On Health Care in the US

I was asked to start a topic on the affordable health care act.  Of course, it’s liable to go beyond that.

To kick it off, I’ll quote a Jay Lake tweet from just a few minutes ago:

‘Romney: “Obamacare puts the federal government between you and your doctor” Hey, Mitt, ever heard of the GOP position on women’s health? #fb’

Now, myself, I am no fan AT ALL of the act.  In my opinion, as long as you accept that profit is more important than health, you cannot fix health care.  But I’m sure others have different opinions.


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0 thoughts on “On Health Care in the US”

  1. Well said SKZB. Though I would ask you, how would you have a system that puts health care before be handled? Cut the pay of the providers? Remove the Health Insurance industry completely?

    If you remove a system that is in place, it is best to have something readily available to replace it. I think that the initially proposed ‘single payer system’ would be a better alternative than what we have now, but I fear that the government would run it terribly.

    I would be willing to pay more taxes in order to help cover everyone, so long as it meant that I wouldn’t have to pay a health insurance company any more.

  2. Well, on the one hand the whole system has profound, terrible problems with cost and profit and graft, with enormous amounts of money being greedily sucked up by every entity involved in health care, from doctors to hospitals (++) to insurance companies to pharmaceutical firms.

    On the other hand, no one would have voted for a bill that addressed those structural problems, serious as they may be.

    I also have a problem with this act being so wordy that no senator or congressman could be expected to actually read it. How hard can it be to keep all bills to under 20 pages? 2,000 pages seems a bit much even for a normal intelligent educated human being to digest, much less a politician.

  3. And, to pick up from what Will said: In spite of the popularity of talking about how inefficient government is, Medicare is an extremely efficient system, measured by dollars in vs patient care out. Much, much more efficient than any insurance company measured the same way.

  4. Look to the Mayo Clinic to see how quality care can be provided at more affordable prices.

  5. This dog’s breakfast is useful in rhetoric for illustrating “moving the Overton window”. It has gone from being the product of a right-wing propaganda mill to intolerably socialistic in less than twenty years.

  6. Healthcare is one of the primary reasons I can’t talk my wife into moving to the US.

    I was born and raised over there. My family were lower income. Always considered myself middle class, my dad worked in a steel mill and we made it by, looking back I’m sure we were hovering just above the water line.

    10 years ago I moved to Australia to live with my now wife, who is a born and raised Australian.

    Still, 10 years later, I have been unable to adjust to the idea that if I’m sick, I should go to the doctor.

    We never went to the doctor growing up. It was too expensive, even back then, for a family struggling to keep it’s head above the water. I can’t imagine what it’s like now for a lower income family to survive in this day and age.

    Now, here, my wife and I do not struggle. We earn a decent amount of money and can afford private health care. We do not at this time have private health care, we instead are levied an additional 1.5% annual tax on our wages to stay with the public Medicare system.

    A year or so back I was having weird pains in my chest, I thought I was having a heart attack or something… called a taxi and went to the hospital.

    I handed them my medicare card and a few hours later walked out with no bill, no signing my name, no nothing.

    They investigated, they checked me, they treated me like a real person. And I didn’t even have to sign my life away for it.

    I can’t express how that felt. It was truly an eye opening experience.

    I hope all Americans can one day know what that felt like. To go into a hospital and not have the fear and knowledge of what comes after, the looming shadow of the bill.

    Perhaps when that one day comes, I’ll be able to talk my wife into moving over there for a time.

  7. SKZB@4- I will have to do more research on Medicare. My basis for government care is Tricare, which is the military health care. Tricare seems to think that Motrin is a wonder drug. We even had a guy with multiple broken bones, who was given Motrin as a pain killer.

    What do you think of co-pay? I’m a fan of keeping co-pay in place. A lot of people tend to think that lines to get health care with be terrible, but I think that a co-pay would prevent that. It would subsidize the cost burden also.

    What do you think the maximum out of pocket should be? The rate on my current insurance plan is $10,000, which I think is reasonable, though I would be very hard pressed to come up with that if I actually needed to.

  8. GWW: “I can’t express how that felt.” The word that comes to my mind is civilized.

    Chris: Given that we live in a society that can provide everyone with decent or better health care, I’m in favor of everyone being provided with decent or better health care. I’m not in favor of any sort of co-pay for anyone.

  9. GWW, that sounds like how it works in Canada.

    Chris, do you know of any other major country that has a co-pay system? I think it’s just more work for administrative staff, and it discourages poor folks from getting checked out early when something seems off.

  10. After a cursory glimpse at the Medicare plan, it looks like a standard 80/20 plan, which is pretty much what I have. So if that is the plan that you’re suggesting we adopt, then, so far, I am a fan.

    I am left wondering how much it would cost though. In the “2010 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUNDS”, Medicare cost $509 Billion in 2009, and that cost has been raising since then. Medicare also only covers roughly 20% of Americans. If all of America is covered under medicare, that would bring costs to over $2.5 Trillion. Everyone agrees that health care in Canada and Australia is great, but they just don’t have the population or government programs that the US has.

  11. @Chris Some Medicare costs are inflated by things like it being against the law for Medicare to negotiate drug discounts by volume and the Medicare Advantage plan, which is basically the Medicare version of an HMO and incurs the costs of associating outside insurance companies. So it’s not a straight 5X comparison.

  12. I was recently in the ER at a hospital in northeast Ohio with my 92 year old grandma. As we sat there hoping, I distracted myself by watching the doctors and nurses and aides working. They spent about 25 out of every thirty minutes doing paperwork, and about 5 minutes doing actual patient care. This is not health care. It is care of the health insurance companies and the goverment bureaucracies, not of people.

    Changing that type of thing is the kind of healthcare reform that I think needs to be done, not requiring that everyone buys health insurance, or you get taxed.

    I saw an article in the Wall Street Journal of an AMA study in Cal. It looked at the prices of appendix removals, about 17,000 or so, though I don’t remember the actual sample size. The low cost was just under $2000. The high cost was over $180,000. Neither value was a statiscal outlyer, though the 180 grand one was close. The study looked at all the charges on the bill, and subtracted out charges that did not apply to the appendix removal, such as one patient who was in for chemotherapy when the appendix went bad. They took out the chemo charges, and left the app. removal. The article said they did their best in other cases to take out other charges so that only appendix stuff was considered.

    How can the same procedure have such a difference the cost?

    Correcting/fixing/modifying that type of varience is what I think of when I think of “health care reform”. I don’t think anybody on Capital Hill would ever think such a thing. I wonder what the health insurance companies say about that kind of difference in the charges? Would they say that needs reform? Or would they just refuse to pay out the 180 thou.?

    I agree with healthcare for all, but I don’t believe the US Gov. could manage such a thing given how far up their asses their heads are. I know that I require health insurance, or I would not be able to afford psychiatric care and antidepressants, and the depression would return, and then I would become suicidal again, but I know that I can barely afford it, and if I get really sick and have to pay my out-of-pocket maximim, I wouldn’t be able to do it and would probably have to declare backrupcy or something. And once I wasn’t able to pay, I would probably then loose the coverage, and then I wouldn’t be able to go to my doctors anymore and fifteen years of being stable would be lost, and me with it, more than likely. I hate thinking about such things, but I can’t help it. How does requiring that everyone buy health insurance help that kind of problem?

    That kind of financial problem, that all too many of us with insurance face, needs seeing to and is what I think of when I think of “health care reform”. Does Obama’s plan deal with any of that?

    Does Obama’s plan help with any of these things? Not that I have heard of, but I am not a politically savy person in any way, shape or form. If it does, would you guys tell me of it.

    And if Obama’s Plan doesn’t deal with these kinds of things, then I think it is a completely useless law that is only going to make things worse, probably for everyone, including the US Gov. Proabaly the only ones not hurt would be the really, really rich, and the health insurance companies who will probably charge us more to make up for all the new headaches they will get, and to make up for any possible losses they might face, no matter how remote the loss might be.

  13. @Chris: it is worth noting that it is estimated that we ALREADY spend $2 trillion a year on healthcare as a nation NOW, and Medicare costs MUCH less per capita than private insurance. It is likely that, rather than going up half a trillion a year, the overall cost would actually drop considerably in very short order.

    The only serious negative impact, economically speaking, would be the near-complete collapse of the private insurance industry, which is now a huge segment of the economy. Absorbing that immediately would be painful. It would probably be better to phase it out over time, by, say, having the eligible ages for Medicare expand in decade-blocks every year or two.

    As far as my opinion of the ACA, I think it amounts to a solid bandage on a sucking chest wound – it’s better than a band-aid (or nothing), but the best it’s going to do is slow the bleeding, and it does nothing to address the underlying problem of major organ failure. Our healthcare costs are rising at large multiples of inflation every year, and huge amounts of money are lost to corporate profits. It’s a fundamentally terrible system, and expanding it isn’t a solution.

  14. gunglegym: As far as I can tell, Obama’s plan fixes exactly nothing. You can’t fix it as long as profit is the central motive.

    Taellosse: Well said.

  15. As a crochity old Libratarian what stuck in my craw in the phrasing of this thing is that “Everyone must have healthcare insurance”. Immediate reaction is to quote TMBG at them: “You’re not the boss of me!”

  16. Right. I don’t think everyone should have healthcare insurance. I think everyone should have healthcare.

  17. The quote of the day:

    • “Historians are going to look back on today and equate it with Plessy vs. Ferguson and Dred Scott.” (Jenny Beth Martin, Tea Party Patriots)

    I’m starting to think we need a Godwin corollary pertaining to slavery.

  18. View from the frozen north: You poor people. My experience is a lot like GWW’s in Australia. I would move back to the states (all three of my kids live there) if I had anything like what we have. This bill won’t do it. Even it is fully implemented, which I doubt. They will use some issue like raising the debt limit to repeal it, just watch.

  19. I support Obama and get that he is/ has dine his best to get as much healthcare to as many Americans as possible, but I agree with Steve on this one- if profit is your game then it’s not going to work. People deserve healthcare. We have developed into a species that lives in community with each other and we need to stop making profit the only real issue.

  20. Health care is ridiculously expensive. My son spent one night in a hospital, was diagnosed and monitored but not treated, and insurance covered the entire $10,000 bill. $3500 of that was just to have a room for the night.

    For patients without insurance, one local hospital charges four times as much.

    The solution to “people can’t afford health care” is now “It’s illegal to not buy health care.” This law is for the benefit of the insurance companies, who will be raking in more dough directly, and the medical providers, who will get some compensation for treating previously uninsured patients. It does nothing for those of us who can’t scrape up cash for premiums, deductibles, copays, and prescriptions.

    I dream of the day the whole medical industry is replaced by a very small shell script.

  21. Seconding GWW’s experience of Australian healthcare. I am a student (that is, low income). In addition to Medicare, which everyone has access to, being on a low income entitles me to a Health Care Card. That means any prescription medication costs me $3. The only flaw in that system is that I have a tendency to try to get prescription meds (which are usually stronger) instead of over-the-counter meds, because for me they’re cheaper.

    I think the big issue is the word ‘efficiency’ which instantly warps the debate. People generally accept that public services are less efficient than private ones, and socialist-type folks respond by arguing that it isn’t less efficient. I understand the urge to argue against that claim, but:

    That shouldn’t be the only frame of debate, which is more efficient. I’m also not fully sure what they mean by more efficient. Which resources are being wasted? Money (whose money?), medicine, doctors, bureaucrats, patients’ time? WHen unemployment is high, I don’t really see how increased number of bureaucrats is a problem. Isn’t that just ‘job creation’?

