Like I said, young people are poor and innovative, and old people are wealthier and not working.

Of course, your point that employee group coverage already caused this sort of redistribution is well-taken.

They are. You just have to look a little deeper for the rational motive sometimes. A decision made on bad information or strange values is not an irrational decision.

Are Americans just inherently self-destructive people then? I certainly don’t think so. There is something that is causing the general population to behave in a non-healthy way, and it is not high premiums - if this were the main reason, then the United States should have one of the lowest obesity rates. There is obviously something else at work that is not finances. If the United States has a high smoker population and a high obesity rate, it’s not because people actively choose to engage in self-destructive behaviour simply because there is treatment for it. You don’t go around cutting yourself with a razor even though there are band-aids available for purchase, do you? Do you not cross the highway on foot because you fear a fine, and not the fact that a car will hit you? Financial incentives are a contributing factor, but definitely not the main one.

To put it differently, I think at-risk individuals worry they might not be able to get treatment, should they develop conditions like diabetes or lung cancer. I think that provides a powerful incentive to be healthy. Cless, you mentioned that doctors used to be more reluctant to treat patients who harmed themselves (as you put it, “hey doctor i’m feeling chest pain,” “yeah no shit it’s because you weigh as much as a baby beluga whale”). As doctors became more willing and able to treat obesity-related conditions, obesity rose dramatically. People have become aware that obesity is not the death sentence it once was, so they’re less frightened of eating. You hear regularly about cholesterol-reducing drugs, Pacemakers, etc., and there’s a reassuring effect. Limit premiums and force insurers to accept everyone, and people worry even less about the consequences of self-indulgence.

I never said doctors were reluctant to treat obesity-related conditions, I just said that a problem like the one I described is a main contributor to health expenses and is caused by long-term unhealthy behaviour. I could just as easily say that because obesity rose dramatically, doctors were forced to recognize and develop ways of treating its effects. Just because two events are correlated does not mean that one is the cause the other, necessarily.

I don’t mean to push this too far. Obviously, the rise of television and video games; the transition from manual labor to sedentary desk jobs; the adjustment from rural to urban lifestyles; the explosion of fast food; and the hectic modern lifestyle that makes fast food necessary, all contribute to obesity rates as well. Europe has handled these issues better than America, and that’s why obesity rates there are low. But discounting “financial deterrents” entirely is wishful thinking. Some people with foresight actually stay healthy to avoid catastrophic costs.

No, financial deterrents is certainly a contributing factor to keeping these rates low. I’m just saying that it’s not the main one.

I worry in those cases that higher premiums would just exacerbate the poverty that’s responsible for their poor health. So as a matter of policy, I would oppose race and poverty-based distinctions in health care.

So why wouldn’t you worry that in the case of the elderly, and women, that higher premiums would do the same thing? Women already make less wages than men for the same type of jobs, and how much of the job market do you see as available to seniors? What’s the difference between a 70-year-old man who can’t pay and a single mom who can’t pay and a poor black family in the ghettos who can’t pay?

I think sin is winning! Watch your backs!

-You have yet to properly define the populations you’re discussing.

-You have yet to demonstrate that “young people” were disproportionately uninsured and will be penalized, or that anything actually changes. For example, how many were not insured before and after and how does this compare to other socio economic groups. This will eventually lead to the question of what social group is proportionately putting more money into the system than others and thus who ends up really footing the bill.

-You romanticize the brilliance of your undefined fictional population, further discrediting any claim you might make about it, ala noble savage.

-People do not make rational decisions. Plenty of work on eating habits and political alignments has demonstrated this.

I was simply saying that the idea people will eat more McDonald’s (or any food really) because they have health insurance is ridiculous.

Correlation does not equal causation. Personally, I would argue that the fear of being unable to buy treatment from a doctor might even increase destructive behavior. Why would I say that? Well, many people without health insurance are in that situation because they’re unemployed, underemployed, or in some other bad life situation. These kinds of intensely stressful situations often lead to alcohol abuse, purchase of poor-quality (but high calorie) foods etc. Now, there are of course people who don’t have health insurance because they are young, healthy and don’t feel it’s necessary to have health insurance due to their healthy life choices. But, to be fair, these types are not a majority. You also say…

