4 ms·

> It scales linearly because the same ratio of services to people continues That would be scaling with population, not GDP. > The payors and providers share t

by cwalv 2y ago

> It scales linearly because the same ratio of services to people continues That would be scaling with population, not GDP. > The payors and providers share the same incentive to raise rates because they each collect a percentage of premiums This must be an oversimplification. Why would insurers ever reject a claim, or spend time negotiating lower rates, if they're only incentivized to see health costs increase?

mlyle 2y ago
No, because the level of services and cost to provide them scales also. Inflation. What paying workers costs. What is considered an “acceptable” level of poverty vs abject poverty as we get richer. New, expensive medical procedures. And as the world gets richer, defense gets more expensive. We can’t pay 1930 salaries to workers, field a 1930s army, nor would we consider it humane for our elderly to end up with an impoverished 1930s standard of living with 1930s medical care. Inflation is misleading for these purposes, too, because it includes hedonic adjustments. So a new better procedure or bigger apartment costing 40 pc more might only be 10 pc higher from an inflation point of view, even though you can’t really buy the old one. Re: insurers— it is an oversimplification. Suffice it to say they are at scale where they have market power and thus don’t price where p=mc, and the regulatory pressures and price opacity push them even further away from efficiency. They are not completely insulated from costs or market pressures, but it’s fairly close.
- cwalv 2y ago
  > Inflation. What paying workers costs. GDP without qualification is 'real GDP', not 'nominal GDP', i.e it's already adjusted for inflation. I agree that costs need be adjusted for inflation
  - mlyle 2y ago
    > GDP without qualification is 'real GDP', not 'nominal GDP' i.e it's already adjusted for inflation. Nah.. I can't intuit what you are thinking or arguing. But I already addressed much more than you responded to. e.g.: > > Inflation is misleading for these purposes, too, because it includes hedonic adjustments. So a new better procedure or bigger apartment costing 40 pc more might only be 10 pc higher from an inflation point of view, even though you can’t really buy the old one.
Aeolun 2y ago
> That would be scaling with population, not GDP. Educating kids the way we did in 1910 would certainly be cheap, but I don’t think anyone in the country is looking for that.
- biztos 2y ago
  What about educating them the way we did in 1980?
- gadflyinyoureye 2y ago
  Is that because we’d bring standards back? Harvard is finding that students can’t read books. https://www.nationalreview.com/2024/10/why-elite-students-cant-read-books/ https://www.nationalreview.com/2024/10/why-elite-students-ca...
  - Aeolun 2y ago
    Haha, fair point. It might actually be better to educate them like in the 1910’s.
  - watwut 2y ago
    They don't read books for entertainment anymore. They play games people on this forum made. That is about it.
    - gadflyinyoureye 2y ago
      No. Modern kids in the US were trained on short form articles. As a result they experience anxiety when as to read a single book per semester. They really hate being asked to read multiple books per semester for just one class.
  - asdf6969 2y ago
    Most people didn’t graduate high school back then
- fallingknife 2y ago
  That may actually be an improvement. One of my math teachers in high school hated the text books and gave us sets of problems from the 1950s. Instead of 20 easy problems, it was 3 much more difficult problems. The problem in our education system is the standards are in the toilet because they are afraid to fail people. This does not cost money to correct.
Majromax 2y ago
> That would be scaling with population, not GDP. This is Baulmol's Cost Disease (https://en.wikipedia.org/wiki/Baumol_effect https://en.wikipedia.org/wiki/Baumol_effect) in action, and it's something that advanced economies must take into account. A barber today is not much more productive than a barber in 1900, but a haircut today costs much more than a haircut in 1900, even adjusted for goods inflation. Why is today's haircut evidently more expensive? The answer lies in the labour supply. If haircuts didn't cost more today than in 1900, would-be barbers would work in goods-producing sectors that have seen real productivity growth and consequently 'naturally' improved wages. In some sectors, this has led to the replacement of labour with capital. Domestic help was once hired by the ordinary middle class, but now we have kitchen and household appliances instead. We see fewer expensive hand-crafts and more factory-produced goods. Even fast food joints try to replace human service with ordering kiosks. This replacement is much more difficult in the government sector, where transfer payments tend to relate to income rather than absolute provision of hard goods and where health-care and education are two of the sectors most affected by the Baulmol effect.
- zdragnar 2y ago
  Domestic help was once available because there was an extreme surplus of dirt poor people. After the economic boom due to rising productivity, there weren't enough dirt poor people willing to work for peanuts, and today things like minimum wage and various benefits programs make it easier to not work for so little money a middle class family can easily afford it. People would rather buy cheap factory goods than the more expensive hand made ones because they prefer to spend money on other things instead. Google says the average barber haircut in 1900 for a man (women often did their hair at home) was 25 cents, which is just shy of $10 adjusted for inflation. Most places around me offer basic haircuts for $20. In 1900, only the state of Minnesota had a requirement for barbers to be licensed (it was the first state to do so, in 1897). No beautician school requirement, no licensure payments, no state or federal income or sales taxes. In short, it's surprising that the rise in cost of a haircut hasn't been higher. I think there's something to Baulmol's theory, but there's a lot of hand waving that isn't really supported as well by the examples given here or elsewhere that I've seen. That, or the effect isn't all that it is claimed to be; it's almost tautological that as supply of workers for a low paying job dries up, the wages for the job have to go up to retain workers.
digitaltrees 2y ago
Claims approval has nothing to do with rate setting. Insurance companies can deny individual claims and still use the total payments in the aggregate to argue for premium increases with their regulators. Remember they are entitled to a statutory administrative costs fee. That’s how they really make money. 10% of a $2B is more than 10% of 1B so they want spending to go up.