    And when did ‘efficiency’ become the only value worth considering? It’s nice, but the argument tends to run: “public healthcare is less efficient. Okay, that’s the end of that idea.” Rather than weighing efficiency against efficacy, health outcomes, job creation, etc etc

  22. @mackerel

    Kinda reminiscent of the vagrancy laws in Orwell’s England: solving the homeless problem by making it illegal to sleep in public places and beg

  23. Steve, as someone who often engages in political argument, I think you will find the Overton Window a very useful mental tool. Indeed, I’d be surprised if you didn’t already grok it, even if you don’t know the name.


    “The Overton window, in political theory, describes a “window” in the range of public reactions to ideas in public discourse, in a spectrum of all possible options on a particular issue. … At any given moment, the “window” includes a range of policies considered to be politically acceptable in the current climate of public opinion, which a politician can recommend without being considered too “extreme” or outside the mainstream to gain or keep public office. Overton arranged the spectrum on a vertical axis of “more free” and “less free” in regard to government intervention. When the window moves or expands, ideas can accordingly become more or less politically acceptable. The degrees of acceptance[3] of public ideas can be described roughly as:


    The Overton Window is a means of visualizing which ideas define that range of acceptance by where they fall in it. Proponents of policies outside the window seek to persuade or educate the public so that the window either “moves” or expands to encompass them. Opponents of current policies, or similar ones currently within the window, likewise seek to convince people that these should be considered unacceptable.”

  24. Universal health care is a MUST, but that said, Steven is living in a fantasy world when he talks about ending “profit”. We tried that in Canada. IT HAS FAILED. Anyone that doesn’t want to believe that, come up on a Monday morning and walk into an Emergency room with stomach cramps.

    There are three major problems with Health Care in Canada:

    A) Lack of doctors.

    If you pay the physicians inadequately, they have ways of fighting back. I’m certain all of you Socialists are perfectly okay with letting Doctors go on strike for better pay like every auto-worker, right? Yeah, not so much.

    If you pay them inadequately you get three responses:
    1) Smart teenagers that could have been doctors choose law, math, science, and engineering instead. Result: fewer good, smart people becoming doctors and a degradation of diagnostic talent.

    2) Smart doctors emigrate to places they can be paid what they feel they deserve to be paid. That happened here: thousands of doctors moved to the USA.

    3) The Medical Association throws up restrictions to prevent doctors from being accredited. And that is what they have done. The Medical practice in Canada is a legally protected Profession, which means that it is self-regulating, like lawyers, engineers, and actuaries. They decide who becomes a doctor, and they have made it impossible for foreigners to work here.

    Consequently, to fight back against the pathetic income the Socialists have chosen for doctors (legally mandated income is SLAVERY, so I stand WITH them), the number of doctors per capita in Canada is less than half of what it was in 1970. And it is getting WORSE. More than 1/2 of all Canadian households, regardless of income, DO NOT HAVE A FAMILY DOCTOR.

    Get over your delusions: if you do not pay them, they WILL NOT BECOME DOCTORS.

    B) A lack of machines.
    Further, since the wealthy cannot pay for better health care, there is a huge drop in expensive machines, like fMRI’s, per hospital. In the old days, a rich man walks in, asks “Money is no object, so what machine do you need to save my son?” He buys it and donates it, his son lives, and everyone else’s children get saved because the hospital has the machine.

    No longer.

    Now you taxes pay for the machines, and you LOATHE paying taxes. Raise taxes for health care? That one NEVER gets a Party elected in Canada.

    That rich man now takes his son to the USA, or to some Caribbean island and gets his son saved.

    c) A lack of trained technicians.

    Hospitals can’t pay competitive wages with industry, consequently, only the stupid and lazy seem to get hired to run fMRI’s, etc.


    Universal health care is a wonderful ideal, but you need to understand that it comes with a huge price tag.

    No one is talking about changing the system here right now, but there are an increasing number of people that are coming to realize the 5 HOUR waiting periods for Emergency wards in hospitals are never going away, until we are willing to shell out more money for more doctors, more machines, and more beds, or until a two-tier system is implemented where the rich are allowed to fork out for their own benefit… and the indirect benefit of others.

  25. I meant to send this yesterday, but there was an error as soon as I clicked on the post button, and I got busy before I could fix it.

    gunglegym@14- First of all, a certain amount of paperwork will always be needed in an industry as vast as health care. That is both because of the bureaucracy, which will always exist in any large institution, and for organization purposes (to ensure that patience are getting meds and procedures in the proper amount and proper order).

    Second, insurance companies don’t pay as much as we do for care. My kids were on two dental plans for a brief time. We (my wife and I) put them through as much dental work as we could while that lasted because we didn’t have to pay anything for the procedures during that time. We looked at the bills for the work, which shows how much the procedures cost and how much each insurance company paid, and noticed that the amount that the two paid combined was significantly less than the amount that was supposed to be paid for the procedures.

    Third, the ACA that was passed yesterday was a mutated bastard child of what Obama’s plan was. It was what was left over after the GOP took a look at it and then dropped it on its head a few times.

    Taellosse@15- I agree that this plan is basically putting a pressure dressing on a gaping chest wound. Unfortunately, party politics and profit motivation are conspiring to make any real solution highly improbable.

  26. Neil in Chicago@6- A friend of mine, who is a political science major working on his doctorate, told me that the current GOP strategy is to present an idea that is even farther than unthinkable, so that when they must negotiate, the window gets moved to unthinkable, which is where they wanted it in the first place. That’s pretty scary when you think about it.

  27. Chris, that’s normal negotiation tactics. You can see that on American Pickers, for goodness sake.

  28. Kreistor, yes, the same principal applies, but the scary part is that they are taking a strategy normally used for simple business transactions and applying it to lawmaking negotiations that affect hundreds of millions of people, if not billions (some laws have global repercussions).

  29. @Chris #29- First, I understand that paperwork is necessary, and even agree with it, since it keeps track of things and communicates what was done, what is going to be done, etc. But the problem is that they are working on the paperwork for 80-90% of the time. It took two hours for all the paperwork to get done so that my grandma could be moved from the ER to a hospital room, and the nurse told us point blank that most of that time was filling out paperwork. He also said that he remembers when doing an admission took ten or fifteen minutes.

    The paperwprk has gotten out of hand and is reducing patient care, at least that I saw.

    Second, thank-you for telling me about the difference in paying with and without insurance. I don’t have kids and have never had that experience. However, was the difference in cost something like 20%, or 50% even? Or was it like 90 times different, like the difference between 2000 and 180,000? That was the point I had tried to make, even though I failed miserably.

    Third, I would like to know what was intended vs. what we got. Somehow though, I don’t think it will make me feel any better. I really, really hope and pray that this law actually helps though, even though I don’t think it will help.

    Lastly, it has been said by several people (I’m too tired from work to go back and look right now), and it is the sentiment that I agree with most: everyone needs health care, not health insurance. Whomever said it, thanks.

  30. Health insurance is there because it benefits the companies that provide it and a lobbying model that requires radical changes. Same could be said for a lot of the insurance industry.

    However, we live in a capitalistic country (which is good, I think) and no law could or should be passed that blockades the pursuit of profit motive otherwise it stifles competitiveness of a market that offers choices.

    The lobbying model of the government as well as the profit motive of our elected officials is the root of the problems we face (not just in the insurance industry).

    All that being said, EVERYONE deserves health care. It is barbaric to refuse treatment or use the “put a bandage on it and send them away” mentality as a form of health care due to what health insurance a person may or may not have. Treating people as the variable in a formula for monetary gains or losses instead of with compassion and mercy is the sign of a decaying society or empire as history shows us time and time again.

    With the infrastructure currently in place, alongside the lobbying system and self-serving agendas of elected officials, nothing can or will be done that will have a fantastic impact that can positively change the lives of all in any nation.

    Unfortuantely, there are no simple solutions to any of these things. But the beginnings of the solutions we all seek and need start with discussions such as this.

  31. Chris: “Kreistor, yes, the same principal applies, but the scary part is that they are taking a strategy normally used for simple business transactions and applying it to lawmaking negotiations that affect hundreds of millions of people, if not billions (some laws have global repercussions).”

    Uh, yeah, it IS normal, and it IS to your benefit. Do you think America’s enemies don’t walk into political transactions with absurd demands? If America did what you ask, they would be vulnerable to such techniques used by others. There is no magical “reasonable” method to defeat someone else’s absurd demands like this. If you’re negotiating for something that you need, you can’t leave the table when the opposition comes with a stupidly self-centered position. And when you start too close to the center, and find you have nothing to negotiate with, and the opposition is coming with lots they will negotiate, then in the funny papers it is YOU that is appearing intransigent and uncooperative. The editorials will be slamming you for failing to negotiate, not him for having a stupid starting position.

    It’s real, it’s normal, and it’s defensive as well as offensive. By entering with an extreme position, if you are really a reasonable person that knows where the middle should be, then you can back off a LOT to get there, if the opponent starts too close to the center.

    Part of the problem, though, is that you don’t know how important something is to an opponent, and that’s true at every level of negotiation from Presidents to farmers. If you enter negotiations and he’s too close to the center, some negotiators will get scared off suspecting a trap… what you’re giving as your basic part of the contract is far more important to the opponent than expected, so you need to investigate what’s happening more: you may be undervaluing your product/etc.

    Remember, you don’t have the benefit of hindsight when you’re negotiating a contract. You don’t know how important something is to him, and he doesn’t know how important something else is to you, no matter how obvious you think its value. Only fools think they’re smart enough to read someone else’s mind. Culture can especially be a killer in valuing an item an opponent wants. You don’t think like him, so you don’t know how much profit he is making off of your trade/deal/contract/etc.

  32. A lengthy comment was lost in the ether, so I will just say: the Design podcast “99% Invisible” has an interesting episode on the design of hospitals that I think can be extended to health care systems as a whole (“The Blue Yarn” — http://99percentinvisible.org/post/7100591795/episode-30-the-blue-yarn-download-embed-share ). I’m a Canadian deeply committed to socialized health care but our system has been failing horribly, and I wonder how much of our system’s inefficiency is due to archaic design, from the hospital level all the way up to the government level (though having a far-right government deeply committed to “Austerity Measures” & “tough on crime” spending certainly isn’t helping).

  33. (and there are of course design/efficiency implications for the US system, where patients pay insurance on their health, doctors pay for their liabilities, and insurance companies basically just act like middlemen, skimming quite a bit off the top of every transaction in BOTH directions (health care & liability lawsuits).

  34. Kreistor@35- Thank you for that. I’m sure I knew about that on some level, but my mind wasn’t making the connections that it should have. It seems obvious now that you put it that way.

  35. gunglegym@32- I don’t remember the exact numbers that the insurance didn’t pay, but I estimate that it was somewhere around 30-40%. I agree that $180,000 is still severe, but I also know that that depends on the size of the hospital. For example, we have a local clinic which seems to give care that is needed and isn’t very expensive, and a hospital closer to the city, whose facilities are capable of treating pretty much every medical condition, who tend to do a series of tests (whether needed or not), and are always very expensive.

    Before we had health insurance: My son went to the clinic with a broken wrist, they patched him up and that first visit only cost a few hundred dollars. Later, my wife was in intolerable pain, we went to the hospital, they ran a bunch of tests, gave her pain killers and sent her on her way. The bill for that was $4,000.

    I agree that there is a need to lessen the paperwork needed. Perhaps it could be streamlined better, or perhaps they could hire someone to just do the paperwork, who doesn’t have a medical degree, so that the nurses and doctors can do their job without having to deal with the paperwork because it is all handled by the paper pusher. I am not knowledgeable enough in that field to tell what is needed, but there is definitely a problem when the red tape created by paperwork actually retards the health care process.

  36. How much of the paperwork would go away if billing was a non-issue?

    How much would billing be a non-issue if profit was a non-issue?