Why do you think Europe has handled these issues better? Well, I wouldn’t argue that universal health coverage is the only reason, but it is an important reason. And it’s not simply because doctors are telling their patients to stay healthy. It goes far beyond that. IT goes down to simple profit motive. The entire health care industry in America has everything to gain and nothing to lose by keeping Americans unhealthy. It gets down even into issues like the farm bill and subsidizing unhealthy growing activities like subsidies for corn instead of support for farmers growing real food. Have you been to supermarkets outside of America? Sure, there is junk food everywhere, but it’s nothing on the same level (except maybe England and Australia - man what’s the deal with fat anglo saxons anyway?). My Chinese colleagues still don’t believe that a mcdonald’s hamburger is cheaper than a head of lettuce or a stalk of broccoli in America. The only reason these things exist is because of the policies we’ve chosen to pursue. And again, those policies are largely dictated by the health care situation. In most of the world where healthcare is not run for profit, there is every incentive to keep costs down and prevent bad situations. None of us are arguing against financial incentives: in fact, they are at the core of our argument as well. You are simply saying that the financial incentive should be on the individual, though all the evidence points to the fact those incentives don’t work. National policy dictates people’s behavior to an extent you’re simply not willing to accept. You can accept that Europe has “deal with the problem better” but then you just throw that part of the argument away without asking why. It’s for a myriad of reasons: cigarettes and alcohol are expensive as fuck, gas is 3 times the price it is here (so people walk and bike), junk food is more expensive than healthy food, and healthcare (including preventative care) is free. It’s just one less thing to worry about.

People are rational creatures, you are right, but part of being rational is making decisions based on the norms of values of the society you’re a part of. When 8 lanes of the supermarket are dedicated to junk food and some moldy old fruits and vegetables are in an ugly, underlit section at the back of the grocery store for outrageous prices, people make the “rational” assumption that the food in those 8 aisles must be good. Everybody else is buying it. There aren’t any warning signs. And it’s so moderately priced. Look at the happy, smiling people on the package. Oh and look, only 150 calories per serving (ignoring the fact that there are 20 servings in the bag). People make a “rational” decision to buy that food, but just becasue they’re being rational doesn’t mean they’re being healthy.

Again, not going to get into the age argument, cause I don’t really understand the issue well enough.

The answer is in my previous post:

You agree with me that inability to pay for treatment plays some role in people’s thinking:

I never said it was the main incentive to stop smoking or stop eating excessively. My original claim was only this:

So I’m not sure we’re even disagreeing.

Because the elderly and women are not disproportionately impoverished groups. The elderly tend to be among the wealthiest, because they are sitting on a lifetime of earnings. I oppose charging the poor extra, based on their higher coverage needs, because they don’t have money to spare. That lack of money contributes to their poor lifestyle and health choices, which make it harder for them to work for money, in a vicious cycle. I support the new subsidies for the poor for exactly that reason. What I oppose is subsidizing all the elderly with young people’s money. I’d be completely fine with a subsidy for only poor old people who can’t afford fundamentally decent coverage.

The same reasoning applies regarding women’s slightly higher rates. You and Rigmarole claim women “make less wages than men for the same type of jobs.” First, this disparity is disappearing rapidly: far more women graduate from college than men, women get higher grades, and 75% of Americans who lost their jobs in the recession are men. I’m not sure we need to intervene on women’s behalf. They seem to be catching up themselves. Second, I don’t think there’s any evidence that women are significantly more impoverished than men. This is possible, even with wage disparities, if there are more men than women who are unemployed or working low-level jobs. I support subsidizing women who are poor, just as I do the elderly who are poor. Also, like I said, I’m not as concerned about men subsidizing women, because most of the difference in rates can be attributed to women needing gynecological and maternity care – which redounds to the father’s benefit as well.

I find the idea of charging different amounts per race troubling for more complex reasons. First, unlike with gender, there’s overwhelming evidence that certain races make a lot less money. They’re already stigmatized for that reason, because of the impoverished lifestyle they lead. I don’t think insurance should make that disparity even worse. It also fosters misguided stereotypes about irresponsibility among the races in question. So even though, say, black people are more susceptible to certain ailments and conditions than other races, I don’t think it’s worthwhile for insurance to try to account for those differences.

This sort of lazy criticism tries to kill argument by saying, “You haven’t done empirical research, therefore stop talking.” But neither have you. One of the problems with empirical research is how manipulable it is. You can find studies supporting anything. Look up “the deterrent effect of capital punishment” sometime.

