TCS Daily


The Mismeasure of Managing Health Care

By Tim Worstall - July 5, 2007 12:00 AM

A touch odd, perhaps, to use the words of a man dead these 127 years to describe Michael Moore's new movie "Sicko". However, the temptation to use Disraeli's "Lies, damned lies and statistics" is simply unbearable so there it is, my three word review.

Admittedly, I've not seen the film and it's most unlikely that I ever will so please feel free to reject it as you wish: perhaps the sour grapes of one who doesn't like the conclusions, perhaps just the witterings of one who knows not of which he speaks. However, bear with me as I explain something a little complicated which bears very heavily on what is being said here, the little bits and pieces which we're not (generally) being told.

CNN has done some analysis of the figures used in the film and their general conclusion is that they're pretty accurate, people are quibbling about details but not the general thrust. Allow me one that's slightly more than a quibble, please:

So, if Americans are paying so much and they're not getting as good or as much care, where is all the money going? "Overhead for most private health insurance plans range between 10 percent to 30 percent," says Deloitte health-care analyst Paul Keckley. Overhead includes profit and administrative costs.

"Compare that to Medicare, which only has an overhead rate of 1 percent. Medicare is an extremely efficient health-care delivery system," says Mark Meaney...

That rather depends upon what it is that you choose to count really. "Overhead" includes not just profit and administrative costs, it includes the cost of collecting the money to feed the system itself. It's a commonplace of public finance that the deadweight costs of taxation finance are 20% of the sum raised through that taxation. That deadweight hasn't been included in our Medicare costs, meaning that the truly comparable overheads are in fact 21%: slap bang in the middle of our private sector range. Let us take this as our first example of your results being dependent upon what you're measuring.

Both Jane Galt and Matt Yglesias (both formerly of these pages) have interesting things to add to the discussion but the most astonishing point is raised by Glen Whitman.

Including the mode of payment when measuring the system's performance is, as Masten astutely observes, assuming what you're trying to prove. After all, the whole question is how healthcare ought to be financed - publicly or privately, with insurance or out-of-pocket payments, etc.

Now you can, if you should so wish, go here and here to see the original material that backs up the following point but here it is in shorthand.

We've got a system of rankings of health care systems. France and Canada are in the top 10, the USA, despite spending more, at number 37. But let's look at how those rankings are composed:

To make the definition of the composite easier to understand, these survey results have been rounded to the nearest one-eighth so that the final weights to be used are 0.25 for health, 0.25 for health inequality, 0.125 for level of responsiveness, 0.125 for distribution of responsiveness and 0.25 for fairness of financial contribution.

Do you see that? Only 25% of the weighting is about the actual health care received. A similar amount is awarded for the equality of care received. So, imagine, say, the Canadian system, everybody waits the same amount of time for a hip replacement, in the American one some get it very quickly, others get it after a long wait: it doesn't matter that everyone in the US waits a shorter period of time than anyone in Canada: the Canadian system would be scored as better here. I'm not saying that those waiting times are actually true, I'm simply pointing to the effects of the weighting: inequality in treatment times is as important here as the actual treatment itself.

Indeed, dependent upon how these numbers are manipulated, it could be that a system where no one has hip replacements would be better rated than one where some do immediately and some wait six months.

The point that Professor Whitman makes is also there: the fairness of financing.

More importantly, the distribution of household contributions will obviously decline when the government shoulders more of the health spending burden. In the extreme, if the government pays for all healthcare, every household will spend the same percentage of their income - zero - on healthcare. In other words, this measure of health outcomes necessarily makes countries that rely on private payment look inferior.

So let me explain the larger picture a little more. We have this system of measuring health care systems. That system states that inequality of care is bad and that tax financing of care is good. Now it's entirely possible that both these things are true but that isn't actually what we're trying to find out. At the moment we're trying to find out about what actually gives us the best care, qua care itself. Out of pocket spending, private health insurance, tax financing -- which gives us the best health care? Then we can go on to ask which gives us the fairest method of paying for it, which gives us the least inequality (if that's what we want) and so on.

I find all of this rather reminiscient of this from last year:

How we're supposed to read this is that the USA has a very uneven income distribution, that the poorest 10% only get 39% of the median income, that the richest 10% get 210%. Compare and contrast that with the most egalitarian society amongst those studied, Finland, where the rich get 111% and the poor get 38%. Shown this undoubted fact we are therefore to don sackcloth and ashes, promise to do better and tax the heck out of everybody to rectify this appalling situation.

