By: Roger

Roger — Wed, 08 Apr 2015 07:22:48 +0000

Thanks, Karl, for your comment. Unfortunately, sitting in London, I have no direct experience of the American health care insurance market so it is very difficult for me to comment except about what I read in sources that I hope are reliable. I am sure that there can be a whole series of local factors that also affect your direct experience. I echo, however, your comments about adding more market reforms. I have read horror stories, for example, about how the pricing of medicines and medical equipment are distorted by restrictive government policies — I don’t think that Obamacare, after all the congressional lobbying from special interests and the explosion of the length and complexity of the legislation, touches very much on this. But above all, there is an assumption that medical care is completely a field where the normal interaction of self-interested consumers and sellers cannot work to produce a good outcome because, when it comes to medicine, consumers are too ignorant or scared to make rational choices. In fact, I think that consumers have historically had almost no incentive to make rational choices and the conventional assumption has simply become a self-fulfilling prophecy. The article starts to show ways in which motivated consumers can start to have a material impact on pricing, including by using their own consumer-advocacy experts.

I believe that there are even bigger areas where incentives, if they were not totally anesthetized, can start to affect the market for medical services. These are the areas of lifestyle choices and end-of-life medical expenditures. I have recently read about a study that claim that 42% of cancers are lifestyle related. I think that most people view cancer as being one of the more random major diseases — with the exception of cigarette smoking causing lung cancer, of course — so I can only imagine that the percentages for something like heart disease and diabetes-related diseases are even higher. The other area where we have all read about — or experienced directly — horror stories is end-of-life treatments, which are often incredibly expensive and which often extend life for a short period of time during which there is basically zero quality of life. I would be fascinated to see a statistic on the percentage of medical expenditures which are related to lifestyle-induced diseases and end-of-life treatment. I think the result would be shocking and could lead to an interesting debate on whether society should be subsidizing these behaviors.

By: Karl Kiser

Karl Kiser — Tue, 07 Apr 2015 15:01:33 +0000

I can’t argue stats and although I read the economist, I did not read that article on healthcare. Regarding Obamacare, I was disappointed that they didn’t inject more market reforms in the program. All that said, in my role as choosing and selecting healthcare insurance for 110 employees (I always wonder why I’m choosing what’s best for them, shouldn’t they be choosing what’s best for them? I digress), for the last 10 years our rates — and we shop around among various healthcare companies each year — have consistently increased from 12-22 % with 15% being the average. This current fiscal year, the first year of Obamacare, the rate increase was 7,5%. We just received our rate increase for next year, 3%, incredible, given 10 years of history. Contrary to the economist article, it is important to note that our rate of increase did not decline during the recession. I’m not sure why our rate of increase has so dramatically diminished in the last year, but clearly something good has happened. Now imagine if more market reforms were added?

Comments on: Après Ski (Part 2)

By: Roger

By: Karl Kiser