from the SEC:
https://www.sec.gov/Archives/edgadata/1801170/000119312521029637/d66346dex991.htm
click for all the tables/images.
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EX-99.1 2 d66346dex991.htm EX-99.1
Exhibit 99.1
In Response to Short Seller Firm’s Questions
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Andrew Still-Baxter 18 min read
From:
Vivek Garipalli, CEO and Andrew Toy, President of Clover Health
Clover’s mission is to improve every life. We do that by scaling the Clover Assistant platform across physicians to drive a meaningful positive clinical impact towards as wide a percentage of our membership as possible. We align our incentives for the Clover Assistant by embedding our software platform inside of the business of our Medicare Advantage plan. As we improve outcomes, and lower costs, Clover can pass those savings on to consumers, improving the attractiveness of our plans and spurring rapid growth. We ultimately seek to transform healthcare for each and every one of us.
Clover welcomes questions about our business, as it gives us the opportunity to share our vision and to address any skepticism, whether founded or unfounded. As you will see from our detailed,
point-by-point response to the short seller firm’s questions, the alleged “report” is rife with ad-hominem attacks, sweeping inaccuracies and gross mischaracterizations. Importantly, the short seller firm did not contact Clover, and we had no knowledge of the short seller report prior to it being made publicly available. In our view, it belies a desperate attempt for publicity while sacrificing any regard for the truth.
In addition, we would note that the report’s title specifically calls out the involvement of “The King of SPACs,” Chamath Palihapitiya, and accuses him of a dearth of diligence. This, as we will show, is completely untrue, and we suspect this was done in order to sensationalize what is otherwise a rather underwhelming piece of research. Given the market’s latest views on short sellers, we believe that Hindenburg, which takes pains to call out their altruism in saying that they are not short on CLOV stock, is foolheartedly seeking to redeem itself by posturing as a white knight of the financial markets.
We’ve put together this response as rapidly as possible. We hope you will find it extremely informative.
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1. Did Chamath and/or Clover know about the ongoing DOJ investigation? If so, why was it concealed from investors?

Chamath and Clover were fully aware of the DOJ inquiry.
To be clear, Clover does not believe it is, or has been, in violation of any rules or regulations related to the inquiry.
We went through both an IPO and de-SPAC due diligence process, and this subject received extensive focus and attention. Consistent with the views of Clover’s outside counsel, Social Capital’s outside counsel, and independently retained outside counsel of third parties, including IPO underwriters’ counsel, we concluded that the fact of DOJ’s request for information was not material and was not required to be specifically disclosed in our SEC filings.
How could a DOJ inquiry not be considered material information? As heavily regulated organizations participating in Medicare Advantage, Clover and its peers receive frequent requests for information from regulatory bodies. These are typically confidential. We promptly respond to these requests as and when they come in. As the short selling firm points out, the DOJ also often reaches out to ex-employees, including by civil investigative demands, as part of their information-gathering process.
For absolute clarity:
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Clover Health believes it has made all appropriate disclosures, which were reviewed and vetted by outside counsel to all parties.
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Clover has not received any civil investigative demands or subpoenas from the Department of Justice.
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Clover has received a request for information from the Justice Department, to which, as we do with all requests from regulatory bodies, we responded. This was on a voluntary basis.
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Clover has conducted a detailed review of matters potentially addressed by the DOJ request for information and has concluded that it is in compliance with all laws and regulations material to its business.
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Up until the publishing of the short selling report yesterday morning, Clover was unaware of any other ongoing investigations of the Company, its officers, or any companies with which they are affiliated.
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Following the report yesterday, Clover received notice of an investigation from the SEC. We believe this inquiry is based on the short selling report issued yesterday morning.

1. Is Clover aware of any other regulatory investigations into the company or Vivek Garipalli and his related companies? If so, what are the details?

Clover is unaware of any other ongoing regulatory investigations, except, as noted above, following the short selling firm’s report yesterday morning, Clover received an inquiry from the SEC. We believe this request is based on the short selling report issued yesterday morning.

1. Has Clover received any subpoenas or civil investigative demands from regulators? If so, how many and from which regulators?

No. Clover has not received any civil investigative demands or subpoenas from the Department of Justice. Clover has received a request for information from the Justice Department, to which, as we do with all requests from regulatory bodies, we responded on a voluntary basis.

1. Why does Clover’s subsidiary, “Seek Insurance” operate a website called “SeekMedicare.com” claiming to offer “independent” and “unbiased” advice on selecting Medicare plans without disclosing that it is owned by a Medicare plan provider, representing a blatant conflict of interest?

Seek Medicare is a startup that was incubated and set up as a separate company from Clover — it has its own management team, outside investor (a nationally-recognized public company), board and employees. Clover and the outside investor share in governance of Seek at the board level, including decisions such as the nomination of the CEO. Clover has the right to appoint a Board Member (currently Andrew Toy, Clover’s President & CTO), the outside investor has a right to appoint a Board Member (currently an employee of the outside investor), and the third Board Member, the CEO, must be mutually agreed upon. In addition, this investor has a unilateral contractual option to convert its investment into 50% equity ownership of Seek.
It’s not unusual for payors to create or have stakes in FMOs. What makes Seek different is its fundamental belief that Medicare consumers are simply not well-informed and that hurts their ability to get affordable, great healthcare. Seek is purpose-built to deliver against that problem. In order to make sure it could effectively pursue its goals, Seek was set up as a separate company, and it has raised nearly all of its capital from the outside investor.
At Clover, we obviously want everyone to pick a Clover plan, but we want to earn that business by providing great and affordable healthcare coverage. The most important thing is that Medicare eligibles end up in the right plan for them.
One final note here: Seek is a brand new startup, and its website is still in version 1.0. Please take a look back next week when its planned version 2.0 comes out.

1. Clover’s subsidiary, Seek Insurance, claims on its website “We don’t work for insurance companies. We work for you” despite literally being owned by Clover, an insurance company. What is your response?

While Seek is an affiliate, as we said, it operates separately from Clover, with its own financing and its own goals, which are to provide neutral, objective advice to Medicare eligibles and to empower, educate and assist them. Seek offers Clover plans but, more importantly, Seek also offers many more coverage options. In fact, in every market in which Seek operates, Seek endeavors to offer at least 80% of available plans in that market.
Even though Seek began very recently, it was able to stand up its agency in the most recent AEP and also launched a pilot in ~100 retail locations in six states, with a focus on markets in Georgia, New Jersey and Texas.
If you want to see the objectivity of Seek, we think the results of Seek’s initial sales period speak for themselves:
Percent of Seek sales, by insurance plan, in the most recent AEP:
1.
Cigna: 20%
2.
Humana: 20%
3.
CVS/Aetna: 17%
4.
Clover: 13.5%
5.
UnitedHealth Group: 11.3%
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WellCare: 8.5%
7.
Horizon: 5.7%
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Other (unrelated to Clover): 4.0%
In terms of scale, applications from Seek totaled less than 1% of the total applications Clover received in the most recent AEP.

1. How much has Clover paid B&H Assurance, the undisclosed outside brokerage firm run by Hiram Bermudez (its Head of Sales) since inception?

Clover has paid approximately $160k directly to B&H since 2017.
Hiram has disclosed the following in connection with his B&H relationship:
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He does not receive any compensation, direct or indirect, from B&H Assurance for any work related to Clover.
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He maintains a 50% ownership interest in B&H Assurance, which he has owned since before he joined Clover.
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Hiram’s only work on behalf of B&H Assurance is monitoring compliance and negotiating contracts, from time to time, with parties that do not include Clover.
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He maintains an ownership interest in B&H Assurance so that, in case he separates from Clover, he has the option to go back to the brokerage agency he co-founded and not have to start over.
As a general matter, Clover engages with brokers in each of its markets in order to distribute its plans. This is standard operating procedure in the Medicare Advantage space. Broker payments are statutorily defined by state insurance regulators, broker scripts are actively monitored by both internal compliance and CMS — including via “secret shopper” and other methods — and we take our obligations to CMS, our members and potential members very seriously. We believe our marketing materials and the brokers that represent us accurately reflect and portray our plans to our members and potential members and do so with transparency and integrity.

1. What portion of Clover’s business has been referred by B&H Assurance since inception? How many members?

Approximately 8,200 of our current members were referred by B&H Assurance to Clover.
While B&H has been a strong producer, we strongly disagree with the statement that B&H alone has “fueled” Clover’s growth. We believe that all Medicare Advantage plans have key producer relationships, and to say those relationships somehow illegitimately fuel growth is a misnomer.
We believe Clover plans are appealing because they are often amongst the lowest cost plans in our established markets, and they offer the same cost-sharing for in-network and out-of-network primary care and specialist visits. As we expand across the country, we intend to establish relationships with additional brokers and key producers.

1. Former employees told us that the relationship between Clover and B&H Assurance was transferred into the name of Hiram Bermudez’s wife “for compliance purposes”. NAIC filings confirm it was transferred into his wife’s (maiden) name weeks after the go-public announcement. What is the explanation for this?

The statement underlying this question is false and misleading. The reason that B&H Assurance’s appointment list does not include Clover is that B&H has what is referred to as a “downline” relationship with Ritter Insurance Marketing, which contracts directly with Clover (note that it appears B&H does contract directly with a number of other plans based on the cited NAIC record page). Rather than a nefarious circumstance, this is also a standard construct in the Medicare Advantage world.
Further, the statements interpreting Yesenia Rivera (Bermudez)’s NAIC profile are incorrect in their conclusions: (1) there was no transfer of any relationship between Clover and B&H Assurance from Hiram to his wife; (2) the NAIC filing simply shows that on August 14, 2020, Mrs. Bermudez was directly appointed by Clover Health to be able to sell Clover plans as an agent.
For context, Hiram underwent a major organ transplant surgery at the end of last summer due to chronic kidney disease. He, thankfully, is doing very well healthwise after the surgery. Hiram informed us that he and his wife made a decision for her to go through broker certification so that, if his condition deteriorated further, she would be able to take over his 50% ownership in B&H.
No one should ever feel compelled to share this type of personal and private health information publicly, but we deeply respect Hiram’s desire to disclose this to make clear he had no malicious intent. Hiram is highly mission-oriented and an amazing teammate at Clover, and pathetic attempts to slander him are shameful.

