4 ms·

I am going to argue with you sideways. :-) I dont think Hello Health is an argument for HSA's so much as a streamlined reimbursement system with some kind or re

by russell 17y ago

I am going to argue with you sideways. :-) I dont think Hello Health is an argument for HSA's so much as a streamlined reimbursement system with some kind or reasonable accountability for costs. The current structure optimizes for assembly line medicine rather than good patient care. Most people go with factory doctors, because of the small co-pay. You can go to a doctor outside your plan, but you typically get only 50% reimbursement. My doctor costs me $100 out of pocket instead of $25, but she is worth it because I get a one-hour appointment instead of 15 minutes. On to Milton Friedman. He makes a very good case for single payer health insurance (11% of GDP vs 17%) and then comes to the opposite conclusion. He is drinking the perfect market koolaid. He assumes that, if people have to pay their own money, they are going to make rational economic decisions about health care purchases and will shop around for the best price. This is such utter crap that it is hard to believe that an open minded economist would utter it. Health purchases are not rationally economic. They are made on other considerations like trust in the doctor and increasingly on patient evaluations of treatment options. If you have a kid with a high fever, you dont start googling for the best price. A part of the conservative economic fantasy is that consumers have negotiating power in the market. Yes, I by drugs at Costco because they are cheaper, but that is because Costco has negotiating advantage, not me. A single payer would have a huge advantage in negotiating drug prices. There is a reason that drug prices in the US are the highest in the world. Health care reform in the US is hugely complicated and a simplistic approach is not going to cut it, even a single payer system isnt enough. Drug costs need to be cut. Defensive medicine needs to be brought in line. (Practice to the patients needs not the doctors.) On and on. Hello Health looks to be a good start in the microcosm.

