I was once at a talk by Marc Hauser (later disgraced for data fabrication) in which he talked about how Nazis tried to trigger disgust towards Jews by likening them to rodents in their propaganda. Hauser ended the talk by saying that we would all be better off if we didn't have the capacity for disgust. I was sitting next to the anthropologist Rob Boyd who whispered to me: we'd be eating feces and mating with our siblings.
I've known Doyne for over twenty years via SFI, fascinating character, I'll check out the interview.
So yesterday we got a major announcement of the Biden/Harris "big success" negotiating drug prices down. Saved $6 billion! The NYTimes and "reality based community" (Noah Smith-sphere)
is of course ecstatic, and I expect it to be used in ad buy after ad buy this fall.
Here's the reality. The prices are actually worse then what the PBMs were getting after rebates and discounts for most of the drugs (the admin disputes this, but those are the real numbers). Somehow Medicare managed to negotiate worse prices. As Adam Fein of Drug Channels put it upon seeing the numbers, Medicare Fair Price ought to be called Maximum Fair Price. None of us know where they are coming up with the $6B saved figure.
Before even knowing this, insurers submitted bids based on the changes in the IRA. The Direct Subsidy, the amount that the government has to pay insurers per member, came in way higher than the trustees report. That's worth about $5-$7B. But that wasn't enough. It probably would have been even higher but we suspect they lopped some money off to pay for the "individual PDP demonstration" that will cost another $5B. In it the government just declares (probably illegally if we were a nation of laws) that it will just arbitrarily subsidize double digit premium amounts on behalf of the members for all PDPs to keep premiums from going up before the election. Also, they are going to narrow the risk corridors (money the government give you if you get your bid wrong) on just one side (the side favoring the insurer). Also, the program goes on for three years! Insurers bid high when they didn't know they were going to get a massive bail out. Imagine what they will do when they do know they are going to get bailed out!
So we've got $6B in fake "savings" and $10B+ in already realized costs, with every expectation they will only increase.
According to the NYTimes and reality based community, this is a great accomplishment. I expect that if we get a Harris administration we can look forward to four years of such accomplishements.
Yeah, I scanned the numbers yesterday- it was obvious that the government method of negotiating "lower" prices was to simply offer $2 in payments in account A to get $1 of cost savings in account B.
This is a non-snarky comment in re AK's ideas about government efficiency or effectiveness: what sort of businessperson from the fields mentioned - "health" insurance, hospitals (if we may call them business, their being mostly non-profit in some notional sense?), pharmaceutical companies, PBMs (I had to look up the acronym) - would be advisable?
You obviously know a lot about this but I don't know if it's related to your vocation.
Biden’s experiment in staffing an administration as fully as possible with professors and nonprofit lifers has not been a smashing success.
(A better conclusion would have been ** has been an abject failure **.)
You said:
I want someone who knows what it feels like to be part of a business trying to survive.
Probably a cliché by now, but an outsider running for senator in my district said voters would be better served if they elected the candidate with "experience signing the FRONT of a check". That he lost the election is an indication that
I never thought these two worlds would collide for me even though now I think about it, it was very probable. Amit's YouTube show Everything is Everything with Ajay Shah is something I look forward to every week. Looking forward to listening to this podcast in full.
Great to hear you at length on Amit Vermas podcast. I appreciate your views and this substack a lot more now. Wish you guys had met after Biden dropped out.
What it feels like to to be part of a business trying to survive?
I have been in regulated (banking, healthcare provider) and unregulated (strategy consulting, healthcare staffing) businesses, from start-up to Fortune 1, and domestic to multi-national.
Banking day-to-day was about turning the siloed business units in new, improved directions. The real battle is to avoid Credit/Risk getting overrun by Sales/Originations. Generational turnover in Chief Credit/Risk Officers seems to lead to new hard lessons (e.g., EVs will trash auto finance at some point). In 1999, we were lobbying for Fannie and Freddie to stop crowding us out of multi-family lending, which were having to underwrite at 0% margin to round out the loan pools for securitization.
