Pre-existing conditions

Mark Palko sent me a link to a Consumer Reports discussion of pre-ACA individual market healthcare.  It was scathing, giving examples like:

The Georgia real estate agent whose group health plan was folding and who couldn’t find replacement insurance unless it excluded coverage of her $1,700-a-month rheumatoid arthritis medication, without which she would quickly become disabled.

I think that the example above gives a good example of what makes the market in health insurance challenging.  When you link your insurance to your job, some people will inevitably lose their jobs.  These people will have paid into insurance when they were healthy but no longer have access to that plan.  Thus they have serious problems ever getting coverage.

Now this would be fine if acute risks were all that we were insuring against (like a house fire).  But we also insure against the development of a chronic condition that is expensive to treat and ongoing.  Now add in recission -- health plans checking to see if you gave perfectly accurate information only after you start claiming benefits (notice that they do not offer to return previously paid premiums as part of this process) and it is clear that the individual health plan market had some serious drawbacks.  In fact, given recission, it is unclear if people who lose inexpensive plans were actually insured in the case of a disaster. 

Now the private market solution to this set of problems is a regulated series of exchanges.  If these exchanges cannot be made to work, and even private companies seem to have trouble with doing so from time to time, the next best solution would be to expand public coverage.  What if anybody could opt-in to Medicaid?  Would that really be a disaster?  It would hurt medical wages and simultaneously expand demand, but we could compensate by expanding medical licensing to groups like Nurse Practitioners provide care to Medicaid patients.  Then private insurance is supplemental (like the UK) and these issues become a lot less concerning (because insurance reputation begins to really matter). 

These issues are worth keeping in mind as we watch this experiment unfold.   

2... 4... 6... 8... Time to disaggregate -- Motley Fool/Netflix Edition

[second in a thread]

Another example of why I'm uncomfortable with the quality Motley Fool's analyses, this time demonstrating a crude but common statistical misstep (or in some cases, distortion). The analyst here is MF regular Tim Beyers (not familiar enough with MF to say why it's in the third person).

Netflix offers each new Marvel show international distribution to as many as 40 million viewers worldwide. Disney can't achieve that on its own, Tim says, because it controls a limited number of channels for offering live action superhero content and ABC already airs Marvel's Agents of S.H.I.E.L.D.

History also favors the deal. More than 66% of gross receipts for Iron Man 3 came from overseas territories. Thor: The Dark World is also tracking well in foreign territories, much like its predecessor. Settling for U.S.-centric distribution would be aiming too low, Tim says.

If you've been following the Netflix story in any detail, one component of this argument will jump out immediately but anyone who works with data will probably have at least a hunch about where this is going.

The phrase "40 million viewers worldwide" raises the question, how many of those viewers are overseas? The answer is less than ten million. For comparison, here's how HBO breaks down:

As of September 2012, HBO's programming reaches approximately 30 million pay television subscribers in the United States, making it the second largest premium channel in the United States (Encore's programming reaches 35.1 million pay subscribers as of March 2013). In addition to its U.S. subscriber base, HBO also broadcasts in at least 151 countries covering approximately 114 million subscribers worldwide.

What's worse, those overseas Netflix viewers seem to be mostly in Europe, with little apparent presence in the all-important Asian market.

Perhaps there's more going on than we know about. Netflix could be on the verge of a big international expansion. For now though, Netflix is not a major international power compared to companies like Time Warner and while the new Netflix/Disney deal may turn out great for both parties, arguing that it's a good idea because you wouldn't want to be too U.S.-centric probably tells us less about the stock and more about the quality of the analysis.

More (Reluctantly Reported) Motley Foolishness

I was going to let the Motley Fool thread drop. They kept coming out with analyses and advice that I was tempted to comment on but I was afraid the comments would start to sound the same.

Recently, though, I saw a headline I couldn't resist clicking on. As a result, I found a whole new reason to worry about people basing investment decisions on MF recommendations. [still more have showed up since I wrote this. I'm afraid we have another thread coming.]

