Journal Marxist Hacker 42's Journal: An interesting argument for public option 43
The Oregon Small business council wrote this Op-ed for the Oregonian today touching on an interesting free-market argument that explains recent health care costs and why a public option might be a good idea.
The recent increases in health care costs look a lot like what happens in a market when an oligarchy or monopoly raises barriers of entry to squeeze out competition. The reason for this may be accidental- they might all be using the best scientific statistics possible to set prices, thus making all their prices close to the same. But the end result is the same- increased cost to consumer due to incredible profits being returned to stockholders, who then reward C-level executives with outlandish compensation packages.
So far, the reasoning is sound. But the solution seems to be novel: Add a low-cost/low-value public option to cover those who can't get insurance otherwise or for whom the low-cost option is sufficient, to add competition to the marketplace.
The argument against this, from the oligarchs themselves, is of course that such an option will put them out of business. I don't find this argument to be credible- after all, US Mail now offers flat-rate volume pricing, but it hasn't put FedEx or UPS out of business. Most cities have a police force, but that hasn't put the alarm and private security companies out of business. Sure, these businesses are less profitable than they would have been without the public option adding competition to the marketplace- but that's the whole point of competition in a free market.
It makes me wonder if we could do much better in other areas. A government low-value food bank system based on the Mormon Bishop's Pantry markets. A nationalized low-cost oil company. etc. Not replacing private industry- but competing with private industry in a free market to lower prices for everybody.
Similarly... (Score:2)
Take for example the case of a laid-off worker with dependents and nobody else in the household who is eligible to work full-time. That person under our current system needs full-time employment; no part-time job or combination of part-time jobs would be acceptable because part-time employment in this country - with a few exceptions - does not offer health insurance. So even if they could make the same tot
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Really? I just pay a health center fee along with my tuition, it's $30 per semester.
It may be very different other places, but most colleges? That surprises me.
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That surprised me too- even tiny little Oregon Institute of Technology, with only 4000 students in Southern Oregon, offered this when I was in college. But that's been 15 years so I just kind of let it pass.
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Every university has a school nurse. The insurance is to cover when a science student dumps pitchblende down their pants or the football team hero breaks his neck or a liberal arts student sprains their brain and real medical attention is needed.
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I just pay a health center fee along with my tuition, it's $30 per semester.
I don't know how your school does it, but where I did my undergrad we had the health center fee that covered the operations of the health center, however we were still required to carry insurance as well. The school where I am currently doing my PhD has the same policy as well; the two are located some 1,000 miles apart.
It may be very different other places, but most colleges? That surprises me.
I am not aware of any colleges that don't, at the very least, require hospitalization insurance for students. If a student attending that school were to be injured on the grounds, the sc
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I had to either pay for student health insurance, or sign a waiver and show proof of outside insurance. Even then, I still got caught in a bind my junior year when I got beat up for protesting the gulf war- $400 emergency room visit that the student health wouldn't pay for.
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I know the Community Colleges around here don't require anything. Not sure about the UW, but I know they offer low-cost insurance to students using the campus health center and university owned medical center.
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I just pay a health center fee along with my tuition, it's $30 per semester.
I don't know how your school does it, but where I did my undergrad we had the health center fee that covered the operations of the health center, however we were still required to carry insurance as well. The school where I am currently doing my PhD has the same policy as well; the two are located some 1,000 miles apart.
It may be very different other places, but most colleges? That surprises me.
I am not aware of any colleges that don't, at the very least, require hospitalization insurance for students. If a student attending that school were to be injured on the grounds, the school could be liable for the cost of the student's hospitalization if the student carried no insurance, even if the injury was of no fault the school.
About 20 percent of college students aged 18 through 23 (1.7 million) were uninsured in 2006
Source: Education Resources Information Center [ed.gov]
I'm insured, but my college has no process to verify that. We're a community college in New York.
Bad Example (Score:3, Insightful)
[...] US Mail now offers flat-rate volume pricing, but it hasn't put FedEx or UPS out of business.
That's not the best example: FedEx and UPS are barred by law from competing with the USPS in the delivery of letter mail. The only reason the USPS is still around is because they are immune to competition from private companies.
