Oscar’s healthcare opportunity

Investment Analysis Clubs Macro Economic Trends and Risks
21

Based on your responses, I don’t feel you really read my posts.

Which happens on this board.

But here we go.

I disagree.

Your world is people making decisions for negative outcomes.

My world is people making decisions for positive outcomes.

As I wrote:

The real world is mostly not people pursuing negative outcomes.

Sure, they happen, but people actually pursue positive outcomes.

This is basic.

But that is not what I wrote.

Oscar is competent, but is tired of BigCorp, he is not giving best effort, and he wants to do something else because he is pursuing his specific personal utility (not pure dollar economic maximization) as I clarified in the post you just replied to and explained in more detail in the other thread:

And here:

Again please read my comments on personal utility.

You lost me.

Did you read the post - in this thread - on thought experiment?

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22

Not at all. Oscar makes the choice because he intends for there to be a positive outcome. But people don’t always get what they intend. Sometimes their choice leads to the cascade of positive outcomes, like you speculated, but sometimes there choice leads to a bunch of unexpected negative outcomes.

But that was mostly just to illustrate that the “parade of positives” can easily be a “parade of horribles” in any narrative anecdote you construct. The really important point is that the main person - Oscar - is choosing to walk away from the position where he has skills, talent, and experience and move to a place where he has none of those. Which is unlikely to be an economically productive outcome.

I was pushing back on your assertion that in your world, he is “not productive.”

That’s almost certainly not true, even in your hypothetical. He’s a senior manager with years of experience and (by implication) wasn’t about to simply get fired. Someone like that is going to be more productive in his current position than if he quits his job to be a dilettante potter.

Because it’s not a thought experiment.

A thought experiment is where you create an imagined scenario and try to test or probe a theory. It’s an effort to answer a question like, “What might happen if…”, often where the “if” is something that we can’t necessarily do in the physical world.

In this context, it might be, “What might happen if we switched to a universal health care system…” - and then you genuinely try to figure out what would happen. But writing a narrative about a single person you imagined isn’t itself a thought experiment. It’s an illustration, or perhaps a counter-example to someone asserting that no positive outcome could arise from switching to universal health care (which I don’t think anyone does). But it’s not a thought experiment - you’re not engaged in trying to figure out what would happen in the “experiment” where we switched to UHC, just telling a story of one imaginary person in that scenario.

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23

For Oscar,

Is it really your claim that there cannot be:

  • experienced employees
  • who are less productive than they could be (“coasting”)
  • because they want to do something else with their lives (because they are pursuing other interest besides pure dollar economic benefits)
  • have the means to take a lower compensation job
  • and their can be a nontrivial number of these people in the workplace
    ?

For Sally,

Is it really your claim that there cannot be:

  • a more junior manager
  • who can be more productive than her (coasting) manager
  • and their can be a nontrivial number of these in the workplace
    ?

For positive vs negative outcomes, is it really your claim that the aggregate of decisions that people make result in net-negative aggregate personal utility?

24

Of course not - and now I am wondering if my posts are being read (occupational hazard of message board posting). I am not saying that a person like Oscar cannot exist - but instead, that they are exceptionally unlikely to be more productive as an inexperienced unskilled dilettante potter than they are in their current job, even if they’re not quite as productive as they could otherwise be. A person who’s in Oscar’s position is going to be far, far, far more productive staying in their current job than taking up pottery in their 60th year. And a person in Oscar’s position who is so disillusioned with their job and has “the means to take a lower compensation job” is pretty likely to have already done it regardless of health care, because if they’ve got that combination of inclination and resources they can figure out that you can solve your health insurance problem with money. Someone who’s got the resources to quit their senior management job and run off to be a junior-grade potter is someone who isn’t likely restrained from doing that by health care premiums.

