Econ 101 Post Series: Moral Hazard and Adverse Selection

[RandomGuy]

These were some really good points until your last paragraph where you went back to normal boustonspeak.

Some studies have shown that the key in a no per-visit cost system is to make the visit to the doctor be as unpleasant as possible. However, this tends to make some people unhappy when they realize just how unpleasant it is to go to the doctor. At the end of the day, costs matters and there must be some cost to deter people from uncessary doctor visits (outside of your hypocrondriacs who you will be unable to safeguard against). That cost can either be monetary (co-pays and deductables) or non-monetary (unpleasant conditions, taking time off from work, etc).

That deals with unncessary doctors visits (which are managable) but the other side is necessary doctors visits that get created via moral hazard (people starting taking more risks, live less healthy lifestyles, etc.). This has proven to be a bigger challenge to manage (and imagine it in your so-called UCA, where McDonalds and PhillipMorris now know everyone has health insurance... think they don't see an opportunity in that?).

I ignored your last paragraph, since it's void of any actual substance.

The studies that are out there show the following:

Co-pays do reduce doctor visits (utilization) for most things, and the largest drop is from zero copay to some small amount like $25. You see some drop-off as the co-pays get larger, but not much. If you really have to go to the doctor, the demand is pretty inelastic.

[RandomGuy]

Why?

When I was uninsured and payed cash, the doctor knew he would collect. There was no paying of staff to do all the tons of paperwork for insurance claims, that insure will turn down whenever they can.

Why are two price lists a problem. Some gas stations charge less for cash vs. credit when you buy fuel. Cash is a sure thing. people sometimes dispute credit payments.

Part of risk management.

One out of every four dollars spent on healthcare goes to overhead.

Every insurer has their own forms and policies on what they will or will not pay for.

Pay cash up front, and there is no back office filing the claim, tracking the claim, no insurer paying 6 people to look at it, then two more to cut/log the check, etc. etc.

I think we would be far better off giving everybody a debit card, taxing people a certain amount to "fill up" the account, then letting them use it at the doctors office to pay as you go, then having insurance for the bigger things.

Single payor, with the government as the insurance company in the model of a modern HMO. Since the risk is collective anyways, this would simply cut out the middle-man of all the hidden cost shifting that we don't see, but pay for nonetheless.

If you want to opt out, then fine, get and pay for private insurance.

[RandomGuy]

Everyone complains about stupid . Texas homeowners complained when we had a $27 billion budget shortfall that resulted in massive education cuts, in great part to pay for the massive property tax reduction they cried for a few years prior. There is no problem with complaining about the shortfall, and there is no problem with wanting lower property taxes. The problem is complaining when you got one and then you are upset because the consequences are the other (much like the renter who now faces higher rent).

*Since you're not from Texas, when we say budget shortfall it isn't defecit spending like in DC. The Texas cons ution requires the passage of a balanced budget, based on the Comptroller's estimate of revenue. So, when our revenue came in $27 billion short, it meant $27 billion of spending cuts had to be made.

FIFY, although they did come up with a lot of stealth tax increases, some of which I personally have seen.

The thing that bugs me most is that it was predicted in 2006, so it wasn't some huge surprise.
http://www.window.state.tx.us/news/60515letter.html

I hate being cynical, but I get the feeling that this was simply a box to check in preparation for his run for the presidency. "Cut taxes: check".
Since the comproller told him about the coming shortfall, he presumedly knew it would lead to huge problems after he left, but did it anyway.

So the lege had to scramble to find new taxes that could be called anything but, and massive cuts to education.

Teachers are not that well-paid in the state, so when you start cutting that, you drop a lot of educators as well, and end up with unmanagable class sizes.

I'll stop now. It rankles.

[George Gervin's Afro]

Part II in the Scott Economics 101 Post Series.

I'm not going to add very much (or any) of my opinion on how it applies to certain matters, because the idiotic replies from boutons and Wild Cobra (who I am beginning to suspect are actually the same troll) make my eyes bleed.

With that said, these are some important topics especially in relation to the debate over healthcare or any kind of insurance program (social or private).

Moral Hazard:



Adverse Selection



An understanding of these theories may alter your decision-making paradigm on certain issues, or it may strengthen them (and that statement can be said no matter what side of a position you are currently on). I've read a few posts that clearly lack a fundamental understanding of these concepts - which isn't a knock on those people lacking said understanding, because most people are unfamiliar with them - and I have entirely selfish motives of increasing the level of debate in this forum.

Why am I so interested in increasing the level of debate? Because it's currently so ing stupid that I usually just avoid it altogether.

Have a nice day.

This thread has shaken my lumbering mind. I first learned of this theory during one of my Business Ethics classes many moons ago.. good stuff because it makes you think ,at least most of us anyway...

I wish many more of these threads were more intellectually honest than they are ...but certain characters seem to consistently lack this honesty..

[CosmicCowboy]

I wish many more of these threads were more intellectually honest than they are ...but certain characters seem to consistently lack this honesty..

Pot, meet Kettle

[George Gervin's Afro]

Pot, meet Kettle

Why am I not surprised that you don't understand what 'intellectual dishonesty' means...

'the advocacy of a position which the advocate knows or believes to be false or misleading'