Price and Quality in medical setting

Posted by BCRinFremont 4 years, 10 months ago to Economics
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I saw a news item today about requiring hospitals to disclose prices and I began preparing a long and drawn out economic analysis of price, quality, and results expected. Instead of posting what could be a doctoral thesis in economics, I would like to present a small template to the masters in Galt’s Gulch and see if anyone will end up where I ended up. Here goes!

Let it be given that healthcare is a Right. (Analysis without this “given” is also acceptable and maybe necessary.) Please address the following 4 scenarios:

1. High priced care with bad outcomes.
2. Low priced care with bad outcomes.
3. Low priced care with good outcomes.
4. High priced care with good outcomes.

The question posed is, “How will a healthcare system settle starting with equal amounts of these 4 types of care?”

This is kind of like determining the number of rabbits it takes to have a healthy fox population.


All Comments

  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    You said these schemes would have "similar outcomes" to the current system, claiming people would somehow "work around" the dictatorial controls except for some, for whom the government controls "might take the lives of people who can't find away around the system" -- and nothing more. That is dismissal of an incalculable evil with a vastly over optimistic pseudo-economics guess that it wouldn't be so bad on average.

    The original 1990s Clinton-care, Obama-care, and the latest escalating Democrat socialized medicine "medicare for all" schemes are morally and economically horrendous. People are not "smart enough" to get around totalitarian government brute force with a sweeping "you'll do it somehow Mr, Rearden", aimed at all of us.

    Force and mind are opposites. The Democrat dictatorial, collectivist brute force is intended by design through government coercion and weaponry to overwhelm and prevent every individual, no matter how "smart", from thinking and acting on his own behalf, with massive penalties for trying to "get around" their evil intent.
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    Posted by CircuitGuy 4 years, 10 months ago in reply to this comment.
    Dismissing/justifying a gov't takeover of medical care has nothing to do with what I'm saying.
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    If the false premise overshadowed his economic question it's because he emphasized it himself with the instruction "let it be given'" as presupposed for thinking and discussion.

    Of course you can't do that, because your concepts of rights are grounded in reality and treating it otherwise demands rationalistic thinking that is not.

    The consequences of a government decree of forced entitlements can in principle be examined, but not in terms of ideas one knows to be false, isolated from the moral requirements for human life. The health care entitlement he implicitly assumed is shear immoral, socialized medicine where rights to private, voluntary production and trade of health care are legally prohibited. That's worse than government interference taxing people more and "buying" health care for redistribution. The "economic question" of where it "settles out" is pure destruction in a system in which there are no"prices", high or low, only imposed costs, because trade is prohibited.
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  • Posted by CircuitGuy 4 years, 10 months ago in reply to this comment.
    "Healthcare as a Right has overshadowed my Healthcare Economics question."
    I am confused by the question. You describe a matrix of high/low healthcare price/quality. You ask how will a healthcare system settle.

    This is hard to think about because I don't think of healthcare as a right or a system. I can set that aside for the purposes of the question. I can imagine a hypothetical where gov't taxes people more and buys a bunch of healthcare at various price/value points on your matrix. That's no stretch to imagine. But then what is the economic question about how that will settle out?
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    There is no such thing as "fair, humanitarian, socialistic policies".

    The "cozy arrangements between the corporation, the unions, the regulator, and government" you refer to was exemplified on a grand scale in the attempt to impose Hillary's Clinton care in the 1990s: The insurance companies were secretly collaborating with her to carve up the country into regions they would be granted to run under government control.

    Fixing the health care mess requires getting rid of the controls, not blaming it on doctors and hospitals while adding more mandates to make them behave. But they are not blameless either -- they don't fight it as they go along, making themselves part of the problem fundamentally caused by the intellectuals they don't challenge. including the notion that there is any such thing as "fair, humanitarian, socialistic policies".
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    That healthcare is not a "right" is fundamental. Understanding that includes understanding the nature of rights and why they are necessary in human action. The moral is the practical, and that and the reasons for it cannot be ignored.

    That fundamental is not "only one input" in a rationalistic "black box", which is not the proper way to think and analyze at all.