But hang on a minute, that's not quite what is being shown. In the USA the poor get 39% of the US median income and in Finland (and Sweden) the poor get 38% of the US median income.

As with that report on income distributions, so with this on the various health care systems. Yes, incomes in the US are more unequal but for the bottom 10% they're exactly the same across countries. With the debate over health care systems we're paying a great deal more attention (half the total measure, the inequality of care received and the equality of money raised to pay for it) to things other than the acual standard of health care being received. When what we actually want to know is, what is the level of health care being received? Something which is a minor part, only a quarter, of the system we're using to do the measuring.

The index is deliberately set up to make tax financing look good, direct out of pocket expenditures look bad, inequality of treatment is as important as the actual level of treatment: and then people express surprise that the US system, which violates all of those implicit rules, looks bad?

Just to hammer the point home. On this system of measurement, the actual level of treatment in the US could fall, but the amount tax financed rise: and the US would be declared to have improved its system. Yes, really, a decrease in the absolute level of treatment could mean a rise up the rankings.

Which rather means that the ranking system isn't of all that much use to us here.

So to add to Disraeli's Dictum above, I offer you Worstall's Corollary: you let me make the rules about how we're going to do the measuring and I'll force our rulers into taking the measures you want. For the simplest way of using statistics to lie is to make sure your desired conclusions determine the statistics you collect.

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62 Comments

Roy?
I had problems with the methodology but this just puts the nail in the coffin of that idiotic ranking report. I am sure that Roy will just blame the author for "knee-jerk" pooh-poohing. Roy only listens to statistical experts when its statistics he likes.

Quality of Health Care For The Mass Population And Automation
In today's world, health care for the people in a country depends upon the country's human resources. For example, a country with a large uneducated population probably won't have enough doctors to treat the ailments of every person.

The development and mass production of more automated technologies could improve health care in every country. It is the inevitable solution to the global health care crisis.

Just for starters
where does the figure of 25 percent of all taxation goes to "deadweight" come from. The author breezily says it's common knowledge, generally accepted. What's the source?

al gore
in al gore's reinventing govt commission during the early years of the Clinton misadministrtion, the commission concluded that govt finances were so hosed up, that it was imposible to determine what agency was paying how much for any service.

paying through taxes
It's interesting that the study authors are appalled at inequality in paying for medicine when the bills are being paid directly by the consumers.
They then conclude that when the bills are being paid by the taxpayer, everybody is paying the same amount 0%.

It's as if these guys honestly believe that health care becomes free once govt starts paying for it.

Last time I checked, the rich pay way more in taxes than do the poor. As a result, paying by taxes results in more payment inequality, not less.

Ummm...
First, the author says 20%, not 25%.

Second, that is a minor point of the article (it is clear that the 1% figure used for Medicare is way off. What about the costs of collecting the taxes, etc?).

But you're just looking for something to criticize since you can't attack the real issue, the fact that those doing the ranking appear to intentionally reward government financed and controlled health care, huh? This is typical of the liberals. They stack the deck to show that their plan looks best. I always thought those rankings must be bunk. Now I know why.

-Bob

Umm no
>it is clear that the 1% figure used for Medicare is way off. What about the costs of collecting the taxes, etc?).
What costs? What specific costs are attributable to collecting those specific taxes? Most of it comes out of FICA, some comes from the general fund. But 20 percent is billions of dollars and that's ridiculous: the entire IRS budget is 10 billion.

Here's the quote:
"It's a commonplace of public finance that the deadweight costs of taxation finance are 20% of the sum raised through that taxation."
Where's the back up for this? Where does this number come from??

>But you're just looking for something to criticize since you can't attack the real issue, the fact that those doing the ranking appear to intentionally reward government financed and controlled health care, huh?

So ignore that particular report, fine. the fact remains that the US spends twice as much of its GDP on medical care as most other countries and still has lots of people damaged by lack of medical care.

Profit Motive
Well by the argument for Medicare every service should be Government provided. Why should food be for profit or clothing. Why should anything be for profit? Should oil be at cost? Cars, Medicine?

This argument is absurd. The profit motive is what make products better, cheaper and more available.

