If you're going to complain about "unreasonable" profits and then back off when people actually ask whether the profits are really that unreasonable, you might want to consider the possibility that the profits aren't all that unreasonable and that your basic complaint is nonsense.
And it's not like building houses is a new high-tech endeavor that only a few companies have figured out how to do. There are *a lot* of people and companies in the home buidling business. They know what it costs and they know what the return is. If the return was far higher than the return on other investments, they'd be borrowing shittons of money and then using it to build houses like crazy. The fact that they're not doing so indicates that the return on that invested capital isn't all that much higher than the return on other investments.
You're complaining about a problem that doesn't exist.
A lot of people consider both Mountain View and San Francisco as valid places to live. Some people would never live in suburbia and some people would never live in the city, but a lot of people are flexible and see costs and benefits to both. They make their decisions in the fuzzy gray areas based on commute time, living environment preferences, and price. Shifing the price of either will cause some percentage of those people to alter their decisions.
And your Honda/Lexus analogy is spot on in many ways, but it doesn't illustrate what you think it does. Many buyers consider both a Honda and a Lexus when they're buying. They may prefer the Lexus but choose the Honda because it's a better deal overall. A $2K bump in the Honda price is very likely to sell more Lexuses. It's not like we're comparing driving Hondas to riding zebras. The two goods are real substitutes, if not perfect ones.
I'm still wondering where you're getting 900% profit from. If there as 900% profit to be made on the dollar, I guarantee you that smart companies like Google and Apple that are sitting on billions of dollars in cash would get into the home building business before the end of the business day. The reality is that once you account for all of the costs involved, different business sectors tend to have fairly similar yields for exactly this reason: if somebody is making outsized profits, everybody pulls their money out of what they're doing and gets into that business.
My grandparents home in Los Angeles County took 35 years to grow 10x in value.
But it eventually happens, and if you limit tax increases to 2% per year, homeowners get a tax cut in real terms most every year.
Anyways, why the need to sell your house?
Are you saying that people should never move? I can think of a few reasons: To change jobs. The kids have moved out, so you don't need a big place (especially useful as it vacates a big place for new families with kids). You're too old to go up and down stairs. You need cash for retirement so you want to downsize from your suburban home and move into a small one story condo. This system breaks the normal lifecycle of home ownership.
Why not target the federal government for supporting the home loan interest deduction, which promotes massive financing that props up pricing?
Absolutely! Provided it was phased out over a number of years, I'd vote for this in a heartbeat.
Why force people out of their homes because of unreasonable property tax hikes?
You can get past the "forcing people out of their homes" problem in a couple of ways. The first would be to allow people with little to no income (seniors, for example), to have the tax assessed against their home and have it taken out of their estate when they die.
The second would be to move to an income tax and forget about property tax entirely. Property tax causes these sorts of problems by its very nature. Property isn't liquid, so you can't use property to pay taxes on property. Rich people have lots of property, so they pay more (in theory). Old people don't have the income to pay property tax, so we give them a break. Basically, we're fiddling with the property tax to try to make it act like an income tax, but with the nasty side effects of all sorts of terrible market distortions. I don't get why we do it.
If nothing else, I'd bet good money that most people who apply to be cops are bullies. The "drive fast, carry a gun, and tell people what to do" job description must draw bullies and nuts like flies to shit, especially when it pays better than most jobs within reach of unskilled assholes. I pity the people who have to weed those guys out and find the decent folks to do the job well.
I will say anecodtally that while I've had good dealings with my local police, I've noticed that the guys in high school who I stereotpycally thought would end up being cops ended up being cops with a surprisingly high probability.
Come on! It makes sense! Letting people die of polio eliminates the weak people who tend to die of polio. Never mind that nobody has to die of polio so that "weakness" is kind of a non-issue. We could expand this philosophy wider by setting land mines everywhere. Sure, it's a problem we don't actually have to live with, but it does keep us on our toes and it weeds out people who don't pay attention and people with bad clotting times.
A colleague of mine suggested that we screen resumes by randomly shredding 50% of them. Those are the unlucky people. Why would you want an unlucky person on your team? If only the lucky people are left behind, the team is much better off.
