August 04, 2017

Hospital Competition Would be a Good Thing

Monday I blogged that ACA (aka the Affordable Care Act aka ObamaCare) is an unworkable political compromise between private health care and government run health care in which insurance companies become rent collectors but add no value. I asked “is it time to just give up the pretense and go to single payer?” – certainly something many on the left believe sincerely would be a good thing.

Reader John McClaughry commented:

“Don't cave in to the socialist "solution" - single payer - just because the fascist "solution" - ACA - fell apart. Replace the unconstitutional individual mandate with income tax based recapture of unpaid medical bills, plus capping the deduction for high priced plans, equalizing tax advantages for individuals, expanding HSAs, allowing catastrophic coverage, breaking up regional health care cartels, removing the efficacy requirement for pharmaceutical patents, allowing insurance purchasing groups, and imposing med mal tort reform. That's for openers.”

John’s suggestion that regional medical cartels be broken up is probably the most important.

A free market usually delivers better product at a decreasing cost over time. That’s even happened with energy despite fears of “peak oil” and it’s certainly happened with computers, telecommunications, and transportation. In order for a free market to work, there has to be competition. We business people don’t willingly lower our prices (and profits); we make reductions so our customers don’t desert us for lower-priced competitors. We don’t plow our money back into R&D just because we love to innovate; we make that investment because we’ll be out of business if a competitor has either a better mousetrap or one that costs less to make.

In much of the country including Vermont competition between hospitals is deliberately suppressed because of the socialist misconception that prices are lowest without the “cost” of over-capacity. Hospitals must get a Certificate of Public Need (CPG) in order to make an investment. They won’t get the CPG if a nearby hospital can demonstrate it already has capacity which will be duplicated. The CPG process assures no competition or pressure to lower cost and prices develops. In theory hospital rates are then regulated to make sure monopolies aren’t exploited. What really happens is that, without fear of competition, hospitals layer on costs such as high pay for doctors and administrators (but not nurses) or overelaborate facilities, which then justify higher prices.

In the competitive world, prices only go down if there is over-capacity. If my competitor and I are running our factories flat out, we won’t reduce prices. But we will add capacity (or someone else will). Pretty soon, as much as we don’t want to, we’re cutting prices to compete. If want to survive, we’re also desperately investing and innovating to distinguish our product and reduce the cost of production. Our customers win.

If there’s competition, some hospitals will fail; that’s a fact. Once airfares became competitive, some airlines failed (and survivors bought their assets at bankruptcy sales). Some of the hospitals which will fail will be “non-profits”. A socialist would say non-profits can offer lower prices because there are no investors demanding a return. Where that’s true, the non-profits will be survivors. If not, they deserve to fail – and should so that more efficient competitors can take their place.

If there’s competition, hospitals will be tempted to cut corners. That’s true and there are expenses we want them to trim. But what about safety? That’s what regulation is for. Airlines can cut costs (and prices) by jamming us in like sardines in the cheap seats; but they can’t put more people on a plane than can be safely evacuated. They can’t skip maintenance. Competitive hospitals will still have to be regulated, just not as much as they are now.

Of course competition is only effective where the consumers care about cost. That’s why McClaughry also suggests HSAs, available catastrophe-only plans, and income tax recapture of unpaid bills.

See also:

A For-Profit Surgical Center is a Good Idea for Vermont

Nice Business To Be In

Freedom, Responsibility, and Preexisting Conditions

Time to Face the Health Care Facts

 

 

August 03, 2017

Arlo by Night

What could be worse than a raccoon in the garden?

First Arlo, my DIY home video camera, discovered a groundhog in Mary's vegetable garden which is being raided faster than leaves can grow. While we were discussing groundhog-elimination strategies, Arlo made another discovery, this one using night vision.

 

In the end the raccoon climbs a ladder-like structure we shouldn't have left there to get to the raspberries.

So what could be worse? It only took a day to find out,

 

That's pretty bad and that was going to be my blog for the day... until a nice lady rear-ended me in traffic. Not my day.

Could be much worse, though. Only bent metal and plastic - and missing raspberries and grapes.

 

July 31, 2017

Nice Business To Be In

You’re in a business where the government requires Americans to buy your product. You’re only allowed to sell the blue-ribbon version of the product; you can’t legally sell an economy version. Many people can’t afford your product at the price you offer it; but that’s not a problem because the government will subsidize their purchase or just compensate you for selling at a “loss”. Competition is all but ruled out by laws which don’t allow a version of your product to be sold across state lines. Industry profits are setting records. What business are you in?

Health insurance, of course.