Just to review, when ABC announced  S.H.I.E.L.D., expectations were high. The Avengers had been one of the most successful movies ever and, based on the box office of the first semi-sequel, Iron Man 3, interest was showing no sign of fading. Nowhere were these expectations higher than at Motley Fool which came out with a list of reasons why  S.H.I.E.L.D might actually turn out to be bigger for Disney than the Avengers had been.

I pointed out at the time that this would have required a huge, historic hit and that none of the reasons listed in the MF post came close to supporting the claim.

Time passed and ratings rolled in.  S.H.I.E.L.D had very respectable ratings, but they fell somewhat short of expectations. More worrisome has been the trend: ratings have been slowly but steadily dropping since the debut.

Now Steve Symington, the MF contributor who provided the previously mentioned post, has posted a response to the news and it unintentionally captures a lot of what bothers me about Motley Fool, starting with the title:

"Skeptics keep panning Marvel's 'Agents of S.H.I.E.L.D.' for its seemingly lackluster overall ratings, but here are several reasons Disney couldn't be happier."

First of all, to get the obvious out of the way, Disney could and would be a lot happier with better numbers. For this show to live up to anywhere near its potential as a tentpole, It would half to be both a bigger and a demographically broader hit and it would need to generate lots of real time view.  There is no real tentpole effect for viewers watching on Hulu and delayed viewing greatly undercuts social media buzz on places like Twitter which thrives on the shared experience of simultaneous viewing.

None of this is disastrous. The numbers for the show are certainly not bad. On top of that, keeping the show around helps strengthen the relationship with Joss Whedon who has proven to be a very valuable asset to the franchise. Still, there's no way to get around the fact that, while there are bright spots, there is no major area where the show is exceeding expectations and there are a number of areas where it is falling significantly short.

Put another way, one of Disney's assets turned out to be worth less than was anticipated. There are various ways for investment councilors to handle situations where predictions prove directionally wrong. They can reassess their advice. They can argue that the adjustment is fairly small relative to the size of the company (difficult once you're on record as saying the asset could be bigger than the Avengers, but certainly valid in this case). What you never want to see is a councilor looking for reasons to justify previous positions. This is a natural response to cognitive dissonance but it's deadly for stock pickers.

The MF piece is filled with attempts at self-reassurance. Bright spots are trotted out without addressing the possibility that the market had already priced in anticipated numbers that were as good and usually better than what we've seen. Desperately upbeat language is used ("incredible staying power," "run up the score") while a negative but accurate statement like "continue to fall" prompts scare quotes.

Perhaps the most telling though, is what's not in the post. If you take a look at this post from TV by the Numbers after reading the Motley Fool piece, you'll notice a couple of interesting points. The arguments and wording are remarkably similar but one phrase that appears in the second post is nowhere to be found in the MF article:

"via press release:"

Weekend blogging -- a few more for my to-see list (Truffaut edition)

As mentioned before, I have a long list of films of films that I should have gotten around to in college. One of these days, I should just go ahead and sign up for Hulu Plus see I can get access to the entire Criterion Collection (probably after I finish up with Netflix). On the other hand, I might actually end up seeing more if I continue catching the free-for-the-__- days selections (that time limit is an excellent motivator)

This week the freebies include a dozen by François Truffaut.

Weekend blogging -- channeling my inner Sherlock nerd

As mentioned before, I'm a big fan of the show Sherlock, for my money the best of the myriad adaptations of the character. That said, I hadn't gone back and rewatched any of the episodes until I went online to find out when we could expect the season and came across this.

The second series concluded with "The Reichenbach Fall". Steve Thompson wrote the episode, which was directed by Toby Haynes, who had previously directed many of Moffat's Doctor Who episodes. First broadcast on 15 January 2012, the episode follows Moriarty's plot to discredit and kill Sherlock Holmes, concluding with Holmes faking his suicide as Watson looked on. It was based upon Conan Doyle's story "The Final Problem", in which Sherlock and Moriarty are presumed to have fallen to their deaths from the Reichenbach Falls in Switzerland. Moffat felt that he and co-creator Gatiss had outdone Conan Doyle in their version of Holmes' fall and Moffat added that, in that much-discussed sequence, there was still "a clue everybody's missed"

The Wikipedia article lead me to this quote from Moffat: "It's not a cheat. We've worked it out. It all makes sense."