    (These are not rhetorical questions; I actually don’t know.)

  37. I’ve been involved in the corporate world practically most of my adult life in one way or another, including the military (which is known for its ungodly amounts of paperwork!)

    That’s not to say I’m the end all, be all expert on this kind of thing. Here’s my thoughts on paperwork goes as to skzb’s questions:

    A large part of the existence of “paperwork” even as we slowly transfer some of it to a digital format, is due to the fact of legal reasons. Meaning, there is a certain amount created initially by any organization to start with and it begins to become larger through growth where there are more and more people involved in the running of the organization as it expands. As well, during the growth process a legal issue may arise through human error or unforseen circumstances that can and will cause yet another document to come in to existence.

    Over time, any large organization will accumulate a humongous amount of documentation and legal forms that become required, not because of billing, but to protect the organization from being liable for a given set of situations that can and will occur.

    That’s not to say that over this time period that all existing forms are necessary nor that some of them can not be merged into a more updated version of paperwork. But with the accumulation of such a large quantity of forms and documentation, it can be less cost effective for a large organization, to change what exists.

    Which comes back to the second question of if profit were a non-issue. Any organization whether it’s for profit or a non-profit, must have
    enough revenue stream to simply exist, let alone exist and be successful, so a certain amount of net income is a necessity for that organization to survive. This of course results in the organization, once again, having a need to protect itself and try to cover all aspects of a business model which then creates a necessary vortex of paperwork.

    I imagine that the healthcare system is no different in these aspects. I’ve never been in the healthcare industry, so I can’t be sure, but I can’t see how any hospital or even clinic (free or not) can make due without a large amount of paperwork for a prolonged period of time and still run efficiently and be able to protect itself at the same time.

  38. In other news…I recently saw a right wing news broadcast which claimed that the downfall of Obamacare would be the mountain of paperwork that would be created by it. There was a guy in a hospital showing the news crew the massive amounts of paperwork that they had to deal with and they said “They had to hire someone specifically to deal with this paperwork, who has no medical function at all”.

    I said (literally out loud), “Really. That is your best argument that we shouldn’t have universal health care?”. I realize that it does no good to talk to my phone (the video was linked on Facebook), but I was awe struck enough the fallacy that I had a verbal reaction.

  39. SKZB: “How much of the paperwork would go away if billing was a non-issue?”

    None. Billing is unavoidable under any system of government. Governments require reporting of the resources being expended at their facilities, and the only known way to represent that in a simple way is conversion to a standard unit of accounting, which the rose-is-a-rose theory states is money, since it all performs the same function. You can muck around with the idea of money all you want: it will never go away.

    SKZB: “How much would billing be a non-issue if profit was a non-issue?”

    No change. Marketing has to set a price tag, and since they cannot know the future financial needs of the institution, since unexpected costs are unavoidable, profit is also unavoidable. Eliminating profit requires Prophets, since they are the only ones that could possibly predict that the water pipes are going to burst on the fourth floor and force major unexpected costs in repairing the building and guarding against mold, etc. Since you must make more money than your current needs, in order to cover unexpected needs, charging more than costs is mandatory, and from there, the mark-ups required to cover basic unexpected needs are identical to the concept of profit. In short, the process is exactly the same, regardless of how much “profit” is being made.

    Only people that have never participated in the process of calculating how much a company should charge for a product could possibly think that eliminating “profit” changes the process. It’s nothing but a multiplier or line item along with dozens of other costs.

  40. I think some people have really misunderstood what “profit” is and how companies MUST produce it. I touch on it in the above: you need to make profit just to be able to handle an unpredictable future. What good is running a company if the first time a pipe breaks you go bankrupt because you can’t repair the plumbing? You must prepare for the disasters of the future, but when they don’t happen, you’ve automatically created profit just by being lucky.

    But I think there may be a misunderstanding of how profit gets generated, and how grossly large profit is produced, WITHOUT screwing the little guy. It’s math, folks, so watch and learn.

    Let’s invent a widget. Some people want it. How many do we produce? How much do we charge for it? Etc.

    Okay, it all starts with cost. I’m going to use the model we did at a company that makes a component that goes in a cell phone. So, it has a semiconductor that we designed and have manufactured by a third party company overseas (China and Isreal, usually). They sell us this part for $1.00 up to Quantity 1-100 (Q100), $.75 for Q1000, and $.50 for Q10000. We have to put this on a circuit board with other components, and each will have its own Q’s and costs, but we’ll average it out at $3 for Q100, $2.50 for Q1000, and $2 for Q10000. Totals: Q100 $4 per, Q1000 $3.25, and Q10000 $2.5. We’re all done with cost, right? Obviously not. We still have to pay a company to assemble the board for us, since we are not at large enough quantity where we could hire our own manufacturing department. Again, that’s another changing Qcost. Lines have large costs when they have to switch from one product to the next, so they really prefer the power of the assembly line staying constant. We can assume they’ll pack the products as part of the service.

    So, is that all our costs? Yes, even though we have not included our company’s rent, employees wages, capital costs, etc.

    So our mark-up? Typically 5-15%. YES, I SAID FIVE TO FIFTEEN PERCENT. And I am going to show you exactly why it doesn’t need to be higher. For simplicuity, use 10%.

    So, you have $400 and can build 100 at Q100, for $4. You produce and sell them in two weeks. After two weeks, you made $40, which is 10% of $400. Hey, you’ve got $440 now and so can make more at Q1000, $3.25. That’s 135. But our profit is still 10%, so we make about $44 profit. Now we’re at $484, and can make more! 10% every two weeks, right? 26 times over the year. How much money do you have by year end? $400 x 1.1^26 = $4767. More than 1000% profit. And I screwed no one with a 10% mark-up.

    That’s how low mark-up turns into large profit: re-using the same money over and over again at small gains turns into ever larger gains the mroe times you can cycle it. Okay, we don’t expect 26 cycles every year: most companies operate on 90 day payment schedules, so 4 cycles at best. But 10% four times per year is 46% return on initial investment, and all you need at that point is for the initial capital to be relatively large and you can pay everyone and deliver a 10% rate of return to the investors.

    Let’s shift our example to grocery stores. How often do the green peppers in your grocery store get replaced? Once every three days? Let’s call it 7 for funs sake. And you’ve heard that grocery store mark-ups are 2% now, and can’t beleive it?

    1.02^52 = 2.80

    At 2% mark-up and 52 cycles, the initial investment returns 180% profit. Not all grocery store items cycle that fast, but now you see why the small corner stores died. They couldn’t drop their profit margin that far, didn’t have the cycles per year, and so couldn’t keep up with the massive stores that started dumping profit margin in favour of volume. Lesson: if you want competition for the big stores, pay more to the corner stores, or that’s all you’ll get. Don’t leave it to the other guy: give your money to whom you want to continue in business.

    Here’s the next one: how do we decide how many to produce? Who knows the size of our market? Marketers? Actually, not so much. It’s the task of Sales to predict how much they will sell and thus how many to build. They run through their lists of potential buyers, rate the probability of each buying, and then review that with the manager/CEO to justify their claims. Multiply odds of buy vs. quantity of buy and add all buyers to get a total, and that gives you the number you should produce. We could hire a Prophet of God to more accurately predict the future, but those are rare and generally smelly, so we use formulas instead.

    What happens if the Sales Directors underestimated? We wind up selling everything. Overestimated? Produce fewer the next quarter. But it is by those numbers that we predict our future, and determine our chances of paying the bills and not going bankrupt. If the quantities com ein low, we may choose the higher end of the profit margin range, simply because we need that much to survive as a company. So what if we lowball, choose a higher margin, and then actually sell every last thing?

    Make unexpectedly high profits. We predicted low Sales, got high, and you think we should somehow have predicted the future?

    Predicting the future is the stuff of mystics and seers. We don’t have the benefit of an accurate Oracle of Delphi. We are non-spiritual, non-fanatical regular guys that don’t use crystal balls, but history and experience to determine the company’s future. And without that crystal ball, it is impossible to accurately price an item such that all costs are covered in one year: consequently, profit must be made in order for a company to merely exist through poor predictions of sales and unexpected costs due to disaster.

    Steven is asking for something he would scoff at, if someone demanded it of him. Know the future? That’s the stuff of religious fanatics that are very much against his Communist leanings.

  41. Kreistor@43- I believe you are slightly missing the point of SKZB’s question regarding paperwork, though I’m sure he will correct me if I’m wrong. To me, his question was directed more at the elimination of paperwork, than the elimination of the need for a record of expenses or profit.

    If you eliminate the need to bill the patient, by all billing going to either the government or an insurance provider, then there should be a reduction in paperwork due to the patient not requiring any.

    As a bit more education on profit in the health care industry, I found this article interesting: http://www.forbes.com/sites/timworstall/2011/12/03/what-bomb-buried-in-obamacare/

  42. Chris: “If you eliminate the need to bill the patient, by all billing going to either the government or an insurance provider, then there should be a reduction in paperwork due to the patient not requiring any.”

    Not for the hospital. No matter who pays, a bill goes to someone. No matter who runs the hospital, a list of resources consumed must be generated to track waste and fight theft. Especially in hospital since they suffer the theft of drugs, especially opiods, but also date rape drugs and other crud idiots jab into their veins.

    There is an elimination of paperwork only for the patient, and an increase for the government. Governments are responsible for the management of YOUR tax money, and so must track all expenses. You can find a ton of the Canadian data on


    If anyone knows where you can get the equivalent for the US gov for free (I’ve only found pay-for-data sites), I’d love the link.

    So the generation of reports concerning rates of use of hospital services, their billing, etc. cannot be avoided. remember that Munchausen syndrome (http://en.wikipedia.org/wiki/M%C3%BCnchausen_syndrome), hypochondria, fraud, and other misuse of hospital services will INCREASE under a system where the patient does not pay. You SERIOUSLY need to investigate these issues before thinking everything suddenly becomes idyllic under socialized health care. Hospitals deal with far more than just the physically sick and dying, but also the mentally and emotionally sick who wind up consuming resources that should be saved for the physically ill. I highly recommed the TLC program “Untold Stories of the ER” for real life stories of what happens at your hospital. (I love the one where the Munchausen’s patient is sent out for a pedicure. Jumps right off the bed in her excitement. :) )

    This is NOT a rant against socialized health care. it is a statement that there is no ideal system where all the problems go away by magic without creating new ones. That only happens in novels. Our world is one of trade-offs, so anyone that thinks changing even one tiny thing won’t have a ripple effect is simply suffering from a flawed model of reality. Putting Government into a system INCREASES bureaucracy, because the public demands an accounting of the use of its money. You want to end government waste, right? Are you really going to put government into the medical system with an attitude of “Go ahead! Spend our money on whatever you want and we don’t care about waste and fraud”? Seriously, are your right and left hands undergoing a Divorce?

    You want increased government “openness” and “transparency”, right? You just dropped government on the medical industry, and are going to apply that philosophy to them, too. Congrats, you just dumped more bureaucratic paperwork on them to generate the data you expect of them. Numbers don’t fall out your butt: someone has to be hired to collect, track, and process them for your consumption.

    Your demands are mutually exclusive. You cannot have transparency AND small bureaucracy.

  43. Chris: Jesus. Those bastards are worse than I thought. Maybe I’m wrong; maybe there is some value in the new act. I’m not convinced, but I’m entertaining the possibility. 80%. Good god.

