[patientrenter]

Health care is a prodigious source of righteous indignation. When someone says our health care system is screwed up and needs to be fixed, everyone cheers.

The trouble is, everyone is hearing different diagnoses of the system’s problems, and cheering for different changes.

1. Doctors and other medical professionals want a system where their pay is protected, and no one is reviewing their decisions.

2. Consumers want a system that provides them with any treatment they want at no personal cost to them.

3. Insurance companies want a system that funnels most medical transactions through them, so they can skim off as much as possible.

4. Companies that pay for their employees’ medical care want to lower its aggregate cost while keeping their workers happy.

The particular problem you mention, flu, can be easily traced to these conflicting forces playing out. Insurers arrange for deals to get medical services at way below “list price”. It might actually be closer to the true cost than the list price, and sometimes below, but that’s not even the point from the insurer’s perspective. They just want the difference between list price and their price to be very high. That forces people to use insurers.

Most of us can afford to buy our own cars and other needs. The fact that ridiculously small medical outlays (like for doctor visits, or even procedures costing a few hundred or thousand dollars) are funneled through employers and insurance companies is an inefficient legacy of WW2-era govt wage controls, sustained by the employer deduction for employee insurance costs, in turn sustained by consumers and insurance companies and doctors motivated by 1-3 above.

The inefficiency is driven by the same thing that made the housing market overpriced – misalignment of interests. Consumers should be the ones driving the choices, with advice from doctors. Instead we often have doctors driving choices. More importantly, payments, as much as possible, should be made by the same people who get the benefits – consumers. Instead payments are shifted to a third party – insurers – that has no direct interest in the health or satisfaction of the consumer, and no overall incentive to limit costs. A fourth party – employers – are the only ones really motivated to limit overall costs. Again, that role should be played mostly by consumers.

So you have a huge part of our economy operating under wildly inflated prices, driven mostly by easy money managed by people who have no interest in the final outcome, and encouraged by govt tax and other subsidies. In many ways, the housing bubble and the health care markets are very similar.

[patientrenter]

Health care is a prodigious source of righteous indignation. When someone says our health care system is screwed up and needs to be fixed, everyone cheers.

The trouble is, everyone is hearing different diagnoses of the system’s problems, and cheering for different changes.

1. Doctors and other medical professionals want a system where their pay is protected, and no one is reviewing their decisions.

2. Consumers want a system that provides them with any treatment they want at no personal cost to them.

3. Insurance companies want a system that funnels most medical transactions through them, so they can skim off as much as possible.

4. Companies that pay for their employees’ medical care want to lower its aggregate cost while keeping their workers happy.

The particular problem you mention, flu, can be easily traced to these conflicting forces playing out. Insurers arrange for deals to get medical services at way below “list price”. It might actually be closer to the true cost than the list price, and sometimes below, but that’s not even the point from the insurer’s perspective. They just want the difference between list price and their price to be very high. That forces people to use insurers.

Most of us can afford to buy our own cars and other needs. The fact that ridiculously small medical outlays (like for doctor visits, or even procedures costing a few hundred or thousand dollars) are funneled through employers and insurance companies is an inefficient legacy of WW2-era govt wage controls, sustained by the employer deduction for employee insurance costs, in turn sustained by consumers and insurance companies and doctors motivated by 1-3 above.

The inefficiency is driven by the same thing that made the housing market overpriced – misalignment of interests. Consumers should be the ones driving the choices, with advice from doctors. Instead we often have doctors driving choices. More importantly, payments, as much as possible, should be made by the same people who get the benefits – consumers. Instead payments are shifted to a third party – insurers – that has no direct interest in the health or satisfaction of the consumer, and no overall incentive to limit costs. A fourth party – employers – are the only ones really motivated to limit overall costs. Again, that role should be played mostly by consumers.

