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Health Care in the U.S.

124»

Posts

  • YarYar Registered User regular
    edited May 2007
    Edwards' plan is superior and more practical and thought out.

    He doesn't exactly come out and say that we retreat from Iraq to pay for health care, but that's sort of how it works out, along with taxing the rich more, of course.

  • LondonBridgeLondonBridge __BANNED USERS
    edited May 2007
    Irond Will wrote: »
    Found this interesting site about health care cost stats. I was wondering why its been increasing and it seems its because of our poor health, fatties, smoking and heart disease. Makes sense, unfortunately.


    http://www.nchc.org/facts/cost.shtml

    The website that says this?
    Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.

    I didn't see anything about fatties, smoking or heart disease there. Now I'm not denying that we do have widespread health problems, but your link doesn't seem to talk about them.

    No, doesn't specify those unhealthy lifestyle but here is the actual quote from the page:
    Public health advocates believe that if all Americans adopted healthy lifestyles, health care costs would decrease as people required less medical care.

    So I'm pretty sure healthy lifestyle means more exercise, no smoking, less drinking, watch what you eat, and no unprotected butt sex with heroin using addicts.

  • ShintoShinto __BANNED USERS
    edited May 2007
    Yar wrote: »
    Edwards' plan is superior and more practical and thought out.

    He doesn't exactly come out and say that we retreat from Iraq to pay for health care, but that's sort of how it works out, along with taxing the rich more, of course.

    Cool, I've been meaning to look into Edwards.

  • Irond WillIrond Will Dragonmaster Cambridge. MASuper Moderator, Moderator mod
    edited May 2007
    No, doesn't specify those unhealthy lifestyle but here is the actual quote from the page:
    Public health advocates believe that if all Americans adopted healthy lifestyles, health care costs would decrease as people required less medical care.
    So I'm pretty sure healthy lifestyle means more exercise, no smoking, less drinking, watch what you eat, and no unprotected butt sex with heroin using addicts.
    Yes, but this is akin to saying "Iraq war expenditures would be drastically reduced if everyone had love in their hearts and agreed-upon goals". The thrust of that page is that health care is mired in systemic problems and outlines ways to address these. Most approaches to reforming the HC system do include provisions for preventative medicine and health, which may go somewhere in addressing an unhealthy population.

    Wqdwp8l.png
  • Irond WillIrond Will Dragonmaster Cambridge. MASuper Moderator, Moderator mod
    edited May 2007
    Shinto wrote: »
    ElJeffe wrote: »
    Goddammit, you people, you're making me support Barack "I'm a Big, Fucking Liberal" Obama's health care proposal, and I don't want to. Stop being persuasive and reasonable!

    The reall horror will dawn on you when you realize that Hillary's plan is even better thought out.

    Horror Jeff.

    Horror.
    I was going to type out this exact thing. Damn you and your precognition Shinto. You need to stop preemptively stealing my ideas.

    Wqdwp8l.png
  • ShintoShinto __BANNED USERS
    edited May 2007
    Irond Will wrote: »
    Shinto wrote: »
    ElJeffe wrote: »
    Goddammit, you people, you're making me support Barack "I'm a Big, Fucking Liberal" Obama's health care proposal, and I don't want to. Stop being persuasive and reasonable!

    The reall horror will dawn on you when you realize that Hillary's plan is even better thought out.

    Horror Jeff.

    Horror.
    I was going to type out this exact thing. Damn you and your precognition Shinto. You need to stop preemptively stealing my ideas.

    I can't help it man.

    You're just not smart enough for quick internet quips. Stick to your rocket science.:P

  • witch_iewitch_ie Registered User regular
    edited May 2007
    To get this thread back on topic, I have a lot to say on this issue. It's one I've dedicated my life to and while I don't have the answers yet, I think there are a few things to keep in mind with regard to the current situation. I apologize for its length.

    Pharmaceutical Research

    When looking at pharmaceutical research, it's good to be aware of some of the facts. Research for a new drug is incredibly expensive. First of all, for a single drug that gets to market, there are a lot of failures that have to happen first or in conjunction with that success. Second, the drug has to go through extensive and expensive clinical trials before the FDA will approve the drug, adding to the cost. When looking into this in graduate school (about two years ago), it was estimated that the cost of developing a single drug and then bringing it to market (not necessariliy including advertising), cost somewhere around $800 million (corrected so as not to spread incorrect information - thank you Feral).

    As Feral mentioned, a lot of these substances are developed by federally and otherwise funded scientists in academic environments. However, there is a lot more involved creating a drug that a person can take than just finding the compound. Pharmaceutical companies provide us all a very important, life-altering service when they do this. Anyone who's ever suffered from any kind of chronic condition with no hope in sight only to have a drug company come up with some new substance that improves their quality of life when nothing else could understands how very valuable this service is.

    The problem facing the U.S. with regard to this is that they pay the bulk of the cost of all pharmaceutical research for the rest of the world. Those other developed countries with single payer systems negotiate their drug prices and get them for far less than patients in the U.S. This is why so many went to Canada or other countries for their drugs. The question here is should this continue? Should other countries ante up or should the U.S. discontinue this practice and cut research dollars in a hugely signifcant way across the board? This would result in less drugs, less cures, less treatments for disease that many suffer from today. This is a global issue, one which the U.S. has been subsidizing for years. If, as many suggest, this is not sustainable, then another solution must be developed or the world will have to face the consequences of fewer new treatments and probably no cures from the pharmaceutical industry.

    I'm not saying that there are areas in which pharmaceutical companies could cut their spending and still have money for research, but that money would not necessarily be anywhere near the $8 billion it takes to develop a single drug.

    Direct to Consumer Advertising

    A lot of people criticize DTC advertising. They're annoyed by the ads, see it as being very expensive, and think that it encourages people to ask for brand name drugs. I thought the same thing until I researched it. While there wasn't a lot of data out there on it when I did, several findings made me think that DTC advertising is not the devil it at first appears to be.

    First of all, physicians and insurers can also encourage patients to at least try the generic drug first and many do. This doesn't mean patients won't ask for the brand name, but does cut down on the number using only the brand name.

    Second, DTC advertising does cause an increase in drug utilization, however, what I found is that these commercials encourage patients with previously undiagnosed, untreated conditions to come in and get care that could save their lives. Specifically my research indicated that people with heart disease and high cholesterol benefitted from this. This is a huge benefit when looking at the overall health of the nation.

    Third, the majority of pharmaceutical advertising is not spent on DTC ads. In fact, they spend approximately 7 times more advertising to doctors. Now, while the industry has been "self-regulating" in this area as far as how much can been spent, anyone who has been on the receiving side of this knows it's ridiculous and excessive. This is probably where pharmaceuticals could save the most money. Of course they face the dilemma of giving the edge to their competitors who may continue to wine and dine physicians, so this isn't something that can happen overnight, although some companies have taken steps towards it by cutting their sales forces.