jacoblyles 17y ago
You don't think people respond to prices? Consumers are not perfectly rational, but that's a bit of a straw man argument. On average, in the aggregate, they do respond to incentives. On average, in the aggregate, a first-party consumer payer is more likely to be price sensitive than a consumer purchasing medical care by way of a third-party employer health plan. The fact that most consumers don't fit some perfect model doesn't seem particularly relevant. Finally you say: "Health purchases are not rationally economic. They are made on other considerations like trust in the doctor and increasingly on patient evaluations of treatment options." Purchasing based on quality is not "rationally economic"? Have you studied any economics at all? That's just ignorant. You don't know the meaning of the words you are using. This is why I stopped arguing with people on the internet. Edit: Yes, this is a little mean and not within the style guidelines of Hacker News, but you will have to excuse me if I am not impressed by yet another person "disproving" the entire discipline of economics with the pseudo-intellectual observation that people make decisions on considerations other than price, as if that fact had been overlooked by every economist for the last three centuries.
- GHFigs 17y ago
  You put the word disproving in quotes, but the parent post did not use that word or claim to be disproving the entire discipline of economics. Your knee-jerk reaction here typifies why so many avoid studying the subject at all. Also, that "psuedo-intellectual observation" won Herbert Simon a Nobel Prize (in Economics) in 1978. I don't see how it's far-fetched or "ignorant" to suggest that healthcare decisions are made by boundedly rational satisficers rather than perfectly rational optimizers.
- russell 17y ago
  Actually my degree is in economics. When I got it, the arguments were in terms of "utiles" instead of dollars. A utile would encompass quality, but was such a nebulous concept that it was of very little practical use. So when I said "rationally economic" I was speaking in terms of dollars, which you can measure and not utiles or feelies which you cannot. I dont think that giving everyone an HSA is going to give Friedman's desired result of lowering health care costs, because it depends on people making dollar based decisions. I think improvements in the cost structure will be made the monopolistic components of health care, including drug pricing, and reactions to insurance optimizations like factory medicine. I made the decision to switch from economics to programming a long time ago, pretty much for the reasons I gave above. I WAS expecting a scientific approach and pretty much got mumbo jumbo like Friedman's essay. And if you think things are very much better, how come Greenspan and the quants and politicians lead us into this economic disaster we have now. I will admit that my attention to theories economic since then have been superficial, and great strides in understanding may have been made, but I dont see it yet.
- mellis 17y ago
  Health insurance is a difficult thing to price. Do you know the probabilities that you will need treatment for any particular condition? Can judge how much more you should pay for a policy with a million dollar limit on total reimbursement than one with a $500,000 limit? Unlike most goods, we don't get lots of chances to evaluate the quality of the product and then switch providers if we're not satisfied. Once you realize your health insurance isn't good enough, you're probably already in trouble. There are a lot of factors required to ensure the proper performance of a free market, and health insurance fails to satisfy many of them.
michaelkeenan 17y ago
He assumes that, if people have to pay their own money, they are going to make rational economic decisions about health care purchases and will shop around for the best price. This is such utter crap that it is hard to believe that an open minded economist would utter it. Health purchases are not rationally economic. They are made on other considerations like trust in the doctor and increasingly on patient evaluations of treatment options. If you have a kid with a high fever, you dont start googling for the best price. You could reasonably compress "rational economic decisions" to be ones considering two factors: price and quality. It sounds like you're arguing that people are often willing to pay a lot for high quality healthcare. I think you're correct that people seek high quality healthcare, especially for their children, but I disagree that this implies the consumer isn't making a rational economic decision. The economic term you're looking for is elasticity. It sounds like you're claiming that demand for high-quality healthcare is inelastic. Inelasticity is a well-understood concept, not one that destroys economic analysis. My impression is that people are cost-conscious when purchasing healthcare. I myself have shopped around for various services. A friend of mine shopped between services in Panama and India for surrogate pregnancy services, and cost was a factor. I've heard that there is a lot of traffic across the Mexico-USA border, and the Canada-USA border, of people seeking cheaper prices. My decisions to purchase from online pharmacies have been driven by price comparisons, and online pharmacies are very popular so I doubt I'm unusual. These things indicate that cost is a factor at least for some people, when considering healthcare expenditures. I think that Milton Friedman's perception of cost-conscious health consumers was correct.
jerf 17y ago
Your understanding of the points you are arguing against is so terrible and flawed that you need to start over from scratch. (Note the difference between that statement and "the points you are arguing against are correct".) "He assumes that, if people have to pay their own money, they are going to make rational economic decisions about health care purchases and will shop around for the best price. This is such utter crap that it is hard to believe that an open minded economist would utter it." The idea that people don't take prices into account is such crap I can't believe anyone could believe it. You argue: "They are made on other considerations like trust in the doctor and increasingly on patient evaluations of treatment options." Which betrays a profound misunderstanding of how economics work. Those considerations are indeed weighed... all in a context of how much it costs! If you can't understand it in an emotional arena like health care, consider buying a house. Price isn't the only concern. How much you like it factors in to your final decision. But if you don't consider price at all, you're going to make a very bad decision by any measure, both conventional (you're going to run out of money) and economic utility. "Yes, I by drugs at Costco because they are cheaper, but that is because Costco has negotiating advantage, not me." Time for some 5 Whys: Why does Costco have a negotiating advantage? Because they are big? Well, why are they big? You can dance around all you like, but you're going to have to come back to "Because they have you and many other people as customers, and Costco can aggregate your bargaining power together." If Costco screws up and alienates enough customers, they will have no more bargaining power. This is a critical aspect of economic theory. Your conception of Costco as a sort of platonic ideal of a large company, with this fact disconnected from the input of the rest of the economy, is very wrong. Costco's bargaining power is an effect, not just a cause. I commend to you a lot of time with a textbook: http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC.html http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC... And I remind, it is not necessarily because "economic theory" must be right... it is because it is objectively true that you don't understand it. Perhaps if you do, you will find you opinion of it changes. (Even if you don't entirely agree with it, it would be weird if moving past a strawman didn't change your opinion.)
- gojomo 17y ago
  The unnecessarily personal tone of this comment distracts from the substantive points. These statements only detract: Your understanding of the points you are arguing against is so terrible and flawed that you need to start over from scratch. ...betrays a profound misunderstanding... I commend to you a lot of time with a textbook... ...it is objectively true that you don't understand [economic theory]. The grandparent-poster reports having a degree in economics; his points may be be wrong, but a denigratory and lecturing tone won't convince him or others. (Edit: I initially flagged the 'idea... is such crap' line as problematic too, but then realized it was just a mirror of russell's own language. Still, it was shoddy name-calling by him initially; mirroring it back is understandable in response or to call attention to it, but doesn't lift the tone any.)
philwelch 17y ago
"A single payer would have a huge advantage in negotiating drug prices." If that single payer is the US Government, expect the same US Government pattern. The system will be gamed to maximize cashflow from US tax dollars to crony corporations. That's the rationale behind Medicare today and that's the rationale behind downsizing the military and hiring back the soldiers we just downsized as mercenaries. That's the rationale behind corn ethanol subsidies. So drug prices (to the government) go up, but drug prices (to the consumer) drop to some arbitrary low level. What do you think will happen then? People will use more prescription drugs. Now the cost to society is even higher, because the inflated subsidies (which in more honest terms might be called "kickbacks") by the government combined with the total lack of spending discipline on the part of the consumer result in an even higher increase to the tax burden and the federal deficit. Which must be dealt with in some way (taxation or inflation) that makes us all a bit poorer. It is a fallacy to assume that individuals make perfectly rational economic decisions on behalf of themselves, but it's closer to the truth than supposing that governments make perfectly rational economic decisions on behalf of the people at large.

