From: andy@SAIL.Stanford.EDU (Andy Freeman)
Subject: Re: Bush/Quayle's Health Plan -- vouchers?
Organization: Computer Science Department,  Stanford University.
Date: Fri, 11 Sep 1992 18:33:05 GMT

In article <92253.211911DGS4@psuvm.psu.edu> <DGS4@psuvm.psu.edu> writes:
>In article <1992Sep10.001658.1498@CSD-NewsHost.Stanford.EDU> andy@SAIL.Stanford.EDU (Andy Freeman) says:
>>In article <92253.150552DGS4@psuvm.psu.edu> <DGS4@psuvm.psu.edu> writes:
>>>In article <1992Sep9.180602.24891@CSD-NewsHost.Stanford.EDU> andy@SAIL.Stanford.EDU (Andy Freeman) says:
>>>>I note that any provider can basically decide on how much it wants to
>>>>spend on overhead (read "waste").  People who think that a much lower
>>>>overhead system is possible in the US without changes that have
>>>>nothing to do with payer systems can prove that any time they want.
>>>
>>>You note incorrectly.  You should do some studying of health care
>>>business practices, particularly the arrangements between providers and
>>>insurers, the literature on monopoly conditions in medical care and
>>>insurance markets, and the importance of uncertain medical judgement.
>>
>>Try again.  Other than MDs and facilities who have EXCLUSIVE ties to
>>HMOs, MDs and facilities will take money from ANYONE, and the
>>exclusive arrangements are quite rare.  Given that, no monopoly is
>>possible unless consumers insist on paying more or avoiding your
>
>You seem to be confusing monopoly and monopoly power.  Every economic
>study I've seen argues that medical care markets, including both physician
>care and hospital care are characterized by monopoly power.

So?  The claim was that PAYER overhead was significant and, if
"saved", could be used to pay for health care for the poor.  The claim
was actually stronger, that the payer overhead could be saved.  We can
look at saving payer overhead without don't have to considering other
problems.

>>service.  Remember, payer systems only have to deal with providers and
>>consumers; they don't have to deal with insurers at all.  (In fact,
>>the payer is an insurer.)
>
>I really am baffled as to what you mean by this last sentence.  Do you
>mean a single payer system doesn't have to deal with insurance companies?

I'm discussing a no-overhead payer system in competitition with
existing payer systems.  Let's call it "Andy's No Overhead Health
Care".  It runs according to the theories of the "insurance companies
and existing health care payer systems steal money away from people"
folk and doesn't do those things.  It merely channels money from
consumers to providers, with no overhead.

It's absurd to think that there's much cost in delivering money to the
providers, so the fact that ANOHC has to send its own checks doesn't
matter.

>>It doesn't take many customers to get a large enough pool so that the
>>risks are predictable.  Moreover, if overhead really is an issue and
>>can be easily wiped out, it's quite a cushion.
>
>Again, I don't see your point here.  Can you explain what you mean?  To say
>"risks are predictable" in health insurance must be a joke, when you consider
>medical inflation and the fact that risk charges are quite high for groups
>less than 100 persons.

group-average health care costs (the risks) are predictable.  (The
fact that the costs change doesn't affect their predictability; change
can be predicted.)  If Shea thinks that's a joke, how does he explain
the predictions of the various health care advocates?  (They're
telling us that the US will pay x in year y.)

Risk variance decreases rapidly with increasing group size (assuming
random selection).  Therefore, ANOHC doesn't have to be extremely
large to "work", if it can work at all, if the theories of the
"overhead is both significant and easily eliminated" folks are
correct.  Moreover, the saved overhead provides a cushion, so a little
more variance can be accomodated.

-andy
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