    Medical Schools and Medical Malpractice

    One of the main areas in which we could seriously change the way medicine, malpractice, and what it means to be a doctor is by changing our medical education system. This is one area where I've come up with potential solutions that I believe would work except for the fact that the AMA would be incredibly resistant. This is a huge obstacle since as one of my professors noted on the first day of class, doctors control 70% of the health care dollar. This means they are powerful and a formidable opponent. Regardless, this is what I would do to address medical school reform and in turn, medical malpractice.

    First, get rid of the cap on medical schools. There is no "official" cap, but what many have come to notice is that the AMA informally controls the number of new doctors, essentially, the supply of physicians. They do this for very good reason - this keeps them in demand with good salaries. After all, whoever heard of the doctor who couldn't get work? One of the reasons given for this is that keeps our physician quality high. By setting high standards for entrance rather than limiting the number of matriculating medical students, the same can be acheived.

    Second, within the medical schools themselves, medical students are taught that they must be infallible. This means that they will learn not to admit to their mistakes. This leads to no chance to improve quality of care with physician training. We as a society must recognize that doctors are human, they will make mistakes every now and then. However, I think that by changing the culture in medicine, much the way it's been changed in nuclear power or aviation, so that people are able to admit their mistakes and learn from them, we will all be safer.

    Third, there does need to be a limit on the punitive damages and pain and suffering in medical malpractice cases. It's been suggested that it should be $250,000 and no more than that. This doesn't mean that the other financial costs of medical malpractice should not be paid, but setting a limit such as this could help.

    Total Health Care Spending and Rationing

    One of the major concerns in health care is the increase in amount of GDP spent on health care. To those of you concerned with it, I recommend looking up an article by David Cutler. I don't remember the exact title, but in short, he essentially examines whether this is actually a problem. I don't disagree that it is a problem when someone can't afford to have the life saving operation or prescription drug, however, it truly is a question of priorities with regard to what we as a nation want to spend our money on. Do we want electronic toys, fast cars, nice homes, good food, fashionable clothes, high quality and technologically advanced health care, or some other commodity.

    The fact is, that while somewhat different from these other goods in nature, health care is a good. And as much as we may wish it otherwise, we do not have a right to it. Like any other good, there is only a certain amount of it, depending on what resources we put in to it. That amount, regardless of how big it may seem, will be rationed. It can be directly through a single payor system like those we see in Canada or Europe or indirectly, determined by the amount of wealth or insurance a person has. This is something that we in America, for the most part, refuse to face as a fact. We are very emotional about our health care and with good reason. It is our lives and well being we're talking about here. We simply need to decide how important it is to us compared to all those other things and then how we want it rationed.

    Single Payer System

    A lot of people think that a single payer system is the solution to all our problems and that the single payer should be the government. While I don't think this would save us as taxpayers any money (even cutting out the so-called "middle man" insurance companies), I question whether this is something America is ready to take on culturally. Our entire country is founded on the idea that we each individually, have a right to decide what to do with our own property. Things like income tax are relatively new, starting in World War II, if I'm not mistaken. So, are people really ready to give up 20-30% more of their income to subsidize a specific stanadard of health care for everyone? I realize that this seems our best solution when looking at what other developed countries are doing, but I can't help but think there may be something else out there that we haven't thought of yet that would allow us to maintain our current stance towards individual rights while still providing that saftey net for others and even ourselves should we fall.

    Please keep in mind that even in a single payer system, it's likely that the wealthy would still buy up and receive better care than the rest of the population. There would still be disparities.

    Electronic Medical Records

    All I have to say about this is that it is incredibly expensive to implement although it might save money in the long run. There is the issue of a standardized record across all hospitals, clinics, and practices so that information can easily be transferred. With a government mandate that challenge is more easily overcome. Also, one of the major areas of resistance has historically come from those who want to protect patient privacy. Although I personally question whether that actually exists today, it is something to think about.

    End of Life Care and America's Attitude Towards Death

    To me, this is the biggest issue facing the U.S. healthcare system today. I read somewhere that the bulk of an individual's life time spending on health care, occurs during the last years of their life. It was something like 70 to 90 percent. As the Baby Boomers age, we are going to see a huge increase in spending, not just because they're all suffering from the chronic conditions that come with age, but also because of the expense of trying to save life near death. In America, somewhat unlike other nations, we have an extreme fear of death. We don't want it to happen to us or those we love. So we try everything to keep ourselves alive, even to the extent of refusing to allow terminally ill patients the option to end their lives on their own terms. When we think about reforming our health care system, we also need to give some thought to changing our attitudes towards death. This will be difficult for every single one of us and may never happen. The thing to remember is that these expenses will not go away, no matter how we pay for them, if we continue to push for high quality care, doing everything we can to preserve life.

  • FeralFeral Who needs a medical license when you've got style? Registered User regular
    edited May 2007
    Oboro wrote: »
    I think there needs to be a bit of reform as far as psychiatric health care goes, too. It's nearly all independent practice, and in NJ the waiting period for even a consultation through the sliding-scale system is between three and six weeks (south versus north, respectively).

    There's a shortage of psychiatrists. The reasons why could fill up a whole new thread, but what it boils down to is low prestige compared to other medical specialties with similar levels of education; and the giant financial sucking sound that psychiatric care presents to hospitals and clinics.

    As for your difficulties with medication, you're in a weird situation. I don't want to get into it too much in a public thread, but you're one of the 'fringe' patients I mentioned in a prior post. The majority of people with your condition can be treated with generics or cheaper brand-names.

    IRT witch_ie - I really want to respond to your post, but I need a little while to absorb it and formulate a response.

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch, man" fallacy.
  • FeralFeral Who needs a medical license when you've got style? Registered User regular
    edited May 2007
    witch_ie wrote: »
    The problem facing the U.S. with regard to this is that they pay the bulk of the cost of all pharmaceutical research for the rest of the world. Those other developed countries with single payer systems negotiate their drug prices and get them for far less than patients in the U.S.

    Right, but this brings up two questions:

    1) Would national health care reduce the number of dollars going into R&D?
    2) How much real-world effect Would a reduction of R&D dollars have?

    As for question 1, a hybrid system where national single-payer covers low-to-middle income people while higher income people have the option of getting private insurance would allow those who can pay for expensive drugs to do so while those who can't would have increased buying power for cheaper drugs. It would open up a lower-end market without disrupting the higher-end market.