by cwalv 2y ago

mlyle 2y ago

No, because the level of services and cost to provide them scales also. Inflation. What paying workers costs. What is considered an “acceptable” level of poverty vs abject poverty as we get richer. New, expensive medical procedures. And as the world gets richer, defense gets more expensive. We can’t pay 1930 salaries to workers, field a 1930s army, nor would we consider it humane for our elderly to end up with an impoverished 1930s standard of living with 1930s medical care. Inflation is misleading for these purposes, too, because it includes hedonic adjustments. So a new better procedure or bigger apartment costing 40 pc more might only be 10 pc higher from an inflation point of view, even though you can’t really buy the old one. Re: insurers— it is an oversimplification. Suffice it to say they are at scale where they have market power and thus don’t price where p=mc, and the regulatory pressures and price opacity push them even further away from efficiency. They are not completely insulated from costs or market pressures, but it’s fairly close.

cwalv 2y ago
> Inflation. What paying workers costs. GDP without qualification is 'real GDP', not 'nominal GDP', i.e it's already adjusted for inflation. I agree that costs need be adjusted for inflation
- mlyle 2y ago
  > GDP without qualification is 'real GDP', not 'nominal GDP' i.e it's already adjusted for inflation. Nah.. I can't intuit what you are thinking or arguing. But I already addressed much more than you responded to. e.g.: > > Inflation is misleading for these purposes, too, because it includes hedonic adjustments. So a new better procedure or bigger apartment costing 40 pc more might only be 10 pc higher from an inflation point of view, even though you can’t really buy the old one.

Aeolun 2y ago

> That would be scaling with population, not GDP. Educating kids the way we did in 1910 would certainly be cheap, but I don’t think anyone in the country is looking for that.

biztos 2y ago
What about educating them the way we did in 1980?
gadflyinyoureye 2y ago
Is that because we’d bring standards back? Harvard is finding that students can’t read books. https://www.nationalreview.com/2024/10/why-elite-students-cant-read-books/ https://www.nationalreview.com/2024/10/why-elite-students-ca...
- Aeolun 2y ago
  Haha, fair point. It might actually be better to educate them like in the 1910’s.
- watwut 2y ago
  They don't read books for entertainment anymore. They play games people on this forum made. That is about it.
  - gadflyinyoureye 2y ago
    No. Modern kids in the US were trained on short form articles. As a result they experience anxiety when as to read a single book per semester. They really hate being asked to read multiple books per semester for just one class.
- asdf6969 2y ago
  Most people didn’t graduate high school back then
fallingknife 2y ago
That may actually be an improvement. One of my math teachers in high school hated the text books and gave us sets of problems from the 1950s. Instead of 20 easy problems, it was 3 much more difficult problems. The problem in our education system is the standards are in the toilet because they are afraid to fail people. This does not cost money to correct.

Majromax 2y ago

> That would be scaling with population, not GDP. This is Baulmol's Cost Disease (https://en.wikipedia.org/wiki/Baumol_effect https://en.wikipedia.org/wiki/Baumol_effect) in action, and it's something that advanced economies must take into account. A barber today is not much more productive than a barber in 1900, but a haircut today costs much more than a haircut in 1900, even adjusted for goods inflation. Why is today's haircut evidently more expensive? The answer lies in the labour supply. If haircuts didn't cost more today than in 1900, would-be barbers would work in goods-producing sectors that have seen real productivity growth and consequently 'naturally' improved wages. In some sectors, this has led to the replacement of labour with capital. Domestic help was once hired by the ordinary middle class, but now we have kitchen and household appliances instead. We see fewer expensive hand-crafts and more factory-produced goods. Even fast food joints try to replace human service with ordering kiosks. This replacement is much more difficult in the government sector, where transfer payments tend to relate to income rather than absolute provision of hard goods and where health-care and education are two of the sectors most affected by the Baulmol effect.

zdragnar 2y ago
Domestic help was once available because there was an extreme surplus of dirt poor people. After the economic boom due to rising productivity, there weren't enough dirt poor people willing to work for peanuts, and today things like minimum wage and various benefits programs make it easier to not work for so little money a middle class family can easily afford it. People would rather buy cheap factory goods than the more expensive hand made ones because they prefer to spend money on other things instead. Google says the average barber haircut in 1900 for a man (women often did their hair at home) was 25 cents, which is just shy of $10 adjusted for inflation. Most places around me offer basic haircuts for $20. In 1900, only the state of Minnesota had a requirement for barbers to be licensed (it was the first state to do so, in 1897). No beautician school requirement, no licensure payments, no state or federal income or sales taxes. In short, it's surprising that the rise in cost of a haircut hasn't been higher. I think there's something to Baulmol's theory, but there's a lot of hand waving that isn't really supported as well by the examples given here or elsewhere that I've seen. That, or the effect isn't all that it is claimed to be; it's almost tautological that as supply of workers for a low paying job dries up, the wages for the job have to go up to retain workers.

digitaltrees 2y ago

Claims approval has nothing to do with rate setting. Insurance companies can deny individual claims and still use the total payments in the aggregate to argue for premium increases with their regulators. Remember they are entitled to a statutory administrative costs fee. That’s how they really make money. 10% of a $2B is more than 10% of 1B so they want spending to go up.