I decided to go back and check out the rooftop sequence. I'm pretty sure I spotted the clue he was talking about (hint: it occurs very early in the scene) and I believe I've got the rest of the clues as well. I'm putting them after the break. If you feel like playing along, scroll down but be warned, it's all spoilers and nerdiness from there on.

I always feel a bit guilty, or at least apologetic, about this kind of post. God knows I've made fun of plenty of fanboys in my time. I will, however, offer a couple of defenses for this one case: first, Moffat really is inviting us to go for it; and second, one of the most appealing traits of this generation of British TV writers is the care they take not to abuse our suspension of disbelief. Once we've accepted the premise, they will make sure that everything that follows, no matter how surprising, will be believable in terms of plot and consistent in terms of character.

The first time I watch a Moffat and friends show, I simply go along with the effective drama and comedy. Later, I'll peek behind the curtain and look at the machinery, but when the story's good enough, that just adds to the fun

Common Core and the Law of Large Numbers

Common Core is a big story that needs to be addressed in depth (Valerie Strauss's column is a good place to start), but a lot of the devils are in the details and one of thee peskiest of those devils (call him the Mephistopheles of education reform) is what happens to high-sounding ideas on the way to actual classrooms.

Let's take the proposed standard that all students should understand the law of large numbers. This a wonderful goal, but before we add it to the curriculum, we need to think about the Luskin effect. Donald Luskin is the CIO for the consulting firm Trend Macrolytics. He's also a widely read columnist and commentator on financial matters. He's someone who ought to understand sampling and who thinks he understands it, but he really, really doesn't.

You will occasionally find an algebra teacher who obviously doesn't understand something like factoring trinomials, but that's rare. Finding a high school algebra teacher (or for that matter, a university math professor) who doesn't understand probability theory is not that uncommon and a sufficiently clueless explanation can be worse than letting the topic wait until college.

When I Googled common core "law of large numbers" this was the first non-video that came up:.

By (date), when given (5) problems involving interpreting results from a simulation using The Law of Large Numbers (i.e. (# of times an event happens) / (total # of trials) approaches the theoretical probability for the event as the # of trials grows large), (name) will correctly solve (4 out of 5) problems.

Example: A student rolls a fair, 6-sided die 10 times and gets the following results: 4, 2, 4, 3, 5, 6, 6, 2, 4, 6. How many times do you expect that the student will roll a 1 after 600 rolls?

Answer: P(rolling a 1) = 1/6, (1/6)*600 = 100 times

This is a terrible example though there's some ambiguity about exactly why it's so bad. If they mean 'expected' as in 'expected value' then the answer is technically correct but has nothing to do with the law of large numbers. If they mean 'expected' in the common usage sense, the answer is just wrong.

I checked few of the other links from my Google search. Lots had simulation results (which was a good first step) but I don't think I saw any that truly got the concept, at least not well enough to explain it. Better than this but not that much better.

Concepts like the law of large numbers are not deadwood -- they are important and useful and if you can actually find a way for students to master them you should do it -- but they share a common problem with jetsam like synthetic division. There is always an impetus to add them to a curriculum but little counterbalancing pressure not to waste students' time.

The announcement of a new curriculum is invariably followed by a round of hearty round of self congratulations and talk of "keeping standards high" as if adding a slide to a PowerPoint automatically made students better informed. It doesn't work that way. Adding a topic to the list simply means that students will be exposed to it, not that they will understand or master or retain it.

If we start talking about setting aside significant time to cover probability and statistics accurately and in reasonable depth and put the ideas in proper context, you have my enthusiastic support, but until then maybe we should focus on the understanding, mastery, retention of the stuff that's already in the curriculum.

Yikes

There is a pension show-down as part of the local contract negotiations at Boeing.

Take one aspect of the Boeing showdown, the pensions. For decades Boeing has given its line workers a decent retirement benefit. It pays out about $90 a month for every year worked at the company, so that someone with 30 years of service would get $2,700 a month when they’re done at age 65.

