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Sunday, January 24, 2010

Ninety Percent Debunking

I'm sorry for not posting much. There are now three reasons. The first is that a lot of my time is still invested in medical appointments and such for the Chief, as well as in SuperDoc's computers. The second is that I am having major problems with internet access, which notably slows things down. The third is that I am gobsmacked and metaphorically concussed with astonishment about the reaction of the press and hunks of the political apparatus to the Massachusetts vote.

I don't know how long it will take me to get through my head that a considerable group of people whose business is essentially politics or commenting on politics are actually horrendously, awe-inspiringly bad at it. Unbelievably bad. Self-destructively bad.

Take, for example, Frank Rich's column on what the Massachusetts vote means, and then compare it to Krauthammer's diagnosis. Krauthammer has more recent data, which is probably one clue as to which I find more convincing. Yet I suspect that both are probably missing some of the real impetus behind the vote. Almost always these things are more local than pundits want to believe.

Still, Krauthammer's point about health care "reform" is addressed in both columns. Rich claims that the WH hasn't done enough communicating about what the bill will mean. In part that's because there isn't a final plan yet, and in part it is because most independent analyses have raised severe concerns about the financial viability of the plan, and its purported solutions. The population doesn't like it and doesn't support it, and as far as I can tell, the population has realistic concerns.

I'm still mentally staggering to find this much off-the-wall nuttiness so proudly displayed, and I'm struggling to understand why this is occurring.

Perhaps these other bloggers are on to something. I am very fond of the Photon Courier blog, because it's different. It's not about sides or the current, but about the basics that we all might miss. David posted a link to Assistant Village Idiot's post, (discussion there or at Chicago Boyz crosspost) which is pretty much a post of correspondence from a friend. It's hard to describe and far too long to excerpt, because his friend is discussing why people who are intelligent fail in the real world, and why academic strengths frequently do not contribute to success outside the ivory tower.

Here are some of the observations:

  1. How to correctly define the problem, in most cases when it presents itself as something else, is key to a successful outcome.
  2. ...simple understanding of a concept does not mean that you can do it.
  3. Paraphrasing - successful business executives become generalists who are not wedded to the skills of their training, but use techniques and skills as necessary to address the problem.
  4. Paraphrasing - High level failures are often created when a stressed executive returns to what has worked in the past but is inapplicable to the current problem.
  5. The last point is that they don’t value experience and the judgment that comes with it.
  6. The conclusion: I think that academics hate business because they don’t “recognize”(are either aware of them as skills or give the credence as skills) business skills at a high level and they don’t recognize the lack of skill in themselves.
I will write more about this later, because I'm still thinking about it. I do want to comment that in my own work, at least 90% of the time has to be spent debunking and critiquing whatever you are doing. The business environment constantly changes because the economy changes. Whatever was true last year usually is false this year or the next. There seems to be a terrible lack of this sort of procedure in the current administration and many of the persons commenting on it. That includes many Republicans, btw.

It's quite true that the attitudes of Massachusetts' citizens towards health care didn't change as a result of Obama's election. What changed is their guess as to how the proposed reforms would work in practice. The rallying cry of "let's just pass it and fix it later" is a dud.

I continue to be amazed that health care, which is a winning issue among small business owners (closely correlated with independents), has been so flubbed by this administration. These people are like a football team that has no defensive line and no running game. Their only idea is to throw touchdown passes, one after another.

Regarding point 4, see Shrinkwrapped's post. He has mentioned his concerns about divisiveness in this administration before. Historically, it has usually been the case that a failed ruler has used scapegoating in the population to suppress concerns over the regime's failures. With all their failures, the Bush administration tried hard not to let this sort of thing develop. One can argue that searching little old Polish-American grandmas instead of targeting people with Arabic names might have been overkill, but it was a strong effort to prevent a tense domestic atmosphere from becoming a persecutorial one.

Wow, that letter was great stuff, and not too long, really. My wife and I have been hashing through some of this stuff lately regarding our businesses--she's got a marketing/operations MBA but doesn't regard herself as CEO material, and I'm an engineer who dabbles in finance (among other things). The question is which one of us has to let go of his/her technical specialty?
Neil - probably the one who is better at switching hats. If you are running small businesses, you both probably have to keep wearing the hats you've already got.

Another factor is people skills. Who is better at talking to people and feeling them out? Even very high-level businessmen are constantly switching focus to deal with various problems, and really that requires sorting out who has the skills and reliability to deal with a certain problem. In small

Engineering gives a person a solid basis in analytical skills, which ought to help define the problem. But your wife may be better at the people side of things, which is generally the determining factor in solving the problem.

