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Miscellaneous meanderings and philosophical ramblings. The title from a spiral notebook I used to jot down my thoughts on religion and other matters some years ago. I like to write, think and express my views on various issues. Robust discussion is welcome.

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"Lan astaslem."
I will not submit. I will not surrender.
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Tuesday, August 18, 2009

Free market healthcare reform – additional objections

Some people just don’t learn. Unfortunately the continued objections of one reader bring up the question of whether this person is dishonest and/or stupid.

The debate began here and continued with my last reply to Shawn Wilkinson being a new blog post here. What is interesting is that Shawn acts as if I did not make certain points. I am quite sure he read that last post as he’s been to my front page on the same day, after I posted it. Perhaps this explains why his latest reply is in comments to the first post, rather than the new one. Wouldn’t want other readers to so easily see that issues raised were already addressed.

Shawn in bold font

My replies in regular font


Mark is the only person I know who in one breath can state that credit default swaps were bad because they weren't regulated, and then prop up an individual who desires to deregulate the health insurance market to create an entity very simlar to credit default swaps.

Shawn is the only person I know who in one breath can combine dishonesty and stupidity to avoid having his narrative demolished. First of all, I have never said I am against all regulations, therefore there is no internal contradiction on my part. As he well knows, I am not an anarchist, but of course he has to imply something like that to shore up his clumsy ad hom. Additionally, I have already noted the several facts that would make health status insurance different from the credit swaps, one of which would be that health status insurance would be under the insurance regulations which credit swaps avoided. Pretending I never made those points only emphasizes his intellectual dishonesty.

It should also be pointed out that the CATO Institute analysis did not say to deregulate the health insurance market in the way Shawn is implying. I’ve addressed what regulations were being referred to here in reply to Chris, who thought dishonestly changing his argument would be clever.

It’s pretty obvious that Wilkinson is working from the narrative that deregulation and credit swaps were the major cause of the financial collapse and he is desperately trying to frame this proposal in the same manner, so much so that he ignores facts. What originally appeared to be a reasonable question has shown itself to merely be rhetoric in an attempt to deceive others.

One has to wonder if Shawn Wilkinson was this intellectually dishonest at some point in his academic career.

But the thing that escapes free market analysts here is that the insurance business itself is not a good model for the free market, not just healthcare but other forms as well. The whole concept of insurance is risk-pooling of resources so that fortunate individuals cover the costs of the misfortunate. The system unravels when profit is considered a motivation. Instead of competing in terms of services, the insurance industry competes for enrollees.

Part of that competition for customers would necessitate providing services better matched to the customers needs/desires along with acceptable cost that the market will bear. The fact is that such competition is limited by various states that mandate insurance must include various benefits which makes high deductible and cheaper, catastrophic insurance impossible in that market, despite consumers who would very much like that choice. Other barriers created by states make entering the market more costly and of course insurers already in those markets encourage that to avoid competition. Profit is obviously a motive in closing markets to competitors and thereby raises costs.

This is one reason the administrative costs associated with private insurers is roughly 20-30% of the premium versus the ~5% costs associated with state-sponsored programs. Another con of the current structure is the inflated compensation of executives and CEOs, furthering the income division.

Several links here that show his claim is based on faulty data. To summarize, Shawn’s numbers require ignoring the many significant differences between Medicare and private insurance. Once those are taken into account, private insurance, managing private insurance products, fares better than state-sponsored programs.

Instead of proposing an insurance on one's insurance to only see it eventually fail,

It is insuring against the possibility that one’s health status will change. Hardly surprising he doesn’t get this as he can’t get past the faulty, and now dishonest, credit swap comparison.

it would be better to adopt a program which we already know is successful and have empirical data to show for it. We can pick any industrialized European country (Britain, France, Sweden, Switzerland, etc.) or our next door neighbor (Canada) and implement a similar system.

Recent news out of Canada is that they know their system is broke. The man who helped institute it years ago has said it is failing. Britain already has government forced rationing and incredibly long waiting lines. Funny that he would include them a list in what is successful. Our system does need some reform, but it first needs to be realized that current government regulations are part of the problem. We are not in a free market now as noted here.

Hell, the VA is much like Britain's socialized medicine and it continuously outranks private insurance in terms of quality and costs.

Funny, the news reports seem to consistently point out problems with the VA

The current reform bill is very Swiss-esque in regulating private insurers with the addition of creating a not-for-profit public option to compete in the current market.

The actual language of the House bill necessarily destroys the private health insurance market. Several Democrats, including Obama and a liberal consultant have said single payer is the/their goal.

And I think you're confusing Medicaire with Medicaid in terms of poor handling. Medicaid is significantly underfunded and is poorly mismanaged by local state officials. Medicaire has shown to be a relaltively successful social engineering program since it's conception in 1965.

Medicare is facing a huge budget shortfall in the not too distant future.

As the recession cuts into tax receipts, Medicare's giant hospital trust fund is running out of cash more rapidly and could become insolvent as early as 2016, the report said. That is three years sooner than was previously forecast. At the same time, the government's already large share of the nation's health care bill will keep growing. (source)

Medicare is also reducing available care as it pays below market for services, resulting in more doctors refusing Medicare patients or even causing a hospital service to close.

Boulder Community Hospital, which owned and operated the practice, made the decision to close the specialty branch because of the rising costs of rent and the low reimbursement rates of its Medicare patients, hospital spokesman Rich Sheehan said. (source, emphasis in bold added)

More about Medicare problems here and here.

There is up to 20% fraud in Medicare. Medicare and Medicaid are such large buyers of healthcare that they ensure fee for service has little competition. Fee for service encourages duplication and waste. Other payment methods have their own weaknesses but if they were allowed to compete they would all have to improve.

The observant reader will notice that Shawn has not conceded that his earlier 45 million uninsured claim is a bogus number nor has he defended it when I briefly noted why it is incorrect. Apparently it’s just more convenient to continue waving one’s hands and hope no one noticed. However, in anticipation that he will blather that I didn’t back up what I said the following is provided:

"It is true that the 46 million figure is based on unreliable Census Bureau data. But even the less unreliable Congressional Budget Office puts the number at about 31 million. And even that number, former CBO Director Douglas Holtz-Eakin claims, is an “incomplete and potentially misleading picture of the uninsured population.

Turns out that 8.4 million uninsured Americans are making $50,000 to $74,999, and 9.1 million more are making more than $75,000. Health insurance is just incompatible with their lifestyles, I guess." (source)

Out of what is left, some already qualify for medical programs but haven't signed up for various reasons. Another study here that goes into more detail.

And let’s not forget that The One himself has compared his plan to the post office. Sometimes the truth comes out even when a politician would rather continue to play shell games.


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