    As for question 2, I don't think that a minor reduction of R&D dollars would necessarily be a disastrous thing. Pharma R&D is a case of diminishing returns - the best, most effective, safest drugs are found first. Further spending results in more niche drugs, drugs for people with allergies or sensitivities, and copycat drugs. See, I think comments like the following are alarmist:
    witch_ie wrote: »
    This is why so many went to Canada or other countries for their drugs. The question here is should this continue? Should other countries ante up or should the U.S. discontinue this practice and cut research dollars in a hugely signifcant way across the board? This would result in less drugs, less cures, less treatments for disease that many suffer from today. This is a global issue, one which the U.S. has been subsidizing for years. If, as many suggest, this is not sustainable, then another solution must be developed or the world will have to face the consequences of fewer new treatments and probably no cures from the pharmaceutical industry.

    In the last few years, the number of new drugs sent to market has been steadily decreasing, from 53 in 1996 to 18 in 2006. This is despite a total increase in R&D expenditures, now up to $40 billion annually. Some of these 18, despite being new molecular entities, were incremental improvements that have the same mechanism of action as prior drugs. For example, one was new steroid nasal spray for rhinitis and one was a metabolite of an existing schizophrenia drug.

    A new drug that revolutionizes patient care is the exception, not the rule, and as I pointed out in my earlier post, the early discoveries that lead to revolutionary new drugs (discovering new mechanisms of action or chemical pathways for instance) often happen by accident or in an academic research lab.

    There's a point at which R&D expenditures meet diminishing returns. I would suggest that we're already past that point. The profitability of the pharmaceutical industry is around 18% from year to year (compared to an average 3% profitability for other Fortune 500 companies) while they spend around 15% of their revenue on R&D. That tells me that they don't see themselves making much of a return on additional R&D spending, so they're at or near the point of diminishing returns.

    As I mentioned before, I'm more concerned about R&D in devices and diagnostics, but that might just be because I don't understand those industries as well.
    witch_ie wrote: »
    I'm not saying that there are areas in which pharmaceutical companies could cut their spending and still have money for research, but that money would not necessarily be anywhere near the $8 billion it takes to develop a single drug.

    Actually, you're off by a decimal point. It's more like $800 million.
    witch_ie wrote: »
    Second, DTC advertising does cause an increase in drug utilization, however, what I found is that these commercials encourage patients with previously undiagnosed, untreated conditions to come in and get care that could save their lives. Specifically my research indicated that people with heart disease and high cholesterol benefitted from this. This is a huge benefit when looking at the overall health of the nation.

    I'd like to see pharma marketing restricted to awareness campaigns for specific diseases. "Coronary heart disease affects over 12 million Americans. The symptoms are... (etc). Ask your doctor about new therapies for coronary heart disease today.)" They just shouldn't be able to mention specific drug names.
    witch_ie wrote: »
    Third, the majority of pharmaceutical advertising is not spent on DTC ads. In fact, they spend approximately 7 times more advertising to doctors. Now, while the industry has been "self-regulating" in this area as far as how much can been spent, anyone who has been on the receiving side of this knows it's ridiculous and excessive. This is probably where pharmaceuticals could save the most money. Of course they face the dilemma of giving the edge to their competitors who many continue to wine and dine physicians, so this isn't something that can happen overnight, although some companies have taken steps toward it by cutting their sales forces.

    I agree totally. It's getting the point now where doctors can't even make the time to see all the drug reps knocking on their door.
    witch_ie wrote: »
    Firstly, get rid of the cap on medical schools. There is no "official" cap, but what many have come to notice is that the AMA informally controls the number of new doctors, essentially, the supply of physicians. They do this for very good reason - this keeps them in demand with good salaries. After all, whoever heard of the doctor who couldn't get work? One of the reasons given for this is that keeps our physician quality high. By setting high standards for entrance rather than limiting the number of matriculating medical studentsl, the same can be acheived.

    I disagree. This approach has "doctor glut" written all over it. I'd rather see the AMA take steps to increase the adoption of non-physician medical providers: nurse practitioners and physician assistants, primarily. Not every disease needs to be treated by a physician.
    witch_ie wrote: »
    Second, within the medical schools themselves, medical students are taught that they must be infallible. This means that they will learn not to admit to their mistakes. This leads to no chance to improve quality of care with physician training. We as a society must recognize that doctors are human, they will make mistakes every now and then. However, I think that by changing the culture in medicine, much the way it's been changed in nuclear power or aviation, so that people are able to admit their mistakes and learn from them, we will all be safer.

    I really see this as a symptom of the malpractice system. Doctors believe that saying "I'm sorry" to a patient can be taken as evidence of guilt in a court of law. Any admission of fallibility is seen as an invitation to litigation.
    witch_ie wrote: »
    Third, there does need to be a limit on the punitive damages and pain and suffering in medical malpractice cases. It's been suggested that it should be $250,000 and no more than that. This doesn't mean that the other financial costs of medical malpractice should not be paid, but setting a limit such as this could help.

    I'm wary of any approach that may diminish patients' abilities to recover damages in case of medical error, but I think I've already covered that pretty well.
    witch_ie wrote: »
    One of the major concerns in health care is the increase in amount of GDP spent on health care. To those of you concerned with it, I recommend looking up an article by David Cutler. I don't remember the exact title, but in short, he essentially examines whether this is actually a problem. I don't disagree that it is a problem when someone can't afford to have the life saving operation or prescription drug, however, it truly is a question of priorities with regard to what we as a nation want to spend our money on. Do we want electronic toys, fast cars, nice homes, good food, fashionable clothes, high quality and technologically advanced health care, or some other commodity.

    I'm more concerned with where the money's going. For all the money we spend, other countries have better life expectancies, lower infant mortality, lower disease rates, fewer medical errors, and more efficient care.
    witch_ie wrote: »
    A lot of people think that a single payer system is the solution to all our problems and that the single payer should be the government. While I don't think this would save us as taxpayers any money (even cutting out the so-called "middle man" insurance companies), I question whether this is something America is ready to take on culturally. Our entire country is founded on the idea that we each individually, have a right to decide what to do with our own property. Things like income tax are relatively new, starting in World War II, if I'm not mistaken. So, are people really ready to give up 20-30% more of their income to subsidize a specific stanadard of health care for everyone? I realize that this seems our best solution when looking at what other developed countries are doing, but I can't help but think there may be something else out there that we haven't thought of yet that would allow us to maintain our current stance towards individual rights while still providing that saftey net for others and even ourselves should we fall.