The point of these non-empirical arguments is to bring out all the mechanisms that might support each view, then leave it to the audience to decide which mechanisms they find more likely. I believe in moral hazards; Zepp is skeptical. I believe the threat of no treatment can deter unhealthy living; so does Cless, but probably not as much. If you want to point to studies that suggest these factors should be balanced differently, by all means. But you don’t need citations to scientific studies in an online argument. As a matter of fact, you don’t need them in the courtroom either: the jury makes the decision about balancing factors, and is free to accept or reject the conclusions of scientific studies. Studies are just too manipulable to be conclusive. Social scientists tend to prove whatever they already believe. For example, I know what you think of the blank slate theory of human behavior, which has fallen out of favor in recent decades. Surely, you don’t put much stock in the abundance of 1960s social studies “proving” blank slate theory.

So when I say “young people” are subsidizing the elderly, it’s not terribly important whether I mean 20-29, or 20-39, or 26-35, or whatever. As the article I cited said, insurers used to charge the “elderly” 6 or 7 times as much as 20-year-olds, because they tended to cost insurers 6-7 times as much. Now the elderly can only be charged 3 times as much as 20-year-olds, and “young people” are being charged higher premiums to make up for it. Most people would consider that enough information on which to base a casual opinion.

The burden of proof isn’t on me. The lazy arguments are the ones you’re making by not substantiating your claims. And yes it was meant to kill the argument by avoiding a discussion about vague undefined concepts that aren’t pertinent to reality. There’s no point to having a discussion about anything unless the people discussing are in agreement about what they’re talking about and understand what it is one another is saying as each means it.

For the record, I don’t believe in the blank slate :P. I think its a ridiculous concept :P. I enjoyed Pinker’s book because it was a giant ‘fuck you’ to the blank slate. Its actually not a book about validating the concept :P.

Specifically, I’m not really asking for precise statistics (though it would be most convincing for the purpose of your argument), but you do need to lay basic groundwork to your claims of unjust burden if you’re going to want anyone to believe this burden even exists. Which you still haven’t done. You made your point about how the law reduced the burden on some of the elderly, but you didn’t mention what proportion of the elderly this affected. Similarly, you didn’t indicate how many of these young 20 year olds were affected and how. Finally, you didn’t indicate who is really paying the bulk of shift in insurance burden. You’re just assuming its the 20 year olds without substatiating the claim. You’re also neglecting the possibility that other segments of society that will now need insurance might possibly cost more to society than the drop in input from the segment of old people affected by the change.

I’d be very careful about what I say about scientific studies. This is much more my domain and I’m very familiar with how it works. Good science is very precise and often times, the problem isn’t with the scientists, but with people trying to stretch extrapolations and misinterpreting the language (thus the need for precise definitions). Claiming that courts where a panel of unrelated random individuals can claim to understand truth from having a person throw random, unverifiable subjective information at them is a better gauge of value, is absurd.

No time for a full reply right now, but just one point:

Exactly. I know you think blank slate theory is garbage. Hence,

My point is that, even though piles of 1960s studies claimed to prove blank slate theory, you give those studies very little credence – so why do you so badly want me to offer social studies now? I believe authors of social science studies tend to prove what they already believe. This is why juries ought to treat them skeptically. It’s also why I question their importance in online arguments. Everyone knows, you just Google for studies that support you, then post links that nobody reads thoroughly; and your opponent responds by doing the same. I think it’s a silly game that distracts us from the substance of the argument.

Hard science studies are quite different. They are rarely politically oriented. The authors have less incentive to skew their results by dubious methodology. Hard science studies try to prove concrete physical theories. Hard scientists don’t attempt to address elusive questions like whether capital punishment deters – something that involves far too many variables to conclusively “prove.” So I put a lot more stock in hard science findings.

Alright, personal financial considerations as far as insurance is concerned is a part of healthy behaviour, we agree. And, like, skin abrasions is part of being thrown off of the grand canyon. The societal forces that zepp mentioned are the major factors - if high personal costs contributed significantly whatsoever, then cost should be an indicator of overall health, no? Currently there’s a very poor correlation.

As for the difference in charging, the problem with that is that it treats people as a group that you’ve arbitrarily designated them as a part of, and not as individuals. People shouldn’t be receiving different costs if they’re female any more than they should be receiving different costs if they’re black, or if they’ve lived in a tropical country, or any of millions of different arbitrary factors that can all be related to predisposition to certain types of illnesses or procedures. There is also a smooth gradation from rich to poor among all groups, so at what point do you decide that some senior is “rich enough” to support an extremely insurance cost?

