Tuesday, October 29, 2013

Small Note for Government, re Advertising Oversight and Stated Value

I'm not sure which area of government has responsibility for oversight of advertising claims (Department of Consumer Protection inside the FTC?), but I have a suggestion for them. It should be a requirement that, if you state a value for some product or service in an advertisement, that value must represent the average actual money paid by independent consumers [recently] for that product or service.

So for example, if you are currently advertising $100 of free merchandise, but the average amount you actually sell that merchandise for (including all the samples given away for free in the average) is $2, then you're guilty of fraud, and susceptible to large fines. There can of course be some leeway for approximations (I'd say anything within 10% of actual value, above or below, would be fine), but if we're policing false advertising, it's absurd that something be advertised as a $X value, where X is ridiculously higher than anyone would ever pay for it.

(Looking a pretty much everyone here, but looking extra-intently at mostly-online multi-level marketing schemes selling novelty trinkets of arbitrary value, for example...)

Monday, October 14, 2013

Health Care Reform

[This post semi-motivated by the open invitation from Jon Steward, on The Daily Show, for opponents of Obamacare to provide some viable alternatives to fix health care problems, rather than just criticize Obamacare. While I do think Obamacare has a number of problems and have been somewhat critical of it, he does make a fair point: there are far less people proposing alternatives to address the problems, which are very real. I figured I should take an abbreviated pass at such.]

Existing Problems

So health care in the US... it kinda sucks. Here are some of the big problems, in no particular order.


Cost is rising faster than just inflation, and has been for a while. This is driven, in large part, by the in-elasticity of demand (ie: people will pay virtually any amount of money to live), and the semi-free market taking advantage of it. Another contributor, though, is the opaqueness of cost of goods and services; many providers are less than up-front with their costs, and the prevalence of various insurance plans obscures the cost to consumers. Add to this a large amount of regulation, requirements, and red-tape, and you get the costly mess we have today.

Reluctance to get Preventative Care

Many people, even with coverage, neglect to get some (or all) of the available preventative care, which can lead to higher medical care costs if and when problems arise. For some, this is simply because care is expensive, and they cannot reasonably afford early treatment. For others, this can also be as issue of timing and hassle, as visits to doctors need to be scheduled weeks (and sometimes months) in advance, and it can be arduous (and sometimes very time-intensive) to go through the insurance claims process. Moreover, if there are problems with the insurance process, it can drag on for literally years, bringing with it loads of stress and a general fear of getting any medical services in the future.

Lack of Ability to Pay for Services

Some people simply cannot afford to pay for the services they receive, but some of the most expensive providers are legally required to provide services to all people. This drives up costs for everyone, as the providers need to increase rates to cover the additional costs incurred, while providing services at the highest possible cost to those least likely to be able to pay.

Ridiculous Nominal Costs Force Insurance

Insurance companies make money; they aggregate risk, while skimming some profit off the top. In a normal scenario, you might have insurance to cover unlikely catastrophic scenarios, and the cost would be low, since the chance of encountering a situation where you would need to use your insurance would be very small. For health care, though, even the simplest of services carries an absolutely absurd nominal rate, for a variety of reasons (not the least of which is to provide a high starting point for settlement negotiations with people who do not have insurance). This essentially forces everyone to use insurance for every service, which means that the overhead for profit for the insurance companies is imposed on every single service received.

Insurance is Tied to Employment

Due primarily to asinine tax laws, you get significant financial benefit from getting insurance through an employer (where it can be paid for pre-tax), rather than on the open market. This means people are subject to the plans offered by/through their employers, and the risk pool of their companies, both of which make the product more expensive. The lack of the ability to shop for competitive insurance means insurance companies are free to be less competitive, and charge people more. Moreover, this limits lateral movement within the economy, and adds a lot of financial uncertainty around changing employment, both of which are bad for the economy. This problem is purely a government-malfeasance issue, though, and could easily be solved by fixing the tax code.

Medicare is a Problem

This is not really addressed by Obamacare in any capacity, but it is a large part of the health care problem in the country. Medicare is a large entitlement program for which the cost is increasing every year, in an uncontained manner. Equally-bad is the pay rates for the program, which are not enough to keep care providers afloat (causing many providers to go bankrupt), and subject to arbitrary manipulation by the government, leading to heavy potential for corruption and massive uncertainty. It seems appropriate to include this in any discussion of the biggest problems with the health care system, even if Obamacare did not modify it at all... which is one of the ugly parts we will get to.