1. Will Clover produce the agreement showing the transfer of the relationship into Hiram Bermudez’s wife’s name? Who signed off on the agreement and which senior members of management knew about the deal?

See previous response.

1. Is Clover aware that disclosure of significant transactions with key senior employees is something investors like to know about, so they can be made aware of potential material conflicts of interest?

Consistent with applicable laws and regulations, Clover has conflict of interest policies requiring employees to disclose any existing or potential conflicts of interest. Clover follows SEC rules and regulations regarding the public disclosure of these relationships.

1. Was Chamath aware that the DOJ was looking into issues of potential upcoding when he mentioned, unprompted, on CNBC “they don’t motivate doctors to upcode or do all kinds of things in order to get paid”?

We agree (as does Chamath) that upcoding is a significant problem in the Medicare Advantage industry, and Chamath was fully aware that we have built the Clover Assistant to address the problems in the approaches used by other insurers.
To be clear, Chamath’s statement that “we do not motivate doctors to upcode or do all kinds of things to get paid” is accurate:
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We pay Clover Assistant Primary Care physicians a fixed, flat payment per office visit.
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Unlike other plans, we never compensate more for agreeing with the Clover Assistant. We never pay less for disagreeing with the Clover Assistant. This payment is fixed and guaranteed, and physicians use their own judgment on what they believe is clinically correct in relation to their direct understanding of the patient.
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Put another way, a clinician could choose to disagree with every suggestion, which means there are no additional diagnoses and no additional risk adjustment codes, and they still get paid the exact same amount as if they did agree. There is NO financial motivation that we provide to physicians to answer in any particular way.
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This is why we specifically do not believe in capitation contracts the same way that others do. These contracts often share risk adjustment back to physicians — i.e., an indirect way to reward them for coding more. Clover does not support those types of strategies.
To be clear, the focus of the Clover Assistant is driving clinical value. Because of its important role in early and improved detection of disease burden, accurate risk adjustment is one of the byproducts of clinical engagement with the Clover Assistant. Notably, however, much of the content in the Clover Assistant has absolutely nothing to do with risk adjustment. More than 50% of the clinical data we capture through Clover Assistant visits has no risk score impact whatsoever.
Here are just a few examples of the Clover Assistant driving clinical value:
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Colorectal Cancer Screening
Medication Therapy Management:
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For Chronic Kidney Disease
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For Statins
Addressing risk:
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Fall Risk
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Mortality Risk
Covid — 19 Response
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Mail Order and Home Drug Delivery

1. Clover reported that “onboarded” physicians used Clover Assistant for 92% of member visits in 2019, but never defined “onboarded”. We found that less than half of Clover’s in-network doctors are considered “Clover Preferred”. What is the definition of an “onboarded” physician? What percentage of Clover’s in-network doctors actually use the Clover Assistant?

This is a good question. Similar to enterprise software, there are two phases of bringing on physicians to Clover Assistant:
Contracting: Where we explain the benefits of Clover Assistant to the physicians and they have agreed to use the software.
Onboarding: Where the physicians have received their initial training and have created their accounts, and we have answered their questions. Basically, they’re ready to use the software. We also refer to the physicians as the “Live” physicians.
We use the Onboarded/Live number (as opposed to Contracted) when discussing engagement because that correlates to the physicians that are trained and ready to use the Clover Assistant. We typically have a pipeline of Contracted physicians waiting to be onboarded at any given time, and our goal is to go from Contracted to Live within 60 days.
Speaking to the second question, currently 22% of all in-network Primary Care Physicians are Live. This correlates to 4% of the total in-network physicians (including PCPs, specialists, etc.), but the Clover Assistant is currently built as a tool for PCPs, so we believe 22% is a more useful number.
That said, we don’t view either of those figures to be particularly relevant to the scalability and impact potential of the Clover Assistant. Instead, we focus on membership coverage. More specifically, as of YE 2020, 56% of our membership were attributed to one of those 22% Live PCPs. An additional 11% are attributed to a PCP who is contracted but in the onboarding pipeline (bringing us to 67% total coverage for Clover Assistant as of YE 2020).
This is because as we bring on physicians, we focus on contracting and onboarding those with more Clover members first, so a disproportionate number of our members are attributed to Clover Assistant-Live PCPs. As we continue to deploy the Clover Assistant, we intend to bring on the remainder of these physicians and we expect to see these numbers converge more. Right now we’re very proud of that 67% coverage number of all Clover members as of year-end 2020.

1. If Clover’s software is so “delightful” to use, why does Clover have to pay doctors extra ($200 per visit) just to use it?

We think this is a big part of the innovation model of Clover and why it’s so important that we build this tool internally as a payor.
The Clover Assistant is a SaaS-type enterprise clinical decision tool, but rather than charge physicians to use it (like regular software startups), we instead reimburse PCPs to encourage them to use it and to recognize the incredibly important role PCPs play in assessing and taking care of our members and controlling costs. PCPs receive less than 5% of total medical expenses in the US, and we believe that to solve the ballooning health care expenses in our country, we need to shift more of our focus, resources, and compensation to primary care doctors.
To be clear, the “extra $200 per visit” is not incremental or “just to use” the Clover Assistant, but represents the overall payment that covers both the PCP office visit and the use of the Clover Assistant. This translates to roughly twice the traditional Medicare fees paid to PCPs for an office visit, more in line with fees paid to specialists.
Most critically, this is a flat fee. We don’t pay them more to agree with us, or less when they disagree. A lot of programs effectively do this, and that creates moral hazards like upcoding or trying to skimp on care. We pay the flat fee because we want to reward PCPs for great data-driven primary care without creating those moral hazards and bad incentives.
Speaking to the delight point — we measure this in an objective, standard way in the form of Net Promoter Score surveys. We run these surveys within Clover Assistant for all Clover Assistant users on a quarterly basis to see how we’re doing in terms of user satisfaction and delight. We’ve traditionally received a score between 55–63 which we think is excellent — particularly for healthcare.
Here’s a screenshot of our NPS survey:
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Clover Assistant NPS Survey
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Our most recent NPS results from the end of last year.
As you can see, most of our Clover Assistant survey respondents give us very high ratings. There are a few “middle” scores, and there are, of course, some detractors who give us low scores. When we receive detractor feedback, we strive to send our Product and User Research teams to interview these users to find out how we can do better. We’re not perfect, but our fast iteration rate (releasing a new Clover Assistant version on average every 3–4 weeks) helps us continuously improve our platform.

1. Multiple doctors explained that it was difficult to remove prior diagnoses from the Clover Assistant. Is Clover aware of this? And can Clover guarantee that in future versions of the software doctors will be able to remove prior diagnoses, so as to ensure accuracy and cost efficiency?

For clarity, every diagnosis that appears in the Clover Assistant is for physician consideration, and they can choose to tell us they don’t think that diagnosis is currently relevant. Here’s a screenshot of how it’s shown.
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Every suggestion made is based upon clinical data that we have at Clover and personalized for each specific patient. Then the physician can tell us whether they can confirm the diagnosis. If they cannot confirm, they can easily select that option (shown above), and we ask them to share the reason why so we can update our internal data.
Note that when a physician tells us a diagnosis is not currently relevant, we do not show that diagnosis again that calendar year unless there is a new reason to believe that the diagnosis applies (e.g., new clinical data).
We may also resurface a diagnosis the following calendar year for reconfirmation. There’s a reason for this: many chronic diagnoses may come and go in terms of their diagnosis state. For example, diabetes may resolve (removing the diagnosis) if a patient loses weight, but if the patient puts the weight back on, diabetes will come back. Or, active cancer may go into remission, then unfortunately return. As such, it’s clinically appropriate to track these previous diagnoses.
Bonus Question: Is Clover Assistant actually helpful to physicians in providing better care above and beyond their EHR?”
This wasn’t actually in the list of questions addressed to us but was implicit in the short-selling firm’s commentary, so we wanted to hit this on the head, too.
We are incredibly proud of the ways, in only a few short years, we have been able to build the Clover Assistant platform in order to support PCPs in providing better care for our members. The Clover Assistant is not attempting to be an EHR; rather, we are focused on building a product that is supplemental to the EHR and driven by physician feedback.
We’ve supported the rapid transition to remote visits during the outbreak of COVID-19 this past spring, we’ve supported members getting their medications delivered to them when they couldn’t leave their home, and we’ve gotten clinical information otherwise not available to PCPs into the hands of those most equipped to utilize that information.
We also surface evidence-based protocols specific to a member’s disease profile. To be clear, we do this in order to help our members receive the right medications, access the right testing, and achieve better outcomes. By doing so, we pay more money now in order to decrease costs and patient suffering down the line.
If you take a look at our most recent investor presentation, you can easily see a view of that functionality on page 10. On page 19 of the same deck, you can also see a view of the Clover Assistant’s impact outside of accurate diagnosis capture.
We are just starting this journey, and know that, like with any software, there are plenty of opportunities for fine tuning and further improvement. But we are motivated by those challenges and solicit that feedback from the healthcare community and our in-network physicians regularly.
— The Clover Product, Clinical, and Engineering Leads

1. A former employee explained that Clover handed out gift cards to doctors and nurses to generate patient leads, a practice prohibited by CMS. These gift cards were justified as being for everything but recruitment, including “morale,” a “thank you,” “motivation,” and “friendship.” How do you respond?