No, I'm genuinely curious about this. It may be more than you have, but is it a crazy unreasonable amount? Are we talking $10K? $100K? $1M? Because the plan you have should have a reasonable out-of-pocket maximum for a serious problem, and it should be far, far below the actual medical bill. For a Bronze Plan, your individual yearly out pocket maximum for a debilitating injury would be $6,350. That's bad news for anyone, but it's a lot better than being stuck with the bill for getting your hip or knee surgically reconstructed, as you problably know better than the rest of us.
The reason I'm pushing this is because every time somebody has become the "Joe the Plumber" face of getting screwed by the ACA in the national news, it has turned out that they actually had very good (often better than before the ACA!) options available to them. The only exception to that is people who fall below the income level for the normal ACA markets and who should have been covered by Medicaid but aren't because their states decided to screw them in order to score political points. It sounds like you're probably one of those people.
So the question is, did the ACA screw you, or did your state screw you by rejecting the Medicaid provisions of the ACA that were designed to cover people with low income? It's quite possible that you should be on Medicaid right now according to the way the law was originally written. Your anger may well be misdirected.
Those options are good, but they don't cover everybody. 1 and 3 are great for people like us who qualify for good jobs that provide health care coverage. For the people who don't (and there are lots of them), those options are right out. You're on the individual market or, if you're disabled and unable to work, Medicare. But not everybody with an expensive chronic illness is disabled either, and not every preexisting condition is a chronic illness--a lot of the time it's just something bad in your medical history that doesn't really affect you much any more.
You said that medical prices can not be pushed down because they are essential, thus don't respond to free-market pressures. That is my understanding of what you said.
That's simply not what I said. I said that the primary reason for the difference in pricing between "essential" and "non-essential" medical goods is the shape of the demand curve at and around the equilibrium quantity. I'm not sure how many different ways I can exlain it to help you understand, especially given the fact that I've said explicitly that both of them respond to market forces perfectly well. Continue with your lecture if you will, but it's pretty clear now that I'm not the one who is missing something.
The interesting question in economics is never, "Does X market respond to market forces?" because every market responds to market forces. The interesting question is, "What does the market look like and why is the outcome what it is?"
I'm really trying to tease out what's in your head here and if you have some sort of underlying point you're trying to make. I made a very narrow point about something way up the thread, and you turned it into a meandering half-assed Socratic lesson trying to teach me something I assumed we both understood perfectly well. I'm now apparently being taken to task for not mentioning price transparency when we just spent the past several posts going round and round on how supply affects price.
The problem with these discussions is that the person with the really shallow understanding thinks he's maneuvering the conversation somewhere clever and the person who actually knows what he's talking about assumed that the clever "end" they were driving at was just one of the axioms at starting point of the discussion that everybody sort of leaves unsaid. It's like trying to sit still and nod politely while somebody ploddingly explains to you the joke you just told.
I'm surprised you haven't read any of that, since you seem to have a degree in economics.
Look, price transparency is good. Markets are good. I understand that supply curves slope up and demand curves slope down. Now that we have that out of the way, do you have something substantive to contribute, or am I wasting keystrokes and inviting more of this facetious self-congratulatory horseshit?
Well, I have a degree in economics, so it's probably not that I'm missing the basics of supply and demand and need to be led there one sentence at a time. It's more likely just that I'm not claiming that increasing the supply of medical care won't reduce the price.
The post I originally responded to noted that non-essential care has dropped in price as if that's evidence that Evil Socialism is driving up the price of essential care. But it's not as though non-essential care is an unfettered free market and critical care is heavily regulated. They're both highly regulated markets with limited supply of specialized caregivers. The key difference is that non-essential care is (surprise!) non-essential, so the shape of the demand curves in the critical regions differ and the equilibrium prices at easily-reached supply levels differ.
If you want to talk specifically about how to increase the supply of critical medical care, that's an interesting topic. There are a whole lot of reasons why it's not the simplest thing in the world to do, but it's definitely interesting.