The problem with health care cost is the government. The simple solution is to abolish employer paid health care and make people responsible for their own care. Young, don't need much care? Buy a high deductable catastrophic care policy. Want Cadillac coverage, then pay. It is about choices and the market. The government cannot provide better care and cheaper than the market. This notion of the lack of profit motive has been shown time and again to fail. Look at British Steel prior to privatization by Thatcher.

The socialists however will clamor for state care arguing it is a right and that it needs to be free for all. The sicko point is nothing is free and is trading freedom for security worth the price?

Freebies
So by this argument every aspect of production should be state owned? That way the profit motive is eliminated? Or just health care?

For that matter, the cost of collecting taxes? Gee, what about IRS employees, collection costs, buildings, power, phones? Do you think the government is zero overhead?

This argument about how health care should be government provided so it is cheaper is absurd. If the lack of profit motive was the solution then why is not every industry state owned?

Do you really want a state run health care system?


Whoa! You've got $70 billion - 10 times the IRS budget to explain. Please do so.
I just pointed out that the essay contained a deeply dubious statement about Medicare and "deadweight" government tax expenses. It said that 20 percent of Medicare was deadweight cost of raising money. If you want to defend the statement, do so. But I pointed out that the whole budget for the IRS, which collects the Medicare taxes along with all the others, is a little over $10 billion. Medicare has an annual budget of $350 billion; 20 percent of that is $70 billion. Care to explain?

What if noone can make money by selling you health insurance?
If you have pre-existing condition like diabetes or cancer, no private health care will sell you insurance. So how does the profit motive help these people? Or do you think if people are sick, they don't deserve to have health insurance??

re preexisting
I thought you told us before that you would take the responsibility to take care of your kids with such conditions, instead of begging us for the money? You could also beg some charitable organizations like the Salvation Army, your church, your friends, take an extra job, try to upgrade yourself, etc. Either way, you always begging somebody else, either us thru the government by force of arms, or the loved ones and goodhearted charities and other liberals who would help you. YOu're a beggar either way if you can't afford it yourself.

Deadweight Costs
Certainly, happy to explain. The figure comes from Tyler Cowen in a recent (last few months) blog post. He referred to it as generally accepted so I do too.
You're getting a litle confused about what "deadweight" means though. We are not talking about the direct cost of raising the taxes. So, no, I do not mean that it costs of government $70 billion to raise the ยง350 billion directly.
What I do mean is that if people were not taxed this money they would spend it on something else. They might well get (in fact we assume that they would....that's why we tax them, not allow them to purchase it privately) more utility from those other purchases/investments than they get from Medicare. The gap between the consumer benefit provided by what people would do with their own money and what is provided by the tax is known as the "deadweight cost".

And the math for this comes from....
Why the figure 20 percent??

and as for this...
>hey might well get (in fact we assume that they would....that's why we tax them, not allow them to purchase it privately) more utility from those other purchases/investments than they get from Medicare.

why do we assume 'more utility?' And who gets this utility?? Private expenditures go to the spenders; people who have more money get lots of utility but people without money do not. People without money get sick as often (or more often) than people with money. But you're sure the system would keep even poor people healthy? Why?

> The gap between the consumer benefit provided by what people would do with their own money and what is provided by the tax is known as the "deadweight cost".

Thank you for making it clear that a) the 20 percernt figure is a fiction, and that b) how dead the weigh depends on how much you make.

And the math for this comes from where?
First, why the figure 20 percent?? Why not 10 or 17 or 82? What's the rationale?

and as for this...
>hey might well get (in fact we assume that they would....that's why we tax them, not allow them to purchase it privately) more utility from those other purchases/investments than they get from Medicare.

why do we assume 'more utility?' And who gets this utility?? Private expenditures go to the spenders; people who have more money get lots of utility but people without money do not. People without money get sick as often (or more often) than people with money. But you're sure the system would keep even poor people healthy? Why?

> The gap between the consumer benefit provided by what people would do with their own money and what is provided by the tax is known as the "deadweight cost".

Thank you for making it clear that a) the 20 percernt figure is a fiction, and that b) how dead the weigh depends on how much you make.

Begging?? The person with the condition just wants to buy affordable insurance.
Where does this come from?

>I thought you told us before that you would take the responsibility to take care of your kids with such conditions,
Sure. Pay for insurance and take care of them. That's not begging, that's just trying to buy a product.

But what if nobody in the market will sell the insurance, because the insurance is a bad bet, because the kid is sick. And a parent doesn't have the $200,000 or so required. You can say, 'beg or die,' but that's a long way from saying the market will supply the need - it's a need because the market _isn't_ supplying it, and can't, by the simple facts of profit and loss.

