Here is your open thread for the weekend beginning Friday September 18th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
America’s Health Management is a Mess
Having said that, aren’t public schools, domestic auto production, newspapers, etc, etc. in an equal mess too?
Is the answer to bail one worker type out and make the non-medical workers eat cake in higher taxes as their jobs/pay dwindles?
There are many bloggers who hate the UAW’s pensions and job protections adding to the Big Three’s fiscal messes; hence push for lower pensions and pay.
Shouldn’t this logic fit medicine and any other field in America too?
Think about it, why should any job type get better wage protection than any other in this current economic mess?
Its good that illegal aliens are barred from this proposed health reform plan by Obama IMO, but the big picture needs clarification too. Let’s hope just Obama banning illegal aliens doesn’t become the slight of hand magic trick to then push single job type protection at the expense of all the other job types; assuming this health reform raises middle class taxes, especially substantially. Then the other 95-98% of American workers are shafted to keep nurses/doctors well paid in a depression/recession.
By softwarengineer @ 1:
They shouldn’t of course. Health care is an oligopoly; that’s why I support caps on prices.
And hospitals and insurance companies too. The industry is enjoying annual increases far above the rate of general inflation.
Price controls, of any sort, are inefficient, and result in unintended consequences. Prices are the mechanism by which markets correct themselves, and to impede pricing from functioning only leads to trouble.
Unfortunately, price signals don’t work effectively in the US health-care system because 1) individuals aren’t paying for their own care due to silly government tax benefits to employers and 2) there is a restriction on the supply of service.
In a free market, there wouldn’t be any need for pricey doctors to prescribe drugs or treat illnesses. People could go to clinics staffed by competent “technicians” who understood the basics. Heck, people could even self-prescribe/treat using on-line diagnostics software.
Worse, all the regulations around medical products (pace-makers, stents, MRIs, pharmaceuticals) drive prices through the roof. A free market would regulate itself pretty well (i.e. no one would want to use medicines or health care providers with bad reputations).
Personally I think Denninger’s health care plan is many times better than any of the junk the D’s are considering in Congress right now.
I’m a long time SB lurker, and a first time “poster”.
I’m curious to know if anyone else is appalled with how skewed the “mortgage bailout” programs have become. My husband and I moved back to WA in June, 2007, and it was readily apparent that housing prices in Seattle were ridiculous, so we made the decision to move into our small vacation home in Eastern WA rather than buy in an overpriced market. Well, over 2 years later, we are still living here (at a considerable sacrifice to our family togetherness as I work in Seattle) and thanking heaven we didn’t buy back then.
However, when I look at what is being done to help people who now can’t pay their mortgage, I wonder if I shouldn’t feel so smug. No one is offering me a great low rate to refinance (my mortgage company laughed at me and said our credit ratings were too high (?) to qualify), and no one is offering to write off a chunk of the remaining principal balance on our mortgage. These perks are only for those people who are in some stage of default, which makes absolutely no sense! Why shouldn’t the responsible mortgage payees who actually make money for the mortgage companies be rewarded? When I signed our mortgage papers on all 4 houses I’ve bought in the last 15 years, I always understood that if I didn’t pay, then I would lose my home and my credit rating would take a big hit. Is that not common knowledge? I just do not understand why the poor credit risk people are getting all the rewards, and the rest of us are not only paying for their bad decisions, but are getting the shaft by not getting the lowest mortgage rates available and other considerations.
Sorry to sound so bitter, but if truly 90%+ of all people pay their mortgage on time, why are not more people completely outraged at what is going on?
Thanks to everyone who posts regularly on this site – I find the information very, very useful!
RE: Quirky @ 5 –
“Sorry to sound so bitter, but if truly 90%+ of all people pay their mortgage on time, why are not more people completely outraged at what is going on?”
The theory is that the problem extends to the 90%+. Just as a single foreclosure in an area can have a lasting impact on an area.
Even before the bubble burst, I had a friend who tried to sell a condo, but he did not realize that there was a foreclosure in his complex. It was a small complex, and it took about two years for the complex to recover. He eventually did sell, but he was not happy, and he still thinks he would have been much better off if the other guy would have paid his mortgage as expected.
Maybe you can call it the risk of being an owner, but when the blight becomes to extensive, it becomes more than just a single owner risk.
RE: Quirky @ 5 –
If you feel this way, then how should people that don’t own any home (renters are taxpayers too) feel about tax credits/breaks for homeowners?