The whole point of insurance is to spread the cost and risk around. Besides being cost-ineffective, I think it’s morally abhorrent for a civilized society to treat health insurance as a private thing, like you would treat car insurance. Would you agree that people who don’t drive much should pay a lower tax since they don’t really use the highways much? Or if they don’t take advantage of city resources then they should be able to dodge municipal taxes? If it’s a choice between paying a tax versus being financially ruined if you get a costly illness, I’d prefer the former every time.

I agree with the vast majority of your post in regards to social sciences vs the “hard sciences”, but there is some value to qualitative studies (as compared to the quantitative approach of hard science). Social sciences tend to perform qualitative research and yes, this is an evolving field that has produced a lot of crap in its life time (to use an understatement), but there are a few people that have done good work in the frame work of qualitative research (note I emphasize the technique) I don’t really want to bog this post down with theoretical discussions about concepts of research though. I just wanted to point out that you shouldn’t just throw the baby out with the bathwater. Good science boils down to asking a question and understanding the limits to the meaning of the results.

That being said I get the feeling of where you want to go with your reply. You don’t need social studies to address my points. My points are purely mathematical. My points simply ask “what fraction are groups X,Y,Z responsible for paying, before and after”. It would be silly to have the discussion you feel very passionately about if only 20% of 20 year olds have to pay anything and end up accounting for only 1% or less of the pie. Mountains. Molehills.

This comes a little close to conflating correlation and causation for comfort. When I was a smoker, I cut down when prices went up because I could not afford to smoke as much at the current price without spending less on other things which I valued more, in the present/immediate future. If numerous debilitating-to-fatal conditions years down the road don’t seem important, financial expenditure related to those conditions isn’t too likely to seem that important, either; I very seriously doubt many people think “I wouldn’t mind bladder cancer, except it’s just so expensive.” I feel that recent economic developments would make the lack of foresight in the American financial landscape rather apparent; most people didn’t care about massive credit card debt in the relatively near future in favour of getting what they wanted right now, and I doubt they’ll care too much about massive health-care bills in the future in favour of getting what they want right now. That isn’t to say that it’s not some degree of deterrent, but I don’t think, in light of all other factors, it’s a particularly significant one.

I might be mistaken, but I believe obesity and smoking rates are higher among groups for whom they are less financially viable.

Yes, but executing anyone over a certain BMI also provides a powerful incentive to be healthy. Or, to make a more direct parallel, executing anyone above a certain BMI and below a certain tax bracket provides a powerful incentive to stay healthy. That doesn’t necessarily make it the best option. I’m being somewhat facetious, but only somewhat; denying treatment to someone who is unable to pay, even for a condition which is arguably his or her fault, is, for many conditions, a long, slow death sentence which one is only able to buy one’s way out of.

Because coverage required a degree of financial stability which all-but ensures one the ability to eat enough to get fat? As Zepp said, correlation and causation aren’t one and the same. That said, I don’t know how much people do listen to what their doctors say.

I agree, in that the current redistribution is not ideal. Rather, cost should be redistributed from those less able to afford it to those more able to afford it. Simply put, regardless of their risk, the rich should pay more for insurance. Nobody in this country would really go for that, though, because we’re scared stupid of anything even resembling socialism. The bill came out vapid and impotent, but did that really surprise anyone?

Unless you’re arguing against current definitions of rationality within decision theory (in which “strange values” are considered rational and decisions are assessed as though the given information is accurate), this is plain and simply wrong. There’s a huge amount of data from a wide variety of subjects, virtually all of which points to people being overwhelmingly irrational.

As far as I know, bladder cancer is not behavior-induced, so it’s irrelevant in a deterrence discussion.

What about diabetes and obesity-related illnesses? These are highly treatable, with insulin shots, pacemakers, cholesterol drugs, dietary supplements and therapy. Say there’s an overweight 48 year old man taking cholesterol drugs, whose doctor warns him he is at risk for diabetes. He got fat because his busy office life leaves him little time for exercise, and high calorie foods provide relief from stress and a source of energy when he’s exhausted. His cholesterol drugs are covered by his insurance. He also knows insulin shots, dietary supplements and therapy are covered, should he ever need them. Will he likely behave exactly the same as someone who knew diabetes treatments would not be covered? I doubt it. Diabetes is very livable with treatment, but a death sentence without it. The overweight man may decide he enjoys and relies on rich food so much that he’ll take the risk of diabetes and having to get treatment, rather than dramatically alter his lifestyle. In contrast, if the man believes he’ll die young from diabetes without treatment, he’ll struggle harder to change his lifestyle.