by russell 17y ago

jacoblyles 17y ago

You don't think people respond to prices? Consumers are not perfectly rational, but that's a bit of a straw man argument. On average, in the aggregate, they do respond to incentives. On average, in the aggregate, a first-party consumer payer is more likely to be price sensitive than a consumer purchasing medical care by way of a third-party employer health plan. The fact that most consumers don't fit some perfect model doesn't seem particularly relevant. Finally you say: "Health purchases are not rationally economic. They are made on other considerations like trust in the doctor and increasingly on patient evaluations of treatment options." Purchasing based on quality is not "rationally economic"? Have you studied any economics at all? That's just ignorant. You don't know the meaning of the words you are using. This is why I stopped arguing with people on the internet. Edit: Yes, this is a little mean and not within the style guidelines of Hacker News, but you will have to excuse me if I am not impressed by yet another person "disproving" the entire discipline of economics with the pseudo-intellectual observation that people make decisions on considerations other than price, as if that fact had been overlooked by every economist for the last three centuries.

GHFigs 17y ago
You put the word disproving in quotes, but the parent post did not use that word or claim to be disproving the entire discipline of economics. Your knee-jerk reaction here typifies why so many avoid studying the subject at all. Also, that "psuedo-intellectual observation" won Herbert Simon a Nobel Prize (in Economics) in 1978. I don't see how it's far-fetched or "ignorant" to suggest that healthcare decisions are made by boundedly rational satisficers rather than perfectly rational optimizers.
russell 17y ago
Actually my degree is in economics. When I got it, the arguments were in terms of "utiles" instead of dollars. A utile would encompass quality, but was such a nebulous concept that it was of very little practical use. So when I said "rationally economic" I was speaking in terms of dollars, which you can measure and not utiles or feelies which you cannot. I dont think that giving everyone an HSA is going to give Friedman's desired result of lowering health care costs, because it depends on people making dollar based decisions. I think improvements in the cost structure will be made the monopolistic components of health care, including drug pricing, and reactions to insurance optimizations like factory medicine. I made the decision to switch from economics to programming a long time ago, pretty much for the reasons I gave above. I WAS expecting a scientific approach and pretty much got mumbo jumbo like Friedman's essay. And if you think things are very much better, how come Greenspan and the quants and politicians lead us into this economic disaster we have now. I will admit that my attention to theories economic since then have been superficial, and great strides in understanding may have been made, but I dont see it yet.
mellis 17y ago
Health insurance is a difficult thing to price. Do you know the probabilities that you will need treatment for any particular condition? Can judge how much more you should pay for a policy with a million dollar limit on total reimbursement than one with a $500,000 limit? Unlike most goods, we don't get lots of chances to evaluate the quality of the product and then switch providers if we're not satisfied. Once you realize your health insurance isn't good enough, you're probably already in trouble. There are a lot of factors required to ensure the proper performance of a free market, and health insurance fails to satisfy many of them.

