Association Group Health Insurance

Justin Haskins of the Heartland Institute writes:

"Thanks to the efforts of the Trump administration and Sen. Rand Paul, R-Ky., millions of people will soon have access to more affordable health insurance.
     On Tuesday, the Department of Labor finalized a new rule expanding under federal law access to association health plans, which will provide small business owners and their employees, as well as sole proprietors, with the ability to gather together to purchase group health insurance plans."

He claims this is a "remarkable improvement" that will result in much lower health insurance premiums for the people who will have this new way to buy such insurance. But in my opinion he merely assumes that premium rates for this new kind of small group insurance plans will be as low as premiums for large group insurance plans.

I am very skeptical and note that his article indicates no understanding of underwriting and rate-setting. I expect the new rule will have little or no effect on them. Insurers will continue to underwrite members of small groups almost like they do individuals. Imagine a group consisting mostly of people in very poor health, e.g. most have had heart attacks. If it offers coverage, a rational insurer will do so with a very high premium, one commensurate with the poor health of the individual members. There is no miraculously cheap rate simply as a result of making a group. Also, why would a very healthy person -- even if he/she is a member of the group -- buy this high-priced group insurance when he/she could buy cheaper individual insurance?

What sort of people do you think will seek to buy this new sort of health insurance? More likely than not they will be the ones who need and want it most, i.e. the less healthy ones. This is called adverse selection in the insurance business. Rational insurers aren't going to offer more risky small groups the same premium rates they charge large groups of mostly healthy people.

An earlier post I made about this is here.

60 Minutes on the opioid crisis #2

A question I had -- not at all answered by the 60 Minutes show-- is why any one drug distributor deserves so much blame. Suppose the following. A rogue pharmacy buys drugs from three different distributors. #1 sells the pharmacy N1 thousand pills, #2 sells it N2 thousand pills, and #3 sells it N3 thousand pills, all in the same time span. So the pharmacy buys N1 + N2 + N3 thousand pills. Why should #1 be held accountable for knowing about the N2 + N3 thousand pills? Similar for #2 and #3. Yet apparently Rannazzisi, the other DEA people, and 60 Minutes host Bill Whitaker seem to believe each of the three should be held accountable and far more to blame than the pharmacy, doctors who write the prescriptions, or the people who overdose. Are the people overdosing with opiods entirely innocent? How guilty are the doctors writing the prescriptions, and the pharmacies filling the prescriptions? Such doctors and pharmacies get a little blame, but it is far outweighed by the blame on the big wholesale drug distributors.

Whitaker claims the distributors know how exactly how many pills go to every drug store they supply (5:29), and the show cites large numbers of pills relative to the local population. Does that mean N1 or N1 + N2 + N3? Are some drug stores buying large quantities in order to supply other drug stores who can get lower prices this way?

Is it much easier for the DEA to go after the drug distributors and going after them is considered more newsworthy? There are thousands of doctors and hundreds of pharmacies and pain clinics, so many that it would be difficult to pursue massive arrests. On the other hand, there is a tiny number of large wholesale drug distributors. The DEA could slap a big fine on a big wholesale distributor company, but that could be chump change to the company and wouldn't be hugely newsworthy. That makes a high-level executive of a big drug distributor an easy target for scapegoating or maybe prosecution. Prosecuting such an executive would also likely be considered very newsworthy.

The drug distributors are supposed to report cases of a pharmacy that makes big orders to the DEA. McKesson and Cardinal Health did under-report and pay a big fine. Regardless, why assume they have obligations beyond that, e.g. knowing what a pharmacy buys from other distributors? Shouldn't any action beyond that be the DEA's responsibility?

The DEA zealots call the drug distributors greedy, non-caring killers. Would they accuse heroin or crack dope dealers of wanting to kill their customers? I doubt it. I don't doubt the distributors like their profits. On the other hand, I am confident that DEA folks dislike their actions being subject to limits. They desire their power as much as the drug distributors do their profit.

60 Minutes on the opioid crisis #1

Last Sunday the television show 60 Minutes reran this episode about the opioid crisis. The original made me suspicious of bias; seeing it the second time more so. It strikes me as very biased about who deserves blame, and it tries to make a likely overzealous bureaucrat into a hero. Joe Rannazzisi is an ex-agent of the Drug Enforcement Administration (DEA). He and the story are very critical of wholesale drug distributors. The story alleges that Rannazzisi exposed the DEA's failure (due to congressional interference, unwarranted in his opinion) to hold Big Pharma accountable in the opioid epidemic.