    It doesn't have to be 20%-30% of our income. As Shinto said, Obama's plan looks at a 5% tax increase on the highest tax bracket, and that's for an immediate reform. I think that rolled out slowly, stepwise, concurrent with other healthcare reforms, and by rebudgeting money spent (read: wasted) on other government programs (notably, the Iraq War) we could have single-payer or something very close to it.

    As for whether or not national health care is American, read my earlier post. I think it's at the bottom of page 3. America is about each individual having equal opportunity to pursue happiness. Right now, medical expenses represent an insurmountable obstacle for many Americans against upward mobility. Alleviating this burden is outstandingly American.
    witch_ie wrote: »
    Please keep in mind that even in a single payer system, it's likely that the wealthy would still buy up and receive better care than the rest of the population. There would still be disparities.

    Good. I like disparities. Disparities keep people motivated to achieve in a meritocracy.
    What I don't like are barriers. Barriers to entry, barriers to mobility. Being unable to get or afford insurance is a barrier to entry; being unable to save for the future (or worse, ending up in a credit spiral) due to medical bills is a barrier to mobility. Keep the disparities, just eliminate the barriers.

    witch_ie wrote: »
    To me, this is the biggest issue facing the U.S. healthcare system today. I read somewhere that the bulk of an individual's life time spending on health care, occurs during the last years of their life. It was something like 70 to 90 percent. As the Baby Boomers age, we are going to see a huge increase in spending, not just because they're all suffering from the chronic conditions that come with age, but also because of the expense of trying to save life near death. In America, somewhat unlike other nations, we have an extreme fear of death. We don't want it to happen to us or those we love. So we try everything to keep ourselves alive, even to the extent of refusing to allow terminally ill patients the option to end their lives on their own terms. When we think about reforming our health care system, we also need to give some thought to changing our attitudes towards death. This will be difficult for every single one of us and may never happen. The thing to remember is that these expenses will not go away, no matter how we pay for them, if we continue to push for high quality care, doing everything we can to preserve life.

    I also agree with this. My main concern, though, is if a reconsideration of our attitude towards death is promoted alongside a national health care plan, the "culture of life" folks will find some way to rhetorically spin "socialized medicine" into "kevorkian medicine."

    I will point out, though there is a slow change happening in the medical field regarding life extension. There's an idea I've been reading about recently - imagine your health as a triangle shape, with the widest point in your youth when you're healthiest and then tapering off from then until death. The idea is that rather than elongate the tail end, make it look more like a pentagon where your health doesn't taper off nearly as rapidly, letting people be healthy and vibrant into their 60s, 70s, even 80s. Instead of helping people live longer, help them be healthier when they're alive.

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch, man" fallacy.
  • Pants ManPants Man Registered User
    edited May 2007
    i haven't read through everything here, but wouldn't 300 million people plus 12-15 million undocumented, non tax paying illegals plus a gigantic group of people needed extensive care in the next 20-25 years kinda put a crimp in things?

    i mean, france and canada having nice systems is great and all, but canada has one tenth the amount of people, most of whom are confined in a relatively small geographic space. they don't face nearly the kind of problems we would, plus i don't tink most Americans would be too excited about the amount of money needed to fund a system like that.

    "okay byron, my grandma has a right to be happy, so i give you my blessing. just... don't get her pregnant. i don't need another mom."
  • ElJeffeElJeffe Super Moderator, Moderator, ClubPA mod
    edited May 2007
    Feral wrote: »
    I'm more concerned with where the money's going. For all the money we spend, other countries have better life expectancies, lower infant mortality, lower disease rates, fewer medical errors, and more efficient care.

    Those don't all necessarily have anything to do with quality of health care, though. Americans are more likely to be obese or engage in unhealthy behaviors than lots of other nations, which drives down life expectancies.

    Our pre-natal practices are such that we try to save a lot of premature fetuses that most other nations would just write off. If a 6 month pregnant woman in France is about to go into pre-term labor, they may say "fuck it" and abort. Here, they'd likely try to deliver it, even if they fail. The French case would count as an abortion, whereas the American case would count as an infant mortality. The lack of clear definition and differing practices across nations make infant mortality rates pretty incomparable across nations, but from what I've seen, if you're going to be giving birth at 6 or 7 months, you want to be in the US.

    Lower disease rates? That could have as much, or more to do with lifestyle and local conditions than with quality of health care.

    I'm unsure about medical errors, and it's definitely the case that a nationalized, heavily monitored health care regime is going to be more efficient than a collection of unrelated, privately-run, for-profit entities.

    Maddie: "I named my feet. The left one is flip and the right one is flop. Oh, and also I named my flip-flops."

    I make tweet.
  • FeralFeral Who needs a medical license when you've got style? Registered User regular
    edited June 2007
    ElJeffe wrote: »
    Our pre-natal practices are such that we try to save a lot of premature fetuses that most other nations would just write off. If a 6 month pregnant woman in France is about to go into pre-term labor, they may say "fuck it" and abort. Here, they'd likely try to deliver it, even if they fail. The French case would count as an abortion, whereas the American case would count as an infant mortality. The lack of clear definition and differing practices across nations make infant mortality rates pretty incomparable across nations, but from what I've seen, if you're going to be giving birth at 6 or 7 months, you want to be in the US.

    I recognize that differences in reporting means that direct comparison between the US and other countries in terms of infant mortality is fraught with error. But there is a correlation between poverty and infant mortality, and also a correlation between being uninsured and infant mortality, which suggests that improving access to healthcare would pull the numbers up, even if we may still end up lower than other countries due to reporting practices.

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch, man" fallacy.
  • witch_iewitch_ie Registered User regular
    edited June 2007
    Feral wrote: »
    witch_ie wrote: »
    The problem facing the U.S. with regard to this is that they pay the bulk of the cost of all pharmaceutical research for the rest of the world. Those other developed countries with single payer systems negotiate their drug prices and get them for far less than patients in the U.S.

    Right, but this brings up two questions:

    1) Would national health care reduce the number of dollars going into R&D?
    2) How much real-world effect Would a reduction of R&D dollars have?

    As for question 1, a hybrid system where national single-payer covers low-to-middle income people while higher income people have the option of getting private insurance would allow those who can pay for expensive drugs to do so while those who can't would have increased buying power for cheaper drugs. It would open up a lower-end market without disrupting the higher-end market.

