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By Brooks A. Mick, M.D.
July 4, 2006 I have announced that I was running for president on U-K and elsewhere. Five out of six responses were quite favorable, though two are from old hands here at U-K. So far I have five votes. But I had one complainer concerning one of my platform planks, that of privatizing Medicare (and Social Security by the way). Much of this I have covered in articles here on U-K over the past couple years. But it bears repeating. From “mrfred:” “Medical IRA? I think the gambling analogy is appropriate. As I recall, Monte Carlo simulation requires extensive mathematical modeling based on a set of very complex assumptions. The popularity of some recent home investor software packages aside, the problem is that it is difficult to implement an assumption set that matches the real world. “The randomness of Monte Carlo simulation clustering the “good times” or “bad times” in its range of scenarios masks the worst-case and most likely scenarios with a range of outcomes so large that it distorts reality.” David Nawrocki, Ph.D. “The Problems with Monte Carlo Simulation” That being said I assume you are a “fee for service” physician based on your comments… My reply was as follows, posted On 7/4/2006 11:11:14 AM EST Hi, mrfred, In the short run, nobody can predict the stock market with perfect accuracy. In the long run--and that is the view insurance adjusters take, is it not?--the stock market investment strategy I propose has worked out extremely well. The return on SoshSec is a measly 2% if you live long enough. The return on a quite conservative investment portfolio would exceed that handily, most likely by a factor of 3 at a minimum, and such a difference, over the average lifetime, would be enormous. Compound interest, which Einstein called one of the wonders of the world, don'tcha know? Even if one simply put the money into a money market fund, no significant risk at all, one would double the rate of return, and that would make the payout (compound interest again) at least triple what SoshSec would pay. And INSURANCE used to be--and should be--INSURANCE against unforeseen catastrophe. It would be relatively cheap to purchase if it were available again. Now, however, people are pretty much forced to buy pre-paid health care, which is NOT INSURANCE, and that raises the costs and it induces over utilization. Instead of dealing with those points, which are reality, you choose to start an esoteric mathematical discussion. But you tend to forget that insurance companies are also averaging out best and worst case in their adjustments to pricing. That investment models also attempt to average out best and worst case is not unreasonable! The Ph.D. has, it seems, forgotten that that is exactly what LIFE IS! Life is not a steady rise or fall in the stock market. The reality is that there are good and bad times. One would WISH TO PLAN AN INVESTMENT PORTFOLIO THAT TAKES SUCH UPS AND DOWNS INTO CONSIDERATION. Wouldn't one? Part of that planning is having TRUE INSURANCE, which is the pooling of risk among a large group--AVERAGING OUT THE BEST AND WORSE CASE SCENARIOS, by the way. As for fee-for-service, I have practiced many ways over the years, from salary to fee-for-service. I actually preferred the straight salary mode, but such staff-model HMOs are no longer viable. One might note that they didn't mirror real life, which is that MOST PEOPLE WORK HARDER WHEN THEY ARE PAID MORE FOR HARD WORK! Are you just making a tangential anti-capitalist remark? The insurance companies, by the way, take your money and INVEST IT. Thus THEY ARE THE ONES MAKING THE MONEY, not you. If it is a good deal for the insurance companies to invest the money in stocks and bonds, why not eliminate the middle man? --Brooks The latter is a point which I have not seen made before: Insurance companies take your premiums and invest them in stocks and bonds! That’s how they make their money! If it were actually a risky proposition to invest in stocks and bonds, do you think the insurance companies would be doing it? Of course one could not permit the investor to sink his money into Uncle Ernie’s perpetual motion machine, as that would be too risky in a government-supervised program such as Social Security or Medicare. But then insurance companies are not sinking their money into Uncle Ernie’s scheme either. They are investing along the Monte Carlo model lines and doing very, very well, thank you very much. If it is good enough for them, it is good enough for me and thee and I would rather thee and me get profit rather than the insurance companies. And that is aside from the benefit of putting the patient back in charge of his own health care rather than some faceless bureaucracy. ------------ About the author Brooks A. Mick: Physician, still practicing medicine but retired from the US Army. Write just for the fun of it, but working on novel in the vein of Tom Clancy's politico-military genre. Email: brooks15@cox.net Comment on this article here! ------------ All articles are EXCLUSIVE to Useless-Knowledge.com and are not allowed to be posted on other websites. ARTICLE THIEVES WILL BE PROSECUTED! |
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