Thursday, December 5, 2013

Learning the wrong lesson while waiting on hold

Health care policy debates seem to have become a war of anecdotes. Margaret Talbot of the New Yorker posted one titled "My canceled policy and my values" which is circulating the blogoshphere
... like many of the twelve million or so Americans who buy their own insurance, we received a letter from CareFirst in late October saying that our policy would be cancelled, because it didn’t conform to Affordable Care Act requirements. ...I stopped procrastinating and got on the phone with CareFirst... First lesson learned: healthcare.gov is not the only balky system around.
I was on hold for forty-two minutes, mostly listening to an especially melancholy rendition of the “Moonlight” Sonata, before the agent who answered told me that she couldn’t help me with questions about individual policies, and, “with that being said,” CareFirst had been having “technical difficulties” all day. I waited another twenty minutes for a member-services representative who didn’t know why the company had increased my premium—maybe it was my age (fifty-two) or where I lived (Washington, D.C.)—or what about my policy didn’t meet the A.C.A. requirements. She transferred me to a third person (wait time fifteen minutes, listening material a jauntier, marimba-inflected Muzak), who told me that my premiums had most likely gone up thirty per cent owing to “the rising costs of health care” and then transferred me, without warning, to the D.C. Health Link, my state A.C.A. exchange. Second lesson learned: part of what is confusing and distressing about this process is that health-insurance companies don’t seem equipped, or maybe willing, to explain the implications of the new law to consumers. (Why raise a premium on a policy they must have known wouldn’t survive Obamacare?)
This reminds me of the hilarious "What if air travel worked like health care?" video that was circulating a few years ago.

Now how do you react to this atrocious level of service? What do you make of this experience vs., say Amazon.com, famous for short wait times and excellent service?

An economist makes the inference, "any company who treats me like this does not care about my business, and is not facing competition from upstart innovators. They must be massively regulated, licensed and protected from competition."

New Yorker writers conclude
 The Affordable Care Act has not necessarily, at least not yet, made the workings of insurance companies any more transparent or accountable than they ever were.
i.e. that more regulation and protection from competition is going to bring 3 minute wait times, and cheerful informed staff. You know, the way the Affordable Shopping Act made the workings of internet retailers more transparent and accountable.

Her story is particularly poingnant.
I’ve had high blood pressure since I was in my thirties. I take ten milligrams of a generic beta blocker every morning, which has successfully kept my hypertension controlled. By doing so, I hope to prevent or postpone some of the possible consequences of hypertension—strokes, heart attacks—which are both debilitating and costly. That’s good preventive thinking for me, and good social policy, but it also means that I have a preĆ«xisting condition
She is a classic case of someone who did everything right -- she bought individual, non tax deductible, insurance, when young and healthy, so she would not lose coverage if she got older or sick. And Obamacare just destroyed that investment. Rather than outrage, however, she feels comforted that this theft may help those not so prescient:
So yes, I’ll subsidize someone else’s prenatal coverage, in a more effective way than I’ve been doing by default under the current system, in which too many pregnant women show up in emergency rooms without having had such care, creating problems for themselves and their babies, and all sorts of costs for taxpayers. And I’ll remember to be relieved that my own access to health care is guaranteed. But they had better work out the problems with the A.C.A.; if they don’t, and it doesn’t fulfill its promise of insuring the uninsured, I’m really going to feel like a chump.
When you get that feeling, you will have company. But don't feel bad. Many a good free-marketer, in their youth, made similar mistakes. We all have values about helping people, and eventually we learn the hard lessons of cause and effect, and what actually works to that end.

22 comments:

  1. "When you get that feeling, you will have company. But don't feel bad. Many a good free-marketer, in their youth, made similar mistakes. We all have values about helping people, and eventually we learn the hard lessons of cause and effect, and what actually works to that end."

    If you want the masses to really pay attention to your ideas like I do, you'll continue with this sort of empathetic tone. It's quite becoming and, I think, disarms opponents to the point where they'll have to debate on the merits and suffer the consequences of their arguments lack thereof.

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  2. "She is a classic case of someone who did everything right -- she bought individual, non tax deductible, insurance, when young and healthy, so she would not lose coverage if she got older or sick" - she would lose under the old system it if she moved to a different state, or got a job with insurance and then lost or left that job.