The story blames a few doctors, a few pharmacies, a few pain clinics, and Congress, but the most blame is for the three largest wholesale drug distributors -- McKesson, Cardinal Health, and Amerisource Bergen. They are the choke point selected by the critics. Rannazzisi gets lots of air-time to give his side of the story. Some other DEA agents or ex-agents, with opinions similar to Rannazzisi, get much air-time. Lobbyists for the drug distributors get some blame. Many of them are ex-DEA lawyers. The critics of the distributors don't appreciate such well-informed people thwarting the DEA's efforts.

There are only two spokesman on behalf of drug distributors, and they get very little air-time. Some media such as here gives the drug distributors' side, but 60 Minutes put very little effort towards that. One of the two was a Congressman who criticized the DEA's aggressive enforcement tactics, but that criticism is pooh-poohed by others. Of course, Congressmen like law enforcers to take it easy on their campaign contributors. On the other, law enforcers sometimes act like they are above the law and morally superior.

Near the end of the episode Rannazzisi makes his main motive very clear -- to put a high-level drug industry executive in jail. Such an executive gives him a scapegoat, and putting one in jail would fulfill his goal of making a big headline, whether or not it is a substantive remedy, and regardless of the degree of objectively determined guilt.

Scientific Revolutions #7

In The Rationality of Science W. H. Newton-Smith calls Thomas Kuhn a non-realist (ref. #6) because Kuhn's model of science makes problem solving the goal rather than the pursuit of truth. He says Kuhn doesn't make truthfulness the main goal of science because it cannot be given a rational justification. In other words, there is no algorithm for choosing which of two competing theories is better in all such comparisons. His exact words follow.

"Thus the use of models for the explanation of change is not the exclusive prerogative of the rationalist. Kuhn, for example, has a model of science which makes the goal problem solving and in which the principles of comparison are the five ways [ref. #5]. What makes Kuhn a non-rationalist is his thesis that these cannot be given an objective justification. This in no way precludes his using his model in generating minirat [*] accounts, a good example of which is found in his recent study of Planck. In this work, in which, interestingly, Kuhn does not make any use of his own theoretical framework of gestalt shifts between incommensurable paradigms, he explains why Planck opted for his distribution law for the radiation given off by a black body through a reconstruction of Plank's beliefs and reasoning processes. One example of a general methodological belief would cite as explaining the scientific community's acceptance of Planck's theory is the belief in the importance of theoretical unification. This, in part, motivated the community to prefer to use Planck's single formula which covers all temperatures instead of Wien's formula for low temperatures and the Rawleigh-Jeans law for high temperatures. ... This means that a rational representation of science should consist not of a single model but an evolving series of models " (p. 224-5). 

* minimal rational account -- an explanation of theory choice which does not include a normative assessment of the goal, or an evaluation of the truth or falsity, or the reasonableness or unreasonableness of the beliefs. 

I see no sharp difference between Newton-Smith's use of real and rational (and their conjugates).

Baseball: Who's in first?

The title is not about the famous "Who's on First?" comedy routine by Abbott and Costello. I checked the major league baseball standings this morning and saw something unusual. The standings shown in the American League East division by CBSSports and FoxSports are:

Place Team                    Won   Lost      PCT    GB (Games Behind)
 1.     New York Yankees      43       20        .683      1.0
 2.     Boston Red Sox          47       22        .681       —

ESPN showed the teams in reverse order.

I don't recall ever having seen this -- a first place team "behind" the second place team.  It is a  consequence of the Red Sox having played 6 more games. They won 4 of them, yielding a PCT (.667) that is lower than their PCT for all games.

Why all three websites use the heading PCT -- and this is the convention followed for all or nearly all sports standings (in English) -- is  understandable but not exact. 0.683 is a ratio; 68.3 is the correct PCT for the Yankees. Ratio or W/G would be a more accurate heading.

Scientific Revolutions #6

Regardless of how one evaluates Thomas Kuhn's ideas about scientific revolutions, his book The Structure of Scientific Revolutions was a huge impetus in discussions of their nature. Commentary on the nature of science and scientific entities and methods preceded Kuhn's book, but the book spurred revisiting said nature, entities, methods, and scientific instruments.

Broadly speaking, scientific realism is the view that science is about reality. But there are significant nuances pertaining to truthfulness, aims versus achievements, mind-independence, what is or isn't knowledge, and more, including claims about unobservables (atoms, radio waves, etc.). This article Scientific Realism sketches the major nuances.

Antirealism is the term used for various arguments against, or foils for, scientific realism. One of these is instrumentalism, which holds that claims about unobservable things have no literal meaning. While the linked article doesn't mention Galileo and his religious detractors, it reminded me of them. Said detractors didn't object to some of Galileo's claims when viewed as instrumental, as mathematically useful. However, they did object to saying said claims were true when they conflicted with Biblical text.