Two comments
First, the concept of a "pre-existing condition" suggests that you did not have (were not paying for) insurance, but realized when you got sick that it would sure be nice to have someone else help you pay for your care. The whole concept of insurance does not work that way, for very good economic reasons. For example, try buying automobile collision insurance after you have had an accident so that the insurance company will pay to have your car and/or the other car fixed. Lots of luck. Or, try to buy an extended warranty on your car after the engine craters.

Second, most states have established "assigned risk pools" for automobile insurance and require that every driver be insured so that the pool is at least partially self-funding. The same could be done for those who are high-risk from a healthcare perspective. However, this would require that everyone either have their own insurance or pay into the "assigned risk" pool.

begging
Maybe it's the same as the market does not supply me with Anna Kournikova either, nor a yacht, nor a new Gulstream. If you want something nobody has ever had in the history of the world, except for people who can afford it(other than dictators who steal from their people), the you have to accept your low station in life, or beg for it. Most people in the world don't even have an aspirin or plaster bandage, and you want..... sounds like everything....and somebody else but you should pay for it? No, not just beg for it, but expect some thugs employed by the State, to use force of arms to extract it on pain of death to supply to you?

Except it doesn't work that way, and blaming the victims doesn't make anything better
The analogy with car insurance is accurate up to a point. Yes, car insurance companies charge people with bad driving records more, sometimes much more.

Where it breaks down is this. First, driving is a privilege, and if people break the law it is regarded as completely appropriate that they have to spend more money for insurance. It was something in their control; their mistake. Second, even someone with a bad driving record can buy insurance - it'll cost them, but they can get it.

But with health insurance, it's difference. Life is not a "privilege." It's not people's fault if they or their children get sick: it's something they nave no control over. And if they have some pre-existing condition, it's not just that they have to pay more, which is bad enough - it's that they can't get insurance anywhere, at any price. The state assigned risk pools that you talk about are not universal, and heavily oversubscribed.

You say, they should have enrolled in some plan in timely fashion and it's their own damn fault if they didn't. This disregards all the reasons that exist for being unisured - more than 45 million are. Instead of looking at the problem and finding a way to expand the universe of coverage so insurance can do what insurance does, which is spread risk over as wide a group as possible, you're blaming the victims.

That isn't what he told you,
and as always, you've twisted someone else's facts, figures, principles, writings, and/or concepts to prove your own prejudiced and vapid "point".

Get a grip. You ask others to provide you evidence for a position that runs counter to your own (immature) position only so you can pretend you shot them down, instread of actually reading or listening. That's why I no longer waste my time on you or your ilk.

Cooked statistics
The basic idea of the post, however, is accurate. I looked at the methodology of the rankings and they are biased toward public financing of health care.

One basic problem in the delivery of health care services in the U.S. is that very few of us pay more than a small fraction of the cost of treatment. We're either on Medicare, have a policy through our employers with a fairly small co-pay, qualify for Medicaid, or are able to show up at the hospital emergency room where you must be seen.

Because most of us have no "skin in the game," we tend to order a CAT scan when a thermometer would do the job. Until each of us has to pay a significant amount out of pocket each time we see a physician, medical spending will increase.

Um, no,
it's that your premiums will be higher.

Yes, it will also be more difficult to find an insurer who will take you, because insurers have to protet themselves against what is known as Adverse Selection, which is the tendency of those who have developed a condition to then go seek insurance.

If you want insurers to be able to take care of unusual medical expenses (which is their job--it really was never intended that health insurance should take care of things like filling drug prescriptions or eyeglasses scrips, which is a huge a part of the health care problem), then you have to allow them to be able to afford to do that (and contrary to your petulant notions, health insurance workers are allowed to eat and have homes, too).

You want a government that is a money tree--and that is already partly what we have, and that is asking for disaster.

Stop wearing your silly and childish hatred for the wealthy on your sleeve. It's peevish and doesn't begin to solve anything at all.

We're not talking about a new Gulfstream or Caviar
we're talking about the lives of people, men women and children. France or Germany aren't military dictatorships because they have plans to take care of all their people who need medical care.

>ost people in the world don't even have an aspirin or plaster bandage, and you want..... sounds like everything....and somebody else but you should pay for it?