  44. If the companies can’t make a profit with the 80% restriction, then they’ll stop providing that service. If all Insurance companies stop providing that service because they couldn’t make a profit, then you’ll have to introduce nationalized health insurance, at governmental bureaucratic inefficiency levels. Like we already have in Canada. It’s one reason why we pay so much higher taxes up here. (But I can’t tell you less than 20% of those taxes pay for the bureaucracy of running the system. Not looking that up. doubt Stats Can carries that figure. Lots of the Health Care numbers are unavailable.) But remember, nationalized health insurance becomes a Tax at election time, so you’ll hate anyone that suggests increasing taxes for improving health care.

  45. 1) Red tape and all, the Canadian health care system spends less the U.S. does per patient and as percent of GDP. I’m not going to provide a link because Google Exists.

    2) The Canadian system spends a much lower percent of its revenue on administration than the U.S. does. Insurance companies are one of the few entities that generate more red tape than government entities do. One (among many reasons): Providence medical, one of the big hospital groups in Wa State, has to bill six major insurance companies with six drastically different requirements. This is so complicated that they maintain a separate staff for each insurance company, and one more staff for billing minor insurance companies and Medicare. Do you begin to see how one major government insurer would generate less paper work? Also dealing with insurance companies and creating a medical culture that can deal with this is complicated, so U.S. hospitals have much higher paid CEOs and more expensive administration in general than in Canada. Again, for confirmation of percent on administration (total – not just insurance or equiv) Google Himmelstein and Woolhandler

    I will add that because Canada’s health care system is done via revenue sharing to Provinces, which means that each Province has its own health care system, Canada loses many of the economies of scale larger single payer or all-payer systems have.

    France has what is called an all-payer system. What that means is that it does not have single payer. But it has a single insurance plan that outlines covered benefits, and ,minimum payment to providers and requirement that it be provided to everyone. The actual provision of the insurance is provided by non-profit companies, which compete on premium and by offering more than the minimum coverage, or higher payment to providers than the minimum. A lot of people just have the minimum plan and get by fine, because 75% of providers in France will accept the minimum plan. You can also have the minimum plan and buy a separate supplement, which is more common than either having only the minimum, or buying a single plan that includes both supplementary and basic coverage. Employers are required to provide the basic plan to all employees, with employees paying a percentage of the premium. and the government pays for policies for those outside the workforce. The government provides some subsidy for all plans. There is a constant three way political tug of war over how much will subsidized from taxes, how much provided by employers and how much paid directly by workers as paycheck deductions. But in the meantime France has healthcare rated as some of the best in the world, and spends a much lower percentage of its GDP on healthcare than the U.S. (Last I heard, France also spend a lower % of GDP on healthcare than Canada, but have not looked at that statistic lately.) And regardless of how it is done billing is standardized. That is the provider just sends the bill to one place, the bill is forwarded to the appropriate insurer which process the same forms by the same means as any other insurer. There are single practioners in France who do their own billing, spending only two hours a week. Tell that to a Doctor in the U.S. and watch her laugh bitterly.

  46. I tend to recall from my college Economics class that if one wants a zero profit margin on any good or service, the method of obtaining some approximation of that is competition. The more competition, the more likely one or more competitors will under cut the price point to something approaching $0 profit.

    The downside is that as the price point approaches a $0 profit, the more people get out of providing that good or service and focus their efforts elsewhere. The result is fewer suppliers (approaching monopolistic conditions) which in turns results in increased prices (and by extension, profit).

    Which in turns results in suppliers returning to the market (if not restricted) and the cycle repeats itself.

    The biggest problem in business is, as I see it, are artificial regulations which prevent competition which results in some suppliers of goods and services have a government protected profit margin.

    Want prices approaching $0 profit as a matter of course? Embrace a libertarian view of business and economics.

  47. Yeah, on account of deregulation has worked out so well.

    The post office was better before some idiot said, “Hey, it’s losing money!” Well, duh. So what? It’s a useful social service, and one we can afford.

    Something that is needed by everyone in a society should be provided by that society; that is exactly what society IS. That’s why we work together to provide infrastructure.

    Society finds the best means it can, at a given historical moment, to provide for those in it. When productive ability has outstripped productive forms–as happens now and then–it means those forms are no longer useful, and must be discarded before they strangle production.

    At a certain stage in history, profit was a progressive, productive force (especially compared to land-based semi-feudal arrangements). The notion that production-for profit rather than production-for-use is always going to be the economic basis of society is unscientific, ahistorical and profoundly short-sighted.

    In this case–the generally reactionary character of profit-based production in the 21st century–health care is not the subject of the argument; it is the proof.

  48. My family physician in Montreal spends a few hours every Thursday afternoon filling out government paper work and none on billing individual patients. My daughter-in-law, a family physician in the Boston area (she practices entirely in a large clinic) spends more than half her time fighting with insurance companies over what her patients need. And that is in Mass with its Romneycare!

    I’ve had nothing but good experience with medicare here and it is, at this point, the only thing that’s keeping me here.

    I keep seeing things like full and double page spreads in the NY Times magazine and elsewhere from hospitals advertising how much better you will be treated than at some unnamed competitor. So they must be generating gigantic profits to make such advertising worth-while. When I was growing up, nearly all hospitals were non-profits, owned by medical schools (this was in Philly that has five medical schools), municipalities or churches. Now they mostly all seem to be privately owned for a profit.

    Incidentally, hospitals in Quebec are not paid by the service. They are given a global budget based on number of beds and allowed to arrange their services to match. Any profit would, I think, be confiscated. Certainly not distributed. This might seem to lead to a race to the bottom, but for some reason it hasn’t. It does mean skimping on meals and also, unfortunately, cleaning services, but overall, it seems to work. So they waste no effort on billing. I am sure there is some sort of internal accounting, but that is different since they get to choose what is worth it.

  49. Big Mike@52- I think that the government confiscating surplus funds might be the reason why there is no comprimise in overall care. They have to distribute their funds wisely, and because food and cleanliness (not sterility, cleanliness, there is a difference) are not vital services to a health care institution, those are closer to the bottom of the priority spectrum.

    If they didn’t have to give the money back, they could distribute costs in order minimize out-go so that they can maximize profit margin. I submit food would turn into strictly for-profit vending machines and custodial services would be nearly non-existant, in addition to only providing the bare minimum of actual health care. At least, that’s what would happen if it were that way in America.

  50. Big Mike: “Any profit would, I think, be confiscated.”

    Chris: “I think that the government confiscating surplus funds might be the reason why there is no comprimise in overall care.”

    Uhm… WHAT? You’re BOTH talking about legalizing theft, and that is Unconstitutional here the same way it is under the US Constitution. Big Mike is woefully misrepresenting the system when he suggests that profit does not exist. Profit is limited, but fundamentally mandatory. Hospitals are paid by the state, but not owned by the state, so they do and always will make profit… just not very much, when the Socialists are involved.


    Here is the website for McGill University Health Care, Montreal’s largest hospital. Do you see “Not for Profit” anywhere on these pages? You’ll find it hard to identify anything about who owns the MUHC, but it certainly does not say “Nationalized” or NGO. It’s privately owned, and therefore illegal for the government of Canada to prevent from making “profit”. It would need to be Nationalized in order for such limits to be placed on it, and Canada tends to only Nationalize when a vital competitor is about to fail and to prevent a monopoly from forming. (PetroCan, Air Canada, etc.) they eventually divest such corporations. (There are a couple exceptions.)

    Hospitals in Canada are still privately funded, which means Capitalization boys and girls, and therefore the state is fundamentally disallowed to prevent them from recovering their investments or preventing them from making a reasonable profit from their investment. Any suggestion of an end to profit would result in legal battles that the state would lose, with judges forcing the government to pay the investors for their shares, at a reasonable rate to ensure the state was not Nationalizing corporations.

    Much as some people think the British system has similarities to Dictatorship (in the way the House of Commons works) legislation is still covered by the litmus test of our Constitution, the various treaties we have signed, and the Charter of Rights and Freedoms. Our government is as legally restricted from the kind of theft you’re talking about as the US government is.

  51. Umm it is affiliated with a public or non-profit university McGill university. I’m not wedded to a pure non-profit model. The French system, sometimes considered the world’s best is mixed, though non-profit and public certainly dominate. But I’d be curious to see actual evidence of private ownership. Actually the following link suggests their newest campus is a public private partnership construction , the building developer and operator being the “private” part and the actual medical part continuing to be public or non-profit. So it seems like your example is not for profit after all. Given the McGill University affiliation, that the Health Centre would be non-profit is not surprising. http://muhc.ca/new-muhc/page/winning-partnership-ppp

  52. Quoted from your own link:

    They provide a number of significant advantages:

    The private partner takes on the financial risk
    The private partner works according to a set budget and timetable
    The private partner must assume the costs related to any financial variables, such as price increases, inflation, unforeseen construction obstacles, and major penalties in the case of delays
    The private partner maintains the building for a period of 30 years

    “The private partner takes on the financial risk”

    Sorry, but you are dead wrong. That statement demands the private partner make profit.

    And sentence number 2 also puts the falsehood to your interpretation:

    “After exhaustive studies and consultations, the provincial government decided that the MUHC’s Glen Campus would be designed, built, financed and maintained through a PPP.”

    “financed and maintained”. That means capitalization and long term participation, which demands profit or they wouldn’t bother stepping up to the plate.

    Sorry, but this did not mean even remotely what you claimed.

  53. I am not going to weigh in on the bill as a whole, but there are a few useful reforms included.

    I can tell you from experience that it is a bad feeling to have to tell a client, that can afford insurance and wants to purchase it, that the simple fact that they let their old policy lapse for a week or two too long (meaning beyond the time allowed through COBRA) means that I cannot sell them a policy at any price due to a pre-existing condition.

    The new law fills that gap at least (or at least it will in 2014–and since I have a very poor memory, excuse me if my date is off).

    I agree that health is not something that the insurance industry can manage. There just isn’t any way to accurately calculate the risks. Therefore the companies cannot set an accurate price without gouging the customer. That means, at least to me, that health care needs to be run by the government so that the budgetary figures are fluid (debt ceilings and taxes can always be raised). I’m all for health before profit.

  54. “I agree that health is not something that the insurance industry can manage. There just isn’t any way to accurately calculate the risks.”

    It’s called Actuarial Science. It’s a profession. It’s statistics. It’s conisdered the hardest branch of mathematics, but it is a math and it is understandable by many people. You may not be one of them. I saw brilliant engineers able to perform three dimensional calculus and design computer systems that would boggle any mind cry as they left their first ever failed class — Statistics.

    Knitting is hard for me and my complete lack of hand-eye coordination. My inability with knitting no more means no one can knit than your inability to grasp statistics means no one can do the statistics on health care. Frankly, I’d bet that Brust’s poker playing has made him a relatively competent statistician, and he could understand the statistics behind health care.

  55. Rykard….I have to agree with Kreistor about your “there just isn’t any way to accurately calculate the risks” comment.


    Statistics and actuarial science is well understood. I wouldn’t call it the hardest branch of mathematics, as Kreistor does….it’s just not something the average person knows much about.

    It is exactly what people use to calculate risks across a large population.

  56. As it turns out, for health care, actuaries really can’t apply their trade with any accuracy (too many variables). I am basing this entirely on meetings I’ve sat in with a major health carrier, so I accept the possibility that it is just an excuse or possibly an argument that the company tried to use to stop the bill, but since it wasn’t a public meeting, I don’t see why it would have been brought up if it didn’t have some truth, at least from the company’s perspective.

    I know a few actuaries myself, but they all work in property and casualty, so I can’t offer more than an opinion on the matter. I would advise you not to put too much stock in a stereotype of their abilities. We have continual changes in our underwriting guidelines do to the inaccuracies of the actuaries.

    I also realize I am a drop in here and, because I work in the industry, can’t give many specifics. The combination grants me zero street cred, but I’ve seen some of the references you guys come up with, one of you can certainly fact check me if it matters to you.