As low capital-intensity service businesses, consulting and staffing are about sales power. Senior relationships obviously make a big difference in professional services like consulting, whereas staffing is a race to get good candidates submitted first. All good, clean competitive fun! That said, we had to wait a year, while burning cash, to get a license to operate in India because we wouldn't pay a bribe.
Healthcare is domestic, US in my case. Two problems: 1) getting paid by the commercial and government payers, and 2) getting clinicians to cooperate when they can and will walk for $0.25 more per hour (only carrots, no sticks). We have trained clinicians to have no loyalty, imo, so their employer is just the name on their check.
The most egregious abuse in US healthcare I saw was a for-profit contractor with a license to hunt from the Feds which walked into a provider, audited 30 files from several years (before I joined the company), extrapolated that to claim significant over-payments, and presumably collected their percentage. Medicare then exercised its right of set-off, the most powerful right known to humankind, and starved the provider of cash while expecting service to continue to be provided. The queue to appeal the ropey statistics in front of an Administrative Judge was three years long. Luckily, we had other providers to subsidize the leaned-out provider. I pity the mom-and-pops still in the game.
From the other side, the name of many of the games in US healthcare is to find several pockets to pick (e.g., outsourcing services so they can be billed separately, then hitting up the hospitals for subsidies), all the while adding overhead and profit margins. Or "plus-plus" as they say in Singapore.
In regulated businesses, the government giveth and the government taketh away. "You have 10 seconds to comply," while government delays the regulations coming into force for yet another year. Government's children are Adverse Selection and Moral Hazard; the grandchild is Unintended Consequences.
"Perhaps having children would have higher status if people were disgusted by LGBTQ, which was the case during the baby boom."
I don't have an opinion on whether disgust for lbgtq is more good or bad. It is certainly some of both but I don't think the dearth of children is a compelling reason. Not that more children isn't mostly good given the developed world's situation. It's just that I don't see less lgbtq resulting in more children.
"If you surveyed people about gas-powered leaf-blowers, or hunting trophies hung on a wall, or smoking, you might register stronger disgust among progressives than among conservatives."
As a resident of Los Angeles and well acquainted with the sound and smell of gas-powered leaf-blowers, count me as an equally disgusted non-progressive. Same goes for smoking (tobacco etc.) Hunting trophies hung on a wall? Never seen one in person. Is that still a thing, somewhere other than reruns of Bonanza and Fawlty Towers?
I’m pretty sure the profit motive does not insulate from producing effects worthy of disgust. Anyway, where I live the profiteers and the government are so thoroughly in bed together it would be hard to untangle at this point.
I imagine when you say “someone in business” should enter the Cabinet, you don’t mean a home services contractor, or that guy who hawks pillows on TV.
What is always meant is a Wall Street money man.
I guess the feint at populism - at what the wealthy do to evade taxes - is supposed to veil this somewhat.
Evading taxes is an honorable pursuit and should it ever be reprogrammed as “disgusting” among the truly productive that would be a bad sign.
Rex Tillerson was a rare exception, having held a real job in a company that involves a product. Perhaps he came from Wall Street though.
I concede that a Mitt Romney would be a pretty good person to tap, to oversee the breaking up of the country, given his relevant experience - “finish the job”, so to speak.
It’s a bit odd to me to imagine that, say, one of those KKR dudes who recently - in the words of that Jacobin rag, the Wall Street Journal - got “a giant payday for no work” - life moves slowly in the home of one’s infirm elderly parents, there’s time to read *all* the articles, and even to look up the arcane tax terms you’d not heard before - ought to run the Interior department.
But ideology does not lead me to conclude that the world is a place easily flattened and made simple, so that expertise in one domain fits you for “the whole”.
The holistic view, the correct one - is that there are Cabinet positions and agencies that ought to be eliminated. The holder is immaterial.
