Private Healthcare = Your Money

It seems progressives have it ingrained that private healthcare insurance are not healthcare services or products that I’ve purchased. This is a lie. It is the essential lie that is wrecking the current debate on healthcare. From Tuesday’s comments here are to remarks to this assertion which I take as typical:

Actually you’ve ‘paid for’ a bet. You’ve betted that you will require certain expensive healthcare over the term of your policy. Your insurance company has bet that you will not. If it wins, they keep your premiums and make a profit. If you win, they pay for your healthcare.

and

As Boonton points out, you haven’t purchased healthcare per se, but healthcare coverage. And I’m not sure who “on the left” “forget” that.

Let me start with a little analogy.

Two men are neighbours. Their families both regularly have a Saturday evening barbecue at which sometimes they chat. One day they both start remarking on a very large boulder uphill of their properties. The way it is propped up it looks like it could hit one or the other of their houses. One of them suggests that every Saturday each one will put $20 a kitty. When (and if) erosion or other processes loosen the huge rock to crack into one of their houses … thy guy whose house is hit gets whatever was in the pot.

Imagine that rock was above a town … and the town agreed to a similar deal … and that contributions were fixed, contributors were voluntary, and that only contributors would be splitting the funds collected funds when the rock released. And that the funds getting large enough needed to hire an accountant to manage those funds … and that some rules needed to be established to apportion that sum in a equitable manner when rock caused damage to various houses in differing degrees. And voila … one has established an insurance company (not healthcare … but that is a distinction without difference).

This essentially the “bet” in the first quoted remark above or the “coverage” vs “product” in the second. What is the status of that money. When the person who’s house is struck has to pay for repairs … is that paid for with his money? It seems obvious that the answer to that is yes, he is paying with his money.

Healthcare coverage today is quite expensive. I don’t have the figures [note: I might ask at my employer for a rough estimate of what our companies healthcare costs per month run.] but I’m guessing offhand that $6k to $12k per year easily is being put to my healthcare insurance for my family of four. The first objection insists that this is a “bet” (which is an odd way to put actuarial calculations). Actuarial evolution is the means by which insurance companies make money. But the amount above the co-pay for medical services and medicines that are purchased on my families behalf is money from the “kitty” above. It is mine. It comes from my participation in the pool. The quantity that must be put in is related directly to mathematical statistical models of our population and our behaviour. Yet it is my money in exactly the same way that the money that money belonged the gentleman above with the damaged house. The movement from the two men to the town is pretty clear. When the money is spent is it still money belonging to and deriving directly from the people benefiting. That there is a “bet” involved is an unimportant detail. That this is “coverage” vs “payment” is a syntactic dodge.

Calling the health insurance that a person earns and receives as on of the means of  remuneration for services rendered to an employer not a thing for which he has bought and paid is rhetorical thievery. The left will tell you today that these actuarial services are stealing from you. They will also deny that the private insurance company benefits are your money. And furthermore, that replacing these with greater government efficiencies will save incredible amounts. One wonders at the naivete at that sort of thinking. Greater. Government. Efficiencies. From what planet do these people originate? Medicare is a public healthcare program. There are private companies that exist solely for the purpose of navigating the arcane and Kafkan intricacies of Medicare paperwork on your behalf. Yep. More efficient indeed. Savings indeed. Mr Obama is indeed a great politician, that is if the term ‘great’ is a measure of the size and frequency of the the lies you tell.

Leave a Reply

Your email address will not be published. Required fields are marked *

21 comments

  1. Suzie says:

    Healing oils are vast. As examples, we have Eucalyptus Oils for those having trouble with their nasal passageways. Eucalyptus Oils are also used when babies have trouble inhaling and when they suffer from blocked airways. It can be done through incorporating the eucalyptus oil in the humidifier and turning in on together with the fan or air-conditioning.

  2. Re: the general thrust of your post, I don’t understand who or what you are arguing with. Obviously when you have health insurance and you need some money for health care and the insurance company actually agrees to pay, the money the insurance company gives your health care provider can be seen as your money. So what?