During last week’s fruitless debate on who pays for health care, Republicans threatened to repeal the individual mandate, the requirement that everybody buy or be offered health insurance. Not surprisingly the health insurance lobbyists were against letting people choose whether or not to buy their product. They pointed out, correctly, that many people wouldn’t buy at the prices they are charging. In Washington scorekeeping, people who choose not to buy insurance are people who will “lose their insurance coverage”.

Even worse, as the lobbyists pointed out, the people who would refuse to buy are young, healthy people who are very profitable. With the most profitable customers gone, rates would have to be even higher for everybody else. Unless Congress raised subsidies even higher, insurance as we’ve known it since the passage of the Affordable Care Act (aka ACA aka ObamaCare) would collapse. It’s hard to be sympathetic toward the insurance companies, which would have been hung in a noose of their own devising – costs going out of control because they can only offer plans no one can afford including coverage for pre-existing and politically expedient conditions and customers being unwilling and/or unable to buy. Strangely anti-corporate Sen. Elizabeth Warren was very concerned about the fate of the insurance companies. She quoted their dire predictions and neglected the attack I would have expected on their profits. Bernie Sanders lost no opportunity to criticize the Republican plan but was, at least in what I’ve read, uncharacteristically silent about profits. Warren and Sanders aren’t good long term allies for the insurance companies, however. They are honest that they want “single payer” health care. If we had that, insurance companies would be out of the loop entirely except perhaps for an opportunity to sell policies providing superior care to people with the money and willingness to buy them.

Although the ACA was passed with no Republican votes (sound familiar?), it was still a compromise between centrist Democrats who knew people wouldn’t like the mandatory coverage and weren’t ready to scrap private insurance and those who looked admiringly at government run and paid healthcare systems in much of the rest of the world.

 ACA has proved to be an unworkable compromise with some of the worst aspects of both public and private health; it’s a disaster financially even though less hospital bills go unpaid by patients. There hasn’t yet been a large-scale study showing improved health outcomes even though people who know their visits will be paid for are going to the doctor more. Costs are spiraling out of control. In my opinion keeping the private insurers in the loop has done nothing but pile on cost and complexity. Private solutions are beneficial when there is competition and a choice of both suppliers and product.  In many markets there are now one or only two providers; products must be gold-plated by government fiat.

Like many benefit programs, this one has proven to be a barbed hook. People are being subsidized by their own tax dollars (with a share subtracted for administration and insurance companies). They have no faith that they’ll be better off personally if cost of the “benefit” is done away with – and some won’t be. Even threatening to repeal the initially-hated personal mandate can’t pass Congress because the ACA (as well as insurance companies) will collapse without it.

So is it time to just give up the pretense and go to single payer? I think that would be a better alternative than trying to maintain the public-private monstrosity called ACA. I would prefer a truly competitive market both for health care insurance and for providing health care (with subsidies for the indigent as we do with food, fuel, and much else). Right now it doesn’t seem we have the political leadership to buck the insurance industry and get us either back to competition or to a government-run (ouch) system with no role for insurers who aren’t providing value.

Just to end on a happier note: Trump has tweeted a threat to make Congresspeople and their staffs buy their own health insurance on the exchanges. The ACA actually requires this but the Obama administration granted a waiver partially based on the fiction that each Congressional office is a small business with less than 50 employees on the average. That which can be waived can be unwaived. Might focus the congressional minds.

 

See also:

What if The Senate Really Debated Healthcare?

Freedom, Responsibility, and Preexisting Conditions

 

July 28, 2017

Arlo Captures Critter

At least on video.

I bought the basic wires-free version of Arlo as an experiment in DIY home security and am trying it in parallel with our traditional system. The first task we gave Arlo was to identify the critter who ransacks Mary's vegetable garden. It's taken awhile but finally Arlo did it. I thought it was rabbits; Mary bet on groundhogs. See the video for the winner

When first installed, Arlo gave lots of false alarms. The alerts can be received on your computer and/or smartphone. Birds were the most frequent cause. So we pointed him at a mass of critter-snack on the ground. Two days later, voila!

Note that you only see the critter leaving. This is because there is a delay between when motion is first sensed and when recording begins. We may have missed the critter a few times because of this so I tried turning up the sensitivity from 80% to 99%. Too many false alarms so had to turn it back down. According to marketing material Arlo Pro (more expensive) responds to motion almost immediately. You can mix and match so I'll probably put a Pro on critter duty and use the old camera for slow people.

 

See also:

Arlo: DIY Home Security

Alexa: The End of a Great Relationship

July 27, 2017

What if The Senate Really Debated Healthcare?

They do have an opportunity.