Perhaps you could set up a system in which you hashed out the primary current problems jointly, and then delegated your chosen executive to line up the solutions?
This is why I don't expect either party to be actually ready to govern competently before 2014 at the earliest. I see little sign that the Republicans have gotten a clue, and the Democrats have just had their bell rung, and don't even know what direction is up. We're on our own.
John - on our own and passing massive spending bills. FHA is going to participate in HAMP now. There is nothing like throwing good money after bad.

I have grave doubts about the GOP. I think we're going to have to really roll Congress before we get a crew that has a clue.

And maybe Obama hasn't been the best or the brightest, but Congress is really the body that has to make the adjustments necessary, not the presidency.
Trying to make sense of the political drama by reading the various news sources is like watching the big-endians and little-endians of Jonathan Swifts Gulliver's Travels, who endlessly debated the proper end from which to eat a soft-boiled egg.
The biggest danger, perhaps, is that the Republicans will fail to learn from the debacle of 2008. The people who were for Obama before they were against him can turn on a dime. Our economy has been crippled by the biggest fraud in the history of finance. It is frivolous to pretend that this was solely the doing of Barney Frank and the Community Reinvestment Act. The Republicans should be leading the lynch mob, but are allowing themselves to be perceived as apologists for the bankers and financiers.

I suspect most people, despite their venting, understand why we can't simply allow the banking system to collapse. They are being made fighting mad, however, by the most recent outbreaks of bragging about profits and well-deserved bonuses, after seeing trillions poured into redeeming worthless swap agreements and the purchasing or guaranteeing of highly suspect financial paper. I hope the Republicans are now persuaded that the "market economy" can't be allowed to become a financial and societal suicide pact, but I have my doubts.

As for "health care reform," in its present modality, many people fear, with reason, that it will cause their rates, already difficult to manage, to escalate. "Equal insurance for all" just doesn't resonate with them. I suspect they would react more favorably to improving the "safety net" of Medicaid, community hospitals and clinics, etc.
Archon - the vote to give companies the 10-year loss carryback was 98-0 in the Senate. The biggest beneficiaries were financials and homebuilders. There's a table at this Businessweek page. Or NBER paper.

Oh, yea, Citi received a scanty fragment of a 38 billion tax exemption from the IRS. And now Obama's railing about banks?

I think it's blindingly obvious that the Republicans don't truly give a crap about the taxpayers. I think that's proof.

So far neither the Dems or the GOP seems to have learned a thing.
Archon - I think most people would support any genuine health care reform. There are few types of companies hated and distrusted more than financials at this stage, except for insurance companies. So I think people are highly skeptical of any plan that forces them to buy insurance from a private company.

Also, it is a dead cert that any plan which has been discussed will raise private rates substantially, so I don't think people are wrong.

But I think there would be strong and broad support for real health care reform. It's just that first you HAVE TO DEFINE the problem, and the problem is that every time we broaden the safety net, we increase the number of people who are underinsured, and shift costs directly to the privately insured.

Real reform for banks and financials has to split risks and create a framework in which we can allow big firms to fail if they cut their own throats. For health care, we have to restore cost accountability, and the only way to do THAT is to pay something close to a cost rate for Medicare and Medicaid.

The GOVERNMENT, not people, created the high rise in insurance costs.

Do you hear any politician discussing what's really happening? No, because they won't take responsibility for it. About 30% more people are due to go on Medicare over the next decade - slapping a 40% excise tax on workers isn't going to help that problem.
Well, I don't know. The spirit of millitant collectvism seems to be running at high tide within the Democratic Party, and I don't see how any good can come of it. Perhaps I spend too much time on Democratic Underground.

Defining the problems: it is said that millions are not getting the health care they need. Somehow, this has been translated into the "right" of "equality of access," with all Americans to be assured of policies of insurance at least as broad as the one mandated in HR 3200. I think this is pushing the spirit of egalitarianism past the breaking point.

Cost: I'm sure you're familiar with Dr. Gawande's study on "overutilization" published in the New Yorker. I don't see where anyone is proposing truly effective countermeasures against these abuses.

A lot of this has to do with one's conception of insurer profitability. Some appear to believe that the cost of coverage can be cut in half by eliminating insurer profits. I don't believe such notions owe much to the statistical evidence.