Add Social Security to that and you’ve cobbled together a comfortable but hardly posh old age for sheet-metal workers, riveters and others who build the nation’s planes.

Boeing wants to cancel those pensions and put in much weaker 401(k) plans. There’s little doubt this will happen, sooner or later. Because if it doesn’t, Boeing can use pension-free laborers in South Carolina to do the same work.

It’s a race to the bottom. Or rather, a slog to an era when workers will be more reliant on Social Security than ever.

So what’s most galling is that Boeing’s CEO is out pushing to cut back on the nation’s retirement plan as well.

In recent years Boeing CEO Jim McNerney has headed the Business Roundtable, a lobbying group of top U.S. corporations. Earlier this year that group called for raising the eligibility age for Social Security to 70 years old, as well as crimping back on the benefits (by reducing the index of inflation used to calculate payouts.)

“We are going to need our employees to work longer just to fill the needs that we have in the work force,” said a Roundtable suit, helpfully explaining why all Americans should willingly retire later, for less.

I don't necessarily want to comment on the merits; Megan McArdle does a good job of presenting the pro-contract side and it was pretty well thought out.  So what I find odd in this constellation of issues is that traditional approaches to recruiting workers are being dismissed.  The CEO of a major companies is puzzled about how to incent workers not to retire at 65.  In my strange quadrant of the gamma sector, we have this thing called "wages" which are often linked to "benefits".  It's a strange paradox, but consenting adults gladly take on employment in exchange for the good and services that they can acquire with these "wages".   

Now it is true that wages have to be higher when the decision isn't "work or starve".  But that is probably a feature and not a bug -- we would like older adults who are less capable to have the option to retire.  There are many options for expanding the workforce.  Immigration for example, started now, would have wonderful effects in about twenty years.  There are a lot of young people who arrived as children and have grown up in the United States who might be willing to help bolster the labor reserve, if there really is this kind of epic crisis underway. 

h/t: Eric Loomis (who I initially thought might be making this up)

Just a quick dip of the toe in the water

One of the interesting pieces that is coming out about some of the high performance charter schools suggests that at least some of their success is due to selecting the most promising students.  These posts, from New Jersey and Arizona, is due to selecting students from higher income families (less school lunch eligible kids), less learning disabilities, and expelling problem students.  Clearly any school that engaged in these tactics would do better relative to public schools (who have a mandate to accept these students and an accountable procedure for expulsions). 

I am reminded of parents I know who had their kids "kicked out" of daycare.  The theory was a private daycare can select who will and will not be in their clientele and remove kids who do not "fit in".  And good for them -- that flexibility is a key part of private business and it can be useful to be able to focus on people your model is compatible with. 

But we should realize that this business model flies in the face of the ideas of universal schooling.  I challenge you to look at the chart on African-American male students in Northstar and not worry.  It's nearly a complete attrition over the course of the cohort's lifespan.  It seems incompatible with any strict definition of a 100% graduation rate, unless all of these children went on to transfer to and graduate from public schools.  If we value universal education as a public good and an underpinning of American prosperity then maybe we need an approach that is actually designed to do this? 

I will also note that it is a key principle of outcomes analysis that you need to look at what happens to the study drop-outs when evaluating an intervention.  After all, all of the adverse events on a drug could happen in the post-drug quitting phase.  This is not evidence of safety.  Nor is sending children who are struggling to public schools evidence that you are able to meet these children's educational needs. 

I would be shocked if Mark Palko didn't have a much more detailed analysis to follow this up. 

Distracted Driving

A classic case of a serious externality:

According to a new study published in Public Health Reports, the rate of distracted driving-related fatalities per 10 billion vehicle miles traveled went up from 116.1 in 2005 to 168.6 in 2010 for pedestrians and from 18.7 in 2005 to 24.6 in 2010 among bicyclists. However, distracted driving-related deaths among motorists decreased over the same time period — a trend that study authors said mirrored overall motor vehicle fatalities and may be attributed to safer vehicles. Unfortunately, cyclists and pedestrians don’t have such protection on the road. In fact, distracted drivers were 1.6 times as likely as nondistracted drivers to mortally hit a pedestrian at marked crosswalks and about three times as likely to hit a pedestrian while on a road shoulder.