As for Sally replacing Oscar, most companies don’t improve when they unexpectedly lose qualified and experienced personnel that they didn’t want to replace on their own. In your construction, Oscar has a senior position of importance in his company, and would continue to keep it if he didn’t choose to leave. His firm doesn’t think that Sally would be more productive than he is, or certainly not by enough that they’re willing to make a change.

That’s why I think that this is a “just-so story.” The combination of: i) a senior manager who has enough financial resources that he can basically retire early and take a low-paying part-time job in a field he has no experience in but doesn’t quite have enough financial resources that he can figure out his health insurance situation; ii) who also is qualified and productive enough to have a senior manager position without likelihood of losing his position but is bad enough at his job that moving him out would be a major step up; and iii) has a junior manager who would be a significant leap forward in productivity but who isn’t implementing any of those things under senior management; so that iv) unexpectedly losing a senior member of the workforce outside of a normal plan of succession and without being able to prepare for it ends up being a positive for the company.

While that string of circumstances isn’t impossible, I don’t think it’s going to be representative of most “Oscars” in the wilde. There aren’t going to be too many of these situations. Rather, inducing a qualified and experienced worker to (essentially) retire early is far more likely to reduce overall productivity of the firm and (to a very small extent) the economy than the reverse. Does that mean it will always and in every instance be the case? No, I’m sure that in the fullness of an economy with hundreds of millions of people, there will be some folks who are exactly a hair’s breadth from actually retiring early who also happen to be ones their firm would get a huge windfall from them leaving but wouldn’t actually take steps to push them out. But a pretty small number of such folks…

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25

Like this?

Definitions, two scenarios and an implication with the reasoning behind it?

And here:

The narrative post was first, it was not the answer/explanation to the thought experiment, which came second with a detailed explanation.

Based on responses from others, other people seemed to grasp the idea without too much trouble, whether in agreement or not.

Open question:

I’m not making any claims about dollar economic productivity in BigCorp vs pottery. Again, the claim is about maximizing personal utility, each person’s unique weighting of time spent in work versus leisure.

As far as ceramic skill, many people have hobbies and sides gigs. Oscar could have 30 years of pottery experience. Why would he necessarily be unskilled in pottery? (yet somehow super productive in his small office that he stopped caring about 5 years ago?)

26

That is just a transfer of our national debt to the rich, low taxes the wealthy, and having the reserve currency that puffs up our GDP.

27

Fair enough. I think I misunderstood your references to the “thought experiment” as being the Oscar character (the topic of this specific thread), rather than this - perhaps because of the structure of the thread, which put the narrative first.

Anyway, I think that your thought experiment portion is incorrect, because it’s not “basic math” that the EO set is larger than the EOh set - because the “new national policy” that decouples health insurance from employment will necessarily have impacts on the universe of employment opportunities as well (with “employment” being a bit of a misnomer, since it’s intended to include non-employment opportunities like retiring early).

That “new national policy” has to be paid for. It decouples from employment, which removes some frictions - but it now applies to everyone, which creates some new ones. EO may end up being smaller than EOh - or close enough in size to not materially matter.

For example, consider Felix. He’s a 24-year-old potter who previously got health insurance from his parents’ policy and had a personally enriching but barely-breaking-even studio where he produced his work. I say “had,” because with the sizable self-employed payroll tax he has to pay under the new national system, he had to close his shop and go work for BigCorp (which he hates, but it pays him enough to cover his expenses now).

There’s also Grover, who had retired at 67 and was happily covered by Medicare. But now Medicare is gone, replaced by a massive VAT, and Grover had to re-enter the workforce against his will because his retirement savings aren’t enough to cover expenses where everything costs 20% more. He’s now working at BigCorp.

His buddy Bosie was a 58-year-old volunteer at several community organizations, having worked at a private company in a union job that provided significant private health care coverage on retirement. But he too was forced to give up what he loved doing once the VAT kicked in and he had to go to work at BigCorp’s retail wing as a greeter.