    Re: government efficiencies, it’s not that government is more efficient, per se, but that the incentives are different. The sole purpose of insurance companies is to make money. That creates a massive conflict of interest in which they hire teams of laywers and other professionals whose primary job is to deny coverage to those who are entitled to it. Government health insurance, by contrast, would be a non-profit endeavor. Not only would it have less incentive to screw customers, it’s not skimming off the top of the pool either. It’s really not that complicated.

  3. Mark says:

    JA,
    Recall New Orleans. Government, because their motive is not profit, is even worse. The government’s incentive is to get re-elected. They will always push the payment to the future. That is not better, it’s worse. As I’ve said in the past, I think we need a Constitutional amendment establishing separation between state and actuarial endeavours, e.g., retirement and insurance. And my reason stands, the incentives are all wrong.

    I’m arguing against those who don’t think that healthcare products via private insurance is healthcare for which I’ve paid. That is the theme that I see repeatedly on the left and is more pernicious than the rationing argument (which I see as a valid issue to discuss by the way. As I noted long ago, I don’t see any fairer way of rationing healthcare beyond ability to pay.).

  4. Boonton says:

    This essentially the “bet” in the first quoted remark above or the “coverage” vs “product” in the second. What is the status of that money. When the person who’s house is struck has to pay for repairs … is that paid for with his money? It seems obvious that the answer to that is yes, he is paying with his money.

    Keeping it simple with just two neighbors and what appears to be even odds that if the rock does fall it will damage one or the other house….how much should be put in the kitty? Enough to repair one house. So one day the rock falls and damages house A. Neighbor A collects the entire kitty and fixes his house. But how much did A put in the kitty? Only half of the amount. How did he ‘pay’ to fix his house when he only spent half the necessary money?

    I don’t have the figures [note: I might ask at my employer for a rough estimate of what our companies healthcare costs per month run.] but I’m guessing offhand that $6k to $12k per year easily is being put to my healthcare insurance for my family of four. The first objection insists that this is a “bet” (which is an odd way to put actuarial calculations).

    Contrast this with putting $6K-$12K a year into a health savings account. At the end of ten years if you loose your job you have $60-$120K (plus interest) to pay for medical care. With insurance you have nothing.

    Now this may sound more efficient to you and there’s some argument for it but consider your original hypothetical. Suppose the neighbors have strong religious beliefs against any type of gambling and would consider the ‘kitty’ to be a form of it. They would have to each save enough to repair their house. But this would be quite economically wasteful….to set aside enough to repair two houses when you know only 1, at most, would require it.

    But the amount above the co-pay for medical services and medicines that are purchased on my families behalf is money from the “kitty” above. It is mine. It comes from my participation in the pool.

    Yes like if I own the winning lottery ticket the jackpot is mine.

    The quantity that must be put in is related directly to mathematical statistical models of our population and our behaviour.

    Yes the bookie must be able to cover his spread. The kitty assumes the rock will not roll down the hill, ram through a house, roll up another hill and then down again into the other house requiring a payout of two full repair jobs.

    Calling the health insurance that a person earns and receives as on of the means of remuneration for services rendered to an employer not a thing for which he has bought and paid is rhetorical thievery.

    I don’t think anyone has done such a thing. If my boss pays me in lottery tickets I’m still receiving compensation. I don’t think anyone denies that.

    The left will tell you today that these actuarial services are stealing from you. They will also deny that the private insurance company benefits are your money.

    Considering that health insurance is such a short term benefit (policies usually only go for a year), I have no idea what you’re talking about. Your attempt to make the left into a cartoon isn’t even logical (not even cartoon logic)….how can the left say a person paying premiums is the victim of theft but the premiums aren’t his money? What is being stolen then and who does it belong to? This might have some relevance to the life insurance market where people buy policies that go for decades and if you brought a long term policy when you’re young you have a tangible ‘property interest’ in the low premiums years later.

    There are private companies that exist solely for the purpose of navigating the arcane and Kafkan intricacies of Medicare paperwork on your behalf. Yep. More efficient indeed.

    As there are for navigating private insurance…additionally private insurance companies aquire services in order to help them *not pay* for medical care. But this is a different subject. Thinking of insurance premiums as either a bet or private property or both doesn’t really inform us on the merits of offering a public plan.

  5. Boonton says:

    Recall New Orleans. Government, because their motive is not profit, is even worse.