Thanks to John McCain’s typical bravery, the Senate has taken up the bill passed by the House and IS technically debating healthcare. This debate is a good thing. Who pays for healthcare (which is what this “debate” is actually about) is obviously an important issue. It certainly wasn’t solved for all time by the Democrat’s partisan imposition of ObamaCare; it won’t be solved by rolling the clock back to preObamaCare. Congress is supposed to debate before making policy. The debate is open to both Republicans and Democrats. It’s a slim, slim hope but maybe something good will come from this discussion.

The alternative would be no discussion at all. Many Senators on both sides of the aisle would have preferred no debate because they would have been spared from having to create a record of their votes on amendments. For some reason most of the “resistance” is also against having a debate in the Senate even to the point of vilifying McCain for his vote to allow debate. Frankly, I don’t get it. You’re against an imperial presidency (so am I) but you don’t want the legislature to do the job we elected them to do. Doesn’t compute.

Yes, I’m being a Pollyanna; but there is an opportunity for the actual bipartisan compromise and legislation John McCain pleaded for in his speech. Whether this happens or not is up to both Republicans and Democrats. For example, a Democrat can offer an amendment to the House Bill which solves some of the obvious problems with ObamaCare (like spending being on an unsustainable growth path) while preserving some of its benefits. Republicans might vote for that, especially if the Senate can avoid debating whether it is fixing or replacing ObamaCare and just concentrate on what affects people. A Republican can propose a phasedown of the absurdity of Medicaid with absolutely no limits while providing some funding so the exchanges can function with certainty. Will all Democrats vote against that? I hope not.

If anything passes the Senate, it’s got to go to committee with the House and be accepted there in some form. Tough problem but all House members are up for reelection next year. If a bill passes the House and Senate, it still needs a Presidential signature. I’m the last person to think Trump is predictable; but good chance he’d like to claim a victory (which is NOT a reason NOT to pass a bill).

The reality is that the status quo is not sustainable. Democrats know that the exchanges will simply implode without more funding and that funding isn’t going to happen without Republican votes. Republicans know now (if they didn’t before) that they will be blamed if healthcare funding collapses. Perfection won’t happen; progress can.

July 24, 2017

Even Hateful Speech is Free

The story below appeared on VTDigger:

BURLINGTON — City officials say they discovered racist and anti-semitic graffiti, involving a swastika and epithet, in the bathroom at the Fletcher Free Library.

The graffiti has since been painted over and library staff are working with the Burlington Police Department on the police investigation into the graffiti, according to a news release.

“As library director at the Fletcher Free, I want to reassure our community that such acts will not be tolerated here, as they are not tolerated anywhere in Burlington,” said Mary Danko, library director, in a prepared statement.

“Our support of free speech does not translate into tolerance for hate speech,” she added.

In his own statement included in the news release, Mayor Miro Weinberger said, “Hate speech of any kind in Burlington is unacceptable. It undermines our work to be a welcoming and inclusive community for all, and threatens the diversity that enriches our community.”

This is the comment I posted:

As a Jew, I resent anti-Semitic speech. However, as an American I am appalled that the Library Director and the Mayor are apparently saying that speech can and should be regulated according to its content. The right to free speech in the Constitution is meaningless unless it protects ALL speech. There is no need to protect speech everyone agrees with.

Defacing public property is a crime and should be punished. Graffiti should be removed from public places whether its content is hateful or benign.

Years ago there were flag burnings in Burlington. Many people (including me) thought them obnoxious. But these were rightly protected as exercises of free speech.

A city with many residents who pride themselves on "resistance" should be the last place to allow a government official to say what speech is "acceptable". There is no place in America for regulating speech according to its content.

See also:

Don’t Ban Anti-Semitic Speech

Motives Are for Mysteries

 

July 19, 2017

Debating Net Neutrality Live

Tomorrow, July 20, at noon ET I'll be debating "Net Neutrality" on "Vermont Edition", a Vermont Public Radio Program. Bradley Holt, a developer advocate and senior software engineer with IBM Watson Data Platform, will be defending the 2014 regulations. I'll be explaining why I think they stifle innovation and protect the dominant Internet players like Google and Amazon who lobbied for them. It's a live call in discussion moderated by Jane Lindholm.

Live streaming available at http://digital.vpr.net/online-streams.

More about the show at http://digital.vpr.net/post/net-neutrality-and-you-whats-stake-internet-regulation.

