Health Care Costs (3)

So to continue:  The way I see Health Care has seen a bubble in the US that has grown huge over a very extended period.  Most have called this ‘bubble’ Health Care Cost inflation.  But a bubble over any period between inception and bursting can be seen as (mistaken for) inflation. Is the HCC “Bubble” going to burst or do we have to just accept this as inflation.  I think that too many people want this to be Inflation, not a bubble. And I do not want a ‘bust’ but I do think we need to get on the off ramp, to a price plateau at the very least.

I’ve discussed:

  1. The pernicious effect of opaque pricing
  2. A spike in Cost/Value in capital investment (buildings and equipment.) 
  3. The Gov’t affected floor to pricing
  4. The profit motive effect of increasing costs in the system

Now I’ll add some more:

  • Direct sales…more and more selling of this that or the other service, drug, wonder cure, to the general populace who have no real way of parsing the useful from the useless or even harmful.  And then the sales guys got to congress and punditry and started demonizing those who tried to point out that the common man was not really in a position to make medical decisions. (Not that the god-doctors should be put in charge, much as many of them believe that they should be because they are smarter than anyone else.)
  • Litigation, because medical outcomes are impossible to ensure, and there has been a Lawyer bubble going on for many decades, doctors got sued more and more frequently, malpractice insurance costs went up and so another cost was added into the equation (and for a long time absorbed because the system hid the costs)
  • Specialization, again 9% of 10,000 is a lot more money than 10% of 5,000, but 15% of 10,000 is even more.  Specialist charge at a higher rate because they are specialists and have special skills, that are needed by special cases…..they don’t have to see as many patients, get to go to conferences and consult with other wizards and look down their noses at the rest of the world, even at other doctors.  What’s not to like? Just one more cost adsorbed in the system.
  • Administrative fief building, its a fact of nature, or rather an emergent property of human society:  administrations grows more complex and adsorbs more resources as time moves on, as the top level administrators increase the number of ‘direct reports’ then create hierarchies so they don’t have to talk to as many people so they can be ‘more efficient.’  Administrators (Bureaucrats) are extremely good at capturing the system and turning it to serve them versus the customer the system is supposed to serve.

So what is the solution.  Well I think you can see the one I would focus on first but that will be a discussion for another day.

Health Care Cost (2)

When I was a kid and even as a younger adult I went to the dentist’s office and other ‘providers’ and the amenities were clean and neat but often I was treated in a ‘ward’ environment.  And this was way after I’d left Jolly Olde England and the NHS (National Health Service.)  Today most providers I go to the office/clinic space is custom designed often with soothing art, music, video etc.  Now don’t get me wrong, Video/Music does help when you’re under the drill (having something probed etc,} and the video screens used for modern digital x-rays or other data reproduction are a boon as well. But why is every ‘provider’ the same.  Why did hospitals move away from wards to private or semi private rooms with the concomitant increase in capital and operating costs.  Why does my local hospital s soaring almost churchlike multi story lobby floored in granite with overlooking balconies and a Yamaha robo grand piano, and this is not the top end hospital in the region. 

It seems to me that what we have seen is a health care bubble, much like the higher eduction bubble (or the overall education system foam,) we’ve seen in the last thirty years….but I digress.

  • As providers realized that they could attract more lucrative patients by setting up nice offices in nice parts of town the general price of HC (excuse the acronym) went up, in general the expectation in all for pay HC went up while the free clinics crashed.
  • It’s mathematically obvious that 10% of 5,000 is a lot less than 9% of 10,000 and the cost of consumables etc are usually fully reimbursed by the payee because their price is a published known. So providers made more and more use of high cost consumables of one sort or another, and were not incentivized to keep the costs down even if their ‘profit’ was squeezed a bit.
  • Medicaid and Medicare have managed to subsidize the lower end of the patient rainbow and pushed up the overall cost by pushing the higher end patients and providers into a different ‘market space.’
  • Because the actual cost of HC is essentially invisible to the patient the steady spiralling cost was not noted by the high-end clients because they perceived (I think rightly) that they were receiving value for money.  BUT as the high-end pulled away the middle dependent ons insurance etc was stretched and the low-end fell away, the old-fashioned cheap equipment / methods / services they had used were rendered obsolete and replaced by the new much higher cost versions.

Add this and other mechanisms together and you have a bubble.  One that grew and grew, while people griped, tried to do something about it but failed.  For some reason we seem unwilling to change the basic underlying dynamics.  Is that because they are so complex and interlaced that people can’t be bothered to go beyond the simplistic.  Or do a lot of the bad things have attractive sides that would be lost if we made major changes? 