You're clearly trying to lead me to something really clever, but I'm just not getting there. This is all pretty basic economics, so what am I missing? Is there a way you could say it without the use of question marks?
No, it's reasonable to assume that the demand curve is more or less smooth and continuous. "Essential" goods act just like any other normal goods once you're out to a certain quantity. But below that, the demand curve shoots off into the stratosphere. That happens for water or food. It happens for critical medical care. It doesn't happen for Troll dolls or DVDs.
I have no idea how you could have gotten that from reading my post and the link I provided. Supply and demand work perfectly well in healthcare. But for lifesaving health care, the demand curve is basically vertical where supply and demand meet in the real world. The demand curve for essential goods approaches infinity as quantity approaches zero and drops off rapidly after your essential needs are met. That means that you're almost completely insensitive to price until the supply increases beyond that point.
If we ever get to the point where there are a bunch of heart surgeons milling around for every one person who needs heart surgery, we'll be way down at the same point on the demand curve as we are for rice and fresh water. But that's not where we are.
We consume food at a much lower marginal utility. We've progressed far enough in our provision of food and water that we produce enough that we now consume them way down on the marginal utility curve. If we were starving hunter gatherers, we'd gladly trade our last beads and monkey skulls for a little bit of food for the same reason. For a variety of reasons, we haven't yet progressed to the point where medical care is provided that far out on the curve (although some of it is--lifesaving antibiotics that would have been worth kingdoms can now be bought like Skittles). Once machines that automatically perform heart surgery are available right next to the vending machines that clog our arteries, we'll wonder why we ever had this conversation.
That seems like a really bad decision, no? And whether your state participated has nothing to do with whether HHS counts Medicaid as "private" enrollment. Which it doesn't.
If there was a way to guarantee that you'd pay cash up front for all of your medical care or go off and die without bothering the rest of us, I'd be all for allowing adults to opt out of having health insurance. But there isn't. If you go to an emergency room and don't pay, the rest of us get stuck with the bill. If you get major surgery done and declare bankruptcy, the rest of us end up eating it. Somehow, we have to deal with those people. Right now, we deal with them by letting it slide and making responsible people cough up the difference.
I had a fun exchange with one of our VPs as I was going over the terms of our exit agreement and what it meant for me to protect company IP. His summary was, "You can't use anything you did or learned here in another job," which is pretty weird phrasing.
Me: But the reason you want me is that I'm an expert in industry X. I've worked here for 10 years, so most of my most current expertise comes from working at this company.
Him: Nothing you learned here.
Me: I'm not talking about taking algorithms and inventions from here and giving them to competitors. I'm saying that "nothing you learned here" is broad phrasing that doesn't really describe what you want.
Him: If you learned it here, it's company IP and you can't use it at a competitor. All of the experience.
Me: So when you hire somebody for your team, you put out a req that says, "5 years experience in industry X." I've seen those.
Him: Right.
Me: So were you doing that to steal IP from other companies?
Him: No.
Me: So if I promise you that I'll only bring to other companies the things that you are taking from other companies in those job postings, we're cool?
Him: [long pause] Yes, that's OK.
Fortunately, I ended up moving to a totally unrelated field, but damn that's a creepy thing to have hanging over your head. "We can't describe what you're not allowed to do, but we'll sue the fuck out of you if you do it."
But what's the actual out of pocket maximum, reasonably speaking? It should be listed on your plan. I mean, being out several thousand dollars is bad, but if we're talking about a catastrophic injury that could potentially cost tens or hundreds of thousands of dollars, it's a pretty good outcome--one that shouldn't financially cripple anybody as long as they eventually get a job again. We'd all love to have zero-deductible free insurance, but it's just not mathematically possible.
The fact that you have to stick with your own insurance rather than dropping onto Medicaid is a function of your state's Medicaid rules. Being unemployed, you may well have qualified for Medicaid in a different state. If your state rejected the Medicaid expansion and that cost you the opportunity to get subsidized care, it would be good to have a chat with your state representatives, because they're sticking it to you intentionally in order to make the ACA look like it's not working.
