Health Care, Economists and Reality

The Health Care market is complex, and to understand it one must drop back and ask two questions. First, just what are we trying to accomplish with Health Care. Second, are there other examples of “insurance” that people buy which seems to work?

Let us answer these two questions quickly. First we want Health Care so that people who are sick can be treated in the best reasonable manner. Note I did not say best possible manner. It should be reasonable based on resources available. However if someone can afford more than they can personally buy more. Second, we have many examples of such an approach apart from Health Care. Namely home, auto, liability insurance.

What makes the other insurance factors work? Simple:

1. They are bought as an individual not through companies as a benefit. Every buyer gets to make their own choice.

2. Minimum levels are coverage are mandated but they really are minimal to protect third parties such as liability limits.

3. Added coverage is optional and can be purchased.

4. It is not tax deductible.

5. There is an un-insured motorist pool which can be made akin to the high risk medical pool.

6. Insurance companies are many and compete aggressively for customers.

Thus we have thousands of examples of such coverage. Then why is Health Care so crazy. Well there are many people who think they know.

In a recent NY Time article by an often self-proclaimed top economist the author states:

In Econ 101, students learn that market economies allocate scarce resources based on the forces of supply and demand. In most markets, producers decide how much to offer for sale as they try to maximize profit, and consumers decide how much to buy as they try to achieve the best standard of living they can. Prices adjust to bring supply and demand into balance. Things often work out well, with little role left for government. Hence, Adam Smith’s vaunted “invisible hand.” Yet the magic of the free market sometimes fails us when it comes to health care. There are several reasons.

Namely he contends:

1. Externalities abound. In most markets, the main interested parties are the buyers and sellers. But in health care markets, decisions often affect unwitting bystanders, a phenomenon that economists call an externality.

Now the externalities are also the unintended consequences. All too often whenever Government gets into the fray we see unintended consequences. Why? Simply because almost all legislation is written by lobbyists who serve the interest of their employers. The more legislation the more externalities. Externalities rare a result of the way legislation is created not inherent in Health Care.

2. Consumers often don’t know what they need. In most markets, consumers can judge whether they are happy with the products they buy. But when people get sick, they often do not know what they need and sometimes are not in a position to make good decisions. They rely on a physician’s advice, which even with hindsight is hard to evaluate.

Well consumers do not know what fender will get crushed by some moron trying to squeeze between you and an eighteen wheeler. You need coverage not specificity. That is the nature of insurance. When my car gets hit I do not know how to repair the fender or how to price it out. Same for dozens of other insurance markets. I am buying a policy to cover the unknown. Thus this reason is without merit.

3. Health care spending can be unexpected and expensive.

Same as the above. I cannot tell you when that moron in the black pickup tries to squeeze between me and the 18 wheeler. I was stopped to allow the 18 wheeler to safely turn. The moron in the pickup is just that, a moron! So his policy pays but mine increases my fee, perhaps because I did not have wings on my care to fly away. Why says insurance is logical.

4. Insured consumers tend to overconsume. When insurance is picking up the tab, people have less incentive to be cost-conscious.

Auto insurance customers do not, frequently. This is insurance fraud. They have adjustors for that. Now there is a corollary. Namely many people abuse themselves via obesity, alcohol, tobacco, and what we get is self-induced disease. That is the equivalent of a person having a multiplicity of moving violations. We have seen and addressed this element.

5. Insurance markets suffer from adverse selection. Another problem that arises is called adverse selection: If customers differ in relevant ways (such as when they have a chronic disease) and those differences are known to them but not to insurers, the mix of people who buy insurance may be especially expensive.

If everyone who drives must have insurance, actually it is the vehicle, then why not the same with Health Care. No exceptions. You may just have the minimum liability policy or you can get the top of the line. But you have it. Perhaps the bottom minimum is covered by a tax deductible. If people do not have the funds they great a tax credit to pay for it. But no free riders.

We had developed the details of such a plan some eight years ago. It is not hard and not overly costly. It gores a lot of oxen. From fat people charged a surcharge to companies getting rid of the benefit. It also get the Government out of telling me when to get a colonoscopy.

Learning to Talk ("Tawk") Like a New Yorker

I grew up on Staten Island. Now I gather that some folks grew up "in" Staten Island but grammatically that would make them a worm or gopher but I gather one must leave Grammar behind in the new Century. Now in my Senior Year of Secondary School after the Christmas break since I had already gotten into college, had my scholarships etc. I began to get a bit reckless. My father, in order to see that I stayed the straight and narrow decided I need some focusing. Now to put this in context my father was in the NYPD Youth Division and my degree of reckless behavior amounted to what today would probably make one a Saint, especially under the current management back in Rome, but I digress.