    One of the major implications you point out here with regard to the single payer system does suggest that there would be reduced revenue for pharmaceutical companies and therefore, most likely reduced money in to R&D. This happens when the national single payer has huge negotiatiing power over drug costs. There are ways to avoid this - 1) the national single payer can not negotiate down drug costs (as is the clause as I understand it in the Medicare Modernization Act (Part D), 2) drug companies will increase the costs for those who can pay, which will eventually shift those in the bottom of the tiered system into the single payer system - rinse and repeat, or 3) drug companies will refuse to sell the single payer specific drugs at such a discounted price (this has happened in England) and those with that disease type will suffer. It could be any combination of these or result in less research.
    Feral wrote: »
    As for question 2, I don't think that a minor reduction of R&D dollars would necessarily be a disastrous thing. Pharma R&D is a case of diminishing returns - the best, most effective, safest drugs are found first. Further spending results in more niche drugs, drugs for people with allergies or sensitivities, and copycat drugs. See, I think comments like the following are alarmist:
    witch_ie wrote: »
    This is why so many went to Canada or other countries for their drugs. The question here is should this continue? Should other countries ante up or should the U.S. discontinue this practice and cut research dollars in a hugely signifcant way across the board? This would result in less drugs, less cures, less treatments for disease that many suffer from today. This is a global issue, one which the U.S. has been subsidizing for years. If, as many suggest, this is not sustainable, then another solution must be developed or the world will have to face the consequences of fewer new treatments and probably no cures from the pharmaceutical industry.

    In the last few years, the number of new drugs sent to market has been steadily decreasing, from 53 in 1996 to 18 in 2006. This is despite a total increase in R&D expenditures, now up to $40 billion annually. Some of these 18, despite being new molecular entities, were incremental improvements that have the same mechanism of action as prior drugs. For example, one was new steroid nasal spray for rhinitis and one was a metabolite of an existing schizophrenia drug.

    A new drug that revolutionizes patient care is the exception, not the rule, and as I pointed out in my earlier post, the early discoveries that lead to revolutionary new drugs (discovering new mechanisms of action or chemical pathways for instance) often happen by accident or in an academic research lab.

    There's a point at which R&D expenditures meet diminishing returns. I would suggest that we're already past that point. The profitability of the pharmaceutical industry is around 18% from year to year (compared to an average 3% profitability for other Fortune 500 companies) while they spend around 15% of their revenue on R&D. That tells me that they don't see themselves making much of a return on additional R&D spending, so they're at or near the point of diminishing returns.

    I understand your point on diminishing returns here, but these niche drugs are key to improving quality of life for a lot of people. Unless we as a species want to give up on people who have diseases for which a drug treatment hasn't been developed yet, we need to be concerned about the money going into R&D. Very seldom in history has an idea come along that "revolutionized" patient care. The key ones were antiseptic, hand washing, and anti-biotics. Everything else we've come to over time through gradual, not punctuated development. Also, keep in mind that a lot of these pharmaceutical companies are trying to streamline their efforts and make them more efficient for their own survival.
    witch_ie wrote: »
    I'm not saying that there are areas in which pharmaceutical companies could cut their spending and still have money for research, but that money would not necessarily be anywhere near the $8 billion it takes to develop a single drug.
    Feral wrote: »
    [Actually, you're off by a decimal point. It's more like $800 million.

    I stand corrected. Thank you for catching this.
    witch_ie wrote: »
    Second, DTC advertising does cause an increase in drug utilization, however, what I found is that these commercials encourage patients with previously undiagnosed, untreated conditions to come in and get care that could save their lives. Specifically my research indicated that people with heart disease and high cholesterol benefitted from this. This is a huge benefit when looking at the overall health of the nation.
    Feral wrote: »
    I'd like to see pharma marketing restricted to awareness campaigns for specific diseases. "Coronary heart disease affects over 12 million Americans. The symptoms are... (etc). Ask your doctor about new therapies for coronary heart disease today.)" They just shouldn't be able to mention specific drug names.

    That is one of the three types of advertisements they are allowed - the other two being the full blown ads about their drugs and reminder ads where they don't tell you what the drug does. I think here, they should be able to mention their drug's specific name. In my mind, consumers have the responsbility of recognizing that there may be less expensive generics out there. They're able to do it with things like tissue (Kleenex) and food (Name vs. store), so I don't think it's unreasonable for them to look into it with prescription drugs either. Many health plans have started charging more for brand names than generics, so the price sensitivity is there.
    witch_ie wrote: »
    Firstly, get rid of the cap on medical schools. There is no "official" cap, but what many have come to notice is that the AMA informally controls the number of new doctors, essentially, the supply of physicians. They do this for very good reason - this keeps them in demand with good salaries. After all, whoever heard of the doctor who couldn't get work? One of the reasons given for this is that keeps our physician quality high. By setting high standards for entrance rather than limiting the number of matriculating medical studentsl, the same can be acheived.
    Feral wrote: »
    I disagree. This approach has "doctor glut" written all over it. I'd rather see the AMA take steps to increase the adoption of non-physician medical providers: nurse practitioners and physician assistants, primarily. Not every disease needs to be treated by a physician.

    I agree that this is a good alternate approach for general medicine. I will note however, that the AMA has also historically opposed this and specialty work still needs to be addressed.
    Feral wrote: »
    [I really see this as a symptom of the malpractice system. Doctors believe that saying "I'm sorry" to a patient can be taken as evidence of guilt in a court of law. Any admission of fallibility is seen as an invitation to litigation.

    I agree - this is also something that could be addressed by changing how doctors are educated about how to recognize and handle mistakes as well as what the consequences are.
    Feral wrote: »
    I'm wary of any approach that may diminish patients' abilities to recover damages in case of medical error, but I think I've already covered that pretty well.

    This only dimimishes the amount they will receive for pain suffering. It has nothing to do with their ability to recover damages.
    Feral wrote: »
    I'm more concerned with where the money's going. For all the money we spend, other countries have better life expectancies, lower infant mortality, lower disease rates, fewer medical errors, and more efficient care.

    I have to agree with El Jeffe here. There are a lot of other factors contributing to the low health of Americans. It's also really hard to say whether care is more efficient or that there are fewer medical errors as it depends on the methods you use to measure each and whether they're accurate.
    Feral wrote: »
    It doesn't have to be 20%-30% of our income. As Shinto said, Obama's plan looks at a 5% tax increase on the highest tax bracket, and that's for an immediate reform. I think that rolled out slowly, stepwise, concurrent with other healthcare reforms, and by rebudgeting money spent (read: wasted) on other government programs (notably, the Iraq War) we could have single-payer or something very close to it.

    Obama's health plan isn't a single payer system. It adds to the systems already in place, but doesn't replace it with one payer. I think 20-30% (if no more) is accurate, especially when you look the amounts other are paying for their single payer systems.
    Feral wrote: »
    As for whether or not national health care is American, read my earlier post. I think it's at the bottom of page 3. America is about each individual having equal opportunity to pursue happiness. Right now, medical expenses represent an insurmountable obstacle for many Americans against upward mobility. Alleviating this burden is outstandingly American.