In the current system its impossible to figure out the trade-off between a private room and a ward.  Once that wasn’t true or as true.  We have the technology to make this problem go away.  I believe that with transparent pricing and costs wouldn’t we make different decisions.  Maybe not all the time, but maybe enough to break the back of the ridiculous inflation rate we see in health care.

Health Care Costs (1)

I was listening to the Diane Rehm show this morning.  She had a panel discussion on Health Care, Obama Care and Health Care Costs.  They touched on a couple of issues that I find rather under discussed and it struck me as odd after a while that no one really dug in on the topics.

Here is Topic 1…

Why is it that the cost of a procedure or a piece of gear etc, varies according to who is paying?  If you’re lucky enough to be covered by a relatively old fashioned policy like I am you will see on your explanation of benefits that the Doctor, Hospital, Clinic, Dentist…(the provider) charged one price but the insurance agreed to pay another, the provider agreed to that and wrote off some or all of the rest and you paid your deductible plus some additional cost sometimes for one arcane reason or another. 

The Provider and the Insurer have some pre agreed price sheet that you never get to see.  (You never get to see any price sheet that I know of.)  Blue Cross Blue Shield apparently has one price sheet, UHC another, Medicare and Medicaid another, and the uninsured are hammered with the top line rate.  An uninsured person who cannot prove he/she can pay up front is charged a higher rate again, (at least that appears to be the game) and then the hospital hounds the near-victim for some ‘pittance fraction’ that in the end is still probably more than an insurer would have paid.

If there were an industry agreed to list of procedures etc (which has to be effectively in place.) You, a consultant, a doctor w/should be able to tell what services you require and you should be able to look up what those services cost on the web comparing various providers.  There should be various providers offering various prices and various deals, that you can work through and figure out what is the best value solution for you and your family quite quickly.

This way the insurance companies could reduce costs because they no longer have to individually negotiate prices, rebates, write-offs with each set of providers, the providers likewise can reduce costs for the reciprocal reason.

Administration costs are a huge part of the Health Care Expenses these days and to me this seems to be one of the myriad reasons why.

Health Care Costs are rising almost uncontrollably and the lack of a price comparison mechanism seems to me to be a significant issue.

 

I Admire NASA but, Should it be Disbanded?

I do not hate NASA, it is and was a shining example of many things I dreamed about as a kid.     And I hate to say this, but if we are serious about space it should should be shuttered, and its staff released to find other jobs. 

Then we need to create a vision of where we want to be in the long term, and not in small terms…we need sweeping strokes that paint a backdrop for us to see our childrens children against and be excited.

And no I don’t want to kill all space science, it has at times kept me from losing hope in the human race but there has to be more tha wonderous pictures of far stars and Marscapes 

So after NASA is good and defunct, maybe 2 years, maybe 5 a number of smaller and more focused organizations need to be set up to support the commercial development of space as well as the advance of technology:

  • National Aviation Science Bureau (aviation technology) {small and lean probably supporting the airforce and army as well as Boeing, et al with things like wind tunnels and basic research into manned aircraft.}
  • National Earth Observation and Services Bureau (terrestrial observation/science, terrestrial Navigation, terrestrial emergency/disaster nets, etc
  • National Space Service (Space Craft Operations (like the ISS,) crewing deep space exploration, oversight of commercial crew training )
  • Space Science Board to support the above with scientist based at universities and programs funding basic science and instruments  (Future, Hubble, Voyager, Sojourner vehicles would be funded by them but not run by them)

Why not just move to this from NASA?  Because I have worked in several large-scale (read Gov’t and Mil Industry) organizations through huge upheavals in ownership and management structure and seen how incredibly resilient the ‘cultural habits’ of such organizations are.    

  • [Bureaucratic / hierarchical structures are an offshoot of early industrial age military organizations and the fundamental requirement of an organization in attrition warfare is the ability to keep driving forward after massive losses.] 

Don’t break the  organizations cultural links with the past and you will not change how it operates in any meaningful way.

  •  {Don’t worry too much about ‘corporate knowledge’ its mostly bad habits and paperwork given a gloss by few knowledgable curmudgeons who get crap done. Those folks will resurface if you give them half a chance, they love the potential and the work.}

I would throw out all this stuff about going to Mars first or the Moon first.  The long-term objective is expansion of the human meme space and resource base.  Of course the Moon, of course Mars, eventually Venus and I believe that free flying Habs (Habitats) may eventually contain the majority of the human race….in a few hundred or a thousand years.  But that is vision not a practical plan.