That's how insurance works. You have lots of people. they all pay into a pool. Then the ones who get sick get benefits. You don't like the idea of insurance? Fine. But don't call it Stalinism. It's risk sharing.

But why is this fair??
You didn't choose to have a disease. It's not like bad driving: it's something you have no control over. And the idea of insurance is precisely risk sharing.

Yes, adverse selection is the issue, and it's one that the market alone doesn't have a solution for. Health insurers don't want to insure bad risks, and bad risks are the ones who most need insurance.

> really was never intended that health insurance should take care of things like filling drug prescriptions or eyeglasses scrips, which is a huge a part of the health care problem)
"eyeglass scrips are not really a huge part of the health care problem. Prescriptions for hundreds of dollars a pill can be. Or don't you want the pharmaceutical companies to make money?

>ou want a government that is a money tree--and that is already partly what we have, and that is asking for disaster.

We have the worst of both worlds. We pay twice as much for health care as a percentage of GDP as most industrialized countries, and still leave millions in the lurch.

>top wearing your silly and childish hatred for the wealthy on your sleeve. It's peevish and doesn't begin to solve anything at all.
Hatred for the wealthy??? How? I'm just suggesting the country would be better off if all the citizens were insured. That's not about hatred, it's about problem solving.

Do you have a point?
What was my "twisting?" Can't make it clear? That's not my fault.

>That's why I no longer waste my time on you or your ilk.
Don't let the door hit your butt on the way out.

Fine: dismiss that study
We still have a health care problem. We spend nearly 14 percent of GDP on health care, compared to 10 percent for Germany, less for other advanced countries. And we wind up with emergency room medicine, bad or no preventive care, bad health statistics - the worst of all worlds.

>One basic problem in the delivery of health care services in the U.S. is that very few of us pay more than a small fraction of the cost of treatment. We're either on Medicare, have a policy through our employers with a fairly small co-pay, qualify for Medicaid, or are able to show up at the hospital emergency room where you must be seen.

And your solution is what? To have people pay for a heart bypasses out of pocket?

"...all the reasons that exist for being unisured..."
Most of the uninsured are healthy younger people who prefer not to spend the money. However, when they get sick, they want to be covered at the same rate as those who have participated in the insurance pool over time. That does not and cannot happen voluntarily in a real insurance plan; nor, should it.

There may well be many reasons why the balance of the uninsured are uninsured - some good and some not so good. Providing coverage when they get sick means that others, either in their role as taxpayers or in their role as insurance policyholders, will be expected to pay some or all of their expenses. In the insurance pool case, that may involve only funding the difference between the "healthy" insurance rate and a higher rate intended to cover the higher risk of insuring someone who is already sick. In the government-provided/funded case, it may mean paying the entire cost, as it does already if the sick individual is also indigent.

No matter how it is handled, expanding coverage to the uninsured sick is going to cost the "well" and/or the "wealthy".

Since "life is not a "privilege"", it is obviously far more important to insist that everyone have health insurance than to insist that all drivers have liability insurance. Perhaps participation in a state assigned risk pool for automotive liability insurance should require proof of health insurance, since health insurance is more important than driving privileges. That might be a "twofer".

Nationalized medicine creates terror threats
Lemuel ignores the unintended consequences of broad promises and platitudes. Consider these news items, indicating that the need for lower-wage doctors in socialized health care systems has created an opening for Al-Qaeda to infiltrate.

"58% of the new doctors registered on Britain's national health service came from foreign countries. And these people exploited that weakness. You didn't need a work permit to become a doctor in Britain."
Source:
http://hughhewitt.townhall.com/Transcript_Page.aspx?ContentGuid=d1287988-3561-44c8-93da-905d72073fa0

"Australia raids 2 hospitals, detains nephew of alleged Glasgow bomber...Haneef worked as a doctor in Liverpool before moving to Queensland in September 2006 to work at the Gold Coast Hospital, the Australian government said. He was recruited through a British Medical Journal advertisement."

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTiirLBZVO94

Again: how does blaming people for being sick without insurance help the situation??
Let's say, for the purposes of argument that half the uninsured people are irresponsible freeloaders. What then?

We're still stuck with their medical expenses when they wind up being treated in emergency rooms at county hospitals at taxpayers expense. It cost much, much more to do this than if they were insured and received preventive treatment. And then what about the half who weren't irresponsible, but just got a bad set of breaks.

If a comprehensive plan existed that brought everyone in, with those who can afford it paying full freight, everyone comes ou better.