    I disagree. While a lot of Americans do care about alleviating burden, it's not traditionally been part of our culture to look out for the little guy. Every single time we've made a move in that direction, it's been a major fight and required a major cultural shift. Examples: slavery, child labor, the civil rights movement, immigration.
    Feral wrote: »
    I also agree with this. My main concern, though, is if a reconsideration of our attitude towards death is promoted alongside a national health care plan, the "culture of life" folks will find some way to rhetorically spin "socialized medicine" into "kevorkian medicine."

    I will point out, though there is a slow change happening in the medical field regarding life extension. There's an idea I've been reading about recently - imagine your health as a triangle shape, with the widest point in your youth when you're healthiest and then tapering off from then until death. The idea is that rather than elongate the tail end, make it look more like a pentagon where your health doesn't taper off nearly as rapidly, letting people be healthy and vibrant into their 60s, 70s, even 80s. Instead of helping people live longer, help them be healthier when they're alive.

    With regard to the "kevorkian medicine" thing, I agree it's a possibility. States such as Oregon have made strides in this. I suspect that as or even before we start to see the Baby Boomers experience prolonged death (that's really what it is), those folks will be in the minority.

    I like that second idea and have heard of it although not with the geometric imagery. Again, it's going to take some time and pushing to get it to be widely accepted to the extent that when someone's loved one is dying, they and the loved one are ready to let go.

  • FeralFeral Who needs a medical license when you've got style? Registered User regular
    edited June 2007
    witch_ie wrote: »
    One of the major implications you point out here with regard to the single payer system does suggest that there would be reduced revenue for pharmaceutical companies and therefore, most likely reduced money in to R&D.

    Frankly, I'm unsure if it would or not in a hybrid system. I don't advocate complete abolition of private insurance, and people who have the cash to pay should be able to pay whatever they want for drugs.

    But let's say the govt system manages to negotiate drug prices down to below what private insurers pay. If people in the middle class move off of private insurance and into the public system, then that would represent a loss of revenue for the drug companies. On the other hand, if people who currently are not insured get on the govt system and get prescriptions, that's a gain in revenue. Whether the gain summed with the loss would translate into a net reduction in R&D dollars... well, that's where I have to say I don't know.

    That said, I don't think that any conceivable loss would be the kind of catastrophic loss that you'd see with full-on socialized medicine. And I don't think that a minor loss would result in significantly fewer, or lower-quality, drugs becoming available.

    But my main point is this: What's good for pharma companies is not necessarily what's good for the public at large. If a given patient, let's name him John, manages to get on govt insurance and get his checkup and discover that he has high cholesterol, but manages to catch it before it becomes serious, then he's less likely to end up giving Pfizer $100 a month for Lipitor. That's $100 per month less that Pfizer will have for R&D. Is that bad for Pfizer? Probably. Is that bad for John? Hell no.

    Likewise - and this is my own personal opinion - I think too many people are taking expensive name-brand drugs when generics would work fine for them. I see a lot of data that suggests that new drugs rarely outperform old drugs to such a significant degree to justify a several hundred or thousand dollar per year premium. If patients are taking name-brand drugs that they don't really need now, then getting them onto generics (or preventing future patients from getting set up on unnecessary name-brands) might translate into less money for pharma R&D.

    I'm just saying that if an analyst or thinktank publishes a report that says "Obama/Hillary/whoever's plan will result in a 10% reduction in pharmaceutical R&D spending," well, I'll have a really hard time caring. If the reports say something like 75% instead, then I'll be alarmed. But the notion of pharma losing revenue, without it being catastrophic, does not offend me on principle.
    witch_ie wrote: »
    Very seldom in history has an idea come along that "revolutionized" patient care. The key ones were antiseptic, hand washing, and anti-biotics. Everything else we've come to over time through gradual, not punctuated development.

    Well, by 'revolutionary' I mean discovery of a new mechanism of action or a new drug class. SSRIs versus the tricyclics, for instance; or COX-2 inhibitors versus opioids. Losing the first drug in a new class would alarm me, but I don't think that will happen. The drugs we would lose first from diminished R&D spending would be the sixth, seventh, eighth drugs in an existing drug class.
    witch_ie wrote: »
    Many health plans have started charging more for brand names than generics, so the price sensitivity is there.

    That's all I'd really want is for price sensitivity to be passed to the consumer.
    On my health plan right now, I pay a maximum of $5 for on-formulary generics, and a maximum of 30% for off-formulary name brands. That makes sense to me. I don't mind paying more for name brand drugs, and all I'm suggesting is that this kind of copay structure be adopted by a universal plan.
    witch_ie wrote: »
    Obama's health plan isn't a single payer system. It adds to the systems already in place, but doesn't replace it with one payer. I think 20-30% (if no more) is accurate, especially when you look the amounts other are paying for their single payer systems.

    You're right, it's not an exclusive single-payer system in that the government becomes the only health coverage available. But no country in the world, save for fully socialized nations like Sweden and Finland, have exclusively single-payer systems. Most are hybrids - with more or less emphasis on the public versus the private side.

    I wouldn't support an exclusively single-payer system. I do support the government offering health care to all citizens alongside private insurance and cash payments. I guess we could argue over whether that's truly "single-payer" but I suspect that's mostly just semantics.

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch, man" fallacy.
  • YarYar Registered User regular
    edited June 2007
    ElJeffe wrote: »
    I'm unsure about medical errors, and it's definitely the case that a nationalized, heavily monitored health care regime is going to be more efficient than a collection of unrelated, privately-run, for-profit entities.
    :!: Give the keyboard back to ElJeffe, please, you interloper.

    One thing I've found managing complex operations is that in many cases, an increase in error reporting is actually a sign of a more advanced process, not necessarily a sign of failure.

    Like, you know, you've got two groups working on stuff, and one reported five errors to you, and another reported zero errors, but you know that there is no discernible reason why each group shouldn't have committed the statistically expected seven errors during that time. So which group is actually doing a better job? The one that actually found and reported errors. It's fallacy to just say 0 < 5.

    My guess is that in many other countries, there is not nearly the same attitude towards actually documenting and reporting errors as "errors" like we have here in our litigious and sensationalist society that loves pointing everything towards individual responsibility.

    I can't really substantiate that empirically, or at least I don't care to attempt it right now, but it is just another reason why stats like infant mortality, errors, life expectancy, and the even more conflated variables like "percentage of population with access to health care" are always dubious and possibly reflect cultural and confounding differences and not really the quality of the health care system. I'd rather look more specific stats, like the success of cancer treatments mentioned earlier. Like, if France reports half as many "errors" as we do in treating cancer, but the success/death rate is the same, or ours is better, then I'd say our higher error-reporting is a sign of a more mature and improving process, not a sign of more errors.