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    1. Correct. Which is why the first step should have been to fix those regulatory impediments to true individual insurance: Allow insurance to follow you across state lines, allow employers to contribute to individual policies instead of group. Instead, this market has now been wiped out, and rebuilding it will be oh so much harder.

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    2. Dr. C hits on exactly the right point in his reply. The best policy would be to attack the micro-level inefficiencies. A similar fix for those who cannot afford health insurance in the private market would be to provide them a tax credit or other subsidy directly.

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    3. The current solution makes healthy people subsidize unhealthy or potentially unhealthy because they are uninsurable otherwise. You skirt this issue in your proposals by declaring adverse selection not a problem without presenting any evidence

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  3. Her mistake was calling the carrier instead of the agent who sold her the policy.

    I sell insurance for a living. I tell my customers that if they have a question for the carrier, don't call the carrier, call me first. The carriers pay me a commission to handle these things for you.

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    Replies
    1. Excellent point. Good thing we now have healthcare.gov so there won't be any agents any more

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  4. "Affordable Shopping Act"

    Hilarious! Don't they have that in Venezuela?

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  5. I live in the UK where we have the NHS. Much cheaper and better than a free-market system. I don't know anybody here who would buy into your philosophy.

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    Replies
    1. Why is it cheaper and better? Why is the government able to provide cheaper and better health care than the private market? What is so special about health care that the government can provide it in a more efficient way and why this doesn't apply to other services such as haircuts?

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    2. Anonymous: adverse selection. In the case of haircuts, the most profitable customer is the one that needs the haircut the most. In the case of healthcare, that is the least profitable customer

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    3. To Much Cheaper,

      Google "NHS bankrupt" for a few stories about your near future healthcare. Better start saving up.

      EasyOpinions

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    4. That is the reason why insurance exists, not the reason why it has to be provided by the government.
      Because you don't know when you are going to need it, or if you are going to need it at all, you sign a contract that provides insurance. Just like car insurance market.

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    5. Andrew, I will let you Google it. You can also Google about life on planet Pluto and find evidence of it. I lived all my life in the UK and know the reality.

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  6. On a business trip to the UK I noticed that there are walk-in, cash-only clinics on high street. They are not part of the NHS. If NHS is "much cheaper and better than a free-market system", why do they exist? (Just asking.)

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    1. Where is the contradiction? NHS covers what it covers, if you want more, you pay with your own money. Sounds eminently logical

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    2. Before the CASH ONLY argument catches on, from the NHS Website


      NHS WICs are usually managed by a nurse and are available to everyone. Patients do not need an appointment. Most centres are open 365 days a year and outside office hours. Some newly opened centres may offer different opening hours during their first few months.

      They have proved to be a successful complementary service to traditional GP and A&E services. Some NHS WiCs offer access to doctors as well as nurses. However, they are not designed for treating long-term conditions or immediately life-threatening problems.

      These are FREE

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    3. If the NHS clinics are free and, as you seem to argue, provide the same level of service as the walk-in, cash-only clinics ... umm, why do those cash-only clinics exist? Is it for foreigners and tourists only?

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  7. Statutory health insurance is a good thing. Seems the implementation has been needlessly idiotic. Or maybe, necessarily iditotic.

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  8. It sounds like Prof. Cochrane is advocating a model where responsible people buy insurance in their youth and stick to it through to their death. But in this model, the insurance is against expenses that happen with probability 1 roughly 50 years into the future, and these expenses are at present unpredictable (and existing experience with health costs is not encouraging).

    Can you really call this type of product by the name insurance? How many insurance companies would want to sell this kind of insurance?

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    1. Prof. Chochrane is actually advocating a free market for healthcare, where the problems that you're describing can be addressed. The system you're describing is closer to the status quo under the ACA.

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  9. Fama, bubbles and the EMH: as Fama once said, stocks go up and down all the time and some drawdowns can be severe. Markets always make mistakes but eventually correct. The term “bubble” does not contradict the EMH. You will probably have no trouble finding someone who correctly predicted the event. There are always some people to warn of stock market bubbles and crashes! The problem is finding someone who consistently predicts when these events occur (the key word here is "consistently"). If you keep predicting a market decline (or rise) you are bound to be correct at some time but this is probably not the best way to make money in the markets. Also, there are plenty of alleged bubbles in the world that have never resulted in a crash.You can never be sure that there is a bubble before it bursts and an alleged bubble does not always burst!

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