By The Tim @ 4:
I like the idea of everyone paying the same rate regardless of age, and then perhaps shifting eligibility for medicare lower so that the rate everyone pays isn’t too high.
How about if someone shows up without insurance, no treatment? ;-)
Tort reform is bull. It just shifts the loss to the injured and allows bad doctors to continue to practice longer. There’s no reason someone injured by a doctor should not be fully compensated for their loss.
RE: Markor @ 2 – The problem isn’t that health care is an oligopoly. The problem is too much high end insurance. Going to the doctor should cost more than $10-20. With insurance a large percentage of people don’t care what anything costs, and that drives up prices.
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My health care plan in 3 easy steps:
+ Eliminate state regulation of health insurance and replace it with national regulation. State regulation adds a lot of complexity, cost and limits competition (it’s very hard to manage with 50 different set of rules).
+ Eliminate employer provided health care. This just makes the American worker cost more relative to foreign labor. It is especially painful on small, growing businesses.
+ Establish up a Value Added Tax of 7%. This way, health care is funded by all not just working Americans and American made products. This money would be funneled back to each citizen as a voucher good for a very basic medical plan that each private insurance company must provide. Everyone would be free to buy up to more coverage, but it would come out of their own pockets.
The CEO of United Health made 150 million dollars in compensation last year. United Health and their brethren also pay lobbyists millions of dollars to ensure that they can continue feeding at the trough.
I honestly don’t know what the solution is, but saying that governnment and regulations is the cause of the health care mess is just wrong, and suggesting all we need is a true free market seems pretty short sighted to me. How about we have pay per view executions of health insurance company CEOs, and use the proceeds to finance health care reform?
By The Tim @ 4:
Seems to me this “solution” is much more likely to result in reduced choice among health care plans. No insurer is going to lose money willingly, so effectively it is a mandate to sell insurance to applicants at the average price of coverage, rather than the marginal cost of coverage. (plus vig in both cases) Most people’s rates will go up; those who were previously uninsurable will find it cheaper. I suspect it will be cheaper, and create fewer distortions, to actually create a single-payer system.
One other thing is getting rid of mandated coverage. Acupuncture? Why should I have to buy a policy covering that? I think there are actually about 60 mandated coverage items in Washington state. Each one adds to the cost of insurance, but politicians act like it’s free, and then complain when insurance rates go up.
RE: Niz Monkey @ 7 –
I am for a flat income tax (no deductions for mortgages, etc.), and I think anyone who votes should pay some taxes (even a nominal amount).
Hey, can we still talk about housing here?
As I wrote a few weeks back, I’m now living on the other side of the US–but thanks to the wonders of the Intertubes, I still keep an eye on my old neighborhood.
There is a townhouse development on S. Angeline St. very near Rainier (street number in the 3700s) that finished up and went on the market just as the bubble burst. The prices dropped over the last year but last I knew none of the nine units ever sold. I noticed that they’re not listed on windermere.com and redfin says they were delisted. KC Parcel Viewer says they still all belong to the development company.
I’m guessing they’ve gone back to the bank–wondering if anyone can confirm by notice of trustee sale, etc. It’s a shame, the builder is a really nice guy. Thanks for any info!
RE: Angie @ 16 – Yes, Angie, it appears that bank took the remaining units back. It was recorded under: 20090403001117 Breaking the recording # down: April 30th, 2009. Previous chain of title looks like the previous Developer that sold to the builder you refer to is probably relieved (timing was good).
Bummer.
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Hey Tim! Thanks for the confirmation. Gah, I’m pretty bummed out–the guy really is a good guy, has a kid just a few years off from college, I’m sure he’s lost his shirt and probably a lot more. Oh, well, I hope he had a good nest egg from the boom years.
Two doors away from that townhouse complex is another one that broke ground this spring (!!) and was under construction this summer. Gotta think that those folks are sweating bullets. Can’t wait to get back out there again and see for myself if they ever actually get finished.
Continuing on the townhouse theme: man, it’s sure been interesting seeing the housing stock out here. Density is so much higher than Seattle, even way out to the second-ring suburbs. High-rises and acres of brownstones in the city, and very desirable ones at that–Seattle doesn’t have anything like it. Even way out in the burbs the majority of residences are designated “two-family” or “three-family”–basically large single houses split by floor and legally regarded as condos. Seems like you have to get almost an hour out of downtown before really, truly single family houses become the norm.