Much as I am terrified by the movements of pedestrians, I do think that this statistic makes it clear that distracted driving leads problems.  Even hands free devices have had mixed success with making drivers safer while talking.

It seems a classic case where regulation would be useful.  Maybe cell phones should stop working in a moving vehicle? 

What do these two things have in common?

Standard and Poor's defense against misleading ratings:

S&P said in its request to dismiss the case that the government can’t base its fraud claims on S&P’s assertions that its ratings were independent, objective and free of conflicts of interest because U.S. courts have found that such vague and generalized statements are the kind of “puffery” that a reasonable investor wouldn’t rely on.

So lying about the results of your financial analysis (for profit) and misleading people who rely on information is okay?  Do these people not know that accurate information is an absolute requirement for markets to work and that ends up being a classic principal agent problem? 

And then consider this case:

It was also the beginning of the end.  The Journal at first identified her as just an analyst for the Institute for the Study of War. In other op-eds, O‘Bagy herself had disclosed the dual association, but for the Journal, at the insistence of Kim Kagan, the Institute’s head, she says, she did not. Kagan disputes this account. Critics were quick to point out the Journal’s omission of O’Bagy’s task force work, charging that she was lobbying the same politicians she was meant to be briefing. O’Bagy and the task force both say she was never involved in the group’s lobbying activities. But that first opening led others to look more closely. Within days, it was revealed that Dr. O’Bagy didn’t have a PhD.

I think that these are both parts of the objectivist ideals that have penetrated American society.  It has replaced ideas like "it's not whether you win or lose but how you play the game" with an ideal of winning as being a sign of moral worth. 

Objectivism definitely has a "do what you want element".  Consider:

Why do they always teach us that it's easy and evil to do what we want and that we need discipline to restrain ourselves? It's the hardest thing in the world--to do what we want. And it takes the greatest kind of courage. I mean, what we really want.

It is not that there is no value in this approach, but one can easily imagine how this can lead to people running roughshod over others in the climb up the slippery pole of success.  I think that this is worth giving a lot of consideration to. 

What is the role of truth, self-discipline, and good conduct in the modern world? 

Weekend blogging -- checking a couple off the list

If there's a film lover's equivalent to David Lodge's literary parlor game humiliation (where you list the most famous/important books you haven't read), I'd be one hell of a competitor. This weekend, though, I plan to knock off a couple of longstanding items from my to-see list.



If you want to catch this first one, hurry. Free viewing expires in a couple of days.




I also need to see Diabolique as background for a post I plan to do one of these days on the odd critical rise of Vertigo, but more on that later.

There is a long history of this type of bad judgement in literature

It dates back to Ivanhoe, who clearly picked the wrong girl -- the less interesting and compatible partner.  It looks like the Marvel version of Thor has the same problem.  Curiously, the mythical Thor actually picked Sif so maybe he will change his mind eventually?

Twitter's 140 -- the fast and the freshest

In response to my previous piece about Twitter, Joseph suggested that the 140 character limit forces writers to terse. I'm not so sure. I think the more common response has been a tendency toward annoying abbreviations, elliptical writing, and small subjects.

This did, however, get me thinking about the possibility of other reasons for the character limit, and I was forced to admit there are a few.

For starters, there's speed. The short length encourages writers to wrap up their thoughts and get them out the door. I am sure there are those out there who labor over each tweet as if composing a haiku, but for most of us very little time elapses between when a thought hits and when the tweet button is hit.

That speed leads to a number of other traits which are desirable for the platform. It more or less guarantees a healthy flow of traffic. You can find a rapidly flowing stream of tweets on almost any subject imaginable.

Compared with blogs, the brevity of tweets can make exchanges feel more like conversations than debates. This gives Twitter a distinct and inviting feel.

Perhaps most importantly, that speed also allows Twitter to be the most up-to-date of news media. When it comes to getting detailed, real time information during a big, complicated crisis, Twitter is exceptionally good, in large part because the users are constrained to produce short, fast bursts of information.