    One can look at the economic consequences of government actions, including its mandatory entitlements. But it requires thinking in essentials, in terms of what one knows to be true. One cannot rationally discuss anything by starting with an assignment of "Let it be given" some fundamental premise one knows to be false and why, with restriction on thinking to arbitrary classifications as "scenarios". The problems with arbitrariness and rationalism are much deeper than "there is no steady state", which everyone already knows.
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  • Posted by Dobrien 4 years, 10 months ago in reply to this comment.
    “Someone in the administration has a brain and kept the promise.” Don’t credit President Trump the main stream media hasn’t told you to. Funny that you bowed to Obama who did nothing but lie and force an unconstitutional burden on all citizens with Obamacare. Oh yes you can keep your plan and your doctor. The insurance price will come down.Spitting out my Taco Bell Lmao.
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  • Posted by Lucky 4 years, 10 months ago in reply to this comment.
    Yes, costs are 'mandated and indirect'.
    The worst part is that (in the industry we are discussing) costs exist and are high even if no actual medical health care is done, fixed costs. The major driver of fixed costs is activity required by government. When costs are fixed, and income is variable - that is if you do no medical health care, there is no income, it is a challenge for management, there are no accounting rules to give answers simply as the amount of work is not known, and it varies with price. What is certain is that the higher the ratio of fixed to variable costs, the more difficult it is for small businesses to compete and for newcomers to enter.
    Government required compliance activities lead to costs to the business which are hard to relate to any particular service or customer. Only big players can survive. Prices creep up. The result is cosy arrangements between the corporation, the unions, the regulator, and government.
    Fair, humanitarian, socialistic policies have attractions on some levels. Those who are attracted are the least able to follow the chain that inevitably leads to inefficiency, opaque pricing, high costs, and so to unfairness and exploitation by favored groups.
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  • Posted by 4 years, 10 months ago
    It seems that Healthcare as a Right has overshadowed my Healthcare Economics question. My caveat of addressing the situation without Healthcare as a right has been mostly ignored.

    My thoughts: In our universe, there is no steady state that lasts for very long. No matter how price and quality are distributed, people will be migrating from one category to another. Supply, demand, policy, rights, etc. all have effects on the way the categories are distributed.

    The answer to the economic question is, “There is no steady state.”

    The answer to “Is Healthcare a Right?” is only one input to this black box.
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    What are you talking about? Do you have a rational response or not? The snide "Pepper and fly specks" is not,

    And who is the hit and run cowardly jerk who is systematically 'downvoting' all of my posts? This is supposed to be an Ayn Rand forum, not a hangout for militant, anti-Ayn Rand conservatives filled with personal hostility.
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    A Government complete takeover of medical care would be a disaster, not "similar" in outcome to the current mixed system. People learn to "work the system" whatever it is, but are prevented from succeeding by the degree and comprehensiveness of the controls. Those controls become worse when noticed as growing in popularity and the government clamps down on the "loopholes".

    "Medicare for all" is comprehensively designed to eliminate the current possibility of avoiding the worst of the current government interference. Canadians escape the worst only by leaving the country for health care.

    People trapped in the Soviet Union cynically "worked the system" the best they could but could not remotely achieve what is possible under freedom. They were trapped with limited choices in what they could do, legally or not. Getting away with something under dictatorship comes with its constant, oppressive built in punishment whether or not anyone "gets away" something. It becomes worse under totalitarianism.

    People do not thrive in spite of controls, and mostly do not even fight back, motivated by the increased oppression. They become accustomed to the new level of deprivation as they sink into cynicism and despair.

    The dismissive most would find a way to "get around" it, while "The system would save the lives of some who wouldn't have their act together under freer systems and might take the lives of people who can't find away around the system", is shear evil. It shows no concern for morality and the rights of the individual or the requirements of freedom of action for human life. If you are killed by government restrictions leaving you with no way to fight it doesn't matter how many others "got around it", and whatever is still possible for "getting around the system" does not excuse what it takes to do it.

    To claim that people will find some way to "get around" the controls is "You'll do it somehow, Mr. Rearden", applied to everyone. The moral is the practical. Increasing collectivism is not "similar in outcome", not practical, and not moral; it is destructive and pure evil.
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    Given the political system they are operating in there is a lot that is implausible about calculating in advance a price that compensate for non-payers. The non-payment extends to all levels in different ways and to different degrees depending on the patient.

    Some pre-calculation is already done, such as in standardized inflated billing for standard items. But they have no way of knowing in advance what all the billable actions will be -- including inflated costs for doctors you never heard of briefly sticking their heads in the door and claiming to be assessing medical status.

    Prices cannot be used for information because there isn't much left of a market, it's all controlled and arbitrary with unlimited rules and bureaucratic decisions. If hospitals couldn't 'work the system' to get what they can through their own per-patient 'flexible' pricing they would not survive in this system.
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  • Posted by $ jlc 4 years, 10 months ago in reply to this comment.
    I would agree with 'they do not want to'. There is nothing implausible about calculating how much they would need to charge for a procedure in order to maintain the burden of non-payers. Upcharging for aspirin is not the right way to do this.

    Every one who sells something has the problem of needing to increase base prices in order to compensate for non-payers and problem-children. It can be done, and it would benefit the patients, but it requires Change...the dreaded Change!

    Jan
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    He wrote it as "let it be given" that health care is a "Right" but the economic arguments proceeded with consequences of the premise of a government enforced entitlement, which isn't the same thing as conceding a "right". https://www.galtsgulchonline.com/post... The "let it be given" concession of a false premise is very dangerous and misleading, leading at best to pointless rationalism.

    You wrote that "No reference to health care can be found in the Constitution. The closest we can get is in the Declaration of Independence". The Declaration isn't "close" either, but it would make no difference if they could be strained to imply such a "right": the premise would still be false, and whatever they say is no obstacle to the false moral arguments from the collectivists.