    What am I supposed to recall about New Orleans?

    In terms of gov’t insurance, both unemployment and social security function as types of public insurance. Both have some drawbacks but neither have replaced private types of insurance nor do their supporters advocate ‘rhetorical theivery’ where premiums paid are not seen as a property interest. In fact, supporters of said gov’t programs have done quite the opposite, insisting on a rhetorical property right in order to maintain support for the programs.

  6. Recall New Orleans.

    I’m not arguing government is ALWAYS efficient. Obviously if you elect an idiot who installs an incompetent crony in a vital position, incompetence will result. The solution is not to get rid of government, though, but to elect fewer idiots.

    If you put Bush in charge of a corporation or Brownie in charge of a private emergency response organization, I’m sure you’d get equally bad results. The problem isn’t public vs. private, it’s competent vs. incompetent.

    Why do Republicans always think that doing a shitty job will convince people that government can’t work? We’re not THAT stupid.

    Government, because their motive is not profit, is even worse. The government’s incentive is to get re-elected. They will always push the payment to the future. That is not better, it’s worse.

    This is a real problem, but it is not limited to the public sector. The private sector does the exact same thing. Quarterly results are favored over long-term results. You may recall the entire financial world melting down a few months ago because CEOs and their underlings optimized for the highest immediate returns possible even though it created enormous long-term risk.

    As I’ve said in the past, I think we need a Constitutional amendment establishing separation between state and actuarial endeavours, e.g., retirement and insurance. And my reason stands, the incentives are all wrong.

    I agree that there are problems with the incentives, but I can’t see a way to fix that.

    I’m arguing against those who don’t think that healthcare products via private insurance is healthcare for which I’ve paid. That is the theme that I see repeatedly on the left and is more pernicious than the rationing argument (which I see as a valid issue to discuss by the way.

    Can you maybe give an example of what you’re talking about? Because I really can’t figure it out. Give me a specific statement of a specific person on the “left” who makes the claim you are objecting to.

    As I noted long ago, I don’t see any fairer way of rationing healthcare beyond ability to pay.).

    Right, no, clearly the rich deserve to get boob jobs before the poor should get emergency appendectomies. Just read Ayn Rand.

  7. Mark says:

    JA,
    Ah, but that is in fact what we see experimentally. That government is in fact always inefficient.

    I see, so that was the reason that the Fannies had so many bad loans on their books? Not government failures?

    I agree that there are problems with the incentives, but I can’t see a way to fix that.

    Which I have so thoughtfully provided, i.e., a way to fix that. Separation.

    Are you suggesting cosmetic surgeons perform emergency appendectomies?

  8. Mark says:

    Boonton,
    About that money (twice what he put in), after the rock moves. One man is in possession. Answer me plainly, is it all his? I say it is.

    If you prefer a health savings account to actuarial accounts, more power to you. There’s nothing stopping you.

    Yes, if you win a lottery the money is yours. If you don’t buy a ticket, you don’t get a chance to win. What’s your point?

    Thinking of insurance premiums as either a bet or private property or both doesn’t really inform us on the merits of offering a public plan.

    True. But claiming of insurance as not something to which I contribute and own but instead something different is in fact not helpful.

    JA & Boonton,
    I’ll find some examples of this tactic and post them later.

  9. Boonton says:

    About that money (twice what he put in), after the rock moves. One man is in possession. Answer me plainly, is it all his? I say it is.

    Yes but before the rock moves what does the man own of that kitty? Technically nothing and if he should stop contributing to it the kitty ‘owes’ him nothing back.

    If you prefer a health savings account to actuarial accounts, more power to you. There’s nothing stopping you.

    Well let’s compare the ‘kitty’ solution to each neighbor establishing their own person ‘rock savings account’. The savings account dodges some moral hazzard issues. If they are doing landscaping, for example, and need some dirt they are not going to pull it from the hill making the rock more unstable. With the ‘kitty’, they very well might since when the rock comes down one of them will get a full repair job by only paying half the cost. Likewise, say the cost of having the rock moved is 75% of reparing the house. With the ‘kitty’ the rock won’t get moved because the payments for each are only 50% of the house repair. With a savings account they would because it would be cheaper to cash in the account at 75% of the value.