So you have a huge part of our economy operating under wildly inflated prices, driven mostly by easy money managed by people who have no interest in the final outcome, and encouraged by govt tax and other subsidies. In many ways, the housing bubble and the health care markets are very similar.

[patientrenter]

Health care is a prodigious source of righteous indignation. When someone says our health care system is screwed up and needs to be fixed, everyone cheers.

The trouble is, everyone is hearing different diagnoses of the system’s problems, and cheering for different changes.

1. Doctors and other medical professionals want a system where their pay is protected, and no one is reviewing their decisions.

2. Consumers want a system that provides them with any treatment they want at no personal cost to them.

3. Insurance companies want a system that funnels most medical transactions through them, so they can skim off as much as possible.

4. Companies that pay for their employees’ medical care want to lower its aggregate cost while keeping their workers happy.

The particular problem you mention, flu, can be easily traced to these conflicting forces playing out. Insurers arrange for deals to get medical services at way below “list price”. It might actually be closer to the true cost than the list price, and sometimes below, but that’s not even the point from the insurer’s perspective. They just want the difference between list price and their price to be very high. That forces people to use insurers.

Most of us can afford to buy our own cars and other needs. The fact that ridiculously small medical outlays (like for doctor visits, or even procedures costing a few hundred or thousand dollars) are funneled through employers and insurance companies is an inefficient legacy of WW2-era govt wage controls, sustained by the employer deduction for employee insurance costs, in turn sustained by consumers and insurance companies and doctors motivated by 1-3 above.

The inefficiency is driven by the same thing that made the housing market overpriced – misalignment of interests. Consumers should be the ones driving the choices, with advice from doctors. Instead we often have doctors driving choices. More importantly, payments, as much as possible, should be made by the same people who get the benefits – consumers. Instead payments are shifted to a third party – insurers – that has no direct interest in the health or satisfaction of the consumer, and no overall incentive to limit costs. A fourth party – employers – are the only ones really motivated to limit overall costs. Again, that role should be played mostly by consumers.

So you have a huge part of our economy operating under wildly inflated prices, driven mostly by easy money managed by people who have no interest in the final outcome, and encouraged by govt tax and other subsidies. In many ways, the housing bubble and the health care markets are very similar.

[patientrenter]

Health care is a prodigious source of righteous indignation. When someone says our health care system is screwed up and needs to be fixed, everyone cheers.

The trouble is, everyone is hearing different diagnoses of the system’s problems, and cheering for different changes.

1. Doctors and other medical professionals want a system where their pay is protected, and no one is reviewing their decisions.

2. Consumers want a system that provides them with any treatment they want at no personal cost to them.

3. Insurance companies want a system that funnels most medical transactions through them, so they can skim off as much as possible.

4. Companies that pay for their employees’ medical care want to lower its aggregate cost while keeping their workers happy.

The particular problem you mention, flu, can be easily traced to these conflicting forces playing out. Insurers arrange for deals to get medical services at way below “list price”. It might actually be closer to the true cost than the list price, and sometimes below, but that’s not even the point from the insurer’s perspective. They just want the difference between list price and their price to be very high. That forces people to use insurers.

Most of us can afford to buy our own cars and other needs. The fact that ridiculously small medical outlays (like for doctor visits, or even procedures costing a few hundred or thousand dollars) are funneled through employers and insurance companies is an inefficient legacy of WW2-era govt wage controls, sustained by the employer deduction for employee insurance costs, in turn sustained by consumers and insurance companies and doctors motivated by 1-3 above.

The inefficiency is driven by the same thing that made the housing market overpriced – misalignment of interests. Consumers should be the ones driving the choices, with advice from doctors. Instead we often have doctors driving choices. More importantly, payments, as much as possible, should be made by the same people who get the benefits – consumers. Instead payments are shifted to a third party – insurers – that has no direct interest in the health or satisfaction of the consumer, and no overall incentive to limit costs. A fourth party – employers – are the only ones really motivated to limit overall costs. Again, that role should be played mostly by consumers.