How about psychological problems like depression from leading an excessively high-stress lifestyle – working long hours, partying and drinking five days a week, and sleeping little? If this stressed individual gets cheap prescription drugs that successfully suppress his depression, he’s much more likely to continue that self-destructive lifestyle. The drugs serve as enablers. If the drugs weren’t covered by his insurance, he couldn’t afford them. To avoid or escape depression, he’d have to alter his lifestyle. Financial deterrence matters.

Now, I’m not arguing that an absence of financial deterrents is the only reason people treat their bodies irresponsibly. I’m not even arguing it’s the main reason. But like I said, I think the new “preexisting conditions rule will weaken people’s incentives” to lead healthy lifestyles.

Zepp, you argue that fear of death from lacking treatment may induce self-destructive behavior like overeating. In other words, fear of death makes people do exactly what will make their fears come to pass. Where is the historical evidence? Coverage now is greater than it’s ever been, and so are obesity rates. And why would humans have evolved so as to seek out the death they fear most? I find this reverse psychology absurd.

There are two slightly different arguments I find more convincing (which you may have implicitly intended). First, people who know they will die young, have no incentive to treat their bodies responsibly. So they eat the fattiest foods, have wanton sex, drink daily, etc. This is convincing enough, but the argument only works if people know they’ll die young. Fearing a lack of treatment, for an ailment that hasn’t yet developed, is hardly enough to trigger this reckless hedonism.

Second, people who believe they’ll probably die, unless they get money, have an incentive to risk their lives to get money. If this means taking Adderall to stay up 72 hours, so be it. If this means entering a gunfight that risks permanent injury and may require long-term treatment, so be it. But again, this argument only works if people have already developed whatever problem is likely to kill them.

So while fear of death may induce self-destructive behavior, it’s very unlikely that fear of lacking treatment for an ailment that hasn’t yet developed would do so.

Insurance companies have every incentive to keep Americans healthy. They profit from individuals who buy insurance and don’t need it. Now, doctors who charge per treatment may have an incentive to ignore unhealthy patient lifestyles, then provide expensive treatments when their bodies break down. Is it doctors you’re complaining about?

In my experience, doctors have consistently urged a healthy lifestyle, despite incentives to the contrary. Perhaps this is because the doctor doing ordinary check-ups, who would be urging a healthy lifestyle, is unlikely to profit if his patient develops a serious condition. Maybe a cardiologist or oncologist somewhere would benefit; but the primary care doctor gains nothing, and even risks having his patient die.

This nightmare world, where doctors lobby Congress to subsidize unhealthy foods, then charge patients exorbitant amounts for treatment, probably doesn’t exist.

We’re trying to maximize overall welfare. You argue that denying treatment due to a self-induced preexisting condition, or inability to pay high premiums, may produce a “long, slow death sentence.” This is only true if we are dealing with relatively young people, because otherwise the life remaining wouldn’t be “long,” who have fatal ailments, as opposed to irritating but livable conditions. You seem to be arguing, in these self-induced long-slow-death-sentence cases, it almost always improves the overall welfare if we provide subsidized treatment. Maybe so, maybe not. But what complicates matters is that, if people fear they won’t get treatment, more people will struggle not to develop the ailment to begin with. This leaves the government with more money to subsidize coverage of non-self-induced ailments.

What improves the overall welfare more: 1) government-sponsored treatment for all long-term, fatal self-induced ailments, or 2) reduced incidence of long-term, fatal self-induced ailments, due to the deterrence from fearing lack of treatment, while the government spends the money it saves on treating non-self-induced ailments? I’m inclined to pick the latter. An attractive third option is to convince people they won’t get treatment if they get self-induced ailments, then secretly provide treatment anyway. Then we get both deterrence and efficient treatment.

But maybe all that’s needed to save money is to stop subsidizing health insurance for those who can afford it, and focus on helping those who can’t. You argue that “cost should be redistributed from those less able to afford it to those more able to afford it.” I support a narrower version of this: the poor who can’t afford fundamentally decent health coverage, should get coverage that is subsidized by taxpayers. The new health laws provide such coverage. The federal income tax is progressive, meaning the more you make, the more you pay proportionately. So, more or less, we’re getting the redistribution you wanted.