    [But maybe not, if the ‘kitty’ is held by a 3rd neighbor, he could pay to have the rock moved and keep the remaining 25% since he will never have to pay out a claim. Since each neighbor only paid 50%, they can at least know that they would have paid out 75% had one of them opted to have the rock moved themselves]

    The problem with the ‘savings account’, though, is that it is inefficient. You are setting aside up to twice the cost of a single incident. In modern economies this is somewhat masked because the financial sector is able to tap unused savings and divert it into interest earning activities…but if you think about this simple model as requiring neighbors to put savings into their mattresses or a ‘kitty’ under the rock you see the issue.

    True. But claiming of insurance as not something to which I contribute and own but instead something different is in fact not helpful.

    ‘Contribute and own’ is IMO deceptive sounding. There are plenty of people who paid for insurance for years, decades yet find themselves with nothing now because of a lost job or other financial misfortune. ‘Contributing’ sounds like you get credit for keeping yourself insured for years. You don’t. Like the lottery ticket, each year is its own bet. As one policy closes your position closes out. If you didn’t make much in terms of claims for that year your insurance company is grateful to you for helping their bottom line but you don’t get ‘credit’ against next year. Again I don’t know what leftist or other position you’re trying to mount an argument with, no one is really disagreeing with you but you’re trying very hard to be disagreeable.

    Ah, but that is in fact what we see experimentally. That government is in fact always inefficient.

    Not really. We see some pretty good empiracle evidence that Medicare is more efficient. I pointed out earlier that SSI and unemployment insurance is pretty efficient (in trying to refute this, please try to keep in mind that efficient != perfect).

    I think one very good argument for the public plan option is that it would put the question to the test. Incentive wise the public plan carries a long term incentive that most private plans don’t. Look back to the rock example. Say moving the rock costs 75% of the repair job. The efficient solution is for the ‘kitty’ to move the rock when contributions hit the 75% mark. But that applies only for one kitty.

    Let’s make it more realistic. Say each year the chance of the rock falling is 1% and the repair costs would be $50,000. The ‘kitty’ would charge a premium no less than $500 per year. The most efficient solution is to spend $37,500 to move the rock (75%). That will not happen, though. Each year the homeowners would find it cheap to pay a premium of $250. The ‘kitty’ would not pay to move the rock because once it does the homeowners will no longer pay a premium (the rock is gone so why worry?).

    Say, though, that the ‘kitty’ is public and will always be covering the homeowners. Now it makes sense for the kitty to invest $37,500 to move the rock. With the danger of paying a claim out of the way, all premiums are profits now.

    The system we have now is that just about everyone ends up on the public plan (Medicare) at the end but before they may or may not be on a public plan (Medicaid). There is an incentive missing now for long term health management. Since insurance policies go only from year to year, any attempt to improve health only pays off if the return is very immediate.

    A totally private solution might be to have very long term medical insurance plans. An example of this is the UAW which agreed to take a big lump sum from the auto companies to manage and provide healthcare to its members for life. I suppose private insurance companies could set themselves to provide very long term policies but this would leave a huge gap open….what happens if they go belly up years later leaving their members with no insurance just at the point where their advanced ages would make them very difficult to insure in the private market? Individuals would also have to be ‘locked in’ to their insurance company….. Person A, for example, might agree to sign up with an insurance company for 30 years. The company knows it will probably pay more in his 40’s but for the next twenty years it will grow fat on his premiums……

    Long story short, a public option will either be more efficient which will drive efficiencies in private plans or it won’t which means its premiums will trend higher and be less favored by patients.

  10. Ah, but that is in fact what we see experimentally. That government is in fact always inefficient.

    Always less efficient than private industry? I’m not sure that’s true. Anyway, why are we even talking about efficiency? How efficient do you need to be to provide insurance?

    I see, so that was the reason that the Fannies had so many bad loans on their books? Not government failures?

    No, as I said, it was the reason for the financial meltdown. The bad loans wouldn’t have caused the meltdown without the financial firms treating them like great loans and gambling wildly on the idea that the housing market would never decline!

    Which I have so thoughtfully provided, i.e., a way to fix that. Separation.

    I’m not opposed to some sort of separation. E.g. Al Gore’s “lockbox.”