Should I suffer a debilitating injury now, I will have to choose between lifelong financial destitution or being crippled.
Are you saying that after your $5K deductible is covered, you won't get any coverage from your private in surance? Or that $5K is permanent financial destitution? How does this scenario really play out?
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If you're going to complain about "unreasonable" profits and then back off when people actually ask whether the profits are really that unreasonable, you might want to consider the possibility that the profits aren't all that unreasonable and that your basic complaint is nonsense.
And it's not like building houses is a new high-tech endeavor that only a few companies have figured out how to do. There are *a lot* of people and companies in the home buidling business. They know what it costs and they know what the return is. If the return was far higher than the return on other investments, they'd be borrowing shittons of money and then using it to build houses like crazy. The fact that they're not doing so indicates that the return on that invested capital isn't all that much higher than the return on other investments.
You're complaining about a problem that doesn't exist.
A lot of people consider both Mountain View and San Francisco as valid places to live. Some people would never live in suburbia and some people would never live in the city, but a lot of people are flexible and see costs and benefits to both. They make their decisions in the fuzzy gray areas based on commute time, living environment preferences, and price. Shifing the price of either will cause some percentage of those people to alter their decisions.
And your Honda/Lexus analogy is spot on in many ways, but it doesn't illustrate what you think it does. Many buyers consider both a Honda and a Lexus when they're buying. They may prefer the Lexus but choose the Honda because it's a better deal overall. A $2K bump in the Honda price is very likely to sell more Lexuses. It's not like we're comparing driving Hondas to riding zebras. The two goods are real substitutes, if not perfect ones.
I'm still wondering where you're getting 900% profit from. If there as 900% profit to be made on the dollar, I guarantee you that smart companies like Google and Apple that are sitting on billions of dollars in cash would get into the home building business before the end of the business day. The reality is that once you account for all of the costs involved, different business sectors tend to have fairly similar yields for exactly this reason: if somebody is making outsized profits, everybody pulls their money out of what they're doing and gets into that business.
But it eventually happens, and if you limit tax increases to 2% per year, homeowners get a tax cut in real terms most every year.
Are you saying that people should never move? I can think of a few reasons: To change jobs. The kids have moved out, so you don't need a big place (especially useful as it vacates a big place for new families with kids). You're too old to go up and down stairs. You need cash for retirement so you want to downsize from your suburban home and move into a small one story condo. This system breaks the normal lifecycle of home ownership.
Absolutely! Provided it was phased out over a number of years, I'd vote for this in a heartbeat.
You can get past the "forcing people out of their homes" problem in a couple of ways. The first would be to allow people with little to no income (seniors, for example), to have the tax assessed against their home and have it taken out of their estate when they die.
The second would be to move to an income tax and forget about property tax entirely. Property tax causes these sorts of problems by its very nature. Property isn't liquid, so you can't use property to pay taxes on property. Rich people have lots of property, so they pay more (in theory). Old people don't have the income to pay property tax, so we give them a break. Basically, we're fiddling with the property tax to try to make it act like an income tax, but with the nasty side effects of all sorts of terrible market distortions. I don't get why we do it.
If nothing else, I'd bet good money that most people who apply to be cops are bullies. The "drive fast, carry a gun, and tell people what to do" job description must draw bullies and nuts like flies to shit, especially when it pays better than most jobs within reach of unskilled assholes. I pity the people who have to weed those guys out and find the decent folks to do the job well.
I will say anecodtally that while I've had good dealings with my local police, I've noticed that the guys in high school who I stereotpycally thought would end up being cops ended up being cops with a surprisingly high probability.
They need to do what the beauty products industry has done so well: Now with natural coconut extract!
Come on! It makes sense! Letting people die of polio eliminates the weak people who tend to die of polio. Never mind that nobody has to die of polio so that "weakness" is kind of a non-issue. We could expand this philosophy wider by setting land mines everywhere. Sure, it's a problem we don't actually have to live with, but it does keep us on our toes and it weeds out people who don't pay attention and people with bad clotting times.