    Have a great one!

  57. oh, and statistics is one of the easiest math classes I have taken. I’m not an actuary however. It might be worth noting that you only need a BS in math to get that job… I’m sure accounting would work as well, although I don’t personally know anyone with that educational background in the field, so I could be wrong.

  58. Agreed, stat is very easy. I have a master’s in math myself…so I know some of the math side of things. A good actually knows a few other fields as well, but they often start off in with a solid background in math, stat, prob, etc.

    I suspect the company you were discussing above was being less than open regarding the potential usefulness of actuaries and health care. We know what sorts of diseases occur and at what ages and in what percentage of the population. That’s one thing our giant health care system does have…lots of records. Our country (assuming you are in the US) has a fairly large population, making such statistics fairly good for understanding the risk of an average 48 year old developing say, leukemia. Or of a typical overweight 50 year old man developing type 2 diabetes.

    I find it very suspicious that they don’t feel they can use actuaries there. I could be wrong….again, I’m not an actuary.

    Sorry to ramble….I mostly lurk, but seeing math come up, I had to chime in. :)

  59. oops…sorry, typing too fast.

    My third sentence above should read “A good ACTUARY…”

  60. To be completely honest, the last meeting they were making noises about having it figured out. I don’t think they really do, but as long as they are allowed to err on the high side, they will dial it in eventually. I like the reform portion myself. in California, the health exchanges are just an extention of medi-cal (medi-caid is the equiv everywhere else). I can’t say it would excite me to use that system myself, but at least now I can sell to everyone. Thats a step in a right direction.

    now i’m rambling

  61. To give an example, you’ve heard of Dungeons and Dragons, I’m certain. The designers of that system for decades claimed it was “too complex” for statistics to model.

    Which is equally absurd. Any random event can be handled by statistics. D&D is just dice, just like craps, and so it can be modeled and mathematically analyzed. The reason why the old TSR employees thought that way was that they were artists and writers hired for their capacity to write good plots, not mathematicians that studied the statistics of the game.

    One of the US states looked at state-run health care some twenty years ago — maybe Nebraska… that’s the one that’s popping into my head? Specific state is irrelevant. The process they used is relevant. The government decided how much money they could afford to tax for it, then asked a group of intellgencia and average citizens how they would spend it. They, obviously, could not do everything for everyone, because keeping everyone alive for an infinite period is infinitely expensive. How do you spend a limited health care budget?

    So they took all diseases and ailments the health system dealt with along with each treatment, and how much “life” it gave you on average and how much it cost, and how many people were afflicted per year. No, i can’t answer every question about things like broken bones which don’t kill you, since the short news report on it wasn’t that detailed. What I do know is that they started at the top and then suggested spending the money down to where it was all spent. Above the line, they’d pay: below, they wouldn’t. The one below the line was a child’s ailment that the cure for would only buy the child 5 years of life, so they covered a LOT, and were down into conditions where the victims were going to die in a relatively short period, no matter what would happen. (It didn’t pass. Probably because that first one below the line *was* a childhood ailment. Passing a system that let’s some children die is uncomfortable for people.)

    Obviously, that is 100% statistics. They were figuring out how much life per $ they were buying and multiplying it by the average number of victims to determine how much they would need each year. Divide average amount of life by cost per solution and sort. For each line item, multiply cost by number of victims per year. Start at the top, and add until you meet your target budget. Simple. Just statistics. Cold and heartless in this case, but statistics could do it.

    So, rykard, I have to stand here and tell you whoever told you that about the health system was feeding you a line of glorious, self-centered BS. Health is 100% probability, and if it was not able to be handled by actuarials, then the Insurance industry wouldn’t touch it with a 100-foot pole. If it was as broken as you present, they could not make profit off of it and they would stop supplying that service the first year they took an unpredicted massive loss. That the industry exists is evidence that you are simply wrong, and have been for more than decades.

  62. @rykard, if Statistics is “the” easiest class you’ve taken, that one would have been the introductory , undergraduate statistics usually a second-year course that covers the basic elements of uniform and normal distributions, continuous vs discrete values, and the formulas for standard deviations, which generally don’t involve any higher math. But there are many more refinements when stat and probability theory are used together, and my engineering track Prob and Stat class involved much calculus and distributions with lopsided tails, multiple peaks, variable width gaps, and worse.

  63. @Kreistor, do you have a cite for the D&D denial? I can certainly believe it (I got into a two-week pogrom on another game’s forum for pointing out that dice totals remain statistically treatable even if they are used to model imaginary things) but I’ve never heard of it being a long standing position on the part of the D&D outfit.

  64. @kreistor

    Dude, I have never seen you agree with anything anyone says here. Your Dungeons & Dragons reference has nothing to do with the subject, is untrue, and shows that you should stick to games rather than commenting here.


    You are undoubtedly correct about basic stats, however the relative difficulty of various courses really was a tangent and had nothing to do with my point.

    to all:

    We got to my point (eventually). Beyond that I don’t care to debate.


  65. You did notice that where the private partner “takes on the risk” was facilities management – i.e. the building, heating system and maybe the equipment – not the doctors or nurse or lab techs or medical personelle. In other words there was some rule where they could not lease a private office building, so they did a public/private partnership so they did not have to bear the risk of building an expensive campus. And the private partner who built the campus bore a risk and takes a profit in return for building the campus and buildings and physical facilities. Basically a backdoor way of having a landlord. Does not stop if from being a non-profit. In he U.,S. non-profits have for-profit landlords all the time. I suspect in Canada too. Probably some restrictions on this particular form of non-profit under Canadian law that force them to take this roundabout means of doing what could be handled more simply by leasing a campus.

  66. @rykard, it sounded like you were flipflopping on the tractability of healthcare to statistics and actuaries. I wanted to point out that there’s always room for more wrinkles to crop up in stat, and there may be some variables that can’t be isolated for practical mathematical reasons yet. Also since it’s human health, some data gathering is ethically bounded and some may even be forbidden by privacy laws.

  67. @NottheBuddha (67):
    Various authors that have worked for them in the past have blogged it. The attitude changed for 4th (pathetic as it is), but they went too far, IMO.

    @rykard (68):
    It shows that even in some realsm that you would think there should be a lot of statistical knowledge, it depends on whom you hire on whether statistics actually get used.

    @Gar Lipow (69):
    “Does not stop if from being a non-profit.”
    But not mentioning that it’s non-profit does.

    Canada’s health care system is government funded and for profit. You will find nowhere any reference to Laws or regulations mandating profitability (or lack thereof).

    More on Quebec health care:


    ‘The “contribution” is not radical by Canadian standards, but a $25-per-visit charge for seeing a doctor certainly is. Elsewhere, such a payment would be called a “user fee.” It might seem to contravene the Canada Health Act. But by burying the fee in the provincial income tax, Quebec is hoping to win any court challenge or fend off a political assault.’

    But I like this one:

    “Other types of service are covered only in hospitals. These
    include laboratory analyses or specialized tests such as
    ultrasound, CAT scans, magnetic resonance imaging (MRI) tests
    and injections for varicose vein treatment. Patients who choose
    not to wait in the public system have the option of out-of-pocket
    payments for faster service in a private setting.
    Since these services are considered uninsured outside a hospital,
    private insurance is allowed. Many health care professionals who
    work for public hospitals choose also to provide some services in
    private clinics.
    It is noteworthy in this regard that, at the start of 2006, Quebec
    accounted for nearly half the MRI machines in private
    establishments in Canada (15 out of 32).4 Taking the average rate
    of use of these machines and the $800 average fee for a test in
    the private sector, it can be estimated that the annual value of
    services provided in the private sector for these tests alone comes
    to $28 million.”

    Yep, totally nationalized. NOT.

    20 minutes on Google. You’ll find other recommendations from 2001 about expanded private infrastructure, too.

  68. I never said Canadas health system was not for profit. Just that it had a large not for profit component. But you used McGill as an example, and McGill is pretty clearly a not for profit institutuion. The biggest for profit health care sector in Canada are individual doctors & partnerships and small clinics. Most hospitals (not all but most) hospitals are non-profit or government owned. And hospitals are where most of the most expensive care is provided. So core insurance is non-profit, though most buy for-profit supplements. And the most expensive types of health care are provided by government or non-profit institutions.

  69. Gar: “Most hospitals (not all but most) hospitals are non-profit or government owned.”

    Then you should have a simple task in providing a single quotation from a single source on the subject. I have already done that to demonstrate the opposite, so I am not asking for anything that I have not already done myself.

    Because you are spouting myth.

    It is a common belief that the Canadian system is not-for-profit, but it has always been profitable. When Socialized Health Care began, hospital costs were regulated (limiting profit), but the hospitals were not Nationalized. They remained in the ownership of the private investors that originally owned them. It has remained that way ever since, while the myth that it was nationalized propagated. That’s part of why hospitals have a hardtime buying hardware in Canada: wiht limited profit, there’s no one willing to provide the capitalization you find in the US system. People came to believe there was no private capitalization, but the system didn’t change: only the costs for services were regulated, with profit driven down to the point the hospitals can’t provide enough profit for investment to compete with other revenue streams. Hospitals seek donations to help eliminate the need for private capitalization, but it is never enough for even 1/2 of what we need. Hospital equipment is extremely expensive. And consequently, since Quebec which has a pseudo-two-tier system that permits adequate profitability, it has more hardware (1/2 the MRI’s in the entire country for 1/4 of the population).

    In other words, you have come to believe a common and false lie about our health care system. If it is the way you claim, it should be a matter of 5 minutes on Google to find it. I spent 20 and couldn’t, and in fact found evidence to the contrary.

    Prove me wrong. I don’t trust opinion or Tim Horton’s coffee crowd anecdotes.

  70. I’m coming really late to the conversation here, but I just want to strongly recommend (pretty much any book by David Graeber but especially) Fragments of an Anarchist Anthropology and Debt: The First 5000 Years. Coming from the perspective of an anthropologist, with numerous concrete examples, Graeber puts down the myth that something in human nature drives us to “truck and barter,” to get the most we can out of others while giving the least. As it turns out, it’s not hard to find places where the deliberate accumulation of wealth is looked upon as distasteful and vulgar.
    Now, more specifically on topic…

    Profit is only necessary as a safeguard against unforeseen eventualities in a situation where you are on your own and can’t count on others to supply mutual aid. In the case of funding healthcare we’re talking about spreading the risk, so I don’t see that rationale applying. Furthermore, with more than one health insurance provider, you have more than one entity holding funds in reserve for the same eventuality.

    The idea behind health insurance is great: spread the risk. Why not take that to its logical conclusion and spread the risk as thin as it can go, with everyone putting funds into one communal pot.

    We already know profit isn’t mandatory for growth, otherwise a not-for-profit organization would never improve its facilities or expand. The basic premise of spreading the risk also gives the lie to the notion that we won’t improve our healthcare system without the motive of profit. Your insurance payment is a very tiny wager than every bad thing possible will happen to you. It’s a wager you want to lose but you’re willing to make, because getting cancer, for example, without having healthcare would suck so disproportionately that it can’t be weighed against a dollar amount. I know statistically that I’m not going to get cancer, but that kind of mathematical analysis doesn’t enter into the decision. In the same way, whenever the newest medical technology comes along, I’m not going to suddenly bet AGAINST ever needing it.

    We know that health insurance is run like Vegas — the fact that it IS profitable should tell us that we’re not getting our money’s worth. So why don’t we all make the smart wager and take our chances without coverage? This certainly can’t be explained while accepting Adam Smith’s theoretical individual. In fact, we are able to see that our preference for the absence of suffering in our particular case is arbitrary, that from another perspective we would prefer the absence of suffering in someone else. Acknowledging that breaks down the self-interested logic of the wager.