    Are you suggesting cosmetic surgeons perform emergency appendectomies?

    Um, sure, if they’re the only doctors around! But I was talking about where money should be spent, not on what doctors should do. Doctors will in large part follow the money, of course. I doubt there’s ever going to be a shortage of rich women wanting bigger boobs, though.

  11. Mad Minerva says:

    Hi, Mark, I think you have a real point about efficiency/efficacy.

    On a somewhat related note, I heard this quip recently about government expanding into health care — how is this not the government in a sense nationalizing your body? It was a joke, but perhaps a little too close to real concerns.

    As some friends of mine in med school are now screaming (they’re quite opposed), who will now want to be a doctor? It is hard enough as it is.

  12. Mark says:

    JA,
    It occurs to me you’ve made a claim which needs correcting that I missed before. You offer:

    The sole purpose of insurance companies is to make money. That creates a massive conflict of interest in which they hire teams of laywers and other professionals whose primary job is to deny coverage to those who are entitled to it.

    This is at best a half-truth for insurance companies are not a monopoly. Every few years, when the contract is up our company reviews dozens of different insurance companies, their benefits and their costs to decide what to choose. Denial of coverage looses customer loyalty.

    Furthermore, Bush was in charge of a private corporation, I believe it was a baseball team. I never heard that it did particularly poorly under his tenure. You may have a dismal opinion of Bush (and Ms Palin) for that matter, but that vision doesn’t actually line up with reality they way you think it might.

    I still disagree on the boob job thing. You are basically saying that your and my discretionary income should be better allocated by the government. There is a name for that kind of thinking. Oddly enough you have offered that Marxism failed because it was a flawed system. Yet here you are plugging it. Go figger.

    I’m not opposed to some sort of separation. E.g. Al Gore’s “lockbox.”

    I’m in favor of a more radical separation, e.g., don’t do it.

    Boonton,
    Coverage is a contract, not a bet. Actuarial “betting” is how the insurance company makes money but that is irrelevant as questions of agent and action. In joining a insurance pool (kitty?) because (as noted when it is more than a gentleman’s agreement between neighbours) contract and contract law comes into play.

    You cite the short term contracts as a liability. It is however a large market force acting on insurance companies.

    Long term contracts are only required for particular insurance pools if they are small because length of time is how statistical fluctuations will be smoothed. If on the other hand the pools number in the hundreds of thousands or greater the statistical fluctuations will average out in much shorter time scales, perhaps even weeks. Thus yearly contracts and movement are not required for large pools.

    Yet the “whose” money questions remain unchanged from the two neighbours.

    Minerva,
    I think you have a good point about young people (not) going into medicine if this goes through. Making a good living is getting harder and harder on doctors … and I live in one of the harder states for doctors because of a very unfavourable malpractice environment. Obama-care will just make it worse. It will be an interesting turnabout if a Chicago based Obama’s own policies drive Chicago residents to get their medical care in Northern Indiana and Wisconsin.

  13. Boonton says:

    Coverage is a contract, not a bet.

    A bet is a contract…..I’m not sure why you think it is terribly important to push this semantic argument until the last straw…

    It will be an interesting turnabout if a Chicago based Obama’s own policies drive Chicago residents to get their medical care in Northern Indiana and Wisconsin.

    And why would that be a result?

  14. Mark says:

    Boonton,
    In a state with doctor shortages on account of malpractice laws … add to that additional shortages due to less people going into medicine, might lead people to be going to states with only one reason for fewer doctors.

  15. Mark,

    This is at best a half-truth for insurance companies are not a monopoly. Every few years, when the contract is up our company reviews dozens of different insurance companies, their benefits and their costs to decide what to choose. Denial of coverage looses customer loyalty.

    See that’s the beauty of it, Mark. The insurance companies can treat 99.9% of your employees GREAT, because they make more money from them than they spend. All they have to do is screw the people that need far greater than normal help to VASTLY improve their profits. (Note that this entirely defeats the purpose of insurance.) And what employer really cares if .1% of their employees don’t like the health care provider?

    Furthermore, Bush was in charge of a private corporation, I believe it was a baseball team. I never heard that it did particularly poorly under his tenure.