Most cities have a police force, but that hasn't put the alarm and private security companies out of business.
Again you're using an example where private firms are prohibited by law from actually competing with the police.
I think a better example would have been public vs. private schools and colleges. There, we actually do have a fairly diverse economic ecosystem (though not without its own set of problems).
It makes me wonder if we could do much better in other areas. A government low-value food bank system based on the Mormon Bishop's Pantry markets.
Ah, now here's the meat of the issue. With food, we can have a low-cost, low-value option. The government can guarantee ground chuck, and I could still go out and buy steak if I wanted to. With food, there's a wide range of options which are distinct in price and value. It's socially acceptable to not guarantee everyone filet mignon.
A nationalized low-cost oil company. etc.
This one probably wouldn't work. Oil is oil. There's no such thing as low-value oil. With oil, all of it is filet mignon, none is ground chuck.
The problem with health-care is that it's a lot more like oil than food. It would be almost impossible to get people to agree on which procedures and medicines are steak and which are hamburger. So, any public option is going to have to cover pretty much everything that a private insurer does. That means it will be a low-cost, but not necessarily low-value, competitor to the private insurance companies. That's where you run into problems.
The health-care system in our country is a mess. I don't think we can implement a system where there is a public option, and still maintain insurance companies in anything like their present form (whether that's a good thing or not is debatable).
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That's not the best example: FedEx and UPS are barred by law from competing with the USPS in the delivery of letter mail.
And yet both offer "document packets" which are essentially the same thing. Though I'd point out in my example, I referred to the new flat-rate volume services USPS offers- which is in direct competition with FedEx/UPS, right down to offering the boxes with pre-paid postage for sale at your local post office.
Again you're using an example where private firms are p
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Though I'd point out in my example, I referred to the new flat-rate volume services USPS offers- which is in direct competition with FedEx/UPS, right down to offering the boxes with pre-paid postage for sale at your local post office.
Well, yes they are offering similar services. My point was that the USPS can leverage its huge letter-carrying infrastructure (with which FedEx/UPS are prohibited from competing) when delivering packages. If the USPS and private carriers were allowed to fully compete in all types of deliveries, the USPS wouldn't be able to compete even in letter delivery. Indeed, private companies have [wikipedia.org] been squashed before for trying to deliver the mail cheaper.
How so? Citizen's arrest is still available [...]
Yes, it is. But, the difference between a citizen's arrest [wikipedia.org] and
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Yep. But those private security services still are not able to wield anywhere close to the power of an actual police force.
I don't see it. On a one-on-one situation where somebody is caught in the commission of a crime- citizen's arrest covers that, as do armed response which in my state includes concealed pistols and tasers, exactly the same as the police carry. What are police allowed to do that the private armed response companies are not?
That's true, but those kinds of accomm
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On a one-on-one situation where somebody is caught in the commission of a crime- citizen's arrest covers that, as do armed response which in my state includes concealed pistols and tasers, exactly the same as the police carry.
Yes. But, detaining someone who you've witnessed commiting a felony is not the only thing the police do.
You do realize what happens after you citizen's arrest someone, right? You call the cops. Because, pretty much the only thing you are allowed to do to the arrestee is detain them.
What are police allowed to do that the private armed response companies are not?
Most types of search and seizure, execute arrest and search warrents, pull someone over in a car, compel compliance with laws regarding public saftey or nuisance, etc. There's lots and lots of stuff the cops can do that private s
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Most types of search and seizure, execute arrest and search warrents, pull someone over in a car, compel compliance with laws regarding public saftey or nuisance, etc. There's lots and lots of stuff the cops can do that private security can't.
Actually, a few of the consultants that work for the same company I do just got pulled over by Intel Security today for on campus moving violations- and both their Intel supervisor and our on-site manager got e-mails about it. Public safety standards regardin
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Actually, a few of the consultants that work for the same company I do just got pulled over by Intel Security today for on campus moving violations- and both their Intel supervisor and our on-site manager got e-mails about it.
They didn't get pulled over, they chose to pull over. It's a fine distinction, but it's there. If they hadn't pulled over voluntarily, the security car couldn't really do anything about it, except call the real cops. Now, if you don't pull over for the cops, they can ram your car off the road, lay down spike strips to blow your tires, follow you for hundreds of miles until you run out of gas, and then arrest you, and throw you in jail.
