Banner Ads tied to Flies

“A company at a German trade show has attached tiny banner advertisements to flies and set them loose on unsuspecting visitors, in a bizarre yet effective marketing stunt.”

Someone passed this around at work and it was too weird not to share.  I’m not sure how I feel about it – it’s creative but it’s animal cruelty but it’s only flies and it’s amazing it works.  Our cats would have a field day if I set a bunch of banner-ad-flies loose in our place.

Health Care

Pnina and I are back from our Round-the-World trip.  I was blogging about the trip on a separate site (http://honeysun.wordpress.com) and I still have a lot of work to do there: the last 3+ months of our trip still need to be written (yikes).  But in the meantime I also have some non-trip things to write about, so here goes…

While we were traveling, Obama won the election, took office, and after dealing with various burning issues (failing banks / auto industry / etc.), he took up health care as his major agenda item.  Pnina and I got tid-bits about his push for health care reform while we were on the road, but in many situations we were pretty out of touch (either because the internet was censored, or connections were unavailable, or connections were available but too expensive e.g. Tahiti, or because we just preferred to spend our time doing other things).  So, since we returned I’ve felt like I need to fill my information gap about the whole health care issue.

I happened to find a couple of really good sources on health care in America, so I thought I’d share them:
1. An article in The Atlantic magazine: How American Health Care Killed My Father.  By the way, I learned about this article from my friend Alex Rosaen who is a public policy consultant.
2. A couple of episodes of the radio show This American Life: More is Less, and Someone Else’s Money.

And in case you don’t have time to read/listen to them, here’s a summary of what I learned…

First off, it’s kind of strange that in America we use insurance to pay for most medical expenses.  Typically insurance is set up for emergency situations: lots of people pay money into the pool, but only a few people take money out, and only in unpredictable, expensive, emergency situations.  This is true of life insurance, home insurance, car insurance, etc.  But for some reason health insurance has grown to cover nearly all our medical care.  We wouldn’t think of using car insurance to pay for gas at the pump, but we think it’s perfectly normal to have our insurance pay for equally routine/predictable things like yearly checkups.  Even pregnancies are (typically) planned, and births are predicted many months in advance, but most of us couldn’t imagine paying for a delivery without insurance.

How did this happen?  Well, back in WW2 there were policies in place that forbode companies from raising salaries (I’m not sure why those policies existed; maybe the government was trying to prevent inflation).  At the same time labor was in short supply because so many men were off fighting the war.  So companies had to find some way to compete with each other to attract people from the small labor pool, and what they did was to offer all kinds of fringe benefits, including health insurance.  Then in 1943 an IRS beaurocrat made a ruling saying that, at least in some cases, employer contributions to employee health plans are tax-deductible.  This ruling was probably an accident and it was ambiguously spoken, but it was enough of a spark.  Accountants around the nation realized that they could save their companies lots of money by declaring all these health insurance contributions.  Companies decided that they should offer even more comprehensive health insurance because, hey, all these extra dollars are tax-deductable anyhow, right?  This became such a popular tax break that companies started demanding from congress to write this into law, which congress eventually did in 1954.  The impact was huge.  In 1940 only 9% of Americans were covered by employer-based health insurance, but this number grew to 63% by 1953.

OK, so we have this insurance-based medical system, but is it really bad?  Well, the trouble with our insurance-based system is that we consumers stop asking/caring about the actual cost of the health care we receive.  When we visit the doctor we may ask “how much is my co-pay?”, but it’s rare to ask “oh, and by the way, how much is the actual full cost?”  If we happen to see the full price on some medical bill, and if we notice that the portion paid on our behalf by the insurance company is very high, our reaction might be: “sweet, my insurance rocks!”  Instead, perhaps our reaction should be: 1. “umm, why is that so expensive?”, and 2. “if my insurance company pays fees like this for lots of other people, will my premiums rise?”  But somehow, I think, those thoughts don’t occur to us.

So, with a system like this, with consumers who are largely ignorant or apathetic, doctors and hospitals are relatively free to charge higher and higher prices.  We consumers won’t stop them because most of us don’t really see these increasing prices.

We often think of health insurance companies as “the bad guys”, but the truth is that they are actually fighting to keep health costs down.  How’s that?  Well, insurance companies sign separate contracts with each hospital system.  The contracts specify how much the insurance company will pay the hospital for each kind of service.  If the insurance company succeeds in negotiating a contract with low fees to the hospital, they can turn around and offer lower premiums to customers (so as to attract more customers away from competitors) or else pocket the extra profits.  If the insurance company is the big dog in town then it has the leverage to negotiate a good contract (it can tell the hospital “if you don’t agree to these lower prices then we will send our customers to a different hospital”).  Conversely, if the insurance company has only a small number of customers while the hospital system is the big dog in town, then the hospital system has the leverage (it can tell the insurance company: “either accept our high fees or else your customers will have to drive far to some crappy hospital, in which case they will probably scream bloody murder and abandon you for a different insurance company”).

So let’s review.  If we have a town with many small insurance companies and one big hospital system, then prices for medical care are likely to be high.  And if instead you have a town with just a few big insurance companies and many independent hospitals, then prices are likely to be low.  Again, many insurance companies = high prices, while few insurance companies = low prices.  This is nuts!  I don’t know much about business, but I thought more competition is supposed to be good for consumers.  Obviously the free market is not quite at play here.

But again, we consumers are generally unaware of all these back-room dealings.  Those of us who have company-paid insurance think: “well, my insurance premiums are already covered and my co-pays are small, so I may as well get all the medical care I want.”  It feels like we’re getting a great deal, but the money for our care has to come from somewhere.  Each year people get more medical care, hospitals charge greater amounts from the insurance companies, and the insurance companies turn around and charge higher premiums.  We may not even be aware that this is happening, but our companies definitley are.  And the increased cost of health insurance means that our salaries rise less quickly or that our companies can’t grow as quickly (or even have to let people go).

What if we had a different system?  What if we paid for our health care the way we pay for most things: out of our own pocket?  As an example, take LASIK surgery.  Most insurance companies still don’t cover LASIK, so when people choose to have this procedure done they largely pay out of pocket.  When it was first introduced, LASIK was a rare and very expensive procedure.  But with time more doctors offered this service.  More competition meant lower prices, and today you can generally have the procedure done for $1000 per eye.  Some doctors offer even lower prices while other doctors attract customers with claims that they offer better service (more experience, better equipment, etc.).  This is exactly how it should be: competition causes prices to fall and quality to rise.

So what am I saying, that I want there to be no public health care?  Well, I’m not sure.  I have to say that before reading/hearing the sources above, I was a regular left-leaning kind of guy, and I fully supported a social-style health care system.  I still think there should be some kind of basic safety net, but I also think there needs to be a lot more transparancy.  Consumers need to get in the habit of saying “do I really need this service?” and “is it really worth the money?”  I think a lot of consumers today understand that generic drugs are just as effective as the corresponding brand-name drugs, and that they cost much less, so in general it’s a good idea to go with the generics.  But drugs are just one part of our huge expensive health care system, and the other parts are still pretty opaque.

Well, that’s what I learned.  Let me know what you think.

Also, as an aside, this is my first attempt to compose a blog post using a Firefox plug-in called ScribeFire.  While Pnina and I were traveling (with a Windows XP laptop) I used Windows Live Writer.  But Live Writer doesn’t work on a Mac, so now I’m looking for an alternative.  I found a few other options (e.g. Blogo) but they all cost money, so for now I’m going with this plug-in.  If there are any other Mac-supported blogging softwares I should try, let me know.