Also, the light-rail transit beats the daylight out of the (otherwise totally fine) bus service–this is reflected in housing prices as well. Walking distance to the closest T station commands a serious premium.
RE: Angie @ 18 – Sorry, I missed your comment a while ago about your move. Where did you move to? I’m a little familiar with two-fam and three fam. homes in Mass. where my brother lives. His three family house is huge.
Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to “strategically default” — abruptly and intentionally pull the plug and abandon the mortgage — compared with lower-scoring borrowers.
http://www.latimes.com/classified/realestate/news/la-fi-harney20-2009sep20,0,2560658.story
Still more evidence that ruthless default exists despite what some here say ……
Jillayne, it was cool to see your article referenced over on CR.
http://www.calculatedriskblog.com/2009/09/ftc-considering-ban-on-upfront-loan-mod.html
Tim, my job made me an offer we couldn’t refuse to move to the Boston area. I wrote about it here (let’s see if that link works–the open thread of Sept 2), with props to Ira for helping me to decide whether and how to sell our residence. The sale should have closed yesterday. Thanks to the magic of corporate relocation we are already done with the transaction and have already pocketed our proceeds.
RE: see it clearly @ 20 – Again, that article assumes strategic default based on payment behavior. So again, some people attempt to quantify strategic defaults simply because it fits with their agenda.
As I mentioned over in the Times’ version of this story, people with low credit scores have a lifestyle that involves defaulting and curing. Thus it’s not surprising that they wouldn’t fit within the pattern which this study assumes is not a strategic default. That’s simply what they do–repeatedly.
The simple fact is without testimony under oath and forensic accounting you have no idea whether or not a default is a strategic default or not. These studies are pointless exercises, but I’m sure someone makes money creating them.
RE: see it clearly @ 20 –
It’s very clear that people way over paid for properties based on sales hype. Some agents this year have been reviewing offers on such and such a date. People are bidding on the good properties.
When the stark reality that housing is something you have to work at sinks in many people will opt for something professionally managed. There is no reason not to.
Bankruptcy is specifically mentioned in the Constitution: To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
Our founding fathers were very familiar with debt as a means of enslaving people. In that regard it may be that walking away from over priced mortgages may be more American than paying for a swindle.
RE: Kary L. Krismer @ 23 -
I cut my comment short before seeing yours.
Why would I pay on a Note that is far removed, over priced, and under valued? What incentive do I have? My good name?
There is a very large back lash to mortgages going on. We read about government involvement helping the banking and financial industries without looking at the reasons.
It’s a matter of law. If I manipulate the value of a stock and sell it at an inflated price I can go to jail. Making loans based on inflated property values is fine, legal, and a right we have. When we turn around and sell that Note repeatedly, knowing the face value is far below what is shown, we are in dicey waters.
There are a lot of problems right now with the fact the economy is far from expanding. If in fact credit gave the illusion of economic expansion is it up to individuals to know that? Is it up to the consumer to know we never had a global economy? Was the whole economic expansion contrived? Where we lied to? Did we buy properties based on a false perception of the economy?
There are some very angry people in this country who are afraid that if we go along with this fiasco there will be another Depression.
Once people stop paying what is the value of Notes? If bankers, mortgage company executive, lenders, and investors go to jail where will that leave our economy?
In my opinion we are going down a path of false hope. We should let the banking industry off the hook, stop paying mortgages, and move on to more profitable endeavors. That seems like the only reasonable solution. Just let it go.
It’s the American thing to do.
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Health care question / comment -
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Recently, my significant other had some major dental work done. After the dentist made his first examination, his office provided a list of needed procedures and a list of fees. Upon the second visit, we informed the dentist that insurance would not be covering our costs and that we would be paying out-of-pocket. Upon hearing that, his office provided a list of fees, same treatment, that added up to 27% less than the original fee list!
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While I am grateful that we apparently got a price break, my question is this – How does the medical profession get away with this type practice? I understand that it is not that uncommon for costs billed to insurance companies to be different (higher) than those for private pay. I am not a friend of health insurance companies, but it really appears that they get ripped off in a systematic manner. Could it be that this type practice is a cause for ever increasing health care costs?
I was disappointed to see Greg P as part of a new sales push.
The Million Dollar Challenge
and the write up for those who don’t want to sit through the commercial.
SREP posting
And I always though Greg P. was such a down to earth guy.. This seems a lot like those “crazy eddy” car commercials.
Buy a boat, save a house! Good luck!