michaelkeenan 17y ago

He assumes that, if people have to pay their own money, they are going to make rational economic decisions about health care purchases and will shop around for the best price. This is such utter crap that it is hard to believe that an open minded economist would utter it. Health purchases are not rationally economic. They are made on other considerations like trust in the doctor and increasingly on patient evaluations of treatment options. If you have a kid with a high fever, you dont start googling for the best price. You could reasonably compress "rational economic decisions" to be ones considering two factors: price and quality. It sounds like you're arguing that people are often willing to pay a lot for high quality healthcare. I think you're correct that people seek high quality healthcare, especially for their children, but I disagree that this implies the consumer isn't making a rational economic decision. The economic term you're looking for is elasticity. It sounds like you're claiming that demand for high-quality healthcare is inelastic. Inelasticity is a well-understood concept, not one that destroys economic analysis. My impression is that people are cost-conscious when purchasing healthcare. I myself have shopped around for various services. A friend of mine shopped between services in Panama and India for surrogate pregnancy services, and cost was a factor. I've heard that there is a lot of traffic across the Mexico-USA border, and the Canada-USA border, of people seeking cheaper prices. My decisions to purchase from online pharmacies have been driven by price comparisons, and online pharmacies are very popular so I doubt I'm unusual. These things indicate that cost is a factor at least for some people, when considering healthcare expenditures. I think that Milton Friedman's perception of cost-conscious health consumers was correct.

jerf 17y ago

Your understanding of the points you are arguing against is so terrible and flawed that you need to start over from scratch. (Note the difference between that statement and "the points you are arguing against are correct".) "He assumes that, if people have to pay their own money, they are going to make rational economic decisions about health care purchases and will shop around for the best price. This is such utter crap that it is hard to believe that an open minded economist would utter it." The idea that people don't take prices into account is such crap I can't believe anyone could believe it. You argue: "They are made on other considerations like trust in the doctor and increasingly on patient evaluations of treatment options." Which betrays a profound misunderstanding of how economics work. Those considerations are indeed weighed... all in a context of how much it costs! If you can't understand it in an emotional arena like health care, consider buying a house. Price isn't the only concern. How much you like it factors in to your final decision. But if you don't consider price at all, you're going to make a very bad decision by any measure, both conventional (you're going to run out of money) and economic utility. "Yes, I by drugs at Costco because they are cheaper, but that is because Costco has negotiating advantage, not me." Time for some 5 Whys: Why does Costco have a negotiating advantage? Because they are big? Well, why are they big? You can dance around all you like, but you're going to have to come back to "Because they have you and many other people as customers, and Costco can aggregate your bargaining power together." If Costco screws up and alienates enough customers, they will have no more bargaining power. This is a critical aspect of economic theory. Your conception of Costco as a sort of platonic ideal of a large company, with this fact disconnected from the input of the rest of the economy, is very wrong. Costco's bargaining power is an effect, not just a cause. I commend to you a lot of time with a textbook: http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC.html http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC... And I remind, it is not necessarily because "economic theory" must be right... it is because it is objectively true that you don't understand it. Perhaps if you do, you will find you opinion of it changes. (Even if you don't entirely agree with it, it would be weird if moving past a strawman didn't change your opinion.)

gojomo 17y ago
The unnecessarily personal tone of this comment distracts from the substantive points. These statements only detract: Your understanding of the points you are arguing against is so terrible and flawed that you need to start over from scratch. ...betrays a profound misunderstanding... I commend to you a lot of time with a textbook... ...it is objectively true that you don't understand [economic theory]. The grandparent-poster reports having a degree in economics; his points may be be wrong, but a denigratory and lecturing tone won't convince him or others. (Edit: I initially flagged the 'idea... is such crap' line as problematic too, but then realized it was just a mirror of russell's own language. Still, it was shoddy name-calling by him initially; mirroring it back is understandable in response or to call attention to it, but doesn't lift the tone any.)

philwelch 17y ago

"A single payer would have a huge advantage in negotiating drug prices." If that single payer is the US Government, expect the same US Government pattern. The system will be gamed to maximize cashflow from US tax dollars to crony corporations. That's the rationale behind Medicare today and that's the rationale behind downsizing the military and hiring back the soldiers we just downsized as mercenaries. That's the rationale behind corn ethanol subsidies. So drug prices (to the government) go up, but drug prices (to the consumer) drop to some arbitrary low level. What do you think will happen then? People will use more prescription drugs. Now the cost to society is even higher, because the inflated subsidies (which in more honest terms might be called "kickbacks") by the government combined with the total lack of spending discipline on the part of the consumer result in an even higher increase to the tax burden and the federal deficit. Which must be dealt with in some way (taxation or inflation) that makes us all a bit poorer. It is a fallacy to assume that individuals make perfectly rational economic decisions on behalf of themselves, but it's closer to the truth than supposing that governments make perfectly rational economic decisions on behalf of the people at large.