A colleague of mine suggested that we screen resumes by randomly shredding 50% of them. Those are the unlucky people. Why would you want an unlucky person on your team? If only the lucky people are left behind, the team is much better off.
But, as you note, who is to say whether that's a good thing or not?
"Marge, it takes two to lie. One to lie and one to listen."
-Homer J. Simpson
No, I'm genuinely curious about this. It may be more than you have, but is it a crazy unreasonable amount? Are we talking $10K? $100K? $1M? Because the plan you have should have a reasonable out-of-pocket maximum for a serious problem, and it should be far, far below the actual medical bill. For a Bronze Plan, your individual yearly out pocket maximum for a debilitating injury would be $6,350. That's bad news for anyone, but it's a lot better than being stuck with the bill for getting your hip or knee surgically reconstructed, as you problably know better than the rest of us.
The reason I'm pushing this is because every time somebody has become the "Joe the Plumber" face of getting screwed by the ACA in the national news, it has turned out that they actually had very good (often better than before the ACA!) options available to them. The only exception to that is people who fall below the income level for the normal ACA markets and who should have been covered by Medicaid but aren't because their states decided to screw them in order to score political points. It sounds like you're probably one of those people.
So the question is, did the ACA screw you, or did your state screw you by rejecting the Medicaid provisions of the ACA that were designed to cover people with low income? It's quite possible that you should be on Medicaid right now according to the way the law was originally written. Your anger may well be misdirected.
Those options are good, but they don't cover everybody. 1 and 3 are great for people like us who qualify for good jobs that provide health care coverage. For the people who don't (and there are lots of them), those options are right out. You're on the individual market or, if you're disabled and unable to work, Medicare. But not everybody with an expensive chronic illness is disabled either, and not every preexisting condition is a chronic illness--a lot of the time it's just something bad in your medical history that doesn't really affect you much any more.
That's simply not what I said. I said that the primary reason for the difference in pricing between "essential" and "non-essential" medical goods is the shape of the demand curve at and around the equilibrium quantity. I'm not sure how many different ways I can exlain it to help you understand, especially given the fact that I've said explicitly that both of them respond to market forces perfectly well. Continue with your lecture if you will, but it's pretty clear now that I'm not the one who is missing something.
The interesting question in economics is never, "Does X market respond to market forces?" because every market responds to market forces. The interesting question is, "What does the market look like and why is the outcome what it is?"
The problem with these discussions is that the person with the really shallow understanding thinks he's maneuvering the conversation somewhere clever and the person who actually knows what he's talking about assumed that the clever "end" they were driving at was just one of the axioms at starting point of the discussion that everybody sort of leaves unsaid. It's like trying to sit still and nod politely while somebody ploddingly explains to you the joke you just told.
Look, price transparency is good. Markets are good. I understand that supply curves slope up and demand curves slope down. Now that we have that out of the way, do you have something substantive to contribute, or am I wasting keystrokes and inviting more of this facetious self-congratulatory horseshit?
Well, I have a degree in economics, so it's probably not that I'm missing the basics of supply and demand and need to be led there one sentence at a time. It's more likely just that I'm not claiming that increasing the supply of medical care won't reduce the price.
The post I originally responded to noted that non-essential care has dropped in price as if that's evidence that Evil Socialism is driving up the price of essential care. But it's not as though non-essential care is an unfettered free market and critical care is heavily regulated. They're both highly regulated markets with limited supply of specialized caregivers. The key difference is that non-essential care is (surprise!) non-essential, so the shape of the demand curves in the critical regions differ and the equilibrium prices at easily-reached supply levels differ.
If you want to talk specifically about how to increase the supply of critical medical care, that's an interesting topic. There are a whole lot of reasons why it's not the simplest thing in the world to do, but it's definitely interesting.
You're clearly trying to lead me to something really clever, but I'm just not getting there. This is all pretty basic economics, so what am I missing? Is there a way you could say it without the use of question marks?
No, it's reasonable to assume that the demand curve is more or less smooth and continuous. "Essential" goods act just like any other normal goods once you're out to a certain quantity. But below that, the demand curve shoots off into the stratosphere. That happens for water or food. It happens for critical medical care. It doesn't happen for Troll dolls or DVDs.