    Ayn Rand didn't count on political documents, no matter how good or mixed, as a basis for her political philosophy. In contrast, the conservatives' appeal to the Constitution and tradition as the starting point is hopeless in a moral argument.
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  • Posted by term2 4 years, 10 months ago in reply to this comment.
    Mayo clinic doesnt accept medicare patients now. If you are over 65 (like me), I had to subscribe to their medallion program at $500 a month cash in order for them to accept medicare reimbursements (and at that, they add 15% over the medicare amount that fortunately getes paid for by the medicare supplement I have.

    Welcome to the age of socialism and its results !!
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    They don't want to charge a fixed advertised price because they can't survive that way. They have to manipulate every charge in any way they can because of the regulations and arbitrary price controls mandating free services to some and medicare and medicaid losses to others, while negotiating whatever they can with insurance company volume payers, and charging as much as they can for everyone else, with padded bills wherever possible.
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  • Posted by $ jlc 4 years, 10 months ago in reply to this comment.
    You really need to have some concept of 'healthcare as a right' in a civilized society. Let's say that a poorly-dressed, dirty person is found passed out on the sidewalk. What do you do? Well, you take her to the hospital and treat her.

    Is this pro-bono healthcare? Not really, because that dirty poorly dressed person is hypothetically 'me'. Maybe I was replacing a fence on my property (hence poorly dressed and dirty) and I have to make a trip to Home Depot to get something I inevitably forgot or ran out of. I do not feel well, step out of my car (leaving my purse behind), stagger a couple of steps and then pass out. I have medical insurance, but I do not have it 'on' me at the time I am found.

    So, in order for me to be safe in our society, I have to endorse that hospitals take care of homeless people...because they are indistinguishable from me-building-fences.

    I actually think that there should be a minimal healthcare safety net, intended for people without insurance, and I would be willing to pay for that because it would also catch me under the abovementioned circumstance.

    Jan
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  • Posted by $ jlc 4 years, 10 months ago in reply to this comment.
    I have helped design (train, implement, etc) medical billing software. The hospitals have leveraged the fact that they genuinely do not 'know' how much a procedure will cost, into a system of deliberately concealing even a viable estimate. For example, the same procedure, requiring the same length of hospital stay, for two patients, may result in different amounts. The diagnosis, insurance company, age, and other factors can change the reimbursement. You can estimate it ahead of time (estimate because you do not know ahead of time if there will be complications) but you have to do it for each individual patient. Or, you can do what a business does and charge a flat fee and make more profit in some cases than in others...but hospitals do not want to do that...

    Jan
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  • Posted by rtpetrick 4 years, 10 months ago in reply to this comment.
    Thanks for the explanation of the cancer that is threatening to destroy our social experiment. I realize that the Constitution isn't the major premise in the Fremont's opine.....But his statement that "Let it be given that health care is a right" constitutes his major premise...and I say, so far at least, health care is NOT a right....hence my comment..."Check your major premise".
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    In a rational system of freedom hospitals would already being posting prices and explaining them in advance in order to compete. So why aren't they? There are so many government controls and costs imposed that we do not have a system of freedom in health care. Hospitals can only survive by looking for whatever loopholes they can find in different circumstances to charge whatever prices they still can.
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    The Constitution isn't a major premise refuting a "right" to health care either. It is not a philosophical defense of any rights, but presupposes them as to be protected by restrictions on government.

    The Declaration reaffirms a common principle of rights of man as freedom from government, broadly accepted at the time, but does not say in any detail what they are or why. It does not come "close" to endorsing anything like a "right" to health care or any other entitlement, but that doesn't stop the left and what they believe either.

    Telling collectivists that they can't impose their entitlements because the Constitution doesn't let them is only a temporary legal-political answer that doesn't stop them. They are operating on a deeper level and seek to change the fundamental form of government in implementing their collectivism. They are already doing that and propose to do much more. Citing the form of government that was created in the 18th century is not an answer to that.

    The Declaration and the Constitution based on it came from the Enlightenment, and the left represents the counter-Enlightenment seeking to overthrow all of it philosophically, not just politically. With no commonly understood philosophical defense of the rights of the individual they have been succeeding.

    Appeals to the form of the original founding government in arguments from "tradition" are fundamentally not an answer to the left. Ayn Rand provided the philosophical defense required in her explanation of the source of morality in the nature of man as recognized as the rational being, and the principle of rights as a moral concept on which a proper government must be based.
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    A premise of a "right to healthcare" is false and inherently contradictory and cannot be the basis of any rational discussion. But the attempt in this thread was to explore the consequences of a government mandated and enforced entitlement. That can be done without granting a false moral premise sanctioning it. But it's essential to maintain the distinction and not grant validity to any argument invoking the "right".
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  • Posted by ewv 4 years, 10 months ago in reply to this comment.
    Since so much of the costs are mandated and indirect, such as compensating for costs of regulations across the entire supply chain and forced free care for some, it would be impossible to provide a complete accounting and any attempt would not result in anything anyone could follow in the reams of 'accounting'.

    But burying hospitals and everyone else in impossible bureaucratic paper work with heavy fines for not complying with subjective rules interpreted on the fly by the bureaucracies is not impossible. In that they will succeed.
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