Clover does not provide gift cards to doctors and nurses to generate patient leads.
Clover prides itself on a strong culture of compliance. If we were to discover any violation of CMS regulations or any applicable law or regulation, our compliance department would take decisive and strong corrective action.

1. Does CEO Vivek Garipalli deny that his CarePoint hospitals at one point charged the highest emergency room prices in the entire nation?

It is important to note that CarePoint is a separate and independent business entity, with different management teams, investor structures, and boards of directors. We do not comment on its operations. We also do not respond to ad hominem attacks against our officers.

1. Why did CEO Vivek Garipalli make a secret $1 million donation to the Mayor of Jersey City?

The aforementioned contribution to a PAC has been reported in the media. Like any private citizen, Vivek makes contributions. As our first market, New Jersey is near and dear to us, and Vivek believes the Mayor of Jersey City has done a commendable job of attracting businesses and developing affordable housing policies.
Vivek also donates to other causes in New Jersey and elsewhere — such as a $1MM contribution to the Goodwill Rescue Mission homeless shelter in Newark, NJ.

1. Why has Clover had such extensive executive turnover, with 3 CFOs, 3 COOs, and 2 General Counsels in the last 4 years?

Clover has evolved significantly over the past four years, and we needed different people with different skill sets at each stage of our journey. We are grateful for the contributions of every one of our employees, past and present, and are proud of our current management team. As is evident from our team’s background, they bring extensive experience across their areas of expertise. We believe we should always be looking to bring on more and more talented and mission-oriented individuals as we evolve and grow.
In particular, we are grateful to our co-founder Kris Gale for his work as the original Clover CTO to build the fundamentals of the Clover data platform. When Andrew Toy, our current President and CTO, came on board, one of the first things he did was focus on the creation of a way to turn data into improved care by physicians. The result of that was the Clover Assistant.

The field of healthcare economics was born with Kenneth Arrow's seminal paper, Uncertainty and Welfare Economics of Medical Care. In his paper, he finds that healthcare markets behave rather differently than that of other sectors, and theorized that free markets may not be the best answer to the healthcare problem. The purpose of this post is to further review the literature surrounding the economics of healthcare markets and summarize the merits of some common health policy.
Note: This post is not a critique of the American healthcare system. I understand that American healthcare is not a free market, but I'm not criticizing the American system. I'm highlighting the problems with the healthcare markets themselves.
Now before we get into the market failures that plague healthcare markets, it is first and foremost important to understand what a market failure is. A market failure occurs when there is an inefficient distribution of goods and services in the free market. In other words, it occurs when individuals acting in rational self-interest produce a less than optimal or economically inefficient outcome for the group. If you don't fully understand what a market failure is, I suggest you read through the article before you continue reading.

Part 1: Competition for Healthcare Services.

Or more specifically, the lack thereof. There is significant evidence that people don't shop around in healthcare, including those who are uninsured, so the mechanism of competition in healthcare is far weaker. This is largely due to an information asymmetry between patients and doctors. When you get sick, you may not know what the best treatment is. You rely on the advice of a physician, who has years of specialized training. And even with hindsight, you cannot reliably judge for yourself whether the treatment the physician offered you was the right one. Sometimes state-of-the-art medicine fails to improve a patient’s health. And given the natural restorative power of the human body, the wrong treatment can sometimes appear to work.
The fact that people don’t shop is especially obvious for emergency care, since a person cannot be expected to price shop in the throes of death, but it remains the case for non-emergency services as well. A study that looks at the rates at which people shop around for MRIs found that people typically get their M.R.I.s wherever their doctors advise. In fact, on the way to their M.R.I., patients drove by an average of six other places where the procedure could have been done more cheaply. Read this article for a more in-depth explanation of the study.
This leads me to my next point, regarding price transparency. It seems intuitive that ensuring that all prices are available would make it easier to shop, so more people would do so. After all, people can't shop around if they can't even see the prices to begin with! Unfortunately, transparent pricing doesn't seem to help either, largely because most people simply don't use them. This isn't because of any lack of encouragement or enthusiasm either. This study surveyed 2,996 non-elderly Americans and found that despite the vast majority strongly agreeing that shopping around is a great idea, only 13% of them actually sought out price info while only 3% actually compared prices before receiving care. For further reading, I suggest you look into these: [1] & [2].
These results aren't unique to the US either. A study on the effects of transparent pricing in Singapore found that there is no evidence of any marked decrease in prices in the years following the implementation of price transparency legislation. Even more interesting is that this research paper found that healthcare costs in Singapore actually increased when the government loosened regulations, because hospitals bought expensive new technology and focused on premium care while neglecting the lower levels for poorer citizens. This led to the government once again tightening its hold.
A German study looking at hospital selection found that it was physician referrals that had the greatest influence in a patient's choice, and pricing wasn't even in the list of factors. This is consistent with evidence from the US. For further reading on how physician behavior affects healthcare spending, read this: [1], [2], [3], and [4].
Now, will making people more responsible for their spending incentivize them to shop around more often? Well for one, evidence is clear that it does lead to a marked decrease in healthcare spending, but that's mainly because people cut back on spending entirely. Sometimes even for medically necessary services! However, a study looking at evidence from HDHPs found that while consumers do reduce their healthcare expenditure when more responsible for their money, cost-sharing does not seem to decrease prices. This conclusion is supported by further evidence.
All in all, it seems competition for healthcare services is a bit of a lost cause… Leading into the next section: Health insurance markets.

Part 2: Competition in Health Insurance Markets.

Like the market for healthcare services, health insurance is similarly uncompetitive. However, unlike the market for healthcare services, health insurance is not a lost cause and sufficient competition can not only be induced through regulation, but competition even seems to improve quality and cut costs.
In a free market, health insurance will play a much smaller role. Only those who are rich and/or healthy will be able to afford health insurance because insurance companies price premiums for the sick much higher that of the healthy, largely due to the greater risk involved. Unfortunately, since poverty is heavily correlated with bad health, it just so turns out that the poorest people will be paying the highest prices. Prices that they cannot afford. This is hardly ideal, it makes little sense to have a healthcare system that denies access to those who need it the most. Even when insurance companies have to charge the same premiums regardless of risk, they will find that insuring the healthy is far more profitable, and tend to actively reach out to the healthy while holding the sick in reserve. This is what we call “risk selection”. As David Cutler puts it in his books “The Quality Cure” (Seriously recommend reading this book if you’re interested in health econ. It's a great intro.):

This same dynamic explains why people find it hard to identify good insurance plans, even when they are in good health. Insurers do not reach out to people readily, like sellers of other goods. Rather, they wait in reserve, checking whether the person is profitable to insure before offering a policy. Their mentality is: don’t encourage people to sign up for insurance unless you know they are healthy. This makes it difficult to comparison shop.

Now let’s take a look at the evidence. We know people often misunderstand insurance, which leads them to pick suboptimal plans (Like in Medicare Part D). There is even evidence that this behavior is exploited by insurers to raise prices and offer less. For further reading, see here: [1], [2], and [3].
Fixing this is rather straightforward. We can prevent insurance companies from denying health insurance based on pre-existing conditions (or sicker people in general), limit the variance of premiums between healthy and sick, and prevent them from tossing aside the sick when they need the most care. This policy is implemented in many different nations, including the US (with the Affordable Care Act), but this alone isn’t enough to make competition in health insurance viable. The problem with preventing insurance from denying coverage and limiting variability is that while sicker people gain coverage, healthier people forgo it because they no longer see it as a good deal and can insure themselves easily when they do get sick. This leads to the risk pool getting ever sicker leading to increasing premiums until the market collapses as a whole! This is what we call Adverse selection (aka the Death Spiral). David Cutler has a pretty good paper over how Adverse Selection destroyed an insurance market in Massachusetts.
How do we fix this problem? Why yes, the individual mandate of course! The individual mandate ensures even the healthy have insurance, so that the market remains stable. The healthy subsidize some of the sick and benefit from usage of general healthcare services themselves! There is an abundance of evidence that the individual mandate helps by reducing insurance premiums like Effects of Eliminating IM penalty in California, Adverse selection and individual mandate, and many more: [1], [2], and [3].

Part 3: Moral Hazard and the Merits of Cost Sharing.

Moral Hazard is a market failure that occurs when one party in a transaction has the opportunity to assume additional risks that negatively affect the other party. In the case of healthcare, it would be the customer unnecessarily using healthcare services far more frequently (since the insurance company will pay for it), which increases costs for the insurance company, increases wait times due to a larger demand, and overall leads to wastage in healthcare usage. Insurance companies combat this through the use of cost sharing methods such as deductibles, co-pays, co-insurance, etc to ensure that people are responsible and discourage them from overusing healthcare.
I’d already touched on cost-sharing and its effects a little in Part 1, but this section intends to go more in depth into the topic. As I stated before, cost-sharing does lead to customers cutting back on healthcare usage, but sometimes it results in customers cutting back on healthcare that is actually necessary! So it's important to strike a good balance between the two, to minimize wastage and ensure customers get the healthcare they need.
Moral Hazard is a huge problem in most universal healthcare systems, and there is an ongoing debate within these nations regarding what should be done about it. To properly highlight the effects of cost sharing on moral hazard, take a look at this study, which is considered the gold standard for determining the effects of insurance reform on medical spending. I would provide more, but this is really all that's needed.
Note: The lack of cost sharing is actually one of the largest issues with Senator Bernie Sanders’s Medicare for all plan. He claims no co-pays or deductibles as if that’s a good thing, but it just so happens that it could lead to billions in waste every year, while driving up wait times all the same. If we apply the results from the RAND study cited above, it could lead to as much as a 30% increase in spending, which is rather ludicrous.