I still think that the Harrison Bergeron effect – setting up an artificially equal playing field for mobile and nonmobile users – is the most important aspect in the success of Twitter, But there's certainly more to the story.

Driving versus walking

We are late to this party but consider:

When it comes to energy use and greenhouse gases emitted, appearances can be grossly deceiving. Granted, people who drive everywhere are energy users and polluters. But walkers also use fossil fuels through the food they eat to replace the calories burned while walking. Of course, driving can be more polluting under some circumstances, such as when large SUVs are the preferred vehicles or when drivers insist on doing wheelies at every stoplight. Bicycling the distance can also be less polluting than driving. Dunn-Rankin sums up the central, largely counterintuitive, point of this commentary: "Driving a small [or moderate-size] car and not having to replace burned calories saves more energy (and greenhouse gases) than walking when the extra calories expended are replaced."

Tim Stuhldreher jumps on the biggest issues:

First, if you’re going to look at the entire food chain to determine the energy cost of human walking, it’s only fair to do the same thing for the car. That means you have to factor in the energy costs of producing it. It’s not clear how much that adds, but it’s significant: Estimates range from 10 percent to 100 percent and everywhere in between. I’m not going to speculate on the exact number, but if it’s 50 percent to 100 percent, then we’ve just put walking right back on par with driving, mile for mile.
 

Second, Dunn-Rankin’s result depends on the use of a high-mpg car, around 40 miles per gallon. If you drive a pickup truck or an SUV, your mileage is worse, and you have to adjust the figures accordingly.

 Third, doing this calculation on a per-mile basis ignores the obvious and important point that people typically drive much farther than they walk. No one buys a car to go half a mile here, a quarter-mile there. Moreover, land use patterns change as cars become more prevalent in society – you get less density and more suburban sprawl. To see the real impact of driving vs. walking, you have to take that into account.

I think the last point is the most salient.  The argument also has other issues -- like if we used bicycles instead of cars for the commute then the bikes would be a lot safer and people would be a lot more physically fit.  It may be implausible to walk twenty miles to work but I have met people who actually do it by bike.  Heck, it is also possible that people would lose weight, become more efficient as a result, and actually generate less emissions themselves. 

Furthermore, this assumes that the same fossil fuel use would remain in agriculture while being removed from personal use.  And that more efficient ways of agricultural transport could not be found (or that we couldn't alter our diet by season).  

It's a point mostly of interest to see how far people will accept the counter-intuitive as true, just because it is so at odds with conventional wisdom.  Sometimes the conventional wisdom exists for a reason. 

Service Contracts

From the local Mad Biologist:

Yes, there are people who will give away their information at the drop of a hat for a ten percent-off coupon. But many of us have no choice in the matter. When you sign the terms of agreement for an internet provider, credit card company, or many other businesses, you are offered a take-it-or-leave-it contract. No negotiation is possible. And these contracts are often for nearly-essential services. Sure, you don’t need a credit card, an internet connection, or an email account, but it’s hard to function in 21st century America without these things.

These are often de facto monopolies (e.g., cable companies), or else you are offered a very limited number of options that really don’t differ that much (e.g., wireless providers). In a common law sense (and the last thirty years of neoliberal and conservative jurisprudence have essentially annihilated the notion of common law), a contract that you can’t negotiate for a service you basically can’t do without isn’t really a contract, it’s extortion. Worse, this unequal (one might use the word servile) relationship is often sanctioned by the government.

 This is a bit strident, but basically correct.  Boilerplate contract that cannot be easily negotiated in individual cases is a nice legal defense but rather misses the point of agreements.  The imbalance in market power is really the problem and the services have become increasingly essential.  Try not having a credit card, a bank account, telephone, or internet access.  People due survive in these circumstances, but the level of cost to avoiding these contracts is high. 

Now when the contract is reasonable that is one thing.  But isn't the idea of a universal reasonable standard of interaction seen elsewhere?  Or was I dreaming during the "government regulations" phase of my education?