I was once at a talk by Marc Hauser (later disgraced for data fabrication) in which he talked about how Nazis tried to trigger disgust towards Jews by likening them to rodents in their propaganda. Hauser ended the talk by saying that we would all be better off if we didn't have the capacity for disgust. I was sitting next to the anthropologist Rob Boyd who whispered to me: we'd be eating feces and mating with our siblings.
I've known Doyne for over twenty years via SFI, fascinating character, I'll check out the interview.
So yesterday we got a major announcement of the Biden/Harris "big success" negotiating drug prices down. Saved $6 billion! The NYTimes and "reality based community" (Noah Smith-sphere)
is of course ecstatic, and I expect it to be used in ad buy after ad buy this fall.
Here's the reality. The prices are actually worse then what the PBMs were getting after rebates and discounts for most of the drugs (the admin disputes this, but those are the real numbers). Somehow Medicare managed to negotiate worse prices. As Adam Fein of Drug Channels put it upon seeing the numbers, Medicare Fair Price ought to be called Maximum Fair Price. None of us know where they are coming up with the $6B saved figure.
Before even knowing this, insurers submitted bids based on the changes in the IRA. The Direct Subsidy, the amount that the government has to pay insurers per member, came in way higher than the trustees report. That's worth about $5-$7B. But that wasn't enough. It probably would have been even higher but we suspect they lopped some money off to pay for the "individual PDP demonstration" that will cost another $5B. In it the government just declares (probably illegally if we were a nation of laws) that it will just arbitrarily subsidize double digit premium amounts on behalf of the members for all PDPs to keep premiums from going up before the election. Also, they are going to narrow the risk corridors (money the government give you if you get your bid wrong) on just one side (the side favoring the insurer). Also, the program goes on for three years! Insurers bid high when they didn't know they were going to get a massive bail out. Imagine what they will do when they do know they are going to get bailed out!
So we've got $6B in fake "savings" and $10B+ in already realized costs, with every expectation they will only increase.
According to the NYTimes and reality based community, this is a great accomplishment. I expect that if we get a Harris administration we can look forward to four years of such accomplishements.
Yeah, I scanned the numbers yesterday- it was obvious that the government method of negotiating "lower" prices was to simply offer $2 in payments in account A to get $1 of cost savings in account B.
This is a non-snarky comment in re AK's ideas about government efficiency or effectiveness: what sort of businessperson from the fields mentioned - "health" insurance, hospitals (if we may call them business, their being mostly non-profit in some notional sense?), pharmaceutical companies, PBMs (I had to look up the acronym) - would be advisable?
You obviously know a lot about this but I don't know if it's related to your vocation.
Adam Fein of Drug Channels is probably the best public expert to follow. Most others you would need to be inside the industry.
These two lines resonated strongly with me:
Matt Yglesias wrote:
Biden’s experiment in staffing an administration as fully as possible with professors and nonprofit lifers has not been a smashing success.
(A better conclusion would have been ** has been an abject failure **.)
You said:
I want someone who knows what it feels like to be part of a business trying to survive.
Probably a cliché by now, but an outsider running for senator in my district said voters would be better served if they elected the candidate with "experience signing the FRONT of a check". That he lost the election is an indication that
too many voters don't have any skin in the game.
I never thought these two worlds would collide for me even though now I think about it, it was very probable. Amit's YouTube show Everything is Everything with Ajay Shah is something I look forward to every week. Looking forward to listening to this podcast in full.
Great to hear you at length on Amit Vermas podcast. I appreciate your views and this substack a lot more now. Wish you guys had met after Biden dropped out.
What it feels like to to be part of a business trying to survive?
I have been in regulated (banking, healthcare provider) and unregulated (strategy consulting, healthcare staffing) businesses, from start-up to Fortune 1, and domestic to multi-national.
Banking day-to-day was about turning the siloed business units in new, improved directions. The real battle is to avoid Credit/Risk getting overrun by Sales/Originations. Generational turnover in Chief Credit/Risk Officers seems to lead to new hard lessons (e.g., EVs will trash auto finance at some point). In 1999, we were lobbying for Fannie and Freddie to stop crowding us out of multi-family lending, which were having to underwrite at 0% margin to round out the loan pools for securitization.