Part 4: Drugs and Price Controls

One of the most common questions people seem to have regarding healthcare is why price controls are advocated for by many, when they are usually seen as economically damaging elsewhere. Well, the answer to that question is that Price controls in healthcare work because market forces don’t. As I’ve stated before, most people don’t shop around, which gives healthcare providers significant market power to increase prices far beyond the market equilibrium and it doesn’t help that healthcare is both demand inelastic and not substitutable. All the price controls are doing is bringing prices down to the market equilibrium... in theory (some go further, resulting in negative effects like loss of innovation).
It just so happens that price controls and drugs in the United States are intricately linked, because the high prices of drugs are a direct result of Medicare’s abysmal price control policy. Many believe that drug costs are incredibly high in the USA, and they aren’t entirely wrong. However, it should be noted that we pay drug molecule costs that are similar to other advanced economies, such as Germany. So why exactly are the prices so high? As I stated before, it has to do with Medicare.
Currently, the Medicare price control policy is based on a drug’s ingredient cost, which makes absolutely no sense. The wack pricing scheme often leads to increased demand for drugs that happen to be less efficient, leading to higher usage of less efficient drugs, resulting in higher costs and expenditure. That said, this isn’t the only reason why drugs are expensive. Some others include:

• US physicians & consumers have a preference for branded drugs.
• US physicians prefer new drugs over old drugs irrespective of relative efficacy. A new drug that is more expensive than an older drug but has the same efficacy will be used more simply because it's new.
• US physicians writing no-substitution script.
• Medicare rules don't allow for substitution if a brand name is on a script.
• The US doesn't allow insurers (including CMS) to refuse to cover expensive drugs with poor efficacy. There are many drugs that offer little or no clinical advantage but are common anyway, this is particularly rife with end of life care. In other countries this is dealt with by central negotiating authorities who impose efficacy/cost restrictions on new drugs, as a result there are many drugs which are either not available at all outside the US or have heavily restricted use outside of the US.

As you can tell, there is significant room for improvement. There are three key ways in which we can massively reduce drug costs:

1. Switch to an efficacy based price control system (like every other country lol), which would bring down the prices of the best drugs, leading to decreased demand (since people are now using less but better drugs).
2. Streamline FDA approval processes to ensure entry into American markets is easier, remove allow insurers to deny coverage for drugs deemed inefficient, encourage physicians to prescribe generics, etc.
3. Negotiate fair payment rates with other nations to ensure innovation thrives (DIFFICULT!!!)

Part 5: Frequently Asked Questions

Question 1 - What about Surgery Center of Oklahoma and other direct primary care facilities? They seem to have cut costs and the free market appears to be working there!
At first glance, DPC does appear to reduce prices. This study finds that DPCs have lower prices across the nation (although it should be noted that data regarding quality is lacking). This is largely due to the much lower overhead from dropping insurance and because regulations like MACRA and other quality and cost regulations don't apply. And while this is great for smaller items, such as lab work, routine check-ups, minor injuries, etc, it fails when someone actually needs medical treatment and is unable to get it because they either don't have insurance and/or the hospital doesn't participate in the cash model! Emergencies are a whole nother problem, because they aren't covered by most membership fees at all, which can be financially ruinous because surgeries may cost in the tens of thousands of dollars (lower than the cost in a non-DPC, but financially ruinous nonetheless). Therefore, it's actually recommended by some DPCs to buy insurance in addition to the monthly membership fees if you have a major health problem and/or afraid of emergencies, so it may not save very much money at all for those who aren't healthy or committed the heinous crime of having a pre-existing condition (as many as 100 million Americans)!
Lastly, is that the study I cited above, regarding lower costs, may not apply to its fullest extent in a truly free market, because they are a vertically-differentiated site of care that may or may not exist under free market conditions and the DPCs themselves benefit from insurance companies reducing prices through their bargaining power (See: Medicare Part D reduced drug prices by introducing drug coverage), so prices may rise in their absence. There is no guarantee that a free market would work! Even at this point, there is evidence that lack of regulation has actually become a bit of a problem in DPCs because there is evidence that stronger perverse incentives are present, which may further increase costs and wastage in the healthcare system! In addition, this study by the American College of Physicians notes that:

Retainer practices note that they are able to see their patients more often throughout the year. Once again, there is no evidence to suggest that this is always necessary or effective. With all of the “amenities” offered by these practices, it is important to do a cost–benefit analysis to understand the true effect of the “extras” in a practice. At this time, no research or data are available to indicate that many of these amenities in a practice yield better clinical outcomes. It is important to be aware of the potential for overutilization of physician time and medical services.

This shows that the data regarding service quality in DPCs are also very lacking. There is very little evidence to indicate that extra time and additional visits, one of the so-called major benefits of DPCs, actually improve health outcomes. There is rationale to believe that DPCs may also offer lower quality services because they may not participate in quality measurement programs and have no interoperability with other electronic health record systems. The lack of oversight and accountability can lead to certain doctors abusing their power and overload their practices with subscribing patients and compromise on quality of care. Since people don't price shop, competition won't be around to save you either.
Question 2 - But what about LASIK and Cosmetic Surgeries? Aren’t they proof that reducing insurance coverage and increasing competition helps? After all, Competition reduced their prices!
The problem with this claim is that it ignores the elasticity of demand of cosmetic surgery and other healthcare treatments. If someone charges too much for a cosmetic surgery, you can simply refrain from buying the surgeon's service because you don't need it to live. Can't exactly say the same for something like heart or brain surgery because you will die without it, so you will be forced to pay the price, regardless of how high. Healthcare providers take advantage of this to raise prices. It's not just life and death surgeries that are demand inelastic though. This study finds that most healthcare services in general are demand inelastic. This article explains it better.
Additionally, it should also be noted that unlike other healthcare services, people who seek out cosmetic surgery are usually much wealthier and better informed and the quality of the cosmetic surgery is very easy to assess, unlike other health services, all of which make it much easier to shop around. Move away from cosmetic surgery, and you can see the argument fall apart pretty quickly. Take a look at dental procedures for example. Like cosmetic surgery, they aren’t covered as much by insurance, yet dental costs have been rising just as quickly as other health services. For another example, take a look at veterinary care, which is seldom covered by insurance. Vet costs have also been rising rather quickly.
Question 3 - Isn’t there a lot of bad regulation in the USA that hurts healthcare?
The answer is yes, there most certainly is. However, while removing them would help, healthcare markets themselves are fundamentally flawed, and most major problems would persist. Even the ACA has some bad regulations within it that inhibit competition and counteract the effects of the good regulations, although that’s beyond the scope of this post. Next up, take CON Laws for example, I agree 100% that they need to go. There was actually a great post about it over on neoliberal. However, there is evidence that repealing CON Laws may help by introducing new competitors into the market, it is doubtful that they will improve quality without first addressing physician scarcity.
The next most common bad regulation I hear about is how the US prevents insurers from selling across state lines, and that preventing this from happening would result in lower costs due to competition. However, most evidence points to the fact that it would do very little. At most, it would reduce variance in healthcare premiums across the nation, but not the overall cost, so some may benefit, but some will definitely lose. Now to the evidence, the Affordable Care Act allows states to form agreements with each other and five states already allow insurers to sell across state lines. However, no insurer actually takes advantage of this as of now. As this study puts it:

According to many insurance experts, the primary barrier for an insurer looking to enter a new market is not the state’s regulations, it’s the cost of building up a provider network at discounted prices.

The massive cost of negotiating new networks deters insurers from expanding their plans beyond that of their state. Lastly, this study states that regulation is only one of many drivers of high cost of health insurance, so it is clear that the free market will not be able to adequately address the cost.

Part 6: The Neoliberal Solution

To recap, healthcare markets are unique. They are unlike any other markets due to them facing the worst market failures of any insurance industry and much more powerful information asymmetry, resulting in a sector that’s barely better than functional at its very best. However, there are many ways to tame the beast that is healthcare through a combination of various policies built on an abundance of research. From my perspective, the list of most important policies (assuming we want to keep a market-based system) would be in no specific order:

1. Prevent health insurers from denying coverage based on health and limit variability of premiums based on health.
2. Individual Mandate
3. Implement an All-payer System
4. Public option (or something like medicare/caid) in order to remove the sickest and poorest individuals from the private health insurance markets, which significantly reduces premiums.
5. Proper price controls (I may make a separate post on this later)
6. Necessitate a basic level of coverage private insurers must provide, such a cancer screening, etc
7. Any regulations necessary to ensure competitive practices within health insurance markets (competition within insurance leads to better outcomes for lower prices).

Of course, there is a lot more to any healthcare system than the handful of policies I’ve described above, but this should be enough to justify the purposes of this post, which is to be introductory. I hope this information serves you well and keep an eye out for any future posts from me. Peace.

The field of healthcare economics was born with Kenneth Arrow's seminal paper, Uncertainty and Welfare Economics of Medical Care. In his paper, he finds that healthcare markets behave rather differently than that of other sectors, and theorized that free markets may not be the best answer to the healthcare problem. The purpose of this post is to further review the literature surrounding the economics of healthcare markets and summarize the merits of some common health policy.
Note: This post is not a critique of the American healthcare system. I understand that American healthcare is not a free market, but I'm not criticizing the American system. I'm highlighting the problems with the healthcare markets themselves.
Now before we get into the market failures that plague healthcare markets, it is first and foremost important to understand what a market failure is. A market failure occurs when there is an inefficient distribution of goods and services in the free market. In other words, it occurs when individuals acting in rational self-interest produce a less than optimal or economically inefficient outcome for the group. If you don't fully understand what a market failure is, I suggest you read through the article before you continue reading.

Part 1: Competition for Healthcare Services.