As someone who buys/sells a number of boats and cars I can tell you this will disappoint as those markets are down too, more than most want to believe:
http://bellingham.craigslist.org/boa/1383179219.html
RE: TJ_98370 @ 26 –
I would guess the difference represents the cost of processing and then waiting for payment through the insurance company. So if everyone paid out of pocket would the average cost be 27% less? No, it would probably be even more deeply discounted because pricing would become more open and competitive. As it is now, many folks with dental insurance don’t even ask for prices, they just have the work done, and the dentist is left to haggle with the insurance company.
As an aside, when my daughter was being treated for cancer at Children’s, we found that the hospital actually charges more MORE to those paying cash- the reverse of what you discovered. Apparently the insurance companies are better hagglers than the wealthy public. But in the end, the bottom line was it was ALL negotiable, just like buying anything else, based on your resources and the needs of the hospital.
By Scotsman @ 29:
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Scotsman –
I strongly suspect you are very close to the truth. Medical costs are adjusted to what the market will bear.
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RE: TJ_98370 @ 26 – Part of it is that the insurance company probably wouldn’t pay the full amount in any event. They have maximums for each procedure. Part of it may be a cash discount.
As I may have mentioned before, just about whenever you have insurance you tend to get a discount on medical procedures. They charge you what the max is that the insurance company would have paid, as if they paid and then you still owed some. Most of my life I’ve had high deductible plans that would never pay, and sometimes the discount for the procedures saved me more than the cost of the insurance that month.
BTW, even if you’d had insurance they probably would have limited what they pay. Often on dental there’s a rather low annual maximum payout, sometimes even only $1,000. Dental insurance is typically not even worth buying if you’re paying for it yourself because the maximum payout is so low. You don’t generally want to insure for things you can pay for yourself.
In your case I’m surprised they even gave you a list. Often dentists will determine what needs to be done, then check with the insurance on what it will cover, and then let you know what your balance will be. So you don’t know anything until after they’ve contacted the insurance company.
By TJ_98370 @ 30:
Adjusted upward usually, because so many people have insurance and don’t care what something costs.
By Kary L. Krismer @ 32:
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Totally agree. I think a rough analogy can be made between auto insurance and health care insurance. I know it to be an indisputable fact that auto insurance companies get billed for more than if collision damage is being paid for out-of-pocket.
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RE: Kary L. Krismer @ 32 –
I would add to your last comment that the upward adjustment is not only because they don’t care, but because they don’t know. You can’t care about something you have no knowledge of. I’m blessed with excellent insurance, and as a result I have absolutely no idea what any of the medical services I take advantage of through the year cost.
I suspect medical costs would reduce by a third or more if two requirements were met. First, that the consumer always had to pay some portion of the cost, and second that the cost was always known and discussed before any work was done. Most doctors now can’t tell you what something costs, it all just happens inside the “black box” of insurance. If purchasing medical services was more like getting a deck added on to your home, prices would fall.
Back in the day when you went to the local Doctor you paid cash or a chicken or whatever you had. And it was affordable. Your health insurance if you had any at all had a very high deductible that only kicked in in the case of catastrophic illness, the equivalent of say a 2000 dollar or higher deductible today. If you want to reform health care my suggestion to go back to cash for your basic visits and remember what insurance is really meant for, to protect you financially in case something serious happens. This probably isn’t possible with our current belief that anyone has the right to life no matter how fatal our condition. There is no death with grace in our country or belief system . We keep corpses alive draining our country financially while young adults die for lack of resources. While this may sound like a call for death panels, it isn’t. However at some point we do need to pull the plug on people who have no chance of recovery. I work in the 911 system and everyday we go through heroic measures to save people who aren’t able to walk, talk or even think. Is it horrifying to tell a family that they will receive no more care for grandma, perhaps but so is keeping grandma, who can’t remember her own name, barely alive in a nursing home while she gets bed sores and wastes away because we can’t say goodbye . We need to remember as a society that there is a time to bow out gracefully and go to meet our maker whomever that may be for you. Health care reform has been a hot topic around the ambulance lately and I have yet to hear one of my co-workers say anything other than “when my time comes please let me go” We see the horrors of sticking around past your time and I am not using the that word lightly. The reason I am focusing on the terminally ill is because historically we spend most of our health care dollars keeping people alive in the last year of their life. We were recently ranked 54th in the world for fairness of health care resources. WE DO NOT HAVE TO BEST HEALTH CARE IN THE WORLD FOR MOST PEOPLE. This is another example of our societies propensity towards shifting resources towards the elderly at the expense of the younger and future generations. I don’t have all the answers about health care reform but I can tell you both me and partner have signed our do not resuscitate orders. Sorry for the rant but this is something I live with everyday and it saddens me to see the waste in our system. Heath care reform? Maybe. Attitude adjustment? Definitely!
