Chinese Economics Thread

[abenomics12345]

it’s mainly chronic illness and internalized to the uninsured.

It’s fairly informed people making a choice that financially advantages *them*

The underlying assumption you make is that healthcare resource is a resource that is readily available, and that the average person looking to make said choice, understands the risk/reward trade off.

Reality check, fast food workers are not actuaries at United Health.

The average person has no idea what they need or do not need. They have *no idea* whether selecting a HDHP is a real financial bonus, or that they are picking up pennies in front of a train.

Consider this example:

"You have a 2% chance of developing heart attack over the next 1 year"

vs.

"You have a 10% chance of developing heart attack over the next 5 years"

Unless you're an actuary well-versed in the expected costs of heart attacks for yourself/the system, the average person has no idea how to evaluate the risk/reward of skimping out on a HDHP.

This is the ultimate asymmetry of information point that I've been trying to hammer home since my initial post and this is the fundamental flaw in your argument that you've not at all addressed.

The prevalence of HDHP changes behaviour at a micro level such that people are much less willing to access preventative care. This propensity to reduce 'consumption' out-patient preventative outpatient care is precisely why there is an 'overconsumption' of acute care.

Put simply, getting an annual test at LabCorp or Quest is a lot cheaper than getting sent to the ER for a previously unknown heart condition that you didn't find out because you didn't want to spend the 200 copay for said annual test.

Finally, a person sitting in the ER for a preventable ailment = one space that is not available for a real emergency. And as such hospital systems need to build excess capacity and hire additional personnel (which by the way = majority of costs) to deal with this, therefore increasing overall cost of the system.

 

[hereforsemithread]

For those of you who feels I'm getting my information from Serpentza because I'm not as optimistic as they are, listen to someone who's actually in the trenches, who by the way describes exactly what I've been saying.

T1's are not "the trenches" ffs, get a grip. They are the most developed areas of the country. They have reached their maximum carrying capacity for population, and have hit the point of diseconomies of scale for agglomeration due to their massive size. However, if the economy were left fully to private hands, these cities would still attract the bulk of new investment and population inflow because of their existing status as huge markets and industrial centers. This is a self-reinforcing tendency, and we can see the effects of it being allowed to run unimpeded in countries like Russia, Mexico, the UK, and to an extent the US. Left uncorrected it will seriously harm the national economy as labor and investment all crowd inefficiently into the same few incumbent urban centers. In order for this to be rectified, the flow of resources has to be redirected to a larger number of smaller and less developed cities that still have a long way to go before they hit diminishing returns to agglomeration. This necessarily entails a slowing down in the growth of the existing wealthiest cities. So SH feeling slow is not just a consequence of temporary factors and will continue indefinitely. That doesn't mean it's representative of the national economy.

 

[chgough34]

The underlying assumption you make is that healthcare resource is a resource that is readily available, and that the average person looking to make said choice, understands the risk/reward trade off.

People with chronic diseases know they’ll need healthcare in the coming year. Standard health risks (who are much more random in afflictions) also know they are standard health risks as well as their liquidity constraints so they’ll look at an out of pocket maximum and decide accordingly.

Reality check, fast food workers are not actuaries at United Health.

Fast food workers are on Medicaid. UNH actuaries are selecting from a cafeteria plan during open enrollment.

The average person has no idea what they need or do not need. They have *no idea* whether selecting a HDHP is a real financial bonus, or that they are picking up pennies in front of a train.

Downside risk to a HDHP is simply premiums paid + out of pocket maximum. For people in upper income strata, they have more than enough liquidity to survive that shock.

Consider this example:

"You have a 2% chance of developing heart attack over the next 1 year"

vs.

"You have a 10% chance of developing heart attack over the next 5 years"

Unless you're an actuary well-versed in the expected costs of heart attacks for yourself/the system, the average person has no idea how to evaluate the risk/reward of skimping out on a HDHP.

This is the ultimate asymmetry of information point that I've been trying to hammer home since my initial post and this is the fundamental flaw in your argument that you've not at all addressed.

Broadly irrelevant because ppl know their liquidity constraints and that health insurance is community rated. Whether their estimations of their health risk matches perfectly with the NAIC tables are broadly irrelevant to them because the upside and downside is a few thousand dollars (and these office wagies are going to be making 100K+)

The prevalence of HDHP changes behaviour at a micro level such that people are much less willing to access preventative care.

No. It doesn’t. HDHPs are dually regulated by both the ACA and ERISA, both of which mandate coverage of preventative care, even before the deductible. The high deductible is meant to prevent ppl from going to the doctor after every snivel, since both the RAND and Oregon Health Insurance experiments suggested highly intensive healthcare utilization from otherwise healthy people does not improve health.