When I was in college, the campus rent-a-cops could not only arrest and detain you, but could, at their option, refer your case to an on-campus court and never bother the public law enforcement about it.
Campus security is always a mess. But, at least in Wisconsin, if they wer
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It may lower the price the health care consumer pays out of pocket. But the public option alone will not lower the cost of health-care. And the cost of medical care is the real problem, not its price.
The overhead of private insurance companies shows that to be only a part of the problem. I have to wonder if the cost would be so high if stockholders and c-level executives were simply eliminated from the system- if by law the only option were true non-profit organizations. Of course, I have a tende
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The overhead of private insurance companies shows that to be only a part of the problem.
Exactly. I don't even think they are even close to the largest contributor to the problem. We have a huge number of other problems we could solve which, I think, would have a bigger effect: a tax code that encourages tieing health insurance to jobs; health insurance which really acts nothing like actual insurance; an artificially limited supply of health-care professionals; differing state regulations for insurance companies; an overly expensive drug-approval process; overly high malpractice insurance requi
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Sure, you'd probably bring down price in the near term. But, if you eliminate the market aspect to health-care entirely, you're throwing out the baby with the bathwater.
The market aspect would still be there- we'd just get rid of the parasites on the system. The non-profits would still be competing for patients, you just wouldn't have to invest $ in making the share price high or paying outrageous c-level salaries.
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The non-profits would still be competing for patients, you just wouldn't have to invest $ in making the share price high or paying outrageous c-level salaries.
So, you're saying that the cost of health insurance would be cheaper if insurance companies were required to operate as non-profits, right? Well, then why hasn't anyone started a non-profit insurance company, offered a cheaper product, and dominated the market for insurance.
It seems that if non-profits would be cheaper, they would have no problem competing with the for-profit insurance companies. There must be some reason why they don't dominate the industry already. If they truly offered a comparable produ
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So, you're saying that the cost of health insurance would be cheaper if insurance companies were required to operate as non-profits, right? Well, then why hasn't anyone started a non-profit insurance company, offered a cheaper product, and dominated the market for insurance.
Keizer Permanente did exactly that in the 1980s. But they failed to keep up with it.
It seems that if non-profits would be cheaper, they would have no problem competing with the for-profit insurance companies.
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Keizer Permanente did exactly that in the 1980s. But they failed to keep up with it.
So then how does the example of Kaiser Permanente make your point?
BCBS and Keizer are the two 500 lb elephants in this business, and are both non-profits. But they still limit who they will take as a patient.
So, the fact that they are non-profit, as opposed to for-profit, doesn't really solve the problem at all then, does it?
Other than the conflict of interest, of course, which pushes up health care prices for everybody.
What conflict of interest pushes up prices for everybody?
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So then how does the example of Kaiser Permanente make your point?
Costs began to increase when they started paying their c-level executives more.
So, the fact that they are non-profit, as opposed to for-profit, doesn't really solve the problem at all then, does it?
It shows that they can, by being non-profit, grab a huge percentage of the business- and out-compete for profit companies.
What conflict of interest pushes up prices for everybody?
Stockholde
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Costs began to increase when they started paying their c-level executives more.
So, you agree that their non-profit status had nothing to do with their success?
It shows that they can, by being non-profit, grab a huge percentage of the business- and out-compete for profit companies.
But not in the long run though, huh?
Stockholder rewards vs consumer health- it's better for the stockholder if the majority of high-cost claims are denied.
No, it's not; at least not in the long run. If we actually had a relatively free market for health insurance, a company that routinely denied legitimate claims would soon find itself without any customers. And that's never very good for the stockholders.
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So, you agree that their non-profit status had nothing to do with their success?
No, for they still don't have the cost of rewarding stockholders.
But not in the long run though, huh?
It's because of their success in grabbing business from the for-profit side that their c-level executives got greedy.
No, it's not; at least not in the long run.
Stockholders don't care about the long run- they only care about the quarterly report.
If we act
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No, for they still don't have the cost of rewarding stockholders.