>No matter how it is handled, expanding coverage to the uninsured sick is going to cost the "well" and/or the "wealthy".
And the uninsured well as well. But yes, that's what insurance is: spreading risk to as wide a pool as possible.

>Since "life is not a "privilege"", it is obviously far more important to insist that everyone have health insurance than to insist that all drivers have liability insurance.

Sure it is. But if people can't buy health insurance because of pre-existing conditions, what does it mean to 'insist?'

Airplanes create terror threats
Let's do away with them: better safe than sorry

If you establish an "assigned risk" pool...
you can accept everyone; and, you can insist that they participate. That is how the state automotive liability "assigned risk" pools operate.

Liberals,...
by failing to address terror threats, encourage more terror threats. (Source: Osama bin Laden) Therefore, we could perhaps apply your "precautionary principle" ("better safe than sorry"), frequently advocated regarding global warming, to liberals as well; some of us could probably do so with "no regrets". :-)

"Osama Bin Laden determined to strike in US"
Or so President Bush was told in August, 2001. Maybe he's a liberal.

And that's one of the solutions proposed
But I thought the system we had was fine, just need more free enterprise.

Maybe he's a liberal
Closer to it than I am, by far.

I was referring to Bush's predecessor's approach to dealing with terrorists, as I am sure you are aware.

NPR said the same thing!
The BBC reporter covering the terror doctors story pointed out that, due to low wages for doctors in the UK, a lot of native-born docs have decamped to the US, leading to 25,000 foreign-educated docs being hired in the UK since 2002.

This from your fellow travellers!

Clinton wasn't the one who got the message about Bin Laden
...nor was he the one who came into office and recieved just-confirmed definitive information about who attacked the Cole and did absolutely nothing with it. But why not talk about health care?

And what's wrong with our health system that _we're_ attracting all these foreign doctors
And as far as foreign educated doctors, here's a random news item.

"For the first time, more than half the doctors beginning medical residency jobs in July at Wayne State University in Detroit will be foreign-educated medical students.

"While the shift reflects a broad trend toward more doctors from other countries practicing in the United States, it also underscores that Wayne State's medical school -- the largest single-campus medical school in the nation -- is at a critical time of change.

"Foreign-educated medical students will fill 91 of 162 first-year residency spots at WSU, up from 79 of 166 the year before."

Osama bin Laden...
sent the message several times. But, I have to agree with you; Clinton never got it.

The US electorate sent a message to the Clintons about socialized medicine. It appears that at least one of the Clintons didn't get it either.

Perhaps nothing
The residency experience may be better than they could experience at home.
The post-residency opportunities may be better than at home.

For someone peddling "solutions", everything looks like a problem. (If the only tool you have is a hammer, everything looks like a nail.)

OK, let's review
It wasn't me that was waving the red flag of terror menace. But let's review

foreign docs in Britian: terrorist peril.
foreign odcs in US: Mark of excellence!

.... didn't send the messsage. and speaking of messages:
The CIA sent the message. Bush got it. He didn't act on it.

>he US electorate sent a message to the Clintons about socialized medicine. It appears that at least one of the Clintons didn't get it either.

maybe you should read papers that are less than ten years old: Health care problems are shaping up as one of the biggest issues for the 2008 election. Maybe if you'd just reassure people that everything's ok, it will go away.

Turn of Events
Well, here I am. I followed my lifes dream and became self employed and I am doing well. I have used my prior employers COBRA for 16 of the 18 months. Now it is time to buy my own policy and guess what?

I have a very treatable case of Ulcerative COlitis which has only flared 3 times in 47 years and responds perfectly to the least risky medicine. The medication all but assures no risk.

Well what a shocker today, I can afford health insurance and want to pay for it and I am uninsurable. No carrier will cover me. Yet if I give up and go back to work for a employer I can get coverage.

I am all for a market economy but this is utter BS. Once again the system needs to be geared for individual coverage. The insurance carriers are milking the cow at one end and screwing it at the other. Why in hell would a employee be covered but not a individual?

So here I am, do I quit a lucrative business to get insurance or do I just end coverage for me and just insure my family, who has nothing? If I decide to opt out then if I get sick I am screwed and basically unless I have vast wealth accumulated I am looking at death.

I am opposed to a government run system but this is a joke and I have never claimed the system as is is not flawed. I just never realized how badly until now.