Or more specifically, the lack thereof. There is significant evidence that people don't shop around in healthcare, including those who are uninsured, so the mechanism of competition in healthcare is far weaker. This is largely due to an information asymmetry between patients and doctors. When you get sick, you may not know what the best treatment is. You rely on the advice of a physician, who has years of specialized training. And even with hindsight, you cannot reliably judge for yourself whether the treatment the physician offered you was the right one. Sometimes state-of-the-art medicine fails to improve a patient’s health. And given the natural restorative power of the human body, the wrong treatment can sometimes appear to work.
The fact that people don’t shop is especially obvious for emergency care, since a person cannot be expected to price shop in the throes of death, but it remains the case for non-emergency services as well. A study that looks at the rates at which people shop around for MRIs found that people typically get their M.R.I.s wherever their doctors advise. In fact, on the way to their M.R.I., patients drove by an average of six other places where the procedure could have been done more cheaply. Read this article for a more in-depth explanation of the study.
This leads me to my next point, regarding price transparency. It seems intuitive that ensuring that all prices are available would make it easier to shop, so more people would do so. After all, people can't shop around if they can't even see the prices to begin with! Unfortunately, transparent pricing doesn't seem to help either, largely because most people simply don't use them. This isn't because of any lack of encouragement or enthusiasm either. This study surveyed 2,996 non-elderly Americans and found that despite the vast majority strongly agreeing that shopping around is a great idea, only 13% of them actually sought out price info while only 3% actually compared prices before receiving care. For further reading, I suggest you look into these: [1] & [2].
These results aren't unique to the US either. A study on the effects of transparent pricing in Singapore found that there is no evidence of any marked decrease in prices in the years following the implementation of price transparency legislation. Even more interesting is that this research paper found that healthcare costs in Singapore actually increased when the government loosened regulations, because hospitals bought expensive new technology and focused on premium care while neglecting the lower levels for poorer citizens. This led to the government once again tightening its hold.
A German study looking at hospital selection found that it was physician referrals that had the greatest influence in a patient's choice, and pricing wasn't even in the list of factors. This is consistent with evidence from the US. For further reading on how physician behavior affects healthcare spending, read this: [1], [2], [3], and [4].
Now, will making people more responsible for their spending incentivize them to shop around more often? Well for one, evidence is clear that it does lead to a marked decrease in healthcare spending, but that's mainly because people cut back on spending entirely. Sometimes even for medically necessary services! However, a study looking at evidence from HDHPs found that while consumers do reduce their healthcare expenditure when more responsible for their money, cost-sharing does not seem to decrease prices. This conclusion is supported by further evidence.
All in all, it seems competition for healthcare services is a bit of a lost cause… Leading into the next section: Health insurance markets.

Part 2: Competition in Health Insurance Markets.

Like the market for healthcare services, health insurance is similarly uncompetitive. However, unlike the market for healthcare services, health insurance is not a lost cause and sufficient competition can not only be induced through regulation, but competition even seems to improve quality and cut costs.
In a free market, health insurance will play a much smaller role. Only those who are rich and/or healthy will be able to afford health insurance because insurance companies price premiums for the sick much higher that of the healthy, largely due to the greater risk involved. Unfortunately, since poverty is heavily correlated with bad health, it just so turns out that the poorest people will be paying the highest prices. Prices that they cannot afford. This is hardly ideal, it makes little sense to have a healthcare system that denies access to those who need it the most. Even when insurance companies have to charge the same premiums regardless of risk, they will find that insuring the healthy is far more profitable, and tend to actively reach out to the healthy while holding the sick in reserve. This is what we call “risk selection”. As David Cutler puts it in his books “The Quality Cure” (Seriously recommend reading this book if you’re interested in health econ. It's a great intro.):

This same dynamic explains why people find it hard to identify good insurance plans, even when they are in good health. Insurers do not reach out to people readily, like sellers of other goods. Rather, they wait in reserve, checking whether the person is profitable to insure before offering a policy. Their mentality is: don’t encourage people to sign up for insurance unless you know they are healthy. This makes it difficult to comparison shop.

Now let’s take a look at the evidence. We know people often misunderstand insurance, which leads them to pick suboptimal plans (Like in Medicare Part D). There is even evidence that this behavior is exploited by insurers to raise prices and offer less. For further reading, see here: [1], [2], and [3].
Fixing this is rather straightforward. We can prevent insurance companies from denying health insurance based on pre-existing conditions (or sicker people in general), limit the variance of premiums between healthy and sick, and prevent them from tossing aside the sick when they need the most care. This policy is implemented in many different nations, including the US (with the Affordable Care Act), but this alone isn’t enough to make competition in health insurance viable. The problem with preventing insurance from denying coverage and limiting variability is that while sicker people gain coverage, healthier people forgo it because they no longer see it as a good deal and can insure themselves easily when they do get sick. This leads to the risk pool getting ever sicker leading to increasing premiums until the market collapses as a whole! This is what we call Adverse selection (aka the Death Spiral). David Cutler has a pretty good paper over how Adverse Selection destroyed an insurance market in Massachusetts.
How do we fix this problem? Why yes, the individual mandate of course! The individual mandate ensures even the healthy have insurance, so that the market remains stable. The healthy subsidize some of the sick and benefit from usage of general healthcare services themselves! There is an abundance of evidence that the individual mandate helps by reducing insurance premiums like Effects of Eliminating IM penalty in California, Adverse selection and individual mandate, and many more: [1], [2], and [3].

Part 3: Moral Hazard and the Merits of Cost Sharing.

Moral Hazard is a market failure that occurs when one party in a transaction has the opportunity to assume additional risks that negatively affect the other party. In the case of healthcare, it would be the customer unnecessarily using healthcare services far more frequently (since the insurance company will pay for it), which increases costs for the insurance company, increases wait times due to a larger demand, and overall leads to wastage in healthcare usage. Insurance companies combat this through the use of cost sharing methods such as deductibles, co-pays, co-insurance, etc to ensure that people are responsible and discourage them from overusing healthcare.
I’d already touched on cost-sharing and its effects a little in Part 1, but this section intends to go more in depth into the topic. As I stated before, cost-sharing does lead to customers cutting back on healthcare usage, but sometimes it results in customers cutting back on healthcare that is actually necessary! So it's important to strike a good balance between the two, to minimize wastage and ensure customers get the healthcare they need.
Moral Hazard is a huge problem in most universal healthcare systems, and there is an ongoing debate within these nations regarding what should be done about it. To properly highlight the effects of cost sharing on moral hazard, take a look at this study, which is considered the gold standard for determining the effects of insurance reform on medical spending. I would provide more, but this is really all that's needed.
Note: The lack of cost sharing is actually one of the largest issues with Senator Bernie Sanders’s Medicare for all plan. He claims no co-pays or deductibles as if that’s a good thing, but it just so happens that it could lead to billions in waste every year, while driving up wait times all the same. If we apply the results from the RAND study cited above, it could lead to as much as a 30% increase in spending, which is rather ludicrous.

Part 4: Drugs and Price Controls

One of the most common questions people seem to have regarding healthcare is why price controls are advocated for by many, when they are usually seen as economically damaging elsewhere. Well, the answer to that question is that Price controls in healthcare work because market forces don’t. As I’ve stated before, most people don’t shop around, which gives healthcare providers significant market power to increase prices far beyond the market equilibrium and it doesn’t help that healthcare is both demand inelastic and not substitutable. All the price controls are doing is bringing prices down to the market equilibrium... in theory (some go further, resulting in negative effects like loss of innovation).
It just so happens that price controls and drugs in the United States are intricately linked, because the high prices of drugs are a direct result of Medicare’s abysmal price control policy. Many believe that drug costs are incredibly high in the USA, and they aren’t entirely wrong. However, it should be noted that we pay drug molecule costs that are similar to other advanced economies, such as Germany. So why exactly are the prices so high? As I stated before, it has to do with Medicare.
Currently, the Medicare price control policy is based on a drug’s ingredient cost, which makes absolutely no sense. The wack pricing scheme often leads to increased demand for drugs that happen to be less efficient, leading to higher usage of less efficient drugs, resulting in higher costs and expenditure. That said, this isn’t the only reason why drugs are expensive. Some others include:

• US physicians & consumers have a preference for branded drugs.
• US physicians prefer new drugs over old drugs irrespective of relative efficacy. A new drug that is more expensive than an older drug but has the same efficacy will be used more simply because it's new.
• US physicians writing no-substitution script.
• Medicare rules don't allow for substitution if a brand name is on a script.
• The US doesn't allow insurers (including CMS) to refuse to cover expensive drugs with poor efficacy. There are many drugs that offer little or no clinical advantage but are common anyway, this is particularly rife with end of life care. In other countries this is dealt with by central negotiating authorities who impose efficacy/cost restrictions on new drugs, as a result there are many drugs which are either not available at all outside the US or have heavily restricted use outside of the US.

As you can tell, there is significant room for improvement. There are three key ways in which we can massively reduce drug costs:

1. Switch to an efficacy based price control system (like every other country lol), which would bring down the prices of the best drugs, leading to decreased demand (since people are now using less but better drugs).
2. Streamline FDA approval processes to ensure entry into American markets is easier, remove allow insurers to deny coverage for drugs deemed inefficient, encourage physicians to prescribe generics, etc.
3. Negotiate fair payment rates with other nations to ensure innovation thrives (DIFFICULT!!!)