Obamacare - the Good (yes, good), the Marginal, and the Ugly

The "Affordable Care Act", AKA Obamacare, does a lot of things. Most of the changes of the law were unknown when it was passed, primarily since the Democrats shit all over their promises of transparency and bi-partisan cooperation, and rammed through a massive sweeping reform/entitlement without even time for people to read the legislation, much less debate its points, much much less actually take input from anyone else (one of the primary reasons for the shutdown impasse which followed). Nevertheless, there are some good things in the bill, it turns out, not that the Republicans would readily admit such. Here's my take on the legislation which was "Rahmmed" through when the Democrats had control of the entire government.

Good: Minimum on Amount Paid Out vs Collected for Insurance

One of the mandates of the law is that insurance companies pay out at least 80% of the amount the collect in premiums on actual care. This does not decrease the cost of the care itself, or really prevent the possibility of kickbacks and other abuses, but it does at least limit the "overhead" of insurance on health care in general to a [still quite large] 20%. That's the theory, anyway, eventually: the Obama administration has given "temporary" waivers to all the big players as a pseudo-kickback, since they helped pass the legislation. Still, though, you have to consider this good in theory.

Good: Removal of Lifetime Limits on Insurance Plans

This might be a minor item, but it's a good one: no longer can plans impose lifetime limits on payouts... that is, plans cannot be constructed to not offer the one benefit people really need from them (as most were). The main reason you get insurance, in the normal case, is for catastophic coverage; with a lifetime limit on payouts, you could essentially get screwed anyway. This was an absolutely positive change in the law.

Marginal: More People Get Insurance, Individual Mandate

This point could be considered good or bad, depending on how you feel about wealth redistribution (since the people making money are paying for it, and it's essentially just another tax on people with income). The overall effect is marginal, though: uninsured people would still get expensive care before, and taxpayers were still paying for it; this just makes the taxation and entitlement program more explicit in the law. The same could be said for the Individual Mandate: if you had the means to have health insurance, you already needed to have it, due to the systemic problems with ridiculous nominal costs in the system. Making it a tax/penalty just locks everyone in to the broken system.

Marginal: Impact on Small Businesses

Yes, Obamacare has some negative effects on small businesses, including incentivizing limiting employee hours to avoid paying health care benefits or penalties, and essentially adding a tax to medium size businesses who cannot afford to subsidize ever-increasing health insurance costs. This might get worse in the future, but right now the tax rate is far below what the actual insurance subsidy/cost would be, and in all honesty is not that significant. Moreover, businesses pass costs along to consumers, so while Obamacare will make [legal] American businesses nominally less competitive, it's really just an additional tax on goods and services... which is not a good thing, economically speaking, but not the end of the world, as some people imply.

Marginal: Website Problems, Cost

Yes, the Obamacare signup website is an unmitigated disaster from a technical perspective: poorly written, ridiculously expensive, unusable under load, full of security holes, etc. But really, how is any of this unexpected or news? The government is historically awful at producing good products at competitive costs, and this is no different. I have full confidence that with enough time and money, they'll be able to produce something which will limp along enough to be marginally usable, like any other government program. As "faults" with a massive government program go, this is pretty-much par for the course, so to speak.

Marginal: Coverage for Birth Control, etc.

Who the F cares. If you care, you're probably trying to interject religion into government, and you're wrong. This is a talking point which makes some Republicans seem like closed-minded douche-bags, and its a fair condemnation.

Ugly: State Medicare Subsidies is a Path to Federal Control and Corruption

The question has been raised by several pundits: why don't some [primarily Republican lead] states expand Medicare, with the federal government covering the cost for the first few years? Well, without being too condescending, perhaps the Republicans are responsibly considering what happens beyond the first few years. Here's what happens: either the federal government grants subsidies to people who obey their demands (ie: opens a massive gateway to corruption and federal manipulation of states), or the states shoulder the costs. It's shameful that the legislation was written this way, although not accidental in any way (it provides a talking/blame point, while the states without responsible leadership anyway take the short-term windfall). It's ugly politics.

Ugly: Waivers for Political Allies is Rancid with Corruption

I'm not sure what else could be said about this... the law provides a tax on "Cadillac" insurance plans, which are far beyond what "normal" people have access to, and are primarily a benefit for unions. Obama them promptly excluded his various union allies and supporters from the tax, in both an unconstitutional abuse of power, and a open, overt, "what are you going to do about it" display of corruption on a massive scale. Oh, and in doing so he also eviscerated all the projections of any semblence of financial neutrality for the law, as a side-note. If that makes you somewhat naseous, you're not alone.