See also:

“Net Neutrality” Protects New Monopolies from Old

Internet Fast Lanes

An Open Letter to My Friends at Google

Don’t Make the Internet Safe for Monopolies

Drug-Addicted Babies

A Repugnant and Maybe Necessary Step

“From 2003 to 2012, the last year for which statistics are available, the number of babies born dependent on drugs grew nearly fivefold in the United States. Opioids are the main culprit, and states like Kentucky are particularly hard-hit: 15 of every 1,000 infants here are born dependent on opioids.” – from an article by Catherine Saint Louis last week in The New York Times.  

This tragedy effects not only the babies and the mothers who often can’t care for them. Neonatal intensive care units are overwhelmed and don’t have enough incubators both for these afflicted children and those born with other severe problems. It seems there is a news story every day in Vermont about the increase in children needing foster care. Should standards for foster families be relaxed to meet the increased need? How many more caseworkers do we need both to monitor more adoptions and to cope with a mushrooming case load of abused children and distressed families? These are just some of the questions which have no good answers but can’t be ignored.

What about prevention? We’ve tried a war on drugs. We lost. Will legalization of drugs decrease abuse? We haven’t finished the experiment but I doubt it.

If we can’t prevent drug abuse, perhaps we have to concentrate just on reducing the number of children born to drug addicted parents (I don’t mean just addicted mothers; I mean addicted fathers – present or absent – as well). Banning sex by addicted people – or even getting them to use condoms - is unlikely to work.

Suppose we offered $1000 no questions asked to anyone between 18 and 45 who is willing to be surgically sterilized. It may well be an offer that addicts can’t resist. Men may well be more inclined to take the offer than women. It probably would reduce the number of addicted babies and babies born to addicted parents six months after it goes into effect.

There is a lot to say against this idea. The money will go for yet more drugs. Some people will recover from their addiction and regret the choice they made when they were less than competent to make a life decision. There will certainly be people who take the $1000 just because they are in desperate need of cash – or to feed an alcohol or gambling addiction.

To some this will sound like the kind of racist eugenics which motivated Margaret Sanger and many other Americans when she founded Planned Parenthood. However, this is not a racist solution; something certainly needs to be done about addicts having addicted babies here in the snow-white parts of Vermont. The drug epidemic does not respect social classes. The decision to be sterilized will be as voluntary as the decision to use drugs; although clearly some people cannot help themselves when drugs are involved.

I find this idea repugnant, frankly; but I’m afraid it may be necessary. My hope is someone has a better idea. I know we must address this ongoing tragedy and will not be able to do so with rose-colored glasses on.

July 14, 2017

“Net Neutrality” Protects New Monopolies from Old

Over the next decade which companies do you think will be better able to exercise monopoly power?

  1. Amazon
  2. AT&T
  3. Comcast
  4. Facebook
  5. Google
  6. Regional phone companies
  7. Verizon

If you’d asked me this question in 2000, I would’ve picked AT&T, Comcast, Verizon, and regional phone companies. They are part of local duopolies for wired infrastructure.  They had a comfortable relationship with the FCC which regulated them nationally and with most of the state regulators. They saw the Internet as potentially disruptive and would’ve preferred to have its potential for innovation slowed by regulation. Amazon and Google (and most of the Internet community of the day) were against FCC regulation of the Internet exactly because that would chill innovation.

The Internet won; the FCC chose only the lightest of regulation. We got innovation; Facebook and Twitter happened; Google and Amazon grew enormously.

And then guess what. In 2014 at the urging of Google, Amazon, and the rest of the Internet establishment, the FCC decided it needed to regulate the Internet after all. In an Orwellian twist, this regulation was given the attractive name of Net Neutrality. Its stated purpose is to protect us from abuses that AT&T, Verizon, Comcast and the like “might” commit.

Are the telcos more powerful than they were in 2000? Of course not; even their landline duopolies are less powerful as more and more last mile access to content is wireless and wireless becomes more and more competitive.

Are Google and Amazon more in need of protection now than they were then? Sounds absurd but they’re the establishment now. They are strong enough so they can’t be toppled by smaller competitors with the same products. The only commercial threat to them – as it always is with dominant players – is disruptive innovation. And what better way to slow innovation than regulation? Note also that regulation is usually favored by those who think they can control the regulators (telcos in 2000; dominant Internet players in 2014).

“Net Neutraility” forbids telcos for charging content providers a premium for “fast lanes”. But Google, Amazon, et al already have private fast lanes and local data centers and data caches so that their content can reach consumers faster than content from anyone else. Conveniently Net Neutrality regs don’t cover the private internet expressways. In fact if you pay Amazon to host your site, you too can have a fast lane. But you can’t buy that fast lane from AT&T ala carte without the hosting because they’re not allowed to sell it.