Maybe there is no "solution." Maybe the simple fact of the matter is that the actual costs of all these new therapies, procedures and medications has outstripped our ability to pay for them.
Archon - private insurer profit margins have been running below 5% on average in recent years, so I would say there is no statistical evidence whatsoever to support that theory. I knew this would be useful someday.

People are confused by the % of GDP numbers, but in fact if you look at health spending in comparison to wages, it looks like the UK spends slightly more, Germany spends about one % less, etc.

We're not that different - it's just that average wages are considerably higher here. Germany charges about 15% of wages.

We could shave a point to two points, beyond that, and we're basically killing people off in some numbers. Denying dialysis, cancer treatments, etc. The other factor causing higher costs in the US is the very high percentage of our population that is foreign born. Much of our recent immigration has come from regions in which people do not get developed-country health care. These people will, on average, have considerably higher costs.

Consider TB, hepatitis, etc.

Yes, you're right. We ought to accept that we can't pay for Cadillac care for everyone.

On average, we COULD cut the percentage of GDP devoted to health care by adopting economically efficient ways of paying for it, most of which would involve major medical coverage rather than payments for normal medical services such as doctor's visits.

If on average a doctor charges $90 a visit, the doctor could normally make more money by charging $50 a visit but taking payment in cash. Doctors employ markedly more administrative employees now than when I was a kid, and it accounts for quite a bit of medical inflation. Cash clinics are WAY cheaper because they have little administrative overhead.
Thanks for the site. Some interesting stats on insurer profitability may be found in chart form at netincomeofmajorhealthinsurers (1 page pdf).It tends to get overlooked that many of the larger insurers are tax exempt nonprofits. There is also the consideration that self-insured employers provide coverage to about 55% of the people covered under group plans, contracting administrative tasks to Cigna or whomever. I read that their savings derive primarily from evading state "mandates" (in-vitro fertilization, "substance abuse disorder," etc. Not much in "profit" or "administrative costs" to be recouped here.

I'm sure you remember Our Canadian Friend. His dilemma prompted me to look into the state of nursing home care in Canada. Not a pretty picture. "Single payer" isn't a cure-all.

Offhand, I don't see why Medicare couldn't be restructured into HMO's, giving providers more incentive not to "overutilize."
Archon - I do remember our Canadian, and I think he got pretty good advice here, given the limitations! Yes, the limitations for long term care are pretty severe. But there are lot of limitations.

Medicare already has a form of HMO - the Medicare Advantage? People are allowed to switch off, and they usually do if they have something like a stroke. The Advantage plans pay for more for run of the mill stuff, but if you have a serious illness, you really have to go with pay for service. Standard Medicare pays for weeks of stroke rehab and so forth.

Which tends to suggest that HMOs increase "overutilization", because in many cases they cover more of the services for stuff that is less crucial.

I think we are just fooling ourselves. There isn't any free lunch here. People want to believe that so badly - just like they want to believe that if we take the latest and greatest diet pill, we can eat all we want and still lose weight. Those are perennial sellers, but they only work for people who restrict their eating and/or increase exercise.

The issue you bring up about self-insurance is a huge one. Avoiding the state mandates is one advantage these companies have in costs over small companies. Why we can't make the arrangement to allow small companies to do the same through associations I don't know. If we really want to create jobs, taking some of the load off small businesses would be the way to achieve it!

What it comes down to is that the best way of avoiding overutilization is to have copays and percentage shares, not HMOs. And then we have to pick and choose coverage for what's most essential.
Self-insured associations of small businesses--why not? But some of our progressive friends are fiercely attached to these "mandates." Increasing copays would certainly focus the mind on the necessity of a procedure, but one hesitates to debate with one's physician. I just put a check in the mail for a preoperative EKG that I was told ahead of time wouldn't be covered. I mean, when you're depending on Medicare, you're grateful to find someone even willing to treat you.

We don't seem to be arousing much interest in discussion.
I would love to read your response to Pesident Obama's speech tonight.

So sorry the Chief is not well and that you are having problems with the Internet.
I've been looking for your earlier
post on SuperDoc's computers and the
"free" .gov software. A discussion
in appropriate detail belongs on
the comp.risks lists.
The comp.risks FAQ is online. I
thought one had to flag the Subject:
of an e-mail message but I don't
see that in the current FAQ. I would
have posted this before but I cannot
get the CAPCHAs in my usual browser
lynx. all the best cycjec.
The post you are looking for is here.
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