  71. James Risley: I have, more than once on this blog, recommended Graeber’s book on Debt. It is brilliant.

    I think we’re running into a problem of definition when we speak of profit. When I say that the health care problem in the US cannot be solved until profit is taken out of the equation, I’m not using profit in the sense of, “the amount of money brought into a system above what it costs to operate.” I’m using it in the much narrower, economic sense: that portion of surplus value that is appropriated by the capitalist.

    In other words, as long as health care is run in order to generate personal income for the owners of health care businesses, rather than in order to provide for the needs of society, the US health care problem will never be solved.

  72. @skzb

    I don’t know why I was being so wordy about it, but that exact distinction covers a good portion of my comment. After operating costs are paid and workers are compensated the remaining money still isn’t “profit” until someone pockets it and takes it home.

  73. James Risley: “Graeber puts down the myth that something in human nature drives us to “truck and barter,” to get the most we can out of others while giving the least.”

    That has never been inherent in the Capitalist system. Never. That is a myth presented by the Socialists that identify a single group of Capitalists and demand that their one belief system is the only core of Capitalism. It’s FALSE.

    At the core of Capitalism is the concept of Enlightened Self-Interest. You may choose to devolve that into “profit and greed”, but that never was the definition, only one possible presentation out of thousands. According to ESI, the individual spending his money will make the bet possible decision, based on his own morality and belief system. If your belief system desires to ensure fair exchange, without the need to grasp excessive profit wherever possible, then that is YOUR choice, and it is perfectly okay under Capitalism. I may, for instance, choose to sell food in a drought ridden area at just slightly higher than normal cost, much less than my price-gouging competitors, because next year, you may be more willing to be give me a better deal compared to them because I was kind this year, in thanks for my kindness and understanding. Nothing in Capitalism forces gouging.

    So Gaeber is fighting a myth prevalent in the Left’s belief about what Capitalism is, not the Right’s belief system. We have never believed in profit for profit’s sake as the only presentation of Capitalism. Change a nation’s morality, and you change the presentation of Capitalism.

    But let us turn back to profit and health care, for a moment. Why does the lack of a two-tier system in Ontario (1/3rd of Canada’s population) result in it having a fraction of Quebec’s MRI’s?

    Simple. When a rich man is faced with a child that needs an MRI, and under the Canadian “get in line and wait” system, he has a choice to make. His son may ie waiting, so he turns to his money, to see what it could do to save his son:

    1) Go to another country where his money matters. This takes money out of the Canadian system and benefits the foreign nation.
    2) Buy the hospital an MRI.
    2a) In Ontario, this does not move his son to the front of the line. So he chooses not to.
    2b) In Quebec, he can now pay to get to the front of the line on the private system, and since the machine can be used for profit, he can over time recoup his investment. This takes more “rich” people out of the public queue, moving more poor further ahead in the public queue, increasing chance of survival as results are received earlier. Everyone benefits, including the poor, but oh woe is us, the rich benefit more.

    The further benefit for Quebec is that when there are no “rich” people willing to pay for the private MRI, it is able to be placed on the public queue and while getting a smaller payment for its service, it at least getting its maintenance paid for, and it shortens the public queue saving more lives.

    Removing the profit from the system removes Private Capitalization, forces the burden onto the taxpayer, whose fickle election time vote turns down increased health care spending. What do the majority that are healthy care for raising taxes so the minority sick can live? You think you, James, are immune to this?

    “I know statistically that I’m not going to get cancer”

    And so you won’t support increased spending on health care, the moment you go to the polls. Everyone thinks like that. We’re all immortal… until we’re dying. It can, and will, happen to everyone eventually, but oh, the statistics are in our favour when we’re young and making money, so that’s fine, and then when we’re old and saving for retirement we can’t afford it either, so… . Right beside public health care, you have decision to make.

    How much are YOU willing to pay for capital investment in the machines you need to keep everyone else healthy, now that removal of profit removes private capitalization of that same equipment? When those current machines break down, and the American rich are going to Bermuda to get to the head of their line and you face the ballot box, are you going to support that candidate that is for increasing health care spending by 20% and thereby raising your taxes? Or are you going to vote out the candidate that supported the bill that raised your health care taxes by 20%?

    In the end, since lower middle and lower class outnumber everyone else by enormous numbers, they will vote AGAINST raising taxes, even for better health care. The intelligencia may view tat as myopic and stupid, but we have seen it in our own nation over and over. The weight of numbers at the ballot box is in the hands of people already cash strapped, so health care funding gets tossed by the wayside.

  74. Kreistor:
    I don’t mean to hijack a thread on healthcare, but I just have to clarify something. My phrasing in my first post simplified Graeber’s case. His critique applies equally to your Enlightened Self-Interest model. It’s not the Enlightened or un-Enlightened nature of the self-interest being debated. It’s whether or not a model with self-interest (enlightened or otherwise) at its center provides an accurate and reliable accounting for the way humans behave. Working within the ESI model, too much of human interaction appears inexplicable.

    Originally I was compelled to comment mainly to respond to your claim that profit was absolutely necessary to maintain quality healthcare. I made my point about that, and Mr. Brust clarified it. I’m on the fence about staying in the conversation beyond that. Here’s why: you quote me saying “I know statistically that I’m not going to get cancer,” pretending that this paints the perfect illustration of why we need private capital, because the plebes will never pony up the dough. But the full sentence (as anyone can scroll up and see) was “I know statistically that I’m not going to get cancer, but that kind of mathematical analysis doesn’t enter into the decision.” I say that I’m willing to pay into a common pot, but you say I’m not… If you don’t take me to mean what I say I mean then I’m not sure how to move forward on this discussion.

  75. Well, James, gol dang it, I’m sorry. I quote mined you, and didn’t mean to. I know why it happened, and I’ll try not to do that again. (I am VERY much against quote mining, so I am extremely embarrassed.)

    My point is less that you individually will pay in, but the problem is getting others (esp. the middle and lower income brackets) to pay in. People in a free and democratic society will reject tax hikes, even against their own benefit. With the sheer chaos of information available on the Internet, the obvious prejudices of the various media corps, informing the public with a good argument is no longer a reliable method of ensuring good legislation passes. People believe the falsehoods they see based on Goodkind’s Wizards’ First Law: people will believe any lie they want to be true or fear to be true. In the case of tax hikes, they want it to be true that it’s not necessary, and there is always some group claiming a tax hike is not, so they believe the person telling them what they want to hear. In other words, even if you’re correct that paying more taxes will help everyone, you can never convince people that you’re correct because they’ll listen to the guy that tells them otherwise, regardless that he’s FoS.

    But you continue to fail to see my point on ESI. You again define it by the words of the name “self-interest”, not by its technical definition which includes “enlightened”. If you (James) decide that it is in everyone’s self-interest to buy things according to societal advantage and buy according to that belief, then that’s YOUR presentation of enlightened self-interest, but only insofar as it pertains to your own choices. That you individually view it as “society’s best interest” is irrelevant to ESI, which only cares that you use some method of choice making based on your personal belief system. YOU choose whats is important to you, and determine how to use your money accordingly, even if you personally believe you’re doing it for society’s benefit. Any form of personal choice, no matter who you choose to prioritize, is ESI. Perhaps in your case, choosing based on what’s good for society is your version of Enlightenment. You’re trying to treat ESI as if only the SI defines it, and that’s simply choosing to ignore that Enlightenment is just as important to the decision.

    If, on the other hand, you tell ME what I’m going to buy based on YOUR determination of what’s important (say for the benefit of Society (Socialism), the Party (Communism), or the State (Fascism)), that would be the opposite of ESI. For Graeber to deny ESI, he would need to be proposing that the State, or an Intelligencia, or an Oligarchy, tells me what to do with my reward for labour.

    Well, I’ll find out exactly what he says. I’ve found an online copy of FoAA, so I’m perusing that now. My library has Graeber’s Debt, so I’ve reserved it. May not see it for a couple weeks, since it’s on loan.

  76. James: “Coming from the perspective of an anthropologist, with numerous concrete examples, Graeber puts down the myth that something in human nature drives us to “truck and barter,” to get the most we can out of others while giving the least. As it turns out, it’s not hard to find places where the deliberate accumulation of wealth is looked upon as distasteful and vulgar.”

    So, I’ve finished FoAA. And your presentation of “concrete” is flawed.

    All of the examples are culturally monotonic. Not one faces the difficult task of establishing the trust necessary for a “gift” economy across racial, religious, or regionally restricted borders.

    Second, all of the examples are technologically repressed and stagnant. Implementation of a non-profit society that returns us to a time of increased female death rates due to childbirth is not worth the price of admission. Having living mothers to raise their children is far more important than elimination of the rich and wealthy.

    Third, they all seem to be in regions where limited resources are not threatening to survival.

    I’ll use the example of the Piaroa. They abhor “hoarding” of food. I live in Canada. The Piaroan culture fails the Darwinian test when the first winter sets in, because food preservation is a survival requirement here. This marvelous (and foolishly shortsighted) culture is blessed with an environment that feeds them 365 days of the year, and due to being on a river delta is extremely drought resistant. In Canada, they starve to death when the first winter sets in from lack of “hoarding” food for winter survival.

    They can get away with hoarding due to their environment. I cannot. A farmer here knows that with such a restricted growing season and crop selection, failure to prepare for the future with “hoarded” replacement tractor parts is raw stupidity. Up here, it’s a Darwinian question: those that prepare live. “Hoarding” of currently unneeded goods increases your chance of surviving the bitterly harsh winter and having working equipment when the spring rolls in.

    So, yes, he has examples of anarchic societies. No, I do not deny that they don’t work. But no, they are not examples of what our society can become, because they do not face the multiculturalism that pervades our society, and have environmental advantages that permit ideas that would be suicidal elsewhere in the world.

    But I completely reject the “Tiv” example. If you can’t see that Case is evidence that Anarchy can lead to the Rule of the Strong, and the annihilation of Human Rights, then I recommend you review what “exchange with one another the rights to younger women’s fertility” means.

  77. Keister


    Only 5% of hospitals in Canada are private for-
    profit institutions.

    Since that goes back to 2002, let’s look at the Commonwealth fund Internation Profiles for Healthcare systems 2009

    “Ownership of acute hospitals that provide medically necessary services varies across jurisdictions in Canada. In general, these facilities are almost all not-for-profit and are owned by religious orders, municipalities or municipal corporations, universities, and governments. They generally operate under annual, global budgets, negotiated with the
    provincial or territorial ministry of health or regional health authority.”

    Note by the way that I did not say that the medical system as a whole does not have a huge private role. Most doctors, labs and clinics are private. But hospitals are mostly non-profit, not because they were nationalized, but for various historical reasons. The Canadian insurance system does not discriminate between private and non-profit hospitals. But in it seems to have turned out that way. BTW this is a well known fact, and you really lower the quality of the conversation when deny well known facts and force the conversation to deal with that.

    Incidentally in rich nations, hospitals are generally non-profit even when the rest of the system is for profit. Even in the U.S. a majority (though not a large majority) of hospitals are public or non-profit.

  78. Thank you, Gar. What you have said, though, undermines everyone else’s opinion, not just my own. And most notably, Steven’s.

    If the majority of US hospitals are already Not-for-Profit, how can the Left Wingers be complaining about the health care system prioritizing profit over health? They already do not, according to your research. You have undermined their premise, too. Remember, Steven’s initial presentation of:

    “In my opinion, as long as you accept that profit is more important than health, you cannot fix health care. ”

    By pointing out that hospitals are already not generating profit, the obvious conclusion must be that health is already more important to them than the profit they never generated in the first place. And if hospitals are already not for profit, but it is hospital bills that are forcing sick US citizens into bankruptcy, the premise of this Blog entry is entirely false, is it not? The problem does not lie in the hospital generating profit, but in the critics having no clue how expensive it is to run a hospital. The Left should be focusing on how to eliminate the costs a hospital suffers, and stop assuming that “cost” and “profit” are synonymous.