Part 5: Frequently Asked Questions

Question 1 - What about Surgery Center of Oklahoma and other direct primary care facilities? They seem to have cut costs and the free market appears to be working there!
At first glance, DPC does appear to reduce prices. This study finds that DPCs have lower prices across the nation (although it should be noted that data regarding quality is lacking). This is largely due to the much lower overhead from dropping insurance and because regulations like MACRA and other quality and cost regulations don't apply. And while this is great for smaller items, such as lab work, routine check-ups, minor injuries, etc, it fails when someone actually needs medical treatment and is unable to get it because they either don't have insurance and/or the hospital doesn't participate in the cash model! Emergencies are a whole nother problem, because they aren't covered by most membership fees at all, which can be financially ruinous because surgeries may cost in the tens of thousands of dollars (lower than the cost in a non-DPC, but financially ruinous nonetheless). Therefore, it's actually recommended by some DPCs to buy insurance in addition to the monthly membership fees if you have a major health problem and/or afraid of emergencies, so it may not save very much money at all for those who aren't healthy or committed the heinous crime of having a pre-existing condition (as many as 100 million Americans)!
Lastly, is that the study I cited above, regarding lower costs, may not apply to its fullest extent in a truly free market, because they are a vertically-differentiated site of care that may or may not exist under free market conditions and the DPCs themselves benefit from insurance companies reducing prices through their bargaining power (See: Medicare Part D reduced drug prices by introducing drug coverage), so prices may rise in their absence. There is no guarantee that a free market would work! Even at this point, there is evidence that lack of regulation has actually become a bit of a problem in DPCs because there is evidence that stronger perverse incentives are present, which may further increase costs and wastage in the healthcare system! In addition, this study by the American College of Physicians notes that:

Retainer practices note that they are able to see their patients more often throughout the year. Once again, there is no evidence to suggest that this is always necessary or effective. With all of the “amenities” offered by these practices, it is important to do a cost–benefit analysis to understand the true effect of the “extras” in a practice. At this time, no research or data are available to indicate that many of these amenities in a practice yield better clinical outcomes. It is important to be aware of the potential for overutilization of physician time and medical services.

This shows that the data regarding service quality in DPCs are also very lacking. There is very little evidence to indicate that extra time and additional visits, one of the so-called major benefits of DPCs, actually improve health outcomes. There is rationale to believe that DPCs may also offer lower quality services because they may not participate in quality measurement programs and have no interoperability with other electronic health record systems. The lack of oversight and accountability can lead to certain doctors abusing their power and overload their practices with subscribing patients and compromise on quality of care. Since people don't price shop, competition won't be around to save you either.
Question 2 - But what about LASIK and Cosmetic Surgeries? Aren’t they proof that reducing insurance coverage and increasing competition helps? After all, Competition reduced their prices!
The problem with this claim is that it ignores the elasticity of demand of cosmetic surgery and other healthcare treatments. If someone charges too much for a cosmetic surgery, you can simply refrain from buying the surgeon's service because you don't need it to live. Can't exactly say the same for something like heart or brain surgery because you will die without it, so you will be forced to pay the price, regardless of how high. Healthcare providers take advantage of this to raise prices. It's not just life and death surgeries that are demand inelastic though. This study finds that most healthcare services in general are demand inelastic. This article explains it better.
Additionally, it should also be noted that unlike other healthcare services, people who seek out cosmetic surgery are usually much wealthier and better informed and the quality of the cosmetic surgery is very easy to assess, unlike other health services, all of which make it much easier to shop around. Move away from cosmetic surgery, and you can see the argument fall apart pretty quickly. Take a look at dental procedures for example. Like cosmetic surgery, they aren’t covered as much by insurance, yet dental costs have been rising just as quickly as other health services. For another example, take a look at veterinary care, which is seldom covered by insurance. Vet costs have also been rising rather quickly.
Question 3 - Isn’t there a lot of bad regulation in the USA that hurts healthcare?
The answer is yes, there most certainly is. However, while removing them would help, healthcare markets themselves are fundamentally flawed, and most major problems would persist. Even the ACA has some bad regulations within it that inhibit competition and counteract the effects of the good regulations, although that’s beyond the scope of this post. Next up, take CON Laws for example, I agree 100% that they need to go. There was actually a great post about it over on neoliberal. However, there is evidence that repealing CON Laws may help by introducing new competitors into the market, it is doubtful that they will improve quality without first addressing physician scarcity.
The next most common bad regulation I hear about is how the US prevents insurers from selling across state lines, and that preventing this from happening would result in lower costs due to competition. However, most evidence points to the fact that it would do very little. At most, it would reduce variance in healthcare premiums across the nation, but not the overall cost, so some may benefit, but some will definitely lose. Now to the evidence, the Affordable Care Act allows states to form agreements with each other and five states already allow insurers to sell across state lines. However, no insurer actually takes advantage of this as of now. As this study puts it:

According to many insurance experts, the primary barrier for an insurer looking to enter a new market is not the state’s regulations, it’s the cost of building up a provider network at discounted prices.

The massive cost of negotiating new networks deters insurers from expanding their plans beyond that of their state. Lastly, this study states that regulation is only one of many drivers of high cost of health insurance, so it is clear that the free market will not be able to adequately address the cost.

Part 6: Conclusion

To recap, healthcare markets are unique. They are unlike any other markets due to them facing the worst market failures of any insurance industry and much more powerful information asymmetry, resulting in a sector that’s barely better than functional at its very best. However, there are many ways to tame the beast that is healthcare through a combination of various policies built on an abundance of research. From my perspective, the list of most important policies (assuming we want to keep a market-based system) would be in no specific order:

1. Prevent health insurers from denying coverage based on health and limit variability of premiums based on health.
2. Individual Mandate
3. Implement an All-payer System of rate setting to ensure everyone pays the same prices.
4. Public option (or something like medicare/caid) in order to remove the sickest and poorest individuals from the private health insurance markets, which significantly reduces premiums.
5. Proper price controls (I may make a separate post on this later)
6. Necessitate a basic level of coverage private insurers must provide, such a cancer screening, etc
7. Remove harmful regulations that hinder competition, such as CON Laws.
8. Any regulations necessary to ensure competitive practices within health insurance markets (competition within insurance leads to better outcomes for lower prices).

Of course, there is a lot more to any healthcare system than the handful of policies I’ve described above, but this should be enough to justify the purposes of this post, which is to be introductory. I hope this information serves you well and keep an eye out for any future posts from me. Peace.