Ugly: Taxes on Pipeline Items Increase Costs for Everyone

You know something is probably bad when just about everyone hates it; for example, the tax on medical devices which the law imposes. This was nominally included to make the law "revenue balanced", but since that latter item is a joke now anyway (and really, was at the onset), this change makes even less sense, if that's even possible. It's just dumb.

Ugly: Invasive Data Collection and Mixing with IRS is Dangerous

If the Snowden disclosures have taught the American people anything (and the jury's still out on that), it should be that the government is not to be trusted. They break the law, constantly, repeatedly, and without oversight or remose. The idea that you could have a new, massive, intrusive data collection program, working in concert with the IRS, should scare the crap out of anyone paying attention. This is just a bad idea (for the people; it's a great idea for the corrupt people in government).

Ugly: Doesn't Fix Any Real Problems

This, though, really is the real problem. If you go back and look at the list of big-ticket problems with the medical care system in the US, how many does Obamacare actually address? It doesn't make health care cost less; in fact, it makes it cost more (on the whole), by adding overhead and paperwork, while doing nothing to contain actual costs. It doesn't help or encourage people take steps to stay more healthy, it doesn't fix any of the problems with the insurance claims/processing industry, it doesn't fix people who cannot pay for care (even with insurance), it doesn't fix ridiculous nominal rates which prevent people from just getting catastrophic insurance (in fact, with the Individual Mandate, it does the exact opposite), insurance is still tied to employment, Medicare is still a massive and growing problem, etc. Obamacare does absolutely nothing to address any of the real problem with health care in the United States... nothing.

What I Would Do

Okay, so I promised I would lay out some things which I would do for health care reform, instead of just analyzing and criticizing Obamacare, and I will. First, though, let me clarify what I'd be trying to do, and what I would not be trying to do, as that will hopefully provide some context (and perhaps some insight into why Obamacare seems like such a miserable failure, when in actuality I think it serves its goal quite well).

Trying to Accomplish:

  • Fix (or improve) one or more of the major problems listed above
  • Preserve the profit incentive of the private health care industry in the US, to encourage innovation and staying on the cutting edge of medical research and treatment
  • Try to provide systemic incentive for people to be more healthy, and raise the level of health of the country in general
  • Keep government costs contained, so we don't create any new massive unfunded entitlement programs which bankrupt the future

Not Trying to Accomplish:

  • Systemic structure for federal control over states, and opportunity for corrupt federal influence on state activities (a la the Department of Education)
  • Massive new government information-collection program, to add everyone's medical information to growing federal databases
  • Getting people more dependent on the government, to both increase government power, and increase the perception that people should be dependent on the government
  • Increase pseudo wealth redistribution, through selective taxation and other "side channel" ways to control who has wealth in the country
  • Making the health care system in the country so painful to use, so corrupt, and so expensive, as to motivate people to call for nationalized health care as the only reasonable alternative to the horribly broken system
That last one is important, since the leaders of the Democratic party have indicated that nationalized health care is definitively their end-goal, and Obamacare is merely a path to that end. It's hard to see how Obamacare moves the country in that direction, until/unless you consider the negative effects, and how frustrated people will be with the system when all the effects of Obamacare have played out. Imagine, for example, how much frustration states will be able to generate, when the federal subsidies for Medicare expansion run out, leaving them to shoulder the entire cost. Multiply that by all the provisions in the massive law, and you could have a whole lot of misdirected outrage. I don't think that's an accident.

Anyway, that's a side note... on to what I would do as an alternative. In no particular order...

Proposal: Establish a Government-Run Network of Baseline Care Providers

This is probably the most far-reaching idea, so lets cover it first. The government should budget a fixed amount of money, annual, for the establishment and maintenance of government-run, health care providing facilities. These should offer free care, preventative, routine, and emergency, to everyone, regardless of income, status, or other qualification. The care should be baseline, and prioritized to keep costs under control; that is, no non-generic drugs, no expensive cutting-edge medical equipment, no highly-paid specialists, etc. The budget amount is arbitrary, but should be budgeted along with the other well-quantified expenditures; eg: $50B flat, annually.