Thus my father with the agreement of the Headmaster sent me for the month of January to the NY Department of Sanitation, the Garbage folks for simplicity. Thus each day I arose at 4 AM and got the 110 Bus to another bus, and then to the NYDS garage with some 40-50 other folks. My first day I forgot my long underwear and wore chinos. It was 20 F and snowing. Needless to say I soon learned that looking "cool" was not an option.

Then out to shovel snow and collect trash. Twelve hours a day, from 6AM to 6PM, with an hour for lunch at some greasy spoon diner. I brought my own peanut butter sandwich.

What did I learn? The first was the use of the most famous profanity in New York, the one making the rounds in the current White House. After 4 years of Latin, through Virgil, I knew Grammar but I have never seen a single word which could be a noun, verb, adjective, adverb, gerund, preposition, etc ever. But I learned its usage like a pro. It made me a member of Good Fellas, I could F word with the best.

Now back to Virgil in February I learned several things. First, do not try these words out in Virgil, and do not try them in Chaucer, you see after Latin was Middle English. Where could I use my new found language. I had a good hold of street Spanish, Italian, academic French, and Latin, a smattering of classic Greek, but my Sanitation Department linguistic capabilities were homeless.

But alas, they now have a home! Doors have been opened by the literati in DC, by the very political lights that leads us forward. I have my skills fine tuned to take on any position in Government!

Going to the Movies

For over a hundred years when one wanted to go to the movies one saw a film that was of interest, found a theater that was showing it and then went to buy a ticket, arriving early if it was popular. The one sat through 30-40 minutes of painful video from ads to previews, oftentimes breaking eardrums.

Now it has changed. Really. You must go on line, choose your seat, choose your time, buy your ticket, and then off to the theater you go. There is no first come first served at the ticket counter, and in fact there is no ticket counter, just a scanning device that allows you entry into massive seats and still the same boom box.

But I suspect that one can now arrive respectfully late, avoid all the promos, and just see the film. This is a cultural change and I wonder where it may take us.

Most Influential Science Books

What can be influential in science, what books for example. The Guardian has run a piece and Richard Dawkins's Selfish Gene comes out on top. They note[1]:

Debates about the most influential science book of all time habitually settle into a face-off between Darwin’s Origin of Species and Newton’s Principia Mathematica. But a poll to celebrate the 30th anniversary of the Royal Society science book prize returned a more recent winner: Richard Dawkins’s The Selfish Gene. Dawkins took a decisive 18% of the vote, while Darwin was jostled into third place by Bill Bryson’s A Short History of Nearly Everything in the Royal Society poll of more than 1,300 readers. As interesting as the votes on the 10 books shortlisted for contention was the often passionate championship of titles that were left off the list. They were dominated by physics and cosmology. Silly not to include David Deutsch, sniffed one of many, who cited a range of works by the Oxford-based quantum physicist. Carl Sagan’s “mind-blowing” 1980 TV tie-in Cosmos garnered a clutch of votes from fans who described it as life-changing.

Now I thought about some of the works I have read over the years and especially the ones I have re-read, some several times. My most favorite is the two volume auto biography of Norbert Wiener. Each time I go through it I see more and more. It is the mind of a mathematician, a brilliant mind. Many think Norbert as a bit of an odd duck and in the Engineering world the folks like Shannon much more, but there is nothing like Wieners autobiography. It is a snapshot in time and a time when one could roam across the world and share ideas.

Now on to my list:

1.     Bell, Men of Mathematics

2.     Einstein, Relativity

3.     Einstein, The Meaning of Relativity

4.     Feynman, QED

5.     Feynman, The Character of Physical Law

6.     Gamow, One, Two, Three…Infinity

7.     Schrodinger, What is Life?

8.     Shannon and Weaver, The Mathematical Theory of Communications

9.     Watson, Double Helix

10.  Watson, Molecular Biology of the Gene

11.  Wiener, Cybernetics

12.  Winograd and Flores, Understanding Computers and Cognition

Just some thoughts.

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[1] https://www.theguardian.com/books/booksblog/2017/jul/20/dawkins-sees-off-darwin-in-vote-for-most-influential-science-book

CBO Numbers

The CBO issued a report on the savings when eliminating Obamacare. They state:

CBO and the staff of the Joint Committee on Taxation (JCT) have completed an estimate of the direct spending and revenue effects of the Obamacare Repeal Reconciliation Act of 2017, an amendment in the nature of a substitute to H.R. 1628, which would repeal many provisions of the Affordable Care Act (ACA). According to the agencies’ analysis, enacting the legislation would decrease deficits by $473 billion over the 2017-2026 period

Yet if you look at what they reported a day ago the savings would be almost $600 billion per-year! How can anyone believe these folks! What number is ever real! Well it is Washington after all.

Healthcare Expenditures

The CBO published a report containing the data below.

Let us examine the above:

1. Medicare is a paid for insurance plan. eight years ago we showed that any middle class person contributing for their 50 years would have paid into he plan, assuming interest at the FED rate in excess of any benefits. Thus Medicare is a paid up benefit. In addition Medicare still charges for participation and still one needs extra coverage. Thus for those who have never held a reasonable job and paid little into Medicare it is a free ride, for all others we pay well more than any benefit!

