Carl, pain isn't that hard to measure; it is done all the time. The patient would not be paid to be in pain, so it is not obvious why they would want to lie about their pain.

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"Pain" (or quality of life) may be hard to measure... It seems the plan is defenseless against hypochondria. And not only full-blown hypochondria, but any variant thereof.

I agree that rewarding the healthcare system when people are sick is dangerous, but penalizing people for being healthy (pay for health) is too.


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Evil Mike: Why don't you compare government health insurance to private health insurance?

You might be surprised; the government can do many things more efficiently than industry ever can, because the government is not required to seek profit - so it doesn't have to include the inefficiencies whose only goal is profit.

Of course, it needs other reasons to avoid inefficiency - which typically happens when it's forced to be open and transparent. (Again, something industry never does ...)

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Robin, two things1) when I worked in a hospital we used to do a treatment for certain people that cost nothing. As far as I know, that treatment worked 999,999 times out of a million. The current treatment cost $5,000 (includes MRI...) and I have never seen evidence that it works any better.So one problem is that expensive new technologies have to be used because the machines cost alot.2) What would the health care system look like if we rid the system of malpractice insurance?

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Robin, I'm surprised you haven't commented on this.

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Robin, yes! If a health care system fails to anticipate some needs and so some people lose out by accident, people accept that. Bad things happen sometimes, nobody has enough foresight, etc.

But when somebody has the job of choosing who lives and who dies, that person has too much power to suit us. So we have to hide how it happens. Sometimes the choice is made by a woman with a high-school education working in a windowless office building in chicago, who's supposed to apply an insurance company's guidelines and who has a degree of flexibility within the general guidelines that spending has to stay in reasonable bounds. She decides individual cases based on a few lines of coded medical information and a company database and her quota. Will your treatment be disallowed? Nobody knows until she pushes the keys. If you'll die without treatment you can sue and hope you don't die before the court resolves the issue.

We certainly don't want to have a known individual who can make that choice and have it be final. If he cuts off the care you need to survive, what would you offer him to restore it? What would your wife and daughter offer him? Don't go there.

Possible solutions include -- project the costs of new treatments before you finish developing them, and defund the ones that will be too expensive. Keep careful statistics on alternative treatments and promote the ones that are cheaper but work just as well. Perhaps there could be subtle encouragement for that sort of thing -- like, MDs who discover cheaper treatments that work just as well get a fraction of the savings for their further research, but MDs who discover better treatments that are more expensive get nothing but praise. Fund public health approaches to improve the public's health. Promote hospices for people who've already enjoyed as much medical care as they can stand. Etc.

Admitting that we are telling people to go off and die, we don't think they're worth keeping alive, is mostly workable only during popular wars. We could have told old people they needed to take their chances just like the boys at the front during WWII. We can't be so blunt today.

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Wow. I've said it before, but I thought I was saying it somewhat metaphorically. But the comments here show it to be quite literal: many people are horrified by any health care system that could clearly fail to deliver a medical treatment, no matter how expensive, that might plausibly offer some health benefit, no matter how small. Since every health system must in fact do this, then such people can only not be horrified by unclear health systems.

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Maybe you can find a way to fudge it, so people don't notice that the choice is deciding who should die.

When I was in Alabama I heard about some chain letters. One of them worked very well -- instead of just sending money to strangers and hoping other strangers would send you money, they had a deal where you recruit 2 people and get each of them to give you $50 and you watch them mail $50 to the guy at the top of the list. You tell them that when they recruit 2 people they get their whole investment back and all the money they get from strangers is just gravy. Lots of people bought into that. I told a med tech why it was bogus. "What's to keep you from putting your mother's name at the top of the list and recruiting as many as you can? Every one gets you $50 and your mother $50." "But that would be cheating!" "Who gave the guy who started this more right than you have to start your own?" Three days later the newspapers denounced it as a scam and it all fell apart. An undergraduate working in the lab thanked me. "I made $350 off that chain letter and so did my mom." And I didn't make a cent. The point is, fuzz out the decisions. Make it look safe. People will volunteer to get all their medical benefits cut off if you can make it look like they win.

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Extending the hospice system would palliate the medical cost problem.

Arguing about which people should get less medical care than they need will not get anywhere for the foreseeable future. It will just make people think you have Asperger's and no emotional intelligence and that kind of thing.

The argument is how to cut costs by refusing treatment to people. This is not going to be politically popular. It just isn't.