In the short-term keep the goals limited and real with an eye towards long-term objectives.  Grab every chance you get to make a buck, but also incentivize people to stay lean and dream.  Every ‘commercial’ space endeavor out there has more fundamental thought in it than has been put into NASA and the ‘Space Program’ since Von Braun.  He understood you needed to dream big but work the small near term stuff hard, fast and clean. 

Get rid of the idea that there is any advantage to keeping space technology ‘secret’  or that we can try and keep it as a US bastion.  This thinking and the resulting ITAR (International Trade in Arms Regulations) categorization has done a lot of damage to our space industry by providing opportunities to our competitors.  That’s over and above the damage that having the US Gov’t as the only real customer has done to the commercial viability of our industry.

Space access needs to be the province of the commercial sector.  We need variety and flexibility, not just SpaceX and Orbital Sciences, we also want Virgin Galactic/LM Scaled Composite, Blue Origin, Boeing, EADS, probably Long March, Kawasaki and others.  

The commercial lifters (and Habs) need to be regulated for safety but reasonably and lightly.  A combination of teaming and adversarial oversight is needed, the FAA wobbles between these two methods and neither is healthy.  The space access regulator should have a dual model, with two separate organizations, one, the principle one provides oversight via teaming support.  The other unit is made up of a few hard-nosed smart auditor teams who check on the partnerships, relatively infrequently.

Bigelow is right, space Habs (space stations) should largely be inflatable structures. They should also be designed for flexibility and for tourists, not professionals. Tourists, who may be astrophysicists, teachers, bio engineers, nano material specialist, or (rich) entertainer.  The ISS should become the center of a commercially driven space complex.  Its served its original purpose of learning how to build things in space, now we need to treat it as an operational asset, plan to have multiple commercial craft able to access it and use it.   Commercialize it, let our commercial innovators as well as those in Europe and Asia use it as a stepping off points for their space plans. 

Last: my mid near term goal would be the Lagrange points, the development of a sustainable space based science network and operational habits for humans out of immediate range of Earth. 

  • Are We Nuts to think about launching the Webb telescope to the Lagrange point with no way to repair it? 
  •  The L points are great vantage point s for many things
  • Set up a Bigelow Bungalow at the L point, big enough to live in for a few months at a time.  Send cargo vessels to it when you need to occupy in then a space taxi with the crew. 
  • Need to set up a new telescope? Send a crew : Need to repair an observatory? Send a crew  : Have a couple of billionaires who want to show their mistresses an out of this world experience?  Send up the wait staff. 
  • There are small rocks around the Lagrange points
  • (don’t treat them as cultural relics, melt them down and experiment with using them to make stuff in space so we can worry about getting humans out of the gravity well not all their gear)  
  • They offer access to near earth asteroids….stir and repeat 

Learn how to operate in deep space, learn how to make things (not just assemble them) get used to putting assets in place so they can support long term plans.  The only way we will start making significant progress is by establishing an infrastructure and working knowledge base that give us the keys to our future. 

Above all else get over the concept that space is the province of rocket scientists and big brains in general and know that expanding the human envelope has always been dangerous, people will die, we’ll regret their passing but they will have been where they wanted to be, on the leading edge, we should see them as the practical heroines and heroes of our future.

Pirates…..AARGH….but it’s no Joke

Somali Pirates in the Indian Ocean

Until recently most people in the west, particularly the US have thought of Piracy as anomaly of the distant past and rather romantic, (in the persona’s of Errol Flynn, Kirk Douglas, Johnny Depp, etc.)  However piracy has existed (in one form or another) ever since people took to the Sea, and it has taken place in every place where you have craft carrying any form of wealth.  There are many places where it has been rare or almost unknown, but there are other places it has been the norm and not the exception.  The Horn of Africa is one of those hotbeds.  Today you hear most news of Pirates coming out of that part of the world but in reality Piracy of various sorts is common in many places.

This article on TheStrategyPage  is one of the best ones I’ve read dealing with the ‘Somali’ piracy from an economic strategic standing. If you change some of the words and places you could turn that article into one written by Spanish author talking about the Caribbean, or a Roman author discussing the Saxon Shore.

Piracy in general is very hard to stamp out unless the ‘host’ country controls its coastline and wants to suppress piracy.  In fact it may have been easier to suppress it in times past because the tools of the trade were costly and conspicuous (fast ships and big crews and/or heavy weapons.)  Also piracy on any scale is not a lone wolf occupation, you have to be able to convert your booty into ready cash and that takes a pretty sophisticated network.