What if someone were to provide a drone-mesh-based fast lane and charge more the faster you want your content to go? Would that be a threat to us? No. Would it be a threat to Amazon and Google? A little; it might be disruptive. Better, in their minds, to subject that service to the strait jacket of regulation. What if telemedicine requires a guaranteed faster service than the public Internet provides? Does it just have to wait until the whole Internet gets faster to start saving lives? Why shouldn’t AT&T or the drone-based ISP be able to sell the faster service at a premium?

If all the ins-and-outs of the Net Neutrality debate are hard to follow, just ask yourself in 2017 if Google’s search dominance is more of a present danger than AT&T’s eroding monopoly. I’m not for regulating Google or Amazon purely because of their size; but I’m certainly against regulation like so-called Net Neutrality which protects their dominance.

See also:

Internet Fast Lanes

An Open Letter to My Friends at Google

Don’t Make the Internet Safe for Monopolies

July 11, 2017

Freedom, Responsibility, and Preexisting Conditions

We want the freedom to decide whether or not to buy health insurance but we don’t want to take responsibility for the cost of healthcare when we get sick and don’t have insurance. Evidence: Americans hated the individual mandate in Obamacare enough to give Republicans control of Congress in 2010 and we are now insisting that Congress repeal the individual mandate WITHOUT leaving us uncovered for preexisting conditions. No politician of either party nor the President wants to tell us that we’re asking for freedom without responsibility. Not surprisingly there is no replacement for or repair of Obamacare which can meet these conflicting demands.

We don’t expect to be able to buy house insurance when we smell smoke. Banks mandate that we buy insurance before granting a mortgage.

We can’t get driver’s liability insurance after an accident. That’s why there’s a mandate for the protection of people we might hurt to buy liability insurance before we register a car. We don’t have to buy collision insurance for our cars; but we won’t get reimbursed after an accident we caused if we don’t. Fair enough and not buying may be a good economic decision if you can afford to replace your car. We certainly don’t expect to be able to buy insurance to cover a “preexisting” collision.

Just to be clear, I’m NOT talking about the problem of coverage for preexisting conditions if you change jobs and must change insurers or when you first leave your parent’s policy and get your own. As long as you have continued coverage from someone, there’s no actuarial problem in covering these conditions.

Insurance obviously only works if people buy it before they know whether they’ll need it. The premiums of the lucky ones who don’t collect fund the payouts for the unlucky ones who do have a loss (plus the expenses and profits of the insurance company). Obamacare acknowledged this by mandating that everyone buy insurance. This mandate actually makes the question of preexisting conditions moot. If you have to buy insurance, you can’t wait until you get sick to make the purchase. Everyone, healthy or not, is in the pool.

But Obamacare has its own contradictions which are causing its actuarial collapse. The cost of insurance for young people is so high and the penalties for not buying so low and so rarely enforced that young, healthy people are NOT buying. On the other hand, the premiums are kept low for older people (because of a hoped-forl subsidy by the young) so older, sicker people do buy. Insurance companies then pay more in claims than they collect in premiums. They either charge even higher premiums, which cause enrollment to drop further, or leave the insurance exchanges or collect a government subsidy or some combination of the three actions.

We can’t fix or replace Obamacare without facing the contradiction of wanting the freedom not to buy insurance without the responsibility of paying for care when we need it. Here are the options:

  1. Socialize all medical costs. Government pays them all. In essence, however, this amounts to an insurance mandate. We’d all be buying insurance but the cost would be hidden in our tax bills. Bernie Sanders will tell you that the cost will be in the tax bill of “the rich and the cawperations” but I’m afraid that money will also be needed for the free college he’s promised. We have already done this with the large percentage of Americans on Medicaid and, to a lesser extent, with us geezers on Medicare who did pay some (involuntary) premiums.
  2. Keep the individual mandate AND coverage for preexisting conditions and stiffen the penalty for not buying. Politics aside, this could work actuarily if premiums for younger people reflected the actual cost of insuring that age group; but then, of course, the cost to the elderly would go up. This solution is between a political rock and a hard place.
  3. Drop the individual mandate and leave those who choose not to buy insurance responsible for the medical costs they incur. Note that the indigent get “free” insurance in the form of Medicaid so they will not be affected. This does not mean that we leave people who gambled and lost to sicken or die; we can’t do that. Not buying insurance is a financial decision. The consequences of not buying should be financial as well. You get the care you need when you need it; you pay for that care either immediately if you can or over time if you can’t. Liens on assets and garnished salaries are as appropriate for collecting this debt as they are for any other.

The choice is stark: we either give up freedom or accept responsibility.

See also:

Freedom and Responsibility

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