 

[abenomics12345]

Downside risk to a HDHP is simply premiums paid + out of pocket maximum

...at a personal level. But not! for! the! system!

People with chronic diseases know they’ll need healthcare in the coming year. Standard health risks (who are much more random in afflictions) also know they are standard health risks as well as their liquidity constraints so they’ll look at an out of pocket maximum and decide accordingly.

This is another cop out - you assume that cost to individual = cost to system. That is not the case at all. People who misprice their own risk = more premiums for healthy people.

The questions here are pretty simple:

At a population level, is the US getting sufficient preventative care in aggregate?

Is the US experiencing more acute conditions than they should?

 

[chgough34]

...at a personal level. But not! for! the! system!

They are the same. Preventative care isn’t restricted by cost to any insured since it’s all free to the insured

This is another cop out - you assume that cost to individual = cost to system. That is not the case at all. People who misprice their own risk = more premiums for healthy people.

All health insurance premiums are community rated anyway. The effects of that are so much smaller and a cost the United States has time and time again in elections has shown it is willing to stomach.

The questions here are pretty simple:

At a population level, is the US getting sufficient preventative care in aggregate?

Is the US experiencing more acute conditions than they should?

Yes and Yes (albeit it is not a failure of healthcare)

 

[henrik]

Seems like I was wrong. I´m not a demographer and the diffrences between China and USA seem to be minor but what do I know.

Most of this discussion here can be falsified through quantitative methods. If we want to know if hypothesis is true one could do this with data and a SPSS and I´m sure it´s already done. This is something that could be answered easy. What you write seem plausible but what do I know.

I´m not saying that China has failed. I do not believe that something is written. This is why I avoid to say; "never". I believe that the low GDP (nominal) capita numbers might be problematic and that they need further discussion. Overall I think China do well.

As I wrote before. If GDP (nominal) per capita is a measurement of wealth - than China is poorer than Mexico. I´m not saying that wealth it´s all about GDP (nominal) per capita. There are several economic factors to be considered. I have actually been to China (Shanghai, Beijing, Hong Kong, Macao and Taiwan) but I have never lived there. I´m from Sweden - a country in rapid decline. When it come to Rome. I have only visited once. The quality of accommodation has always been a disappointment in Southern Europe. I cannot really afford to live at 5 star hotels how they are so I would not know about the quality. I stay at more modest 3-4 star hotels.

One have to wonder. Why do 12-13 million Chinese live in Western countries and 10 million of them in USA, Canada, Australia and New Zealand? The United States alone hold 5.3 million Chinese people. In 1950 Sweden had 397 Chinese immigrants. By the end of 2022 Sweden had 43,980 immigrants - more than half of them are women. Why do Chinese come to the West? Is this because China is economically, culturally and politically developed or is it because China is a impoverished third world country? You live in white man´s land and I doubt you are a mail-order wife.

I will say that I enjoy your writings. It´s proactive instead of the self-hate that is so common among Chinese and other Asians (in particular some Asian women) in the diaspora.

When China has their own high-bypass engine and is one of the leaders in the semiconductor industry I might agree with you.

China already has their own high-bypass engine and is already one of the leaders in the semiconductor industry. Don't you know?

 

[abenomics12345]

T1's are not "the trenches" ffs, get a grip.

It's a figure of speech ffs, you get a grip.

They are the most developed areas of the country. They have reached their maximum carrying capacity for population, and have hit the point of diseconomies of scale for agglomeration due to their massive size. However, if the economy were left fully to private hands, these cities would still attract the bulk of new investment and population inflow because of their existing status as huge markets and industrial centers. This is a self-reinforcing tendency, and we can see the effects of it being allowed to run unimpeded in countries like Russia, Mexico, the UK, and to an extent the US. Left uncorrected it will seriously harm the national economy as labor and investment all crowd inefficiently into the same few incumbent urban centers. In order for this to be rectified, the flow of resources has to be redirected to a larger number of smaller and less developed cities that still have a long way to go before they hit diminishing returns to agglomeration. This necessarily entails a slowing down in the growth of the existing wealthiest cities.

Sounds like you want to bring Hukou back. Reality check, the stated policy goal is to reduce and remove Hukou restrictions.

 

[chgough34]

How do you know if you need preventative care if having a high co-pay prevents you from going to your PCP?

Because preventative care (annual checkups, vaccines, etc) is free

 

[FairAndUnbiased]

Because preventative care (annual checkups, vaccines, etc) is free

Is preventative care limited to annual physicals and a small subset of vaccines?

 

[chgough34]

Is preventative care limited to annual physicals and a small subset of vaccines?

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