    Bush was not in charge of the baseball team. Some of the success he did have there was due to his charm and the rest from his money and connections. (Google it.)

    You may have a dismal opinion of Bush (and Ms Palin) for that matter, but that vision doesn’t actually line up with reality they way you think it might.

    I’m actually sorry I brought Bush up here. (Well, I didn’t really, you brought up Katrina, but regardless…) I think Bush is actually a reasonably intelligent guy, caricatures to the contrary. He’s a poor speaker and apparently uninterested in policy details, but reasonably intelligent. (125ish?)

    I still disagree on the boob job thing. You are basically saying that your and my discretionary income should be better allocated by the government. There is a name for that kind of thinking.

    WTF? It’s called taxation. You act like I invented it.

    Oddly enough you have offered that Marxism failed because it was a flawed system. Yet here you are plugging it. Go figger.

    FOR THE LOVE OF GOD PLEASE STOP CALLING ME A MARXIST, IMPLYING I AM A COMMUNIST, SUGGESTING THAT I WANT SOCIALISM, ETC. I’m defending the friggin’ United States of America and the way it’s been for decades.

  16. Mark says:

    JA,
    You hang out with people on the left who call health care a right. It isn’t.

    It’s called taxation. You act like I invented it.

    You act like you want twice as much of it.

    Look, you’re telling me person X needs a appendectomy so person Y shouldn’t have discretionary money to spend.

    United States of America and the way it’s been for decades.

    That’s what I’m defending Mr caps-lock-person. Yankee Independence, integrity, ingenuity, perseverance, self-sufficiency, …. et al. You know the things that made America great. The whole “you can’t have a boob job because some other schmuck needs the money” isn’t that.

    And what employer really cares if .1% of their employees don’t like the health care provider?

    Mine. How about yours? Likely most of them, in fact.

  17. You hang out with people on the left who call health care a right. It isn’t.

    I don’t think anybody I’ve ever hung out with has ever called health care a right.

    You act like you want twice as much of it.

    You think healthcare is going to cost 100% of the total current tax revenues?

    Look, you’re telling me person X needs a appendectomy so person Y shouldn’t have discretionary money to spend.

    Considering I favor a strongly progressive income tax, it’s more like person X needs an appendectomy so person Y should pay a slightly higher tax rate. Crazy, huh?

    That’s what I’m defending Mr caps-lock-person. Yankee Independence, integrity, ingenuity, perseverance, self-sufficiency, …. et al. You know the things that made America great. The whole “you can’t have a boob job because some other schmuck needs the money” isn’t that.

    I never said anybody can’t have a boob job. I’m just saying that the government should pay for appendectomies before it pays for boob jobs.

    Mine. How about yours? Likely most of them, in fact.

    So if one person in a thousand is unhappy with the health care coverage, the employer is going to pay more somewhere else? Yeah right.

    Also, I bet there’s not a single company with 1000 people or more that doesn’t have at least 1 in a thousand employees dissatisfied with their coverage.

  18. Boonton says:

    In a state with doctor shortages on account of malpractice laws

    I hope you’re not talking about that time you claimed there were no neurosurgeons south of Joilet in Ill. and I spent 15 minutes on Yahoo Yellow Pages and found dozens?

    … add to that additional shortages due to less people going into medicine, might lead people to be going to states with only one reason for fewer doctors.

    Less people going into medicine could only be cuased by certain factors. For example, a rapid rise in pay for non-medical careers or a decline in pay for medical professions. It is interesting that your argument against medical licensing would actually harm doctor’s pay thereby resulting in fewer people entering medical school.

    But the problem with your assertion is that it doesn’t make sense. If doctor’s pay suffers either because a national system forces lower reimbursement systems on providers or because your libertarian ideal prohibits doctors from holding a monopoly….setting up practice in another state is not going to help which lends yet more evidence to the hypothesis that despite writing numerous blog posts and comments on health care policy you haven’t bothered to actually study any of the issues involved.

    This is at best a half-truth for insurance companies are not a monopoly. Every few years, when the contract is up our company reviews dozens of different insurance companies, their benefits and their costs to decide what to choose. Denial of coverage looses customer loyalty.