  • ElJeffeElJeffe Super Moderator, Moderator, ClubPA mod
    edited June 2007
    Yar wrote: »
    ElJeffe wrote: »
    I'm unsure about medical errors, and it's definitely the case that a nationalized, heavily monitored health care regime is going to be more efficient than a collection of unrelated, privately-run, for-profit entities.
    :!: Give the keyboard back to ElJeffe, please, you interloper.

    I was speaking of efficiency in this very specific instance, and not speaking of, say, "efficiency" in making sure all resources are best used to result in the highest number of satisfied patients. I certainly don't think that a nationalized system is better, so don't bust out the body-snatcher detection kit just yet. But yeah, one organization trying to count errors is probably better than 50 less accountable entities doing the same.

    Maddie: "I named my feet. The left one is flip and the right one is flop. Oh, and also I named my flip-flops."

    I make tweet.
  • ElJeffeElJeffe Super Moderator, Moderator, ClubPA mod
    edited June 2007
    Feral wrote: »
    ElJeffe wrote: »
    Our pre-natal practices are such that we try to save a lot of premature fetuses that most other nations would just write off. If a 6 month pregnant woman in France is about to go into pre-term labor, they may say "fuck it" and abort. Here, they'd likely try to deliver it, even if they fail. The French case would count as an abortion, whereas the American case would count as an infant mortality. The lack of clear definition and differing practices across nations make infant mortality rates pretty incomparable across nations, but from what I've seen, if you're going to be giving birth at 6 or 7 months, you want to be in the US.

    I recognize that differences in reporting means that direct comparison between the US and other countries in terms of infant mortality is fraught with error. But there is a correlation between poverty and infant mortality, and also a correlation between being uninsured and infant mortality, which suggests that improving access to healthcare would pull the numbers up, even if we may still end up lower than other countries due to reporting practices.

    Certainly we could bring the numbers up by improving access, and I recognize the correlations you mention. And one may well think that having a 0.05% mortality rate across all demographics is preferable to having a 0.1% rate for the poor and a 0.02% rate for the non-poor, even if the latter results in an overall-lower rate. I was just saying that it's not possible to really look at those numbers and declare a winner, partially because they aren't directly comparable, and partly because what they're measuring isn't entirely objective.

    Maddie: "I named my feet. The left one is flip and the right one is flop. Oh, and also I named my flip-flops."

    I make tweet.
  • AzioAzio Registered User regular
    edited June 2007
    Pants Man wrote: »
    i haven't read through everything here, but wouldn't 300 million people plus 12-15 million undocumented, non tax paying illegals plus a gigantic group of people needed extensive care in the next 20-25 years kinda put a crimp in things?
    Single-payer healthcare doesn't exactly benefit non-citizens.

  • ElJeffeElJeffe Super Moderator, Moderator, ClubPA mod
    edited June 2007
    Azio wrote: »
    Pants Man wrote: »
    i haven't read through everything here, but wouldn't 300 million people plus 12-15 million undocumented, non tax paying illegals plus a gigantic group of people needed extensive care in the next 20-25 years kinda put a crimp in things?
    Single-payer healthcare doesn't exactly benefit non-citizens.

    The numbers that always get bandied about regarding the number of uninsured "Americans" includes undocumented illegals. It's possible that the politicians going on about it don't actually realize this, or it's possible they realize it and don't care because it makes the number sound scarier, or it's possible that their intention is to try and cover them, as well. My money is on the first two options, at least for now. I can't see dropping hundreds of billions of bucks to provide comprehensive health care to illegal aliens would be a salable proposition.

    Maddie: "I named my feet. The left one is flip and the right one is flop. Oh, and also I named my flip-flops."

    I make tweet.
  • YarYar Registered User regular
    edited June 2007
    Azio wrote: »
    Single-payer healthcare doesn't exactly benefit non-citizens.
    Hooray for privileged birth.

  • monikermoniker Registered User regular
    edited June 2007
    ElJeffe wrote: »
    Azio wrote: »
    Pants Man wrote: »
    i haven't read through everything here, but wouldn't 300 million people plus 12-15 million undocumented, non tax paying illegals plus a gigantic group of people needed extensive care in the next 20-25 years kinda put a crimp in things?
    Single-payer healthcare doesn't exactly benefit non-citizens.

    The numbers that always get bandied about regarding the number of uninsured "Americans" includes undocumented illegals. It's possible that the politicians going on about it don't actually realize this, or it's possible they realize it and don't care because it makes the number sound scarier, or it's possible that their intention is to try and cover them, as well. My money is on the first two options, at least for now. I can't see dropping hundreds of billions of bucks to provide comprehensive health care to illegal aliens would be a salable proposition.

    They could also be working under the assumption that the illegals would be on the 'path to citizenship' type deal that's currently being worked on or one that would obviously be passed when they come to office which would solve our immigration issue and broken borders for once and for all.

    Also, those people do pay taxes Pants Man. Some don't pay all of them because we won't allow them to, others have fake social security numbers and do pay all forms of taxation that is required of them.

    tea-1.jpg
  • RoanthRoanth Registered User regular
    edited June 2007
    Wanted to throw out a potential way to limit meritless malpractice lawsuits while at the same time allowing people who have genuinely suffered to be compensated for their trials.

    Basically we adopt a Roman style civil court where those bringing suit need to post the amount they are seeking in compensation, with the exception of a $250,000 or $300,000 minumum that no money needs to be posted for. This will act as a sufficient deterrent to those who are persuing frivilous lawsuits or seeking damages well in excess of what they have suffered. Additionally, the amount posted would be the minimum that a complaintant could collect. If a jury weighed the merits of the case and determined a larger award is justified the complaintant could still collect on this higher amount, with a cap of, oh, let's say 150% of the amount that was posted. Likewise, if the award is lower, the plaintiff would lose the difference between the amount sought and the amount that was actually awarded.

    I can hear the screams now, "What about the disadvantaged and poor who can't post huge bonds?" The answer is quite simple. With the tremendous desire for return in capital markets combined with piles of cash floating around, a person with a "real" case would probably have no problem finding a "backer" willing to post the necessary bond or letter of credit in return for a cut of any eventual award. Hedge funds, pension funds, and everyone else would be lining up to provide capital for truly "worthy" cases. The key obviously becomes determining the merits of a case. Legal consultants, lawyers, actuaries, and other professionals could provide the necessary analysis needed to arrive at a "risk adjusted" bonding amount. The upside potential above this amount would provide additional incentive to post this sort of financing (i.e. if you have a homerun case, your return could be up to 50% higher than the amount you posted).