Another sad throwback that you should note in the article is the rather cold-blooded off-hand comment about the pirates butchering the crews of the smaller African or Arabian vessels they capture.  This was the norm in most times and places, and accounts for the harsh justice dealt out to captured pirates. it was assumed that the pirates had murdered a lot of people before they were captured, or would have if they had gone uncaught.

Piracy has been with us for such a long time because it is not one phenomenon.  At the small-scale end a pirate can be a starving fishermen who has bad catch and reacts violently to a rivals good luck; at the other end of the scale they can be rich nobles or merchants given carte blanche to attack the enemies of their sovereign in undeclared war.  Piracy around the Horn of Africa today (as is typical of most objectionable human activities) is fomented/supported by a mix of elements, with poverty and geopolitics key among them.

One comment I’ve received in writing sci-fi is the frequent reference to space piracy.  Some have found it unlikely that piracy will emerge in space, that the technology is too expensive and the environment too dangerous to make it worthwhile, etc.  But we all forget how vast and dangerous the sea was to our ancestors, and that ships, even craft we would call boats, were once the epitome of technology.  Unfortunately (at the personal level at least) when we establish a complex civilization in space there will be pirates and they will be as bloody handed as they have ever been. 

Yes I am a pessimist in that I do not think that humans or human societies can be perfected in the way that some have dreamed of.  You can perhaps program piracy out of future-sapien and its Utopia but I would argue that the people would not be human as we are human, and that the Utopia would not be a society/civilization as we have today.  And I would expect such a Utopia to be fragile and/or more utterly ruthless than the most bloody handed pirate.

Piracy is a human activity and as long as there are creatures that are human there will be pirates.

Pirates AARGH!!!

Consumption vs Production

I am frustrated with the silliness that passes for wisdom these days.  To much of what is said is based on simplistic assumptions and understandings, with solutions crafted for sound bites not reality. One recent example is the call for more Consumption.  The argument is that we are a consumer economy and that more consuming will by itself drive the economy forward and up.  This seems to be based on a simplistic interpretation of the meaning of what a consumer based economy is all about. 

 In the beginning the early mass production auto manufacturers had it right.  They paid their workers enough to buy the product that they were building.  The rationale was that they could buy the cars(or other products) which required labor and materials:  sheet steel, wood frames, rubber tires, copper wire, iron castings, etc, all of which required labor and materials from a lower level supplier.  Each time the money passed through it was 1) applied in as effective way as possible, 2) stimulated value added labor, 3) Brought more people 4) got people to think of ways to do the job more efficiently so they could capture more profit.  This was the Consumption based economy, an engine of progress. 

But if you think about it the productive effect of a dollar spent on different consumption has vastly different leverage, spend it in Defense to buy a new jet or missile and you get a huge leverage (mostly US parts, mostly special equipment and special designs, high value add.)  Spend it on a Twinkie and its smallish, a few low paid workers and raw materials.  Spend it on a hamburger and its even smaller, spend it on consumer electronics and most of the value goes to Asia.. 

The problem I see with today’s version of the consumer economy is that any consumption is good.  In an economy at full steam that may be true, an extra dollar would go into buying a car, RV or adding value to your home.  But in a down economy most of that next dollar goes to base consumption such as food or buying a DVD or video game only a small fraction of that money goes to drive some version of the cycle above, most of it vanishes into profits and raw materials with very little processing / value add.

Something I said the two paragraphs above is a key reason I think that our economy has not done worse than it has during the great recession (if that’s what it really is.)  Huge amounts of money have gone into buying military equipment over the last five years.  Ninety percent of this equipment has come from US producers and money has leveraged out through the economy.  Now war isn’t a very popular stimulus method but in my opinion it has buffered us from something that could have been vastly worse and has ensured that the money was spent reasonably effectively.

But with the war economy ramping down what comes next.  More Twinkies are not going to get us out of a recession.  We have to find something that has the excitement, mass and leverage to get the wheels of the economy back in line.  I have not seen it yet, but I see a lot of opportunities, which I will talk about in another post.

 I wish that it were some grand adventure like a drive into space, low-cost space access exploration for resources among the near Earth asteroids and the moon, the generation of power in orbit, missions to mars and beyond.  But I can see that as yet the ‘value proposition’  (value / costs) of space is too low to pull a big effort out of government / society which has lost its appetite for (or maybe its ability to sell) risks and long-term pay backs at least for now.