So, then why haven't non-profit insurance companies taken over the industry? You can't blame it on executive compensation, because I'm sure they make a comparable amount to those working at a for-profit insurance company.
Stockholders don't care about the long run- they only care about the quarterly report.
Whoa there. There are plenty of stockholders who are looking well past the next quarter. Warren Buffet, for one, has done pretty well.
How would the customers find that out?
I don't know, Consumer Reports maybe. How do you decide what car to buy?
Who just take their profits when the stock is high and move on to the next company- it's very good for stockholders to destroy an industry like that, happens all the time.
No it isn't, and no it doesn't. Don't forget that in order for those people to sell h
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So, then why haven't non-profit insurance companies taken over the industry?
They've got more than 50% market share, what more do you want?
You can't blame it on executive compensation, because I'm sure they make a comparable amount to those working at a for-profit insurance company.
I can blame the rise in their prices for that, which brought non-profit prices in line with for-profit prices.
Whoa there. There are plenty of stockholders who are looking well past
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They've got more than 50% market share, what more do you want?
Then it's obvious your solution does not solve the problem.
I can blame the rise in their prices for that, which brought non-profit prices in line with for-profit prices.
You can? Can you back it up with any, you know, data? You can blame the increase in executive compensation for their increased rates, but you have not shown that to be the case.
But short term thinking always does better than long term thinking in the stock market- as long as there is a long term sucker to sell the stocks to at the high point.
You don't get it. Those suckers who buy stocks at the height of a bubble are not the long term traders.
Before you make pronouncements about the nature of the stock market, you should perhaps learn something about how it works.
Yeah, but there will always be another sucker to sell crap to.
No, there's not. That's why there's a crash. Know
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Then it's obvious your solution does not solve the problem.
How so?
You can? Can you back it up with any, you know, data? You can blame the increase in executive compensation for their increased rates, but you have not shown that to be the case.
They were well below the cheapest insurance in the business- then they got a new CEO who raised their prices. What's to show?
You don't get it. Those suckers who buy stocks at the height of a bubble are not the long ter
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How so?
Because you've demonstrated that a non-profit insurance company won't offer rates any lower than a for-profit company.
They were well below the cheapest insurance in the business- then they got a new CEO who raised their prices. What's to show?
If you want to demonstrate that the increase in rates was solely to increase executive compensation, you have to show that the money actually went to compensation, not something else. You haven't done that.
I'm talking about the people who buy stocks when they're low and then change the functioning of the company to increase stockholder value at the expense of consumers- the people who BUILD the bubbles, not the ones who invest after the bubble is built.
You called the ones who bought stock at the high, "long term sucker[s]". The kinds of people that chase a rally like that are rarely, if ever, long term investors.
What kind of people "BUIL
public commons (Score:2, Interesting)
We have a lot of oil and natgas and other resources that are taken off the public land. We *could* have a per citizen ration you are allowed at cost plus a little to maintain the infrastructure. Sort of the local electric co-op deal but with fuel. As it is now, it is sold at auction for rather cheap bucks, then resold back to the public at full price. Our oil gets sold back to us at the same price as imported oil from oogga booga land..nutz... the amount would be small, but if we as taxpayers were offered a
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My whole response to your argument is one of: you are absolutely correct about what you say, but there's a caveat.
I see healthcare as an issue of basic human dignity. All humans should have a right to healthcare. In this way, any for-profit system providing basic healthcare is wrong.
Providing premium healthcare for-profit makes sense however. You make an argument that such a line cannot be drawn, however there are things people will easily agree about:
* Rooms without a roommate are a premium, unless medi
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I see healthcare as an issue of basic human dignity. All humans should have a right to healthcare. In this way, any for-profit system providing basic healthcare is wrong.
I agree with the first half, that healthcare is seen as a human right in this country. But, I disagree with the second.
There are lots of things which we consider to be human rights, that we leave up to the market: food, clothing, shelter, etc. We don't have a non-profit food system in this country, yet that is more important than healthcare.
What we do have (or, more acuratly, what we try to have) is a system that assures the basics, yet distorts the market as little as possible. We don't need a non-profit f
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There are lots of things which we consider to be human rights, that we leave up to the market: food, clothing, shelter, etc. We don't have a non-profit food system in this country, yet that is more important than healthcare.