As low capital-intensity service businesses, consulting and staffing are about sales power. Senior relationships obviously make a big difference in professional services like consulting, whereas staffing is a race to get good candidates submitted first. All good, clean competitive fun! That said, we had to wait a year, while burning cash, to get a license to operate in India because we wouldn't pay a bribe.
Healthcare is domestic, US in my case. Two problems: 1) getting paid by the commercial and government payers, and 2) getting clinicians to cooperate when they can and will walk for $0.25 more per hour (only carrots, no sticks). We have trained clinicians to have no loyalty, imo, so their employer is just the name on their check.
The most egregious abuse in US healthcare I saw was a for-profit contractor with a license to hunt from the Feds which walked into a provider, audited 30 files from several years (before I joined the company), extrapolated that to claim significant over-payments, and presumably collected their percentage. Medicare then exercised its right of set-off, the most powerful right known to humankind, and starved the provider of cash while expecting service to continue to be provided. The queue to appeal the ropey statistics in front of an Administrative Judge was three years long. Luckily, we had other providers to subsidize the leaned-out provider. I pity the mom-and-pops still in the game.
From the other side, the name of many of the games in US healthcare is to find several pockets to pick (e.g., outsourcing services so they can be billed separately, then hitting up the hospitals for subsidies), all the while adding overhead and profit margins. Or "plus-plus" as they say in Singapore.
In regulated businesses, the government giveth and the government taketh away. "You have 10 seconds to comply," while government delays the regulations coming into force for yet another year. Government's children are Adverse Selection and Moral Hazard; the grandchild is Unintended Consequences.
Disgust - There's probably no right answer but I tend to think those things that liberals dislike are something related but different than disgust.
"Perhaps having children would have higher status if people were disgusted by LGBTQ, which was the case during the baby boom."
I don't have an opinion on whether disgust for lbgtq is more good or bad. It is certainly some of both but I don't think the dearth of children is a compelling reason. Not that more children isn't mostly good given the developed world's situation. It's just that I don't see less lgbtq resulting in more children.
"If you surveyed people about gas-powered leaf-blowers, or hunting trophies hung on a wall, or smoking, you might register stronger disgust among progressives than among conservatives."
As a resident of Los Angeles and well acquainted with the sound and smell of gas-powered leaf-blowers, count me as an equally disgusted non-progressive. Same goes for smoking (tobacco etc.) Hunting trophies hung on a wall? Never seen one in person. Is that still a thing, somewhere other than reruns of Bonanza and Fawlty Towers?
I’m pretty sure the profit motive does not insulate from producing effects worthy of disgust. Anyway, where I live the profiteers and the government are so thoroughly in bed together it would be hard to untangle at this point.
I imagine when you say “someone in business” should enter the Cabinet, you don’t mean a home services contractor, or that guy who hawks pillows on TV.
What is always meant is a Wall Street money man.
I guess the feint at populism - at what the wealthy do to evade taxes - is supposed to veil this somewhat.
Evading taxes is an honorable pursuit and should it ever be reprogrammed as “disgusting” among the truly productive that would be a bad sign.
Rex Tillerson was a rare exception, having held a real job in a company that involves a product. Perhaps he came from Wall Street though.
I concede that a Mitt Romney would be a pretty good person to tap, to oversee the breaking up of the country, given his relevant experience - “finish the job”, so to speak.
It’s a bit odd to me to imagine that, say, one of those KKR dudes who recently - in the words of that Jacobin rag, the Wall Street Journal - got “a giant payday for no work” - life moves slowly in the home of one’s infirm elderly parents, there’s time to read *all* the articles, and even to look up the arcane tax terms you’d not heard before - ought to run the Interior department.
But ideology does not lead me to conclude that the world is a place easily flattened and made simple, so that expertise in one domain fits you for “the whole”.
The holistic view, the correct one - is that there are Cabinet positions and agencies that ought to be eliminated. The holder is immaterial.
Thank you for posting the video interview with Professor Farmer.