The time to introduce these ideas is when we're in an extended war and our national existence is threatend. When 70% of the doctors are serving with the military, and hospitals have electricity 10 hours a day, and everybody's making big sacrifices for the war effort, *then* is a good time to point out that we have to cut medical costs for people who can't hope to contribute more to the war effort than their treatment will cost.

We only make hard choices in wartime.

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Evil, I'm describing a mechanism that can be used by government or private parties. I just illustratred it first for government.

Biomed, "Hello Mrs. Winslow, sorry to disturb you but today turns out to be your random health audit day. How are you feeling? Can you get to the store? Are you in any pain? ..."

Botogol, I had in mind one-at-a-time auctions, but am open to variations.

Alan, you and your plan are both hurt; there is no need for you to be hurt less if they are hurt more.

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Maybe I'm picking up on the wrong part of the post, but

> I remain puzzled to see no interest in this idea.

attracts most of my attention. Radical ideas need a following, not least to have many eyes to get the bugs out. So what are the weak points of the exposition, viewed as an attempt to attract interest? My reason for posting the following criticisms is that I would like to see a more attractive expostion leading to a wider discussion of this important idea.

> Thus bad medical choices would hurt them just as such choices hurt you.

I first read this as

> Thus bad medical choices would hurt them just as much as such choices hurt you.

and wondered how that could be. If the choices are to hurt then as much as they hurt me don't I have to hand over the full value of my good health? Scary!

The article doesn't quite say that. Perhaps I hand over less and the choices hurt them less than the hurt me, leaving the incentives weaker than ideal. If I'm serious about analysing the posts proposal I have to regard it as a parameterised proposal and analyse the logic with mathematical formula involving a hurt-leverage ratio.

> Since payments to plans would usually far exceed medical expenses,...

I think this is where the post loses 80% of its serious audience. The obvious meaing here is lumpiness: most years you are well, so pay a hefty fee that far exceeds your medical expenses that year. However the post is about something else. Everytime a healthy young person is fatally splattered in a motorcycle accident, the health care provider is seen to close a hugely profitable account. In essence the stream of payments constitute an annuity with the health care provider as the beneficiary and the patient as the annuitant. The annuity is valuable, so the health care provider should pay for it. For a preliminary analysis of the health care provider's incentives, intended to drum up interest in the idea, we should simply assume a fair price. An auction is a pricing mechanism, but we don't need to discuss pricing mechanisms at this stage; that is just a distraction.

> Yes, the government would acquire a financial incentive to hurt your health,...

Once we recognise that the health care provider has purchased an annuity, we also see that the government has sold an annuity. Selling annuities is routine. Pensions companies don't murder their pensioners. Pensioners don't decline their pensions out of fear of assasination. The objection being raised is outlandish and distracting.

You can boil the idea down to one sentence: get your health care provider to purchase an annuity based on your life with itself as the beneficiary.

A follow up question is: Are third party annuities underpriced? Life assurance companies take adverse selection into account. They price their polices to reflect a bias towards long life amongst the actual purchasers. Do they take active management into account? That is, do they allow for beneficiaries paying for life extending treatments to prolong the life of the annuitant and thus extract more money from the policy provider? If not, why not?

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Would people be auctioned 1-at-a-time, or in cohorts? I am not clear why any plan would bid anything for a chronically-ill person in a lot of pain.

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"These evaluations of disability and pain might be based on random auditor visits."

Robin, can you elaborate on how you would quantify the health gains or quality of life in this mechanism?

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"Evil, you are forgetting revenue goes in from the auction, and then goes out again for the annual payments. The net outgo equals the cost of medical treatment. For private versions, you would of course choose a value of life level you thought best given your budget and priorities."

Wouldn't that kind of loop have a net profit of $0.00 ??

I really like that you're thinking about it, but after having given a great amount of thought to this myself, I honestly think that a pure free market approach would be far better than anything government run. Seriously, when was the last time the government did anything efficiently? Or even on time and under budget?

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To bad it would be too corrupting to offer Medicare recitients the money that their care should cost so that they can spend it where they please. Like you had a pretty severe heart attack here is $50,000. You had a small heart attack here is $10,000. etc.

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Laura, the whole point is to find a way to decide what treatments are "reasonable." If you have some other good way to do that, then you don't need my mechanism. My proposal is that treatments are reasonable when their cost is less than the benefit.

Evil, you are forgetting revenue goes in from the auction, and then goes out again for the annual payments. The net outgo equals the cost of medical treatment. For private versions, you would of course choose a value of life level you thought best given your budget and priorities.

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