Heck, we have the world's biggest hidden non-profit for food- the Department of Agriculture subsidy system. *MOST* of our food is produced below cost in the United States, thanks to that gigantic wealth transfer. One could say that the entire food system of the United States,
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Heck, we have the world's biggest hidden non-profit for food- the Department of Agriculture subsidy system.
No. Agricultural subsidies prove my point. These kinds of subsidies and incentives work within the for-profit market system. The government has some goal or ideal, and they offer incentives, in the form of increased profit for market participants, to engage in activities that further those goals.
It's the exact opposite of constructing a non-profit alternative system.
One could say that the entire food system of the United States, at least for basic non-processed food inputs, including organics and other specialty foods, is subsidized to the point of being a non-profit.
No, it's not. It's the perfect example of the government manipulating the market system to achieve desirable* goals.
* Whether or not these goal
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No. Agricultural subsidies prove my point. These kinds of subsidies and incentives work within the for-profit market system. The government has some goal or ideal, and they offer incentives, in the form of increased profit for market participants, to engage in activities that further those goals.
Ok, so if you're alright with that, how about limiting health insurance to companies that get subsidies INSTEAD OF STOCKHOLDERS? At least in agricultural subsidies serve the public interest by keeping an e
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Ok, so if you're alright with that, how about limiting health insurance to companies that get subsidies INSTEAD OF STOCKHOLDERS?
I don't know who it is you think gets those agricultural subsidies, but a large number of them are corporations with *gasp* stockholders.
At least in agricultural subsidies serve the public interest by keeping an essential national security industry at home.
That's what I'm saying. If we decide that universal health care is in the public interest--and it seems that we have--then we should do it. But, the public option is not the only way to achieve that goal; nor, in my opinion, is it the best.
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But, the public option is not the only way to achieve that goal; nor, in my opinion, is it the best.
Well, given that the market has decided to decline to serve around an eighth of the population as being hopelessly unprofitable (potential disease expenditures > potential lifetime premiums), what do you suggest instead? I don't see any option, even with subsidies, that would make these people profitable customers- and in fact, most people have a 95% chance of switching classes from the 7/8ths gr
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Well, given that the market has decided to decline to serve around an eighth of the population as being hopelessly unprofitable (potential disease expenditures > potential lifetime premiums), what do you suggest instead?
Well, it is not quite true that the market has declined service to these people; it's that it has declined service at a price these people can pay. To solve this, you either give the people who cannot get coverage a voucher for health insurance equal to the difference between what they can pay and what the insurance company wants them to pay, or you give the insurance company a subsidy of the same amount if they take on these people as clients.
I don't share your faith that given those numbers, the market will *EVER* be an adequate solution for this, any more than the market is adequate at paving roads or bringing electricity to rural farms.
The market is adequate at paving roads and supplying electricity
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Well, it is not quite true that the market has declined service to these people; it's that it has declined service at a price these people can pay.
Nope- the letter I've gotten now from 4 separate insurance companies is that my application for coverage was declined, with no other options given.
To solve this, you either give the people who cannot get coverage a voucher for health insurance equal to the difference between what they can pay and what the insurance company wants them to p
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Nope- the letter I've gotten now from 4 separate insurance companies is that my application for coverage was declined, with no other options given.
Because of the way insurance companies are regulated, they cannot offer you coverage at a price which would be economical for them. We should scrap those regulations, and give insurance vouchers to those who cannot afford that coverage.
And what if they still decline to take people with pre-existing conditions?
What possible reason would a for-profit insurance company refuse to cover someone if they could charge a price which would net them a profit?
How do you force them to do business with the people that they refuse to do business with.
The only reason they "refuse" to do business with certain people is because they are prohibited by law to charge them a premium which w
competition (Score:1)
I usually don't post on health care stuff, I have pretty much no idea what I'm talking about. I've been to the doctor once in about 5 years. And now for a rant from someone who knows nothing:
One of the biggest problems in our system is probably lack of competition, but I'm not sure that's the only thing. It seems like Americans have much higher expectations than most other countries, and so the total cost is going to be greater, of course. And there's also the problem of separating the user from the payer,