So you have a huge part of our economy operating under wildly inflated prices, driven mostly by easy money managed by people who have no interest in the final outcome, and encouraged by govt tax and other subsidies. In many ways, the housing bubble and the health care markets are very similar.

[patientrenter]

Personally, I tip my hat to you.

But honestly, I think you’d be very lucky to catch any breaks if something went wrong while you took unusual initiative to go after a criminal. So do it at your own risk. I would probably take a small risk to catch a bad guy, but not too much. If you had an accident while chasing a bad guy, it wouldn’t shock me if you were prosecuted for reckless endangerment or the like. As with any other public policy issue, there are groups on both sides. Against you would be ranged the people who consider criminals victims of society (where society = you), and even some elements of law enforcement who would rather monopolize their physical role in limiting crime.

But hey, it’s fun to fantasize about becoming spider-man or superman, or otherwise play a good-vigilante role on behalf of the true victims of criminal thugs. I do it myself, and I only admire others who actually act on it.

[patientrenter]

Personally, I tip my hat to you.

But honestly, I think you’d be very lucky to catch any breaks if something went wrong while you took unusual initiative to go after a criminal. So do it at your own risk. I would probably take a small risk to catch a bad guy, but not too much. If you had an accident while chasing a bad guy, it wouldn’t shock me if you were prosecuted for reckless endangerment or the like. As with any other public policy issue, there are groups on both sides. Against you would be ranged the people who consider criminals victims of society (where society = you), and even some elements of law enforcement who would rather monopolize their physical role in limiting crime.

But hey, it’s fun to fantasize about becoming spider-man or superman, or otherwise play a good-vigilante role on behalf of the true victims of criminal thugs. I do it myself, and I only admire others who actually act on it.

[patientrenter]

Personally, I tip my hat to you.

But honestly, I think you’d be very lucky to catch any breaks if something went wrong while you took unusual initiative to go after a criminal. So do it at your own risk. I would probably take a small risk to catch a bad guy, but not too much. If you had an accident while chasing a bad guy, it wouldn’t shock me if you were prosecuted for reckless endangerment or the like. As with any other public policy issue, there are groups on both sides. Against you would be ranged the people who consider criminals victims of society (where society = you), and even some elements of law enforcement who would rather monopolize their physical role in limiting crime.

But hey, it’s fun to fantasize about becoming spider-man or superman, or otherwise play a good-vigilante role on behalf of the true victims of criminal thugs. I do it myself, and I only admire others who actually act on it.

[patientrenter]

Personally, I tip my hat to you.

But honestly, I think you’d be very lucky to catch any breaks if something went wrong while you took unusual initiative to go after a criminal. So do it at your own risk. I would probably take a small risk to catch a bad guy, but not too much. If you had an accident while chasing a bad guy, it wouldn’t shock me if you were prosecuted for reckless endangerment or the like. As with any other public policy issue, there are groups on both sides. Against you would be ranged the people who consider criminals victims of society (where society = you), and even some elements of law enforcement who would rather monopolize their physical role in limiting crime.

But hey, it’s fun to fantasize about becoming spider-man or superman, or otherwise play a good-vigilante role on behalf of the true victims of criminal thugs. I do it myself, and I only admire others who actually act on it.

[patientrenter]

Personally, I tip my hat to you.

But honestly, I think you’d be very lucky to catch any breaks if something went wrong while you took unusual initiative to go after a criminal. So do it at your own risk. I would probably take a small risk to catch a bad guy, but not too much. If you had an accident while chasing a bad guy, it wouldn’t shock me if you were prosecuted for reckless endangerment or the like. As with any other public policy issue, there are groups on both sides. Against you would be ranged the people who consider criminals victims of society (where society = you), and even some elements of law enforcement who would rather monopolize their physical role in limiting crime.