    Anyway, let’s consider one hospital that does (appear to) produce profit. How about the Mayo Clinic? Makes gobs and gobs of money, right? It’s right there on their yearly report, after all!

    2010 Revenue: $7.9 Billion. Expenses: $7.4 Billion. Total income: $515 Million. 6.5%. But that was a five year high. ’06-’10 year Average is 3.1%, including ’08 at 0% break even.


    Yeah, totally gouging. “Eliminate” the profit, and health care gets all of 3.1% better, in the few hospitals where profit is even generated.

    Somehow, I suspect the premise of this entire article was false.

  79. Kreistor: “Well, James, gol dang it, I’m sorry. I quote mined you, and didn’t mean to.” Simple misreadings are another thing entirely, so no worries there!

    First off, ESI. Indeed, I am unfamiliar with the use of this term in the way you seem to mean it. Are you saying that any decision made by someone with a moderate degree of education and/or foresight, so long as their will is not coerced, is an example of ESI? If so, ESI seems like a misleading term, unnecessarily taking on the connotative baggage of the phrase “self-interest.” If all you’re saying is that the individual will should not be coerced by violence or the threat of violence (structural violence), then you’ll get no argument from this anarchist. But I’ve always heard the term ESI used more in line with the definition you’ll find on wikipedia (for one lazy example), which is to say that “an individual acting in his/her own self-interest can still consider the benefits of others, since the benefits of others may still in some way benefit him/herself.” Here I’m thinking of the impressive contortions evolutionary psychologists will put themselves through to say that “altruism” is merely a short-circuit of an impulse that evolved in situations where we could always expect some form of reciprocity. That’s the portrayal of human nature that I’m objecting to.

    Look again at the quote where you object to my use of the word “concrete.” I don’t claim that Graeber is offering “examples of what our society can become” (the examples he cites are meant to suggest possibilities, e.g. not that we should strive to become more Tiv-like, but that looking at the Tiv can help us understand what things we take for granted which could actually be different). I’m saying, and I think you’d have to agree, that Graeber demonstrates that human nature does not make us capitalists, nor necessarily happiest as capitalists.

    Now, even should we accept the notion that observing less hierarchical societies can suggest fruitful avenues to explore for our own society, you are correct to point out that the societies Graeber discusses have a significant advantage in that a collective identity is more readily apparent. Forking over our taxes would be a lot less painful if we thought every penny was going to our family or friends. The good news is that, as humans, we do have a collective identity; There’s just a lot of work to be done before, when asked to define ourselves, “human” springs to mind before a race, region or religion.

    In the Piaroa example you cite, “hoarding” specifically means that your neighbor has immediate need of some supply, but you hold it in reserve for yourself just in case you need it in the future. Of course the abhorrence for hoarding doesn’t mean the Piaroa don’t plan for the future; no culture, whether or not its clime is as harsh as Canada’s, can perpetuate itself without planning for the future (and if the Piaroan environment were as abundant as you suggest, hoarding would be an eccentric habit, not a vice). The Piaroa simply believe that the future is best faced collectively instead of by everyone for themselves. This seems to be another manifestation of our disagreement over whether “profit” is the best or only way to prepare for the future. The impulse to collectively manage resources arises from revulsion at witnessing one person needlessly suffer while another has excess. The logic is still one of efficiency, even “economy,” but it’s an economy concerned primarily with human well-being.

  80. James, I wrote a response, but it’s too massive. I think I’ll try to find a way to link it in rather than Wall of Text this.

  81. The profit is in the insurance industry. And the harm is in the way it fragments risk pools and purchasing power. IN short private insurance companies are like cockroaches. The problem is not what they eat but what they spoil.

    Total administrative costs (not just insurance overhead, but administration inside hospitals and doctors offices and so on) is about 30% in the U.S. , 15% in Canada. Dealing with a single insurance company that covers most costs is cheaper. But it is not just a matter of billing. Each insurance company has its own set of protocols covered providers have to comply with, and since a doctor or nurse can’t follow one set of rules with one patient and a 2nd with another, you end up with complicated prototols that comply with the rules of all the insurer. Another problem with without the leverage having just one or a few payers provide everything in the U.S. system is more expensive. We pay more the same drugs. We pay more for machines like MRIs (per machine I mean) . We even pay more for bandages and hypodermics and medical supplies. And I don’t just means patients pay more. Hospitals pay more. Clinics pay more. Individual doctors offices pay more.

    Of course the problem with the Canadian system is that is mainly administered at the provincial level, which means the purchasing power is not as great as it could be. France has better results, because pricesare negiotated nationally not on a province by province basis, which results in lower costs than Canada and better quality care than Canada. Also France has an almost ideal balance between public and private. It has a nominally larger role for private, but also a really robust well funded public sector, and rigorous control over certain aspects of both public and private.

  82. http://ir.wellpoint.com/phoenix.zhtml?c=130104&p=irol-newsArticle_financial_invest&ID=1718067&highlight=

    WellPoint latest second quarter results:
    Income: $643.6M
    Revenue: $15.2B
    % profit: 4%

    That’s going to swing wildly, though. Profit in Q4, ’11 was only $343M for the same $15.2B in Revenue. Total operating gain for 2011 was only 6%. 7% in 2010. 7% 2009. 7% 2008.

    That is not excessive. once you kick out 1-2% for inflation. And even if eliminated, isn’t going to seriously scratch the overall issue of social health. Certainly not high enough to justify the ranting seen here.

    Sorry, I don’t know if you were saying that Health Companies were making 30% profit in the USA and 15% in Canada. But I will say that I have no doubt that in a really good year, some health insurance company probably did make 30% one year — all it takes for a community to have exceptional weather, which can reduce incidents of basic illness which turn into Pneumonia, etc.

    So, Gar, sorry, but I really need reference to a study that shows exactly how the profit in the Health Insurance in the USA is so extraordinarily higher than the 7% WellPoint reported. 30% would have every investor in the USA dumping everything they own and jumping onto that ship!

  83. Believe it or not, I cut 4.5/7 pages out.

    James: “But I’ve always heard the term ESI used more in line with the definition you’ll find on wikipedia (for one lazy example)…”

    By that page, ESI covers the broad spectrum between Rational Selfishness and Altruism. But Capitalism does NOT care which of them you follow. Whether you spend your money for yourself or others, all Capitalism cares is that THE MONEY KEEPS MOVING! GDP does not care if you bought a smartphone or food to put in the donation bin. Some product was bought, and that keeps someone else working. That doesn’t change under a gift economy. More trades = more work.

    You think that Anarchy will magically create 0% unemployment? When one farmer feeds 1000 people, what exactly do the other 999 do, especially if you loathe “useless” products?

    James: “Here I’m thinking of the impressive contortions evolutionary psychologists…”

    I’m not familiar with the suggestion, so cannot respond to it. I will say that in my experience, altruism has more to do with assuaging feelings of guilt than anything else.

    James: “Graeber demonstrates that human nature does not make us capitalists, nor necessarily happiest as capitalists.”

    Since all systems of governance (inc. Anarchy) are products of intelligence, not instinct, I’d call all of them distinctly unnatural. Deciding between them should be based on rational, “cost and reward” analysis, not someone’s opinion of what will make everything wonderful and great. (Ie. The risk of Anarchy turning into Rule of the Strong has got to be one of the big costs tallied against it.)

    As for Capitalism making people happy… Capitalism does make some people unhappy, due to the stress of the work environment. But you’d replace that with guilt and shame for “wrong thinking” under your idealized Anarchy. I do not count that as “better” in any way. I choose the stress over the guilt of committing thought crime. I also don’t think many people that have to abide by democratic votes against them will be particularly happy, either.

    James: “Now, even should we accept the notion that observing less hierarchical societies can suggest fruitful avenues to explore for our own society,”

    Conceptually pretty, but functionally impossible. Democratic vote on a small scale can work, but as the scale increases, so do the number of issues that need to be voted on, and the amount of time to study increases as complexity increases. Eventually, you’re spending all of your time studying and voting, and none working. And that is why hierarchical systems became necessary.

    James: “The good news is that, as humans, we do have a collective identity; There’s just a lot of work to be done before, when asked to define ourselves, “human” springs to mind before a race, region or religion.”

    But when you open borders, as Graeber suggests, you are bringing in people that are not indoctrinated into your pristine “collective identity”, and we have already established that the “gift economy” demands a distinct level of trust from everyone involved. Refugees have distinctly low trust levels due to persecution by their previous State, and it is refugees that will be coming to an open border. Can anyone join the Pialoan society, or do they protect their racial identity, and thereby protect their Anarchist society from corruption by imported hatreds? Is there an example of an Anarchist society that is open to immigration, or is participation limited only to children that are indoctrinated into the culture?

    James: “The Piaroa simply believe that the future is best faced collectively instead of by everyone for themselves.”

    I have always rejected democratic vote as a source of wisdom. It works for some things, but anywhere expertise has come to be required, democracy is an idiotic idea. On the small scale, with limited subject matter that everyone can understand, democracy can work adequately. But the issues become increasingly complex, until they become too difficult for the average human to comprehend, and at that point, they stop voting on rational opinion, but on who looks or sounds the best. Our society is simply too large, and the problems too complex, to not have hierarchical systems of expert managers making daily decisions.

    James: “This seems to be another manifestation of our disagreement over whether “profit” is the best or only way to prepare for the future.”

    Technically, I don’t think I said that, but I will now. It is the only way a modern technological society can grow.

    I could approach this in many ways, but the one I will use is technology. People do NOT understand it. I will refer you to Richard Dawkins “Root of all Evil?” and “Enemy of Reason” for a couple of examples of how many human beings have limited capacity (or desire) to understand science and technology. Science has changed society such that people can hold foolish beliefs about Alternative Medicine and Pseudo-Science, but not die for their idiocy. Anarchy only creates a system whereby the idiots can democratically vote away the scientific systems that keep them alive.

    In a community run by democratic vote, science and technology are at the mercy of tradition, superstition and ignorance. Science becomes the plaything of popular opinion and fad, because the scientist has to justify complex research subjects that require brilliant minds and 7 years of study to people that couldn’t pass Gr 12 Physics. Scientists don’t get doctorates because they’re the only ones that don’t understand science and need the training, but because they’re the only ones capable of understanding the science. How can you expect that someone with high school education could judge the worthiness of a physics experiment, or engineering project to create a new oscilloscope? Or whether a circuit board needs to have a PLL on it? (I couldn’t even convince two Bachelor mathematicians of that one. Their manager understood, fortunately.)

    So why is profit a necessary part of the system? Because technology is seriously, bloody expensive! Democratic votes aren’t going to pay for that, because people believe in fantasies like invention can happen without investment, or just that they simply don’t want you changing their traditional methods of doing things. The Capitalist Investment system that performs that function in our society works because only a few investors need to study and understand the science in order to buy into an idea and obtain all of the resources to make the new product or advancement. In order to have that funding to begin a new effort, someone needs to have more money than he currently requires, mandating profit for continued investment into invention.

    Communism can handle that level of understanding since it recognizes the need for hierarchical systems of management, so experts decide which projects get funding. Some might think this eliminates the need for profit, but that’s just mental gymnastics. If the government funds it, then the government has more money than it needed to pay its workers, so the government was making profit in the first place. If you think that this is just the cost of doing business for the Communist state, then I can say the same thing for the Investor.