Please...
...Lemuel, it really isn't possible to provide a full and detailed explanation of each and every point. There has to be an assumption that the reader is familiar with some of the background points...otherwise, we'd have to put a 50 page entry explaining the concept of "New York" every time we referred to the city.
Try reading the Wikipedia entry on "excess burden of taxation" in order to grasp the concept.
This blog posting will also help:
http://www.marginalrevolution.com/marginalrevolution/2007/03/tim_worstall_as.html
It's where I got the 20% number from. You'll see below that at least two academic economists (kznz and Alex Tabarrok) disagree on the size of it but not its existence.
Does that help?

Sorry to hear this and good luck.
I hope you can find a way through. It's bad when really important life choices are determined by government; it's just as bad or even worse when it's an insurance company who's calling the shots.

Aging is not a welfare trap
Look, you bring up a truly gigantic number, 20 percent of Medicare expenditures, or $70 billion, which appears nowhere on any accounting and just assert that this is the deadweight burden that Medicare exerts on the economy. You can't simply assume this, nor do simple analogies with markets for nails or peanuts make the case. Health care is a unique service and product with its own traps and peculiarities, as the business about adverse selection and its effect on health insurance illustates. If you or someone else can make a good-faith effort to explore and illustrate deadweight costs with specific reference to healthcare expenditures, you may hbe a point. A casual passing reference to "20 percent deadweight" doesn't pass muster without such an effort.

And I read the blog posting. I see nothing about health care. The Wiki talks about welfare traps.

Yes, there may be an element of welfare trap in Medicaid, to poorer people, so that they avoid making enough money disqualify them. (That's a distortion that a universal coverage system would avoid, by the way).

But for Medicaid, it's a little harder to see this. Is the idea that Medicaid is an incentive for people to grow older faster?? If not, where's the deadweight? Do you think without Medicaid the market would be offering much cheaper oldercare even to the most unhealthy elders, despite adverse selection effects? Seriously, I would hope you could explain this.

Both industires
Yeah, I think both the Government and Insurance are to blame. We need reform and I have read several excellent articles on market reforms. I also heard praise for the MA Plan.

I think the employer based coverage, a holdover from the depression and WW2, needs to be based with employer assisted premiums (much as today) EXCEPT we purchase our own plans by shopping for coverage based upon need and risk. Coverage would be mandatory (you can't squander the money) and the risk pool is shared.

It is utterly absurd that employers can cover employees with no health checks but individuals cannot.

In fact, more and more people are moving to self employment and the industry and politicians refuse to change the system. I read over 50% of the uninsured are people who are self employed and cannot buy coverage, like me, at any cost.

In CA the insurance companies are reviewing private policies to cancel as many as they can.

In other words, unless you are in top shape with no illness you cannot buy individual coverage.

This country was built by privateers and now were going to squash this over the inability to cope with a self generated problem?

If we do end up with socialized medicine the insurance industry is as much to blame, if not more, than anyone.

It's a matter of bargaining power
If you're an insurer and you want a big or medium size company's business, you have to agree to take the good risks with the bad. And since you're insuring a relatively big group. you get enough healthy people to pay for the ones who aren't/

But an individual going out to buy insurance for himself has no bargaining power at all. If he's a bad risk, there's no reason to insure him.

The problem is inherent in the situation, and as long as insurance companies have the right to pick and choose, there's no way out of it.

Your situatin is, as you point out, more and more common. I hope this creates political pressure for a solution, for your sake and for the sake of so many others in your difficult position.

Yes, let's review
There is no "red flag" being waved; I think the facts of the case in the UK speak for themselves.

At the risk of sounding smarmy, what on earth is a Wayne State University? Sorry for being an obnoxious New Englander, but in the big leagues of medical care, we're not hiring University of Baghdad med school grads. Of course, native-born med students might not have Detroit at the top of their application list. At any rate, there's a tremendous difference between American med schools whoring themselves overseas and the British health service hiring whatever warm bodies they find to fill the rosters.

But I should have been clearer in reporting the BBC story; the majority of docs going to the UK are Middle and South Eastern. If the oh-so-PC BBC thinks it's a problem, I won't quibble.

Wayne State's only a random example
The percentage of foreign-born doctors in the US is increasing sharply as well, and lots of them are from the middle east/ south asia. US doctors earn a lot of money, and British docs aren't the only ones to want to take advantage of it.

>If the oh-so-PC BBC thinks it's a problem, I won't quibble.
a problem, or a fact?

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