But hey, it’s fun to fantasize about becoming spider-man or superman, or otherwise play a good-vigilante role on behalf of the true victims of criminal thugs. I do it myself, and I only admire others who actually act on it.

[patientrenter]

Thanks, peterb. I lived in Orange County before moving to the East Coast last year. But I don’t know San Diego county very well, so I don’t have a feel for the safety and livability of the neighborhoods. Oceanside seems to have a great coastal location, but was tarnished by the demographic and income profile of the people associated with the Marine base. (No insult to Marines here – males aged 18-25 share some characteristics, and if you don’t pay them a lot, then the community that serves them also shares some characteristics.)

[patientrenter]

Thanks, peterb. I lived in Orange County before moving to the East Coast last year. But I don’t know San Diego county very well, so I don’t have a feel for the safety and livability of the neighborhoods. Oceanside seems to have a great coastal location, but was tarnished by the demographic and income profile of the people associated with the Marine base. (No insult to Marines here – males aged 18-25 share some characteristics, and if you don’t pay them a lot, then the community that serves them also shares some characteristics.)

[patientrenter]

Thanks, peterb. I lived in Orange County before moving to the East Coast last year. But I don’t know San Diego county very well, so I don’t have a feel for the safety and livability of the neighborhoods. Oceanside seems to have a great coastal location, but was tarnished by the demographic and income profile of the people associated with the Marine base. (No insult to Marines here – males aged 18-25 share some characteristics, and if you don’t pay them a lot, then the community that serves them also shares some characteristics.)

[patientrenter]

Thanks, peterb. I lived in Orange County before moving to the East Coast last year. But I don’t know San Diego county very well, so I don’t have a feel for the safety and livability of the neighborhoods. Oceanside seems to have a great coastal location, but was tarnished by the demographic and income profile of the people associated with the Marine base. (No insult to Marines here – males aged 18-25 share some characteristics, and if you don’t pay them a lot, then the community that serves them also shares some characteristics.)

[patientrenter]

Thanks, peterb. I lived in Orange County before moving to the East Coast last year. But I don’t know San Diego county very well, so I don’t have a feel for the safety and livability of the neighborhoods. Oceanside seems to have a great coastal location, but was tarnished by the demographic and income profile of the people associated with the Marine base. (No insult to Marines here – males aged 18-25 share some characteristics, and if you don’t pay them a lot, then the community that serves them also shares some characteristics.)

[patientrenter]

Allan,

Sorry about the confusing sentence. I read it over, saw it was confusing, and decided to be lazy and just post anyway. Bad idea.

I meant to say that most banks have equity that is less than 10% of their liabilities. Another way to say it is that assets are less than 110% of liabilities. In reality, the %’s are lower for most of the big banks. I just wanted to point out how thin the banks’ safety margins are. Their margins are designed to withstand shallower, or more scattered, downturns than the deep and broad one we have now.

A few might be lucky enough to withstand the downturn regardless (I am being generous here), but most of the ones that survive will probably do so only by virtue of superior current and future earning power, together with no worse than average initial negative equity, and booster shots of free money from taxpayers for the interim period.

Is there enough room in our economic future for very good earnings at 90-100% of today’s banks? I doubt it. I’d guess that we are overbanked by 20-40%. I am assuming here that the illusion of sustainable high investment yields that we experienced for many years now is dead for a couple of decades. That illusion helped make a lot of investment intermediaries look more valuable than they were. We could still get back to that illusion through persistently high inflation, and that is a real possibility, but I think even then the banks are going to have to shrink.

And the assumption I make about the current assets of many banks being less in value than their current liabilities? I am exposed in my line of work to valuations of various assets and liabilities, including the major IB valuations of large and varied bond portfolios, and I have my own sense of how the financial community is valuing certain assets versus what I can see on the ground, like any other Pigg (e.g. mortgages, commercial rents and vacancies, fiscal and trade deficit pressures etc). I see people living in two different worlds, each hoping the others are dreaming.

[Author]

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