2. Medicaid is a free plan. The ACA double Medicaid coverage adding $250 billion to this plan. BUT, it was to stop and fall upon the states. As some Governors try to allege, falsely so, we are not expected to keep filling up their trough.

3. ACA Support is the $250 billion being spent for Obamacare payments on the Exchange. Add that to the Medicare expansion and we have $600 billion we never had before!

4. Insurance is what the working folks pay!

5. Out of Pocket is again the working folks.

6. Other is the working folk.

Thus almost $600 billion is added to our deficit and growing. The folks who pay their own way, including Medicare, will ultimately have to pay for this excess free riders!

Russian Intelligence

In the old days when the Soviets had a KGB and other intel agencies they were pervasive and managed to keep themselves well hidden from Western intel agencies. The classic example was the Philby clan who managed to keep themselves out of the MI6 and CIA radars. The Russians are quite intelligent and sophisticated and somewhat unlike Chinese intel have well established western outlets. There were thousands of fellow travelers in the old Soviet days and in today's world the need for promulgating a Soviet world view are no longer necessary. The interest is establishing a strategic advantage to maximize whatever Russia may have.

Unlike China which has an economic dependence on the West, Russia sells its extraction elements, oil and minerals. You really can't buy any "Made in Russia" stuff at Walmart. So why doe Russia do what it does? Simply it is the Russian mindset of having a presence, a seat at the table. It is doubtful that Russia wants to overthrow the United States. Frankly they have enough problems at home without taking on more. International influence, yes, international "respect", yes, recognition, yes.

Now as to Russian Intelligence Operatives. What do they seek? Sources of information, strategic advantages, weaknesses of the other side. If a target can be compromised then a target can be manipulated. Yet to compromise one must know something the target wants kept secret and then let the target know that they are vulnerable. Classic extortion. To work, the Operative must be invisible, yet present to the Target.

What are the rules for an Intelligence Operative?

There are three simple rules:

1. Never put it in writing

What does this mean? Simply never leave a discoverable trail. Clearly when one enters Trump Tower or any other major building in New York one is captured on video hundreds of times and one must register to enter the building, one is photographed, one must submit valid IDs etc, pass through Secret Service filters. Thus, any meeting at Trump Tower is a major violation of Rule 1! Let us assume that the Trump folks were just naive. They took a meeting which may after the fact have poor optics. Let us assume they were smart. They took a meeting knowing that any operative would never appear in such an open venue. Operatives meet in obscure locations like forests, mountain paths, under bridges, or anywhere where they chance of being seen is as near zero as possible. Operatives do not meet at a location under Secret Service control, like Trump Tower. Unless the Secret Service has also been compromised in toto! That is a tale going too far.

2. Trust no one

As an Operative you must trust no one, not even your father (or mother as the case may be). Anyone can be anything at any day. Trust is a non-entity. Counter Intelligence relies of building trust with a target. If the target is themselves an Operative then the target knows enough not to trust anyone. In fact any attempt to build trust may be a sign of a Counter Intel Operative. I have seen Counter Intel Stasi and Cuban Operatives, very attractive but they scream beware!

3. Always have a second exit.

This is a critical one. It covers a lot of ground. From that of a simple Plan B to the use of third parties to do messy jobs and seeing that they are expendable. Never hold the knife, you may get caught. Have plausible deniability, be transparent. Have another identifiable as the Operative, always have a delaying plan while escape can be made.

Is Russia a Major Threat?

In the old days we worried about a Soviet nuclear attack, really! There were plans for various options such as the RISOP plan[1]. We still live on a remnant of RISOP. Russia has ready nuclear forces, and the US maintains its triad forces. The past Administration let the weapons remain un-updated, but there are still more nuclear weapons to destroy the earth many times over. Russia likewise has active capabilities. But both Russian and American key players understand the end game of any nuclear engagement and would thus mitigate against any. China is a bit uncertain but its focus has been on economic warfare. Thus Russia may at the extreme be a threat but not in any day to day environment. One may then ask why they are acting as they do? The answer is simple. It is the tale of the frog and the scorpion. The scorpion walks to the edge of a raging river and seeks to cross. He asks a frog who at first refuses, after all it is a scorpion. The scorpion promises not to sting. The frog agrees and halfway across the raging river the scorpion stings the frog, now both will die. The frog asks in his last breath; why? The scorpion replies: I can't help it, I am a scorpion. Thus one understands the Russian mind.

Is Russia more of a threat than China?

Now here we have a concern. This is an economic player. A large military but one suspects to keep peace at home. But a massive player in world economies and growing. Perhaps more time on this issue would be better spent than on the scorpion!

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[1] https://fas.org/blogs/security/2008/07/risop/