Felix, Grover and Bosie had their “EO” set limited by the significant financial consequences of paying for a universal healthcare system. We can’t assume that the EO set is bigger than the EOh set, because there are a fair number of jobs (and perhaps an even larger number of “non-jobs” like retirement situations) that are able to exist because those jobs do not have to provide health insurance or cover the cost of providing health insurance. Changing that situation will have consequences to what jobs and non-jobs are available for people to choose from.

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28

One thing I didn’t make clear. While I"m now retired, when I had the high deductible plan, I was self employed, so no employer plan was in the equation. My plan was a $5k high deductible and in theory could be paying out another $20k if myself and DW had issues.

I’m sure I’m a minority, maybe not, but definitely not something the politicians ever think through. Retired early and several. years short of Medicare. It seems like everything government involved assumes people work until “retirement age”.

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29

So your “all-in” cost was $5k, no employer contribution.

30

Well, maybe, maybe not.

Your scenario doesn’t show that it is necessarily so that EO is smaller after some policy change, only that it could be.

You show that you can make up a scenario that reduces EO.

You don’t show that the following does not exist:
a policy that equalizes health care over “eo’s” and expands the set EO to include EOu while keeping per-person private insurance at the same cost as private employer plans today.

But, here’s what we do know today.

Health care cost, benefit value per dollar and policy certainty are substantially unequal across employment opportunities.

There is one set that has it better: EOh.
And one set that has it worse: EOu.

Thought Experiment
If we could equalize healthcare over those sets, keep per person costs, value and certainty the same as today’s employer plans, then we increase the set of employment opportunities available to people wanting healthcare.

I don’t make any specific claims about universal healthcare, tax requirements, etc

That’s of course your thought experiment purposely created to reduce EO.

But the natural inclination is for people to expand opportunities in a market, not reduce them.

Can you think of a policy not purposely designed to reduce EO, but expands healthcare to EOu?

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31

Right. I’m just pointing out that your suggestion that “by basic math,” the set of opportunities in the universal health care scenario is going to be larger than the one we have today isn’t necessarily true. You can’t have UHC without setting up some system to pay for it, and that system is going to dramatically affect the set of opportunities (I hesitate to keep calling them employment opportunities because many of them have nothing to do with employment) available to people.

But such a system can’t possibly exist, right? I mean, at a minimum, any system that "equalizes health care over “eo’s” is going to eliminate a million or two jobs - about a million in the private health insurance industry, and another million or so in health care provider institutions that manage the private health care industry. The health care system is 18% of the U.S. economy - it’s literally impossible to materially change it without having some impact on the set of EO’s that makes some EO’s disappear or fundamentally change. Whether the reduction in EO’s is offset by the increase in EO’s from the health flexibility is a question for the outcome of your thought experiment, not something you can assume as a condition of the thought experiment.

I mean, you can set the total amount of funding as a hard constraint, if you like - total spending under the new system cannot exceed total spending under the current system - but you can’t keep the set of EO’s constant if you do that.

Again, that’s not necessarily the case. You can’t equalize healthcare over those sets without paying for such a system, and whatever system you establish to fund the healthcare equalization is going to affect the set of employment opportunities (which, again, include early retirement and other “non-employment” outcomes).

You don’t have to include any specific claims about them as part of the hypothesis of your thought experiment - but then you’d need to address them as part of the various outcomes of your thought experiment. IOW, if you’re answering the hypothetical question, “What if we had ‘equalized healthcare across over EO’s’?” (to borrow your formulation), the answers to that thought experiment are going to depend greatly on what that equalization process looks like and how it’s paid for.

None of these policies are purposely designed to reduce EO - it’s an unintended consequence of them. Any system of universal health care that’s large enough to expand healthcare to the 20-25% of jobs that currently don’t have it (the EOu) is unavoidably going to have an impact on some of the other EO’s in the set. If your thought experiment is only going to include possible outcomes, then your system that expands health care to all the EOu is going to have to be funded - and that funding mechanism is going to have to be proportional to the expense of expanding health care to the EOu set. Which means it has to be massive, which means there’s no plausible way that it wouldn’t have a material impact on the EO set which will both create and destroy EO’s. You can’t simply conclude as the starting point of your thought experiment that the switch will expand opportunity, although you might conclude that at the end of your thought experiment.