    Very large companies are basically self-insuring th eir workers with the insurance companies playing the role of outside managers. But this illustrates part of the trade off here. Because insurance companies do not have much of a monopoly status there’s a lack of incentive for long term cost savings. If a patient has diabeties, it would make sense for the insurance company to pay for insulin and needles because not using them will cause the patient to end up in a costly ER visit in less than a month. But if a patient is a borderline diabetic but will not be for several years, there’s no incentive to address the issue now because the chap will almost certainly be someone else’s patient several years from now. Any money invested will just end up in some competitor’s pocket.

    I still disagree on the boob job thing. You are basically saying that your and my discretionary income should be better allocated by the government. There is a name for that kind of thinking.

    I’m not quite seeing how this is applicable. Medicare does not pay for boob jobs (except maybe reconstructive ones in cases of breast cancer). Yet 65 year olds seeking to up their cup sizes are able to purchase either supplemental insurance or pay privately for boob jobs.

    Look, you’re telling me person X needs a appendectomy so person Y shouldn’t have discretionary money to spend.

    Errr yes. Hence we make common provision for person X’s appendectomy. Should person X want a boob job in addition, s/he can foot the bill for it. Should person Y want a boob job but needs to save up an extra year for it because taxation to cover person X, again that is called taxation.

  19. Boonton says:

    In a state with doctor shortages on account of malpractice laws

    I’m curious how Mark would explain this graph cited by Greg Mankiw

    http://gregmankiw.blogspot.com/2009/07/keeping-animial-spirits-alive.html

    If health expenditures are driven significantly by malpractice lawsuits, what about expenditures on vetinary services? Suc services are:

    1. Not typically paid for by insurance.

    2. Even when paid for by insurance, it is insurance brought privately by individuals and not by employers in tax sheltered spending categories.

    3. Not typically paid for by gov’t unlike health care spending for people which is something like 50% gov’t paid for already.

    To my knowledge (and I could be wrong), there is no great market in filing malpractice lawsuits against vets and I’d imagine even if there were so the damages would be relatively limited (sorry people like dogs but a jury is always going to give big bucks to a mother who lost her child to medical malpractice rather than, say, the owner of an Irish Setter*) Yet the behavior of animal health spending appears to be exactly the same.

    * Irish Setter – Best dog in the world.

  20. Mark says:

    Boonton,
    You do realize that graph is just as problematic for the left’s claims on what the problem is and the fix. It just happens that it does agree with my assessment of the crux of the problem (re-arranging deck chairs and skilled labor vs automation).

    The malpractice remarks was to line up with Ms Minerva’s remarks on public healthcare having a deleterious effect on the supply of doctors (that malpractice has a deleterious effect state by state on the supply of doctors).

  21. Boonton says:

    I don’t agree that the graph is as problematic for the left as right. On the right analysis of healthcare problems usually centers on regulatory issues or incentive issues. On the regulatory side is the charge that malpractice suits drive defensive medicine and raise costs. A more libertarian angle argues against the FDA & license requirements for doctors and nurses. On the incentive side the focus is usually on who pays for healthcare. Many on the right note when patients make healthcare decisions, they usually pay little or nothing of the actual cost. Hence little effort goes into weighing costs versus benefits (at least in terms of money, obviously patients do weigh costs like the discomfort of having to go under the knife when deciding what medical care they will and won’t do). To make it worse, most patients don’t even really see the cost of insurance since a large portion of it is essentially invisible as it is picked up by the employer as non-taxable income.

    The policy ideas that flow from this hypothesis tend to center on makeing patients pay a larger portion of costs more directly. Hence the health savings account idea. Likewise Bush’s idea of taxing ‘high end’ health plans as income in order to try to break the link between your employer and your insurance company. But here we have a similiar type of product (healthcare for pets) that already incorporates many of these ideas. Payment is made almost entirely by consumers, very little by insurance and what is from insurance is paid for directly by consumers without tax subsidy or shall we say non-clarity of actual costs. Yet there appears to be no difference in cost behavior.

    From the left I don’t think the goal is capping or controling health care spending growth. Clearly it would be nice if health prices fell while quality continued to improve but I think the left’s primary goal is to achieve more comprehensive coverage, more security (whether or not you’re covered won’t depend on whether you work for a good company or whether you just got laid off) and to do it at a reasonable cost.