I won’t pretend that scholars agree about human rationality. Traditional economists argue that the model of rational profit-seeking behavior, somewhat various values, and imperfect information best approximates human behavior. In contrast, behavioral economists focus on where rational assumptions consistently fail.

For instance, a minor newsworthy event that casts negative light on a business’s profitability tends to depress its stock value far more than the event itself warrants. Behavioral economists argue this means humans are irrational, and systematically overestimate the effects of bad news. Traditional economists reply that investors rationally expect inexperienced investors to overestimate the negative impact of bad events, based on bad information. Experienced investors sell their stock in anticipation of depressed prices, which is quite reasonable, even if the events themselves don’t warrant the depressed prices. They also know other experienced investors will be ditching their stock, which creates an even greater incentive to sell before prices fall. This is a variant on the prisoner’s dilemma, where everyone would benefit most by staying loyal (keeping money invested), but fear of betrayal induces preemptive betrayal (by ditching your stock quickly). It provides an explanation for how rational behavior can produce a seemingly irrational result. I find the traditional economist’s explanation more convincing.

Your distinction between “group” and “individual” characteristics is untenable. Is it unfair grouping or individual consideration to say that having a vagina means you will need more gynecological appointments than someone who does not? Is age an unfair group characteristic? If so, would it be better if insurers analyzed the telomere length of each individual to determine his risk of age-related ailments? Are smokers being unfairly grouped? Surely, some smokers are incredibly healthy and will live to age 90 without needing coverage. Must insurers analyze the lung tissue of all smokers to determine their individual risk of lung cancer? The risk of heart attacks is partly genetic. Must insurers test the DNA of each overweight individual for susceptibility to heart attacks, to determine how much his premiums should increase?

Your concern seems to be that grouping unfairly stereotypes. But insurers group people based on obvious traits that are extremely accurate in predicting a need for coverage. If insurers wasted money individually testing every insured for his or her expected coverage, this would leave far less money for other insureds to recover. So prohibiting “groups” harms the people it was supposed to help.

To elaborate, insurance rates always rely on risk factors, which are imperfect proxies for true future costs. Insurance only exists because we don’t know our own future health care costs, and we want to cancel the risk of catastrophic liability. Every risk factor involves stereotyping, in the sense that some people with risk factors will need treatment and some won’t. You suggest that we ignore risk factors. This means cost would have nothing to do with risk. An insured could live as irresponsibly as he liked, and still pay the same price. I suggest the opposite: we research risk factors in as much detail as possible, use them to predict how much coverage each insured will need, and price accordingly. Only in this case would it make economic sense for the insurer and the insured to reach an agreement.

That’s the whole point of toll roads. That’s the point of zoos, museums, golf courses, and city orchestras that charge admission fees. That’s why most cities allow groups to petition for, say, a new and higher-quality road to run by their houses, and to pay the costs themselves; or for a group of businesses to petition the city for extra police coverage and litter collection in their neighborhood, and to pay the additional costs themselves. The idea is that people who want better-than-basic city services are free to pay for them.

With finals impending, I don’t have time to research and breakdown what proportion of insurance premiums is redistributed per age. I don’t know if the burden falls mainly on 20-29 year olds, or is spread on 20-50 year olds. I don’t know at what age you shift from paying higher premiums than your insurance’s fair market value, to lower than market value.

But per the article I cited, insurers used to charge the “elderly” 6 or 7 times as much as 20-year-olds, because they tended to cost insurers 6-7 times as much. Now the elderly can only be charged 3 times as much as 20-year-olds, and “young people” are being charged higher premiums to make up for it.

So I’m not sure what you mean when you say maybe “only 20% of 20 year olds have to pay anything and end up accounting for only 1% or less of the pie.” If you’re suggesting 80% of 20 year olds are on their parents’ health plans, that may be true. Under the new laws, you lose access to parental coverage at age 26. 100% of 26 year olds with individual health insurance will now pay extra. I read somewhere that it translates to two or three hundred dollars more per month, for the average “young person.”

The excess will be redistributed to the “elderly.” Again, I don’t know how old is “elderly,” and I don’t know what proportion goes to each age within the elderly category. I’m not sure I could get these statistics without writing to an insurance company.

Anyway, assuming $200-300 per month is correct, that’s $2400-$3600 per year. This could buy a used car, a high-end computer, a year’s rent. This is closer to a “mountain” than a “molehill” for most young people.