RE: Sara @ 35 – This all can be summarized as a quality of life measure.
I too take a quality of life approach, but I mix a little finance with it. Let’s ignore some of the medical concerns you might have, and keep to economics/resources.
If we have a single knee, and we have two people that need a knee replacement, then let’s take a look. Let’s assume that the expected recovery period is six months, and a full recovery will take place in all cases (thus avoiding other medical issues).
1. A 16 year old who will enjoy the knee for up to 84 years, based on a maximum life expectancy of 100 years.
2. A 94 year old who will enjoy the knee for a maximum of 5 years (recovery time becomes critical).
From a public policy perspective, I hope it is clear that the 16 year old should get the knee replacement. That said, if the 94 year old has sufficient resources, as is often the case, then based on ability to pay the 94 year old will more than likely get the knee replacement.
RE: Sara @ 35 –
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Well said Sara. Your post was not a rant. I think you are just saying what many people already think.
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I recently lost my mom. I personally experienced what you describe. Other than dementia for the last six years of her life, my mom enjoyed above average health except for the last nine months or so. In the end, all of her systems were gradually shutting down. I witnessed medical technology with all of it’s awe inspiring capabilities. They kept on pulling her back from the brink.
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In the end she was only cognizant of her surroundings maybe 5% of the time. She had 37 tubes sticking out of her, a machine helping her breath, other machines monitoring blood composition, vital signs and who knows what other. After watching her curled up in the fetal position for hours, it hit me – WHY ARE WE DOING THIS !?! WE ARE ONLY PROLONGING THE INEVITABLE !?!
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I loved my mom. I wanted her to stay around forever, but not like this. It became evident that the system was set up to keep her going for as long as they could. She had generated a health care directive indicating no heroic measures were to be taken, so I was able to intervene and stop the insanity, I was able to block artificial nutrition and hydration efforts. She passed a couple weeks later. It was the best thing that could have happened to her at that stage and it was what she wanted.
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My point to all of this is that I truly believe that without family intervention and my mother’s health care directive, the health care system would have kept my mother alive for many months more. For what? At what cost?
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RE: TJ_98370 @ 37 – Often in those situations it’s the family members who are unwilling to say goodbye. They’re practically torturing their loved one by sustaining their life, and doing it at government expense.
So there’s really at least two issues. Does the system by itself prolong life too long, and do some families prolong it even further, but cost being an irrelevant consideration for them?
RE: Kary L. Krismer @ 38 –
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You are exactly right, Kary.
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I remember a doctor advising me at the start of the final stages, that my mom may be dying and that I should be especially attentive to not allowing her to being “beaten up along the way”.
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It was a horribly unforgettable experience, a great conflict between emotion and logic. What’s cost relative to a loved one’s life. You really do feel like you are “pulling the plug” and in a sense, you are.
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Life and death decisions are tough, even with cats. You don’t want people not getting properly treated just because they can’t pay. But on the other hand, at some point the person is in such bad shape, with no chance of recovery, that spending money to prolong life doesn’t make much sense.
IMHO, there really needs to be some control over force feeding and resuscitation when the government is footing the bill.
RE: TJ_98370 @ 39 –
I too lost my mom less than a year ago, and still believe that if it weren’t for the health care system, she’d be alive today. She’d been treated for cancer, but was recovering nicely. Then she picked up a nasty infection in the hospital, C Diff, which weakened her to the point where she couldn’t walk. When she was at the rehab place, she fell out of bed and , although she had been on blood thinning medication for something unrelated, nobody looked at her head for internal bleeding until it was practically too late, and died within a couple of weeks after being diagnosed as having bleeding in the brain.
She had great health coverage, and access to the highest technology medical equipment.
We may live in a country with the best equipment and the highest paid doctors, but that doesn’t necessarily translate into heallthier people, just better paid doctors and high paid insurance company executives.
RE: Everett_Tom @ 27 – I’m not the least surprised.
RE: Kary L. Krismer @ 40 –
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I think the key to end of life medical treatment is thorough consideration of “quality of life” factors, as AMS alludes to in a previous post. Translating that concept to workable policy would be extremely difficult, however. .