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32

This whole thread is copyright infringement. “Oscar” is Jared Kushner’s health care scam.

intercst

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33

I haven’t mentioned universal health care one time (other than to respond to your mentions).

Can you provide your definition of UHC so I can understand it and use it in the same way, or adjust, if needed.

Do you mean single payer, gov admin? (I think that is what you mean)

How funded?

34

Oh, I was just referring to the system you were using as the basis of your thought experiment. The one that would “equalize healthcare across EO’s.” That type of system is often described as universal healthcare, or single-payer, or whatever - I’m using UHC because writing “a system that equalizes healthcare across EO’s” is cumbersome to use in a sentence.

But it’s whatever system you’re thinking of implementing in order to make it so that healthcare was available in every potential EO (which includes both actual employment and early-retirement scenarios). If such a system were to exist in the real world, whatever it’s form (and whatever you call it), it would need significant funding in order to have the feature of extending healthcare equally across all EO’s.

So - what do you mean by this system?

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35

I haven’t gotten very far on a specific policy implementation.

First, I was trying to make the claim:

If { A }, then { B }.

And to the big-picture discussion,

Do you believe that pursuing a goal of not linking a person’s health care opportunity to a person’s employment opportunity, as a high-level, strategic goal could be overall beneficial for the US society, and worth careful consideration?

I believe yes.

What do you believe and why?

This is the “what.”

I am asking to set aside specific policy implementation for the moment (the “how”).

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36

I believe that any system of not linking a person’s health care opportunity to employment is unlikely to have much material effect on the range of employment options available to them, because whatever positive impacts come from the part of the system that gives them health care are going to be largely counteracted by the part of the system that pays for it.

The system has to be funded in order to exist in the real world. That’s part of the “what” of these types of systems. You can defer your consideration of the “how” the system will be funded (payroll taxes, sales taxes, VAT taxes, etc.). You don’t have to get into the weeds of the specific policy implementation for the moment. But you know it has to be paid for somehow, even if you put off deciding how it’s going to be paid for. There’s no benefit at all to spending time considering whether such a system would be worthwhile if it would be costless. We know that such a system won’t be free.

If you’re asking whether this kind of system could be “overall beneficial” to the US society, that analysis has to consider the fact that the system has to be paid for in some way. Which means, no, the impact on “employment opportunities” (again here a bit of a misnomer) is not likely to be very material. Because the positive aspects of delinking health care from employment are going to be largely undone by the negative impacts of whatever payment system makes up the “how.” Which is why there’s plenty of people in the developed world who are also stuck in jobs they don’t like, even though the rest of the developed world has the type of system you’re advocating with lots of different “hows” in how it’s implemented.

The primary purpose for switching to the type of system you’re alluding to is to give the government monopsony control over health care purchasing/pricing, not because it’s going to materially expand the range of EO’s in the economy.

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37

Ok, so I can be clear, because you wrote a lot.

To this question, especially the “is it beneficial to pursue,”

Should I take your answer to be ”no”?

And I did read all of your explanation, so I think you are a no.

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38

That’s correct. I do not believe that pursuing that goal is worth “careful consideration,” because you can’t achieve that goal in any material way by changing the health care delivery mechanism. The gains in greater opportunity caused by the modified delivery mechanism would be relatively tiny and mostly (if not entirely) undone by the losses of opportunity caused by the means of paying for it.

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39

Correct.

(Blah, blah, blah to satisfy the 20 character minimum in answers. When did that start?)

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40

When you say gains and losses, do you mean in pure dollar terms, or something more general, like personal utility as I defined it upthread?