    I had a long rant against Graeber’s position on Patents. I’m going to cut to the conclusion. If you would have invention in your society, you must ensure inventors can make their living inventing. Graeber’s proposals make that impossible.

  84. One of the biggest problems is the need for malpractice insurance. There are some occasions in which a lawsuit is appropriate (removing the wrong arm, for example), but for the most part, enough Americans seem to see lawsuits as a way to hit the lottery to contribute to the high costs of health insurance.

  85. I recommend T. R. Reid’s _The Healing of America_ to see a survey of other countries’ health care systems. There’s a lot of ways of delivering universal health care. Warning: very depressing reading for Americans, as you’ll see how backwards and inefficient we are, above and beyond the universalism question.

    One note: Canada’s waiting lines (for non-urgent care) do seem real, but they’re also unique to Canada, not an intrinsic feature of UHC.

    Will: yes, some other countries have co-pays. France, for one.

    Chris: “I fear that the government would run it terribly.” The government already runs Medicare, the VA, and the Federal Employees Health Benefits plan, all well.

    “Medicare also only covers roughly 20% of Americans”. Yeah, but the oldest and sickest 20%. Insuring the other 80% doesn’t cost as much. Besides, we’re already (mostly) paying for that; Medicare for all would mean shifting from private premiums to Medicare taxes, not an increase in overall spending. And Medicare is more efficient, so actually a decrease.

    The bill is 2000 page (misleading, bills have lots of whitespace) partly because it’s doing lots of things, including various attempts at cost controls, not just approaching UHC in the most business-friendly way possible.

    skzb: “As far as I can tell, Obama’s plan fixes exactly nothing” Wrong. It fixes the problem of people not having insurance and thus not having care. Obamacare is at core the same as Romneycare, which I live under. It *works*.

    “I don’t think everyone should have healthcare insurance. I think everyone should have healthcare.” Everyone having health insurance is one way of providing health care for everyone. It’s the most common way: private but regulated insurance in Germany or Japan, public insurance in Canada or Australia.

    “It does nothing for those of us who can’t scrape up cash for premiums, deductibles, copays, and prescriptions.” Nothing except the biggest expansion in subsidies for the poor and lower middle class in decades.

    “Universal health care is a wonderful ideal, but you need to understand that it comes with a huge price tag.” Smaller than what the US pays for non-universal care, though.

    “First of all, a certain amount of paperwork will always be needed in an industry as vast as health care” A ‘certain’ is pretty vague. France and Germany have smart cards, which store patient records and facilitate payment. A doctor enters procedures done and runs the card, and gets paid electronically a few days later. Vastly different from the US and its paper billing.

  86. “None. Billing is unavoidable under any system of government”

    Wrong. US billing paperwork is insanely inflated by having multiple insurers all on their own system, *and* Medicare, *and* Medicaid. *Any* single system would cut costs and paperwork, as would going electronic and not having paper.

    There’s also the NHS/VA/Beveridge model, where doctors are employees paid to keep people healthy. While you want to document what’s done, it’s not as strictly necessary.

    “profit is also unavoidable” Wrong again. Non-US systems are non-profit at core. For example, the Bismarck model countries most like Obamacare have non-profit insurers, and usually premiums set by the government. Commonly, what doctors are paid per treatment is set by the government as well, as in France and Japan. No need for “marketing” decisions.

    Enlightened self-interest works sometimes. Other times it bows to the prisoner’s dilemma and the tragedy of the commons. Competitive markets with no unaccounted externalities and no asymmetric information work great, but you need all those conditions.

    “enough Americans seem to see lawsuits as a way to hit the lottery to contribute to the high costs of health insurance.”

    I’ve seen it suggested that due to the lack of UHC, suing the doctor is the only way of trying to survive financially (or at all) if there are complications. I don’t remember Reid talking about about why US malpractice is so expensive, but he does note that foreign doctors typically pay $1000-5000 a year in insurance, and don’t really expect to get sued in their careers, while US doctors pay $50,000 and do get sued.

  87. …I guess with all that, no one spelled out how Obamacare is supposed to work.

    Currently, individual health insurance doesn’t work. Alice is young and healthy, with expected costs of $800 and is willing to pay $1000 to be safe. Bob is old and sick, with expected costs of $10,000 but can only spend $8000. An insurer covering both of them at the same rate would $5400, covering the joint costs — except Alice would refuse to pay, and then Bob wouldn’t be covered at all. An insurer charging individualized rates would charge Alice $800 and not sell Bob insurance at all, as a known loss. Or would charge Bob $10,000, which he can’t pay. (Note this is assuming magically efficient and non-profit insurers, who are only covering costs. If there’s anyone to blame, it’s Alice!)

    Obamacare says
    a) you can’t deny coverage, Bob has to be sold insurance. “guaranteed issue”
    b) you can’t charge different rates, so Alice and Bob have to get the same rate, which here is going to be $5400. [I’m simplifying; there is age adjustment allowed, but in a limited range.] “community rating” Also, there’s high minimum standards; everyone’s getting *good* insurance.
    c) everyone has to get insurance, so Alice has to pay the $5400 and pay into the system. “individual mandate”
    d) and if Alice genuinely can only afford $1000, then she gets another $4400 in subsidies to pay her premium with.

    You need all of these. (a) and (b) enable Bob to get insurance, (c) allows the insurer to continue to exist, (d) makes up for the effect of (c) on poor people. Remove any one of them and the system breaks. But together they mean everyone can get insurance, and thus pay for health care, even if they’re aging self-employed people. It’s the Bismarck model of UHC — the oldest one in the world, dating back to 1880s Germany — and used in lots of places.

    The US version could be better. Allowing insurer profit and requiring 80% of premiums to be spent on benefit is still pretty low compared to a typical 95%. By itself it still allows balkanized billing practices, and insurers setting premiums introduces uncertainty. Out of pocket maxima may still be too high, or subsidies not high enough, or having too much of a poverty trap effect (get a bit more money, lose $4000 in subsidies.)

    But overall, it’s moving us from “lots of people die because they can’t afford health care” to “everyone has health care but society is paying too much for that”, which is flawed but a huge step forward.

  88. Damien, my argument for profit in the Health Care system has nothing to do at all with Insurance. It has to do with promoting Capital Investment into providing new machines. I support the concept of a two-tier system, where the public system provides a certain amount of basic and advanced health care for everyone, and those that want to spend more to improve speed and quality can do so at their own expense. I use the Quebec model compared to the Ontario model to demonstrate that a two-tier system provides a much higher level of Investment into the system, which improves the overall care for everyone, at the limited moral cost of the wealthy gaining a greater benefit by giving the Investors profit. (Note that the public model may not provide profit. Only the Upper Tier needs to. Do you really care if the wealthy are paying profit to other wealthy people, so long as the poor are not?)

    If you want to eliminate that last 5-7% profitability from the Insurance industry, go right ahead. It won’t change a thing in actual health care to the sick. You will have to bail out the industry during epidemics (when insurance has abnormally high pay outs), but if that’s a cost you’re willing to foot, more power to you. There is no obvious gain to the system from Insurance company profit. My concern is increasing the amount of capital equipment providing direct care to the sick and injured, but that’s not going to rise by cutting Insurance costs.

  89. The opinions of Kreistor are well stated summaries of the conventional wisdom re economic reality in the United States. The problem is that the way we work doesn’t work. No matter how many times or by who it is pointed out that Medicare and the VA have a lower cost of care than private, for profit insurance funded care, it seems to make no impression on the iron clad article of faith that government can never manage anything as well as private enterprise. As you may recall, during the debate over Obamacare (I call it that in respect for the mighty struggle to make only a few improvements in a wretched system-more people covered, no preexisting conditions, etc that people of conscience have been trying for for most of a century! ) there was a meme that was tossed around by the GOPs about “govt bureaucrats pulling the plug on Granny.” The Honorable (sic) Chuck Grassley was one among many top GOPs to use it. Turns out it was actually a small but eminently sensible provision from Georgia GOP Johnny Issacson to provide payment for a physician to consult with the family on end of life care so that they would have all the information they needed to make difficult decisions re costs, outcomes, discomfort versus amount of life extension, quality of life from one intervention or another, etc. That is what turned into “govt bureaucrats pulling the plug on Granny.” On the other hand, the California State Nurses Assoc. found that either one in four or five claims for medical care were denied by health insurers, so there really are “death panels,” but they are run by the insurance cos. See Wendell Potter’s book “Deadly Spin” for the straight skinny on the deceptive and frankly fraudulent practices common in the biz. He was a Vice President of PR at CIGNA, the first high level insider to blow the whistle.

    In the words of Sir James Goldsmith, wealthy British financier, “The economy exists to serve society, society does not exist to serve the economy.” Thanks to the estimable Thom Hartmann for the quote. And from the longshoreman-philosopher Eric Hoffer, “In times of profound change, the future will belong to the learner, and the learned will find themselves beautifully equipped to cope with a world that no longer exists.” Don’t remember where that one came from, but it’s a good’un. Comfort the afflicted and afflict the comfortable!

    SKZB: BTW, In my approx. 50 years of reading SF and Fantasy, Vlad Taltos is one of my very favorites. This is actually the first fan letter I have ever written to any writer (head hung in shame) but thank you everso for many pleasurable hours. Looking forward to the completion of the next adventure. I also send my prayers for your health and wellness now and in years to come.

  90. Kreistor: I meant no offense to you. Rereading my comment, I saw it could have come off as snarky. Maybe I do have snark tendencies from time to time but I know that is not a useful attitude. You come across as a decent sort who tries to live in the real world. We need people like that to balance fuzzy minded theorists like me, but it’s hard to tell these days what actually is real. Figures don’t lie but liars sure can figure, so coming to a truly accurate assessment of any given situation is crucial. But in order for that to happen, we need to respect each others’ intent, if not their philosophical position. People aren’t good or bad, people are good and bad, and nobody has a monopoly on the truth. If we work together to reach some kind of consensus of what really is happening, we will be much more likely to be able to do something about the challenges we face as a world civilization.

  91. “Kreistor: I meant no offense to you. Rereading my comment, I saw it could have come off as snarky.”

    I never take personal offense, unless someone clearly states they are trying to offend. I give everyone the benefit of the doubt.

    “The problem is that the way we work doesn’t work.”

    In the USA, I completely agree. Canada can be better, too, but Moore isn’t completely disingenuous presenting our system. In “Sicko”, he visited London, a small city with the biggest medical training university hospital in Canada. London gets the best we have, so he makes it seem like waiting times are 20-45 minutes everywhere, by cherry picking the best. For most Ontarians (health care is a provincial dept, not Federal), waiting times of 3-5 hours on Monday morning are typical. He is correct when he shows that we don’t pay (we do pay for ambulance rides) directly, but it is tax funded, so we really do pay every year, healthy or sick. Nothing’s truly free, under any system.

    The gross fallacy is that Insurance can’t make money unless it treats you Americans like trash. They do. They do NOT need to. If they charged you insurance rates relative to the real cost of the industry, your premiums would rise but you’d get better overall care. But the managers are completely foolish, trying to increase membership by lowering premiums, and retaining profit by sacrificing health, whihc lowers premiums further still. I presented earlier that they aren’t making the %ages people think, and I do still support that, but numbers can hide the pain. The industry can sacrifice lives to retain profitability, without turning pain into massive profits.

    Remember, in the microeconomic world, lowering your prices increases the number of people buying your product, and that is how the insurance industry has come to view its existence. It is the worst presentation of competition in the marketplace, and demonstrates that it must be regulated.

    (For those that have forgotten, I support regulated Capitalism, not “pure” Capitalism, to ensure abuses like this are hammered into oblivion. I’m against Idealism in all of its forms.)

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