The 2020 Mix Tape is —les Miserables
I AM CALLING FOR A GENERAL STRIKE(google the Definition ) and I will now explain why.
They devour widows’ houses and for the sake of appearance say long prayers. They will receive the greater condemnation.” Mark 12:40
And he received them at their hand, and fashioned it with a graving tool, after he had made it a molten calf: and they said, These be thy gods, O Israel, which brought thee up out of the land of Egypt. ~ Exodus 32:4 For more info about the coronavirus, see cdc.gov
The individual's rights are only as strong as the collective will, Just as the collectives rights is only as strong as the individuals will. #occupyacouch. As of now, there are a total of 438,749 “confirmed” cases World Wide. In the USA according to the White House Task Force, there are OVER 55,243 COVID-19 CASES WITHIN U.S.virus cases, with 802 "confirmed” dead in the United States as of today. As I said before there are 7.7 Billion People in the world. if everyone got the virus, at a 1% death rate we are looking at 77,000,000. The World Health Organization just said we are the Epicenters of the Corvid19 (cnn video)
I was raised to always “have an open mind” and “do not judge a book by its cover,” I am not religious but I am spiritual, I believe in a creator and creator of creators. But in the end, I rather believe in me and you, I believe in peace and kindness. I struggle with my faith But I will never struggle in my belief of love/kindness and what it can do for others. For we would not be here if it was not for the kind acts of another. The Children of Tomorrow Will Always Remember your actions of today no matter the present. You are what you perceived as to be perceived in lifes masquerade ball. Right now the “The Emperor’s New Clothes” should be a best seller. the leaders make minor changes to protect themselves and their own aka the Privileged and Capitalistic. Greed out of Fear or Gluttony.
GENERAL STRIKE I say, for all Non-essential workers till the science, prevails a vaccine (4–18 months) , For the Safety all, if there was ever a time TO do a General Strike for the betterment of all now would be the time. ONLY “essential” jobs should be permitted(hospitals, childcare, dentists, Shipping and receiving, Construction, grocery stores, tobacco, hardware, pharmacies, gas stations, Waste Management, Vehicle repair, Pet Stores, Police Dept, Fire Dept, Maybe continue to take out at Restaurants, If liqueur stores and then also state marijuana dispensary open, both recreational and medical, and any other jobs working-class essential jobs may have missed) remain open for the greater good. Schools should remain closed for the rest of the year. More Local Health codes Inspections and Osha Inspections paired with medical personal should make random drop-by visits and tests, monthly randomly. All Essential travel for the public to those locations should be permitted, along with to their family, and friends only who understand social distancing. Public transportation should be restricted to certain hours. The elderly and those with immune deficiencies should be isolated for health-related reasons, except out of emergencies/hospice but have contact with the outside world through technology communication provided by the state or federal government so that way doesn’t die alone. If there was ever a time to stop working, and by doing so save the world from the couch and comfort of your home, now is the time, seize it, don’t fuck it up. In turn, save a life, and stop the spread of this Corvid-19 by all of doing so it could end up saving yours and those that you love. It is negligent for any governing body or company to encourage their workforce to continue, it is class base genocide. Not just through pending Economic means because of the recession we are in, but Health means from the lack of ventilators and who will be able to afford a 50k ventilator when they run out of them? Let the entitled, privileged elite Eat the metaphorical cake of debt for the failure of leadership this time let them bend the knee to the people again.. During this time All Sanitation Service Nationwide should come with hazard pay, benefits, and a living wage guaranteed by the federal government, whether private or public you’re risking your life. my gf cleans warehouses, houses to get buy and her 6 yr old daughter has a compromised immune system (higher death rate) because of her diabetes type 1. Every day she and others like her, risk their lives cleaning so others don't get sick. We owe them a debt. We owe all those Essential workers making that sacrifice a debt. Hazard pay, a rise (A living wage), Benefits (medicare for all), and (maybe tuition-free college) more social programs will be the only way we pay them and the children of tomorrow back?
“The rich man is always sold to the institution which makes him rich.” ― Henry David Thoreau
If your job is considered “#essential” during this pandemic and you must work, firstly thank you for what you’re doing, also I believe then your position deserves a living wage/raise and health benefits along with hazard pay. If corporate says no, then unionize, or strike. Strike for your mother, Strike for your father, Strike for your Grandparents and Children. Strike to save lives of those you know and those you don’t, for your neighbor, and the safety of this country GENERAL STRIKE and #occupyacouch.
Its time to reflect and revaluate what is important to consider what we value, and what is value, and our own value. Each Perspective petal of infinite colors, to the flower that endlessly wilts and blooms. The working poor and the middle class are in this mess together; it doesn’t matter what political affiliation And we’ll pick it up together. For the wealthy, entitled, and privileged coffers. Can you get a test? can you get the medication to fight this? do you have enough money to cover the cost cuz sure as shit the wealthy, the entitled, the privileged, the (insert party) politicians, corporations can, and they can’t wait to pick at you like a vulture after a kill with taxes and inflation? Do what you can now to help your State, County, Town, and community and help those in need. I say stand together, they want to divide narratives/ideologies for greater control of the people till they are isolated in their anxious echo chamber of thoughts, forget the binary perspectives for now. We face a defining moment and only together can we conquer such and those in power obviously care more about markets then lives. If you can’t find kindness be a kindness if you can’t find love, be love, and if you cant find peace, make and be peace, and most importantly always help those in need around you with logic, intelligence thoughtfulness, and empathy. As long as we stand together collectively with logic and love there is hope, call it a fools hope.
Firstly President Donald J Trump says he wants the country ‘opened up and just raring to go by Easter,’ despite health experts’ warnings during this outbreak according to CNN (article) aka its dangerous you face planting into a bag of Cheetos like Scarface Al Pacino style fool. Right now Local EMS are Struggling for example — Lee County EMS officials continue to search for ways to stay afloat after receiving news the agency could soon face bankruptcy. The county recently approved $36,000 to fund the private service for the rest of the month but that's it (article). More then likely that is the same in other areas of the country. According to the Independent Bill Gates says businesses should stay closed during coronavirus pandemic: ‘US has passed the opportunity to control this(Article) In Regards to Politics, The stimulus deal reached in the Senate includes far less financial assistance for states Election Security to prepare for 2020 elections amid the risk of disruption by the pandemic. What was taken off the table for this bill was offering all voters mail-in ballots and, if an election is held during a national emergency, sending a mail-in ballot to every registered voter (article) unemployment insurance benefits has expanded eligibility and offering workers an additional $600 a week for four months, on top of what state unemployment programs pay. Millions of Americans have filed for unemployment benefits in the past few weeks, flooding a system that isn’t designed to cope with a sudden wave of applicants and has shut down in some states. Older people would rather die than let Covid-19 harm US economy — Texas official, basically a narrative of suicide for the greatest generation all for a broken market? shame(link).
There is always a war for your mind, your heart, and your wallet. Your Life, your Liberty, and your Property. In a consumer nation, the altar of worship is things. And you are but a tool to a machine that values no life. Perhaps the Stoicism of the culture and greed of old money in the area that inhibits companies and governing body's ability to grow through cultural expression. Maybe its because the narrative art and culture that was “anti-establishment”, “anti bubble gum”, “anti-baby birded bs narrative and norms.”My generation will understand this meaning, those at the top will always be “possers” aka fake, as Holden Caufield would say “phony” at heart with words not matching action aka word service, with a dash of wag the dog, disconnected from the struggle of the average person, therefore, unknowing of the dreams of peace, the dream of love, the pursuit of happiness, the yearning for a nonhostile, anxiety-free, zero fearing mongering and harassment, the yearning for a better job, a better standard of living, care, and pursuit of knowledge. Maybe it’s a generational thing, parents generation spiting the youth aka boomers and millennials. Maybe its greed. Maybe the Music was anti-establishment and self-reflective, rock lived on, past 1989. The music was too real, and that was the problem, the corporate machine couldn’t control the anti-establishment trend or be part of it without being called out for what they were, only posers to social trends, haves pretending they have not. Imposters to cultural relevance or impact and envious to both. Like i said before, Stoicism of the culture and greed of old money in the area inhibit expression. My gut tells me 80–90’s yuppies or maybe 60–70 traditionalists, with their traditional fears of the poor, with a sweater over shoulders. Part of me thinks its happening across the country for a reason, to better control the youth through their voice, is the arts(music, animation, film, etc). Expressionism has always been dangerous to the powerful. Whoever can control the questions and the flow/amounts of them can control the narrative of the answer. The individual’s rights are only as strong as the collective will, Just as the collectives rights is only as strong as the individuals will. People that labor must stand together, for the value and pay for all, profits right now are the unpaid wages of the worker.This is why I believe in bottom-up #workplacedemocracy . If a bottom-up Democracy(future E-Democracy my opinion)is good enough for a Governing Bodys, it is then good enough for its Companys’s workers also. May Day(International Workers’ Day) Should be Interesting this year. #Solidarity; People should always come before profit. short-term gains are not worth lives. Whatever happens, we all will be facing it together. Only the working poor and the middle class together as a collective can we overcome the challenges ahead and save lives so Strike Let this give us purpose to be kinder gentle logical but empathetic over apathetic. We are what we feel, don’t be afraid of being afraid, but don’t become that fear for we are together, and we are strong. Don’t be afraid to be yourself and to feel, the fear is natural, our leaders failed us in acting, this feeling is natural and this moment and feeling too shall pass, but how you act and what you do will be the footprint and will be burned not just the minds you love, but also into the pages of history, along with all the data collected.
In a finite resource-based society facing viruses, climate change, and economic uncertainty have a major impact should those companies/individuals/government that leave impacts from lack of oversight and safety standards/workers/human rights, should they then pay/work off a continuous cost/face punishment for their length/damaging negligence depending on the action politician, CEO, governing body? Further more Should a Person or a few people, Business, Religion, or Government own/control/profits/people/rights of the many? Or should those profits/natural resources/rights/etc belong to everyone equally in an egalitarian manner unowned or owned collectively? Greater men then have pondered and continue to ponder such.
I say people over profit, empathy over apathy, Knowlege, and fact over Ignorance and Fear-Mongering narratives General Strike for the Safety of all. I say this now to the privileged class, those with the illusion of power, and hubris of ego; If you do nothing, you get nothing. If you do a little you get a little. IF you do a lot you will get a lot. We the people are not fools. What of those who are less fortunate, the single parent, the homeless. Thanks to you we are now self domesticated and workshop boxes and things, and value nothing but nature and life, valuing opinions(emotional logic) over fact-based(mental) logic. You have Twisted the natural way of things. We were met to be caretakers, and from this point on you will reap the cullings avalanche of reality. I know the president is nothing but a mouthpiece for you set there to reassure with the illusion of words and act like the mayor from Jaws reassuring the general public that there are no sharks, or others could argue Like Jim Jones screaming subtly “die with Dignity” all for his ego for we know what he values, things and ego over people and lives. There are people considering Coffee Filters for Toilet paper.
Be considerate. Take only what you need, and help those that cannot help themselves. If you cannot find kindness, be kindness. There must Be Senior Only Times Essential BusinessBut According to some big Banking Financial Institutions those that are Privileged, Capitalistic worship, that the worst (financial projections) will happen in the second quarter of the business cycle April 1st through June 30th That’s when we’ll see the peak of this virus…I’m just saying that because I’m going with the financial institutions and their projection rates and not this Broken Administration because I feel that a bank, the people that maintain value, projections and forecasts, are more then what some countries and companies have. hopefully, I’m wrong in my speculation, (Article Here). I'm sure some Economics Historians are having Flashback to The Hyperinflation in the Weimar Republic (don't know what that is, click here)
As I said before One has to wonder if the stimulus packages would be better served to be Medicare for all American Healthcare Systems would insulate and be an improvement over the current affair during a Pandemic. Expansion and creation of new social programs like higher education and medicare for all will provide a safeguard for those weaker economic country’s in regards to restructuring its economy would speed up the cost and length of self-repair to its economic system. Social programs that provide food, healthcare, and education to allow it to rebuild the workforce. This is not counting for possible climate change effects creating massive migration(lack of habitable environments and the coastline pushing further because of the poles melting causing a lot of coastal species to die) human climate refugees and diseases(melting permafrost now 28 new viruses (link)along with diseases ticks, parasites, and mosquitoes breeding more because of hotter climates (link).
Furthermore, why not invest into the children of tomorrow by Expanding and creating more social programs will only grow with the growth of current technology and its impact on the workforce, Income Inequality platform and those that stand behind it will also grow with it. Automation plus capitalism will only lead to a darker employment future. Industry Experts have spoken at this to length saying that 25–40% of the workforce will be replaced by automation and AI within the next 5–15 yrs world wide. Here are three links to further my argument Here, Here and Here. Those in positions of Economic Power will accept this innovation because it doesn’t sleep, eat, get sick, take holidays off, it will cut costs and promote growth, meaning the rich will get richer. Those with enough capital to buy these machines, or will supply each person with an AI assistant for better efficiency from lawyers (AI listen to cases finds relating case arguments) to retail (insert efficiency, etc) etc job, they will only grow faster small business and the worker will not be able to compete. Those at the top will not weigh the costs to society nor to their humanity. For they value things, and when the value of things outweighs the value of people you lose the value of everything. With up to 40% of the working population jobs becoming obsolete, major changes will be needed and the only way to counter it is with job creation from innovation and society or nation will yield more with reeducation(free technical and college education).Who will profit from this tragedy other than the Pharmaceutical Companys, Corporate Hospitals, Health Insurence companies, news outlets who get ad money per click of fear, will their profits go finding a vaccine? Who is going to be able to afford/receive those tests/vaccines first other than federal workers and government officials along with their friends? There are questions then answers and those with the answers seem to dodge, fudge, and avoid the questions or put out incongruent paralleling data. According to the Washington Post the President has told 16,241 false or misleading claims. FACT
“I ask for, not at once no government, but at once a better government.” ― Henry David Thorea
I fear some of us will live to see the trauma and horror in our grandchildren’s eyes and the fear, anger, sadness’s that we can not imagine emotionally at all because of our collective inaction.As time has gone on the more careless, regarding to the value of our labor, our morals, principles, dignity’ for all have been exploited, dehumanized, overworked to the point of exhaustion to not collectively paying attention or pursue truth, instead we are accepting half-truths which are full lies, and tolerating opinions are more important then facts by baby birded generational systems narrative of fear and control out greed/ego. Both are chains, a slow poison for them want to divide and conquer by feeding fear, ego, vanity, insecurity, for it is easier to control by consistently by masking all of this as normal and ok.Why do I say that? well, right now we only value, insulated, and protect a system that values things. A system where the value of the things outweigh the value of life and the labors of the living(reinforced by collective belief/desperation or inaction) Right now we are on the edge of losing the value of everything. Right now the individual's greed(ego/fear) is worth more than the collective’s values and values; labor, or natural cycles of this one planet that sustain us, and our inaction has led to complacency, and complacency has led to tolerance of what is in my view a collective assisted suicide a reaction from ignorant inaction. society’s economic structure is based on the nativity of the instant; fear-mongering vanity and gluttony. But now we MUST be patient no longer in tolerating these behaviors or feeding it with inaction. Forgive me for I am tired, tired of collective systematic lie we believe, that another way is not possible. That we can not rise to meet the tides of change and progress together, overcome our difference Because I believe we can together in #solidarity, Protest Peacefully through your wallets and labor. Strike for better standards and the safety of all.
“Law never made men a whit more just; and, by means of their respect for it, even the well-disposed are daily made the agents of injustice.” ― Henry David Thoreau,
Question Time- Will the Pollin of the spring Making this worse for people with Allergies? What will Grocers do for People Facing Deadly Food Allegerys? Why aren't their Hazard pay/health benefits for many in Sanitation? What is being done to help the Homeless, the downtraut and forgotten? Why is Debt never canceled and only loans are always given to small businesses during recent times of economic crisis? With the stay at home ban going on, do you think there will be a baby boom in 9 months? Could the Stimulus’s been better served to by College Debt, Protections for Corporate Apartment Tenants from eviction and landlords who might get hit with foreclosure? Medicare for all and Tuition-free College instead of bailing out Wall st again, Hotel Industry’s, Cruise, Insert Hospitality? Will you shop at “non-essential” retail places that stayed open this risking the public and risked their workers let alone without hazard pay, a living wage, and health benefits? Do you think the powers that be, want us to be more empathetic or, apathetic? Lastly, Truth is like Poetry no one likes to hear it, yep, a Poetic posed Question.
Why in Markets is it Always, Have and Have nots. Why in Famine is it Always, Poor Eat Poor Why in War, Is it Always, Poor vs Poor. Why in Dreams is it always, Poor Vs Rich.
Let us all Occupy the Couch. Save a Life. #GeneralStrike Still he Privileged incompetent cannot come out and say hey sorry I’m incompetent so they conspire to cover up their incompetence, with excuses, and too little to late action. SO wash your hands, social distance(6 feet apart), don’t go to nursing homes, stay away from hospitals, stay away from people who have immune issues like cancer diabetes HIV, etc patients.. If you’re over 60 don’t fly. Try to do your shopping early morning or right before closing where there’s the least amount of people. Use the pharmacy drive-thru. Wash your hands before and after you smoke, eat, use the toilet, hell after you touch anything, etc. Picture it like a snowstorm. But it’s worldwide and we are 12- 18 months before we have a shovel aka vaccine according to a recent USA Today Article. They haven’t even released accurate numbers because there isn’t enough tests to give it So nobody knows how many people are infected there’s no official count because not everybody’s been screened. if we have only 100k tests. for the United State a country with a population of 300- 400 million.. But no way to test the sick. they will never be an accurate count because we weren’t prepared, not enough tests, and not enough time to backtrace to stop the spread that’s the Bottom line correct? maybe the people in power weren’t ready or didn’t care. They had the privilege to be apathetic. Based on the current recent actions, it seems they cared more about markets than they did about lives.
After everything is read I pose my question again to you my reader, “Could an argument be made, that the rich, who dress nicely, who can afford to travel, entitled and privileged that spread/create it? Was the spread of this Pandemic Caused by Privilege and Capitalism?