There should be a department, under HHS, responsible for managing this program, and ensuring the government gets optimal return for the money spent on it, to maximize the number of providers and services available. Part of the cost control will be limiting exposure to medical malpractice suits; as a government entity, it will have this ability. Another part will be necessarily limiting care options to only baseline, proven, and affordable options. Yes, this means some people will suffer for the lack of more expensive and/or specialist treatments, and that's a necessary trade-off in the system. Yes, there will also be waiting lines, and prioritization based on immediate needs; this is another necessary trade-off. Finally, the law would also (at the same time) eliminate the requirement that private facilities treat people who cannot pay, as they could then be treated at the free facilities; this is another absolutely necessary compromise of quality of care for people who cannot afford to pay for it.

This approach provides a few benefits. First, it would serve as a good and visible example of what nationalized health care would look like, with pros and cons. Second, it provides the baseline care for everyone, without [necessarily] collecting any additional information, or making judgments. Moreover, along the same lines, it could provide better incentive to actually get preventative care, as payment hassles would not be a concern at all. Additionally, it would provide built-in demand for medical professionals from the education system, strengthening the quality of people going into medical care in general. Finally, it would preserve the existing private care/insurance systems, allowing people who can afford care to continue to have access to the highest quality of care and products in the world.

Ideally, it would also serve as motivation for people to acquire enough resources to afford private care, but admittedly that ability is often not entirely under control of the individuals (everyone would like to make, or at least receive, more money if they could). Would it work well? That would depend on a lot of factors. If it did, it would make a good case for nationalized health care (and indeed, would be a de-facto nationalized care system). If it didn't, it would serve as a perfect illustrative example of all the issues with government-run institutions. But either way, it would provide the baseline care that many people think the US needs for its people, without destroying the potential for more efficient, effective, and leading edge care that private industry can provide.

Proposal: Legislate Fixes for Private Insurance Problems

Using the law appropriately, we can make private insurance better, and eliminate many of the hassles and potential disasters which can befall people. To wit:
  • The law should force insurance providers, if someone is admitted to an "in network" care provider, to cover all ancillary expenses, procedures, costs, etc. as if they were also "in network". This means the insurance providers will need to work with their "in network" care providers, to ensure that everyone "pulled in" to care procedures are also in the network, or shoulder the financial cost as if they were. This would eliminate all the patient hassle involved with screening everyone involved in complex procedures to meet insurance needs, when all you want to be concerned with is getting healthy.
  • The law should allow patients the option to handle all billing through the insurance provider (for in-network care), and if that option is chosen, legally absolve the patient for financial responsibility for non-covered costs. It's absurd that patients need to handle balance-billing issues, when the insurance company is both better positioned to do so (since they have pre-existing relationships with the providers and patients), and more able to streamline the process. If I get in-network care, I should be able to have the insurance company deduct my portion of the cost from my paycheck, and that should be the end of it... no more billing disputes, multi-year fights with billing companies, headaches with complicated accounting, all of these would be gone. Good riddance.

Proposal: Make All Health Care Expenses Deductible

I'd say this is a no-brainer, but I'm not sure what that would imply about the politicians who haven't been able to get this done. Detach insurance from employment, and let everyone afford health care/insurance on equal footing, without all the accounting and money-management tricks. It's really that simple and obvious; there's not much else to say about it.

Proposal: Legislate Nominal Cost Limits Based on Negotiated Rates

The law should specify that private providers cannot charge more than a fixed percentage (eg: 110%) of the lowest negotiated rate they will accept for any item/service, to anyone paying with a verifiable compensation source (ie: where the patient can prove viability of funds). This eliminates the need to carry insurance for normal procedures, as it forces nominal costs to be reasonable for anyone who can pay for service (eg: anyone with a credit card). Moreover, it only imposes this limit on provider with negotiated rates, and only relative to said rates; thus, there can still be boutique providers with arbitrarily high rates for exotic or specialized services.

As a corollary to this, the law should also require providers [with negotiated rates] to publish their nominal rates for people who can pay, preferably online, in an open format. This would allow easy cost-comparison and shopping for service providers, even (and especially) when people are not in dire need of services. Again, this would be a positive for the market, with very little practical downside for providers compared to the status quo.

Proposal: Keep the Good Parts of Obamacare

This could probably go without saying, but as I said, there are some good things in Obamacare, and they should be preserved and/or mirrored in alternative legislation. Baby, ocean of nasty bathwater... you get the idea.

Summary, TL;DR:

Well, there you go: some alternative proposals to Obamacare, from someone openly critical of the existing legislation. I don't expect this will silence any of the people who think everyone opposed to Obamacare is so because they just hate black people or something (or poor people, or whatever the projection is); there will always be ignorant vitriol in the world. Heck, I don't really expect many people to even read this. But, for what its worth, there are some other ideas.