    We now have a mechanism that allows the "market" to weed out frivilous lawsuits and imposes a definite cost to those who pursue this type of litigation on their own, and should lead to lower premiums and a saner medical tort system.

    Anyways, just a thought. I figure anything has to be better than the current shit show.

  • ThanatosThanatos Registered User regular
    edited June 2007
    Out of curiousity, how are these investment firms that back the cases going to get insurance?

  • RoanthRoanth Registered User regular
    edited June 2007
    Thanatos wrote: »
    Out of curiousity, how are these investment firms that back the cases going to get insurance?

    Not sure I understand the question. If this is a dig at the slightly off-topic nature of my post, I would refer to the multiple times malpractice insurance and tort costs impacting health care costs have been mentioned in this thread.

    If you are being serious, I am not sure why an investment firm would need insurance. They are making a calculated risk on an investment that may or may not pay off. Something they do every day.

  • FeralFeral Who needs a medical license when you've got style? Registered User regular
    edited June 2007
    Roanth wrote: »
    If you are being serious, I am not sure why an investment firm would need insurance. They are making a calculated risk on an investment that may or may not pay off. Something they do every day.

    Large investment firms take out insurance against investment risks, too, y'know.

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch, man" fallacy.
  • GorakGorak Registered User
    edited June 2007
    Feral wrote: »
    Roanth wrote: »
    If you are being serious, I am not sure why an investment firm would need insurance. They are making a calculated risk on an investment that may or may not pay off. Something they do every day.

    Large investment firms take out insurance against investment risks, too, y'know.

    And those insurers then re-insure with other companies.

  • RoanthRoanth Registered User regular
    edited June 2007
    Feral wrote: »
    Roanth wrote: »
    If you are being serious, I am not sure why an investment firm would need insurance. They are making a calculated risk on an investment that may or may not pay off. Something they do every day.

    Large investment firms take out insurance against investment risks, too, y'know.

    It's called using a derivative. You literally don't buy a policy against losing money, I don't think such a product exists. Could be wrong and would love to see a link to such a policy. You "hedge" the risk instead through a call, put, write a call, short a stock / commodity, buy credit default swaps, or one of the other billion derivative securities that exist. Although I don't know of many hedge funds that are still bothering to hedge exposure. The premium on such a policy (if it existed) would logically equal the potential return you are looking to make. Why would an insurance company take the risk exposure of an investment without taking all the upside as well?

  • FeralFeral Who needs a medical license when you've got style? Registered User regular
    edited June 2007
    Roanth wrote: »
    Feral wrote: »
    Roanth wrote: »
    If you are being serious, I am not sure why an investment firm would need insurance. They are making a calculated risk on an investment that may or may not pay off. Something they do every day.

    Large investment firms take out insurance against investment risks, too, y'know.

    It's called using a derivative. You literally don't buy a policy against losing money, I don't think such a product exists. Could be wrong and would love to see a link to such a policy. You "hedge" the risk instead through a call, put, write a call, short a stock / commodity, buy credit default swaps, or one of the other billion derivative securities that exist. Although I don't know of many hedge funds that are still bothering to hedge exposure. The premium on such a policy (if it existed) would logically equal the potential return you are looking to make. Why would an insurance company take the risk exposure of an investment without taking all the upside as well?

    Fair enough. I was thinking of portfolio insurance, which is a blanket term for all of the techniques you mention.

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch, man" fallacy.
  • RoanthRoanth Registered User regular
    edited June 2007
    Feral wrote: »
    Roanth wrote: »
    Feral wrote: »
    Roanth wrote: »
    If you are being serious, I am not sure why an investment firm would need insurance. They are making a calculated risk on an investment that may or may not pay off. Something they do every day.

    Large investment firms take out insurance against investment risks, too, y'know.

    It's called using a derivative. You literally don't buy a policy against losing money, I don't think such a product exists. Could be wrong and would love to see a link to such a policy. You "hedge" the risk instead through a call, put, write a call, short a stock / commodity, buy credit default swaps, or one of the other billion derivative securities that exist. Although I don't know of many hedge funds that are still bothering to hedge exposure. The premium on such a policy (if it existed) would logically equal the potential return you are looking to make. Why would an insurance company take the risk exposure of an investment without taking all the upside as well?

    Fair enough. I was thinking of portfolio insurance, which is a blanket term for all of the techniques you mention.

    Do you mean diversification of risk through a portfolio? This eliminates unsystemic risk that is caused by only owning a few assets (the primary benefit of a mutual fund). Derivatives are another form of this, basically taking it to the next logical step. Anyways, I digress. I think the only way to reduce investment risk regarding this particular type of investment would be to get a syndicate to invest along with you. There may also be the possibility of a new type of insurance security being created if the market was large enough for a carrier to write policies for multiple cases (diversifying their risk). In all likelihood, the risk / reward of these types of investment would probably result in premiums being so high that an insurance product would be too expensive anyways. Okay, done babbling now.

  • SavantSavant Registered User regular
    edited June 2007
    Feral wrote: »
    Roanth wrote: »
    Feral wrote: »
    Roanth wrote: »
    If you are being serious, I am not sure why an investment firm would need insurance. They are making a calculated risk on an investment that may or may not pay off. Something they do every day.

    Large investment firms take out insurance against investment risks, too, y'know.

    It's called using a derivative. You literally don't buy a policy against losing money, I don't think such a product exists. Could be wrong and would love to see a link to such a policy. You "hedge" the risk instead through a call, put, write a call, short a stock / commodity, buy credit default swaps, or one of the other billion derivative securities that exist. Although I don't know of many hedge funds that are still bothering to hedge exposure. The premium on such a policy (if it existed) would logically equal the potential return you are looking to make. Why would an insurance company take the risk exposure of an investment without taking all the upside as well?

    Fair enough. I was thinking of portfolio insurance, which is a blanket term for all of the techniques you mention.

    Yeah, portfolio insurance is made using derivatives or by constructing derivatives, as it is essentially a form of derivative. I recently did a little work in stochastic finance, and there are ways that you can construct these with a continually adjusting portfolio of stocks, bonds, and other derivatives. It's pretty much impossible to exactly model or hedge the values of these due to the fact that you can't instantaneously adjust your portfolio and due to the inability to truly model the underlying assets. However if the hedging instrument is available and traded on the open market then can just look at the market prices.

    Hedging does happen quite a bit in the real world though, even though you are cutting off upsides when you try to reduce risk. Southwest Airlines made off well a few years back because they hedged the price of fuel with futures.

    Edit - as for insurance on the proposed mechanism, they probably wouldn't get any other than by using pools to spread out the risk a bit. In any case the risk would be build into the cost somewhere along the line.

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