occupyacouch

stay healthy, and what to do, the information they have could save your life and the life others for knowledge is power, and it can save lives. https://wwwnc.cdc.gov/ https://www.who.int

Good afternoon BE,
Given the discussion in the Fiat thread about bringing back the Wumbo-wall, I thought I would take the opportunity of Bernie’s announcement that he is running for the Democratic nomination for president in 2020 as an opportunity to talk about health insurance, and one thing in particular: moral hazard.
(Side note: this is meant to be a useful exercise for economic laymen, I am not going to dive deeply into the state of the art literature on cost sharing too much and I am not going to give the most in depth description of moral hazard. I mostly have this stuff prepared from teaching undergrad health econ this semester.)
Bernie’s Health Care Plan
The details of Bernie’s health care plan, announced back in 2017 and still what he has endorsed, are available here and with a quick fact sheet.
I’ll summarize a couple of key points. The insurance covers:

• hospital services (including inpatient and outpatient hospital care, emergency services, and inpatient prescription drugs);
  
• ambulatory patient services;
  
• primary and preventive services (including chronic disease management);
  
• prescription drugs, medical devices, and biologics;
  
• mental health and substance abuse treatment services (including inpatient care);
  
• laboratory and diagnostic services;
  
• comprehensive reproductive, maternity, and newborn care;
  
• pediatrics;
  
• oral health, audiology, and vision services;
  
• short-term rehabilitative and habilitative services and devices.
  

This lines up pretty closely with the ACA Essential Health Benefits (EHB), with the addition of benefits for oral and vision as well as some coverage for long-term care. One of the most important parts of the Bernie plan design, that is not present in almost any other 2020 candidates plan, is that (with a few exceptions) these services are provided with no cost sharing.
RI: Cost sharing is a good idea and an important tool to control health care costs
What is Cost Sharing?
Cost sharing is simply the portion of the price that the insured consumer has to pay at the point of care. Cost sharing is common in all forms of insurance today, both private (employer sponsored insurance) and public (Medicare and Medicaid). Cost sharing is comes most often in three forms:

• Deductibles: Deductibles are the amount the consumer must pay before insurance coverage kicks in. If your plan has a $500 deductible, you must pay $500 before your coverage pays anything at all.
  
• Copays: You pay a certain fixed amount at the point of care. Usually these vary across type of service as a mechanism to encourage substitution to lower cost care ($25 for urgent care visit vs. $100 for emergency department visit)
  
• Coinsurance: Similar to copays, but as a percentage of cost rather than a flat rate.
  

Why is Cost Sharing Important?
The purpose of cost sharing in health insurance is to reduce moral hazard. Moral hazard is the phenomena that because insurance lowers the price paid by the consumer at the point of care, consumers will slide down their demand curve and consume more care. This additional care that is now consumed but would not have been without insurance is care that is not valued by the consumer at the true price, and thus represents welfare loss. In addition, because patients do not face the true cost of the care they consume, providers can raise prices. The total effect is an increase in cost of care.
This is best explained in graph form! First, we can see how consumers of health care slide down their demand curve from Pp (the true price) to Pc (the price they face when insured), and the amount of welfare loss created as they move their quantity consumed from q* to q-bar. Second, we can see how, given a marginal cost line, the welfare loss can be broken out into welfare loss for the consumer (triangle B + triangle A) and social welfare loss (with consumption at a price below marginal cost, triangle A). Finally, we can see that when the demand curve rotates due to consumers not paying the full price of care and thus having a less elastic demand curve, both quantity and prices increase.
But this is all theory! I only go to the doctor when I get sick, the cost doesn’t matter!
It was once possible to make the argument that demand for health care was completely inelastic, in which case moral hazard would not be an issue. However, we have very strong evidence this is not true! One of the largest social science experiments ever done was the RAND Health Insurance Experiment, which randomized households into different cost sharing tiers. This randomized control trial found that individuals randomized to the arms with lower cost sharing consumed more care than those in the higher cost sharing arms, with no effect on health status. Further studies have shown an elasticity of demand to health care, with mixed evidence regarding the impact of insurance and cost sharing on health.
How could we improve on Bernie’s plan?
The more recent literature on cost sharing is mixed. While economists agree moral hazard is a real phenomenon, deductibles may be too blunt of an instrument. How should we use the evidence to craft cost sharing policy? If Bernie wanted wonk credentials, he could explore finding ways to incentivize high value, inexpensive care and discourage lower value, expensive care. Potential strategies range from including tiered cost sharing, such as multi-tiered prescription drug formulary, all the way to value-based insurance design.
Is Bernie bad economics because of his stance on cost sharing?
In this one aspect of Bernie’s health care plan, we have identified an area of economically inefficient policy. This does not mean it is bad policy, however! There is evidence from the RAND health insurance experiment that individuals who were low income and had chronic health conditions did have positive health benefits from being in the lower cost sharing arm, likely reflecting an income constraint effect. It is possible that a Medicare for All with no cost sharing is more defensible politically (free programs are more likely to build a durable base of support than those with cost sharing or means testing) or ethically (it is more important to provide comprehensive care to the poorest individuