Ones and Zeros

Recently I needed an MRI for a sprained ankle to see if I’d torn a ligament or not.  I decided to use this as a project to figure out how much an MRI costs.  (I was inspired by the excellent podcast episode of Planet Money: ”Shopping For An MRI“.)

I had a choice of two MRI facilities, one was the local hospital and the other was an independent MRI/x-ray/sonogram company.  When I called the hospital it was clear that cost wasn’t a common question.  After twenty minutes on the phone talking to several people and being on hold I found I needed a diagnostic code to find the cost.  But it wasn’t clear where to get that code.So I called the independent place instead, they were more helpful.  They had two offices locally about five miles apart and the cost at one was $1200 and at the other was $500.  That’s $700 difference for similar equipment and the same staff.  After some discussion I found the real difference was some competition near the cheaper one.But wait!  This wasn’t the cost that I faced.  I have insurance and these costs are the “self-pay” costs for those without insurance.  However, no one really pays these self-pay costs.  If you pay up front they discount it 40%, if you pay in installments they discount it 25% I’m told.

Also the insurance companies contracting with the facility to pay a certain rate for each service.  Different insurance companies may pay different amounts if their contracts are different.  Without a long and tedious discussion with the billing department I wouldn’t be able to find out what my insurance company paid or what my co-pay amount was.

The usual rules of the free market fail here miserably.  To recap those rules: We have to have roughly equal sized sellers and buyers so that no one unduly controls the market.  Second, the prices and services in that market have to be known and similar.  Here the medical and insurance companies in this market are much larger than I - I have no ability to negotiate on anything like equal terms.  The insurance company is supposed to do that for me, but I’m locked into one particular insurance company at work and can’t easily change so there’s no real competition there either.  And, as we see, price information is essentially unavailable.  I also have a limited ability to compare the quality of the service since I’m not a medical expert.

The optimizing abilities of a free market don’t apply here since it’s not a free market in the economic sense of the words.  Besides, do you really want to price-shop for the cheapest doctor?  Yeah, me neither.  In the absence of market competition there’s no price control.  Some sort of regulation is necessary as the usual mechanisms don’t work.  That, I hope, was the original point behind the health care bill.  We’ll see how well it works out now that it’s passed through the partisan meat-grinder of Washington DC politics.

And that ligament?  Yup, it’s torn.  I’ve got a “boot” on to prevent me from moving that ankle, and there’s to be no running or hiking this fall for me.

Senator Jim Bunning has now apparently raised his block against extending unemployment benefits.  His stated motivation was to impose fiscal pay-as-you-go discipline by saying “Tough Shit” to Americans.  But in May 2007 Sen Jim Bunning voted for $120 billion for the war in Iraq.  He’s comfortable going into debt for war against a country that didn’t attack us (Iraq), but not for US citizens who’ve lost their jobs due to financiers.  Financiers that are already bailed out.

There’s also plenty of spin going on to attempt to make sense of Bunning’s effort. Michelle Malkin’s saying that he just wanted everyone on the record for example. Others have said that unemployement benefits cause people to NOT look for jobs.  The first is clearly overkill.  The second is ridiculous for anyone who’s been laid off.  Frankly unemployment benefits won’t replace any reasonable salary.

It’s been a pretty good while now, and my posting was getting sparse before that.  Despite the news with health care, various items of note in economics, and more recently a guy with a bomb in his pants I’ve not been around.

My day job has been occupying a very large portion of my time for the last three or four months.  In engineering project work it’s not uncommon to have a “push” where long hours are required.  This is usually a week or two, occasionally as much as a month.  Three months is not common and was due to budget shrinkage with no work shrinkage, I’m supremely glad that’s over.

There are plenty of other people doing year-end retrospectives; let’s look forward here in a few areas.

Economy:  It won’t be getting better for many of us.  If your idea of economy = Wall Street, you’ll probably be ok for a while at least.  But Wall Street can’t be isolated from the real world forever.  The hangover in the lack of jobs and the consequent poor consumer spending will affect us for some years yet.  The stimulus helped, but it was too small.  It will also be years before the housing bubble is resolved as housing is comparatively illiquid.  In short 2010 will be a lot like 2009 without some of the higher drama perhaps.

Politics: What can I say here?  The GOP is against everything and for nothing.  The Dems are trying to keep everyone happy - a losing game - and ended up with a weak and watered down health care bill.  The next year looks like the same: the GOP will continue to be the party of the irrational tantrum and the Dems will continue to ignore the progressives that got them elected.  Lawrence Lessig is right.  Without reforming the election process, there is no progress.

Aviation: For me 2010 won’t bring a new rating as it did last year.  (Unless my company funds it, which is very unlikely.) In a less self-centered view, I’m told that all the GA aviation companies are focusing on glass panel instruments now.  The AOPA show in Tampa had very few people that were pushing round dials.  So expect the technology revolution in aviation to continue and to probably accelerate into new areas. The FAA is continuing to move toward a GPS-based nav system.  The little problem of single points of failure is dictating some sort of backup.  But GPS and WAAS is the way they’re going.

Technology: It seems like Apple may kick off their tablet computer early in 2010.  Google will follow with theirs of course. They’re both planning to remake computing as  we know it again.  They’ll probably both succeed in some way too.  It’ll be a big year.  The “maker” movement will continue to pick up steam and is an outgrowth of open source tech.  This is a good thing and offers hope for future technical growth.  The risks in tech are the ongoing dilution of privacy and security for our information.  I’m more concerned about out government and our companies misusing information about me that I am with terrorism.  The former is infinitely more common.

If we can survive the economy and the political battles of officials who’ve forgotten how they were elected, we’ll be ok.  I do believe things are getting better over the long run.  It is hard to see that long run on a day-to-day basis sometimes.  Keep the faith, and may your new year be a good year for you.

There’s Fed Chair Ben Bernacke saying we’re past the recession.  Meanwhile Treasury Secretary Timothy Geithner says that we’ve got a long way to go.  They’re both right.

It all depends on what the meaning of the word “recession” is.
As usual Paul Krugman puts it clearly.  The recession is over but there’s a shortfall of unused people and unused economic resources (shut down factories and unused equipment).  It will take some time to get those people and equipment back into use.

Recession is basically defined as declining GDP.  Yet most of use don’t mean that when we use the term.  We mean that we know of too many people who lost their jobs, that we’re worried about our job, and that we see stores and businesses closing.

The economy has to keep expanding to keep us all growing economically.  Some 50,000 jobs need to be created each month nationwide to maintain a normal job growth rate.  Right now we’ve lost around 8% of GDP since late 2007/early 2008 when Bush was telling us we’re fine economically.  We seem to be basically flat right now - neither growing nor shrinking much.  We’re not technically in a recession.  But we’ve got a lot of people, equipment, buildings, and factories either completely idle or underused. In the case of people, they’re either unemployed or we’ve got top chefs, accountants, and engineers making burgers.

It will take some time to grow our way back to “normal”.  So the recession is over, but that doesn’t mean much for us day-to-day.  There’s nothing wrong with the honest work of flipping burgers for those accountants and others above, but it would be better for the economy if highly trained people were working where they could use their training.

This isn’t just a US problem.  The world shipping fleet is 12% unused. That rate used to be a around 0.1%.  Consumer demand has dropped off a cliff and goods don’t need to be shipped from producers to consumers.  Since jobs in one place  are connected by shipping to purchases in other places then we’re all in this boat together.