I have no idea how you could have gotten that from reading my post and the link I provided. Supply and demand work perfectly well in healthcare. But for lifesaving health care, the demand curve is basically vertical where supply and demand meet in the real world. The demand curve for essential goods approaches infinity as quantity approaches zero and drops off rapidly after your essential needs are met. That means that you're almost completely insensitive to price until the supply increases beyond that point.
If we ever get to the point where there are a bunch of heart surgeons milling around for every one person who needs heart surgery, we'll be way down at the same point on the demand curve as we are for rice and fresh water. But that's not where we are.
We consume food at a much lower marginal utility. We've progressed far enough in our provision of food and water that we produce enough that we now consume them way down on the marginal utility curve. If we were starving hunter gatherers, we'd gladly trade our last beads and monkey skulls for a little bit of food for the same reason. For a variety of reasons, we haven't yet progressed to the point where medical care is provided that far out on the curve (although some of it is--lifesaving antibiotics that would have been worth kingdoms can now be bought like Skittles). Once machines that automatically perform heart surgery are available right next to the vending machines that clog our arteries, we'll wonder why we ever had this conversation.
It looks like at least 27 states are going forward with it in 2014 with a number of states sill debating.
"Having problems?" "Going to prison?" Are we still talking about Medicaid?
So you're going to do the super smart thing and not have any health insurance at all, right? That'll show 'em.
That seems like a really bad decision, no? And whether your state participated has nothing to do with whether HHS counts Medicaid as "private" enrollment. Which it doesn't.
If there was a way to guarantee that you'd pay cash up front for all of your medical care or go off and die without bothering the rest of us, I'd be all for allowing adults to opt out of having health insurance. But there isn't. If you go to an emergency room and don't pay, the rest of us get stuck with the bill. If you get major surgery done and declare bankruptcy, the rest of us end up eating it. Somehow, we have to deal with those people. Right now, we deal with them by letting it slide and making responsible people cough up the difference.
I had a fun exchange with one of our VPs as I was going over the terms of our exit agreement and what it meant for me to protect company IP. His summary was, "You can't use anything you did or learned here in another job," which is pretty weird phrasing.
Me: But the reason you want me is that I'm an expert in industry X. I've worked here for 10 years, so most of my most current expertise comes from working at this company.
Him: Nothing you learned here.
Me: I'm not talking about taking algorithms and inventions from here and giving them to competitors. I'm saying that "nothing you learned here" is broad phrasing that doesn't really describe what you want.
Him: If you learned it here, it's company IP and you can't use it at a competitor. All of the experience.
Me: So when you hire somebody for your team, you put out a req that says, "5 years experience in industry X." I've seen those.
Him: Right.
Me: So were you doing that to steal IP from other companies?
Him: No.
Me: So if I promise you that I'll only bring to other companies the things that you are taking from other companies in those job postings, we're cool?
Him: [long pause] Yes, that's OK.
Fortunately, I ended up moving to a totally unrelated field, but damn that's a creepy thing to have hanging over your head. "We can't describe what you're not allowed to do, but we'll sue the fuck out of you if you do it."
But what's the actual out of pocket maximum, reasonably speaking? It should be listed on your plan. I mean, being out several thousand dollars is bad, but if we're talking about a catastrophic injury that could potentially cost tens or hundreds of thousands of dollars, it's a pretty good outcome--one that shouldn't financially cripple anybody as long as they eventually get a job again. We'd all love to have zero-deductible free insurance, but it's just not mathematically possible.
The fact that you have to stick with your own insurance rather than dropping onto Medicaid is a function of your state's Medicaid rules. Being unemployed, you may well have qualified for Medicaid in a different state. If your state rejected the Medicaid expansion and that cost you the opportunity to get subsidized care, it would be good to have a chat with your state representatives, because they're sticking it to you intentionally in order to make the ACA look like it's not working.
Are you saying that after your $5K deductible is covered, you won't get any coverage from your private in surance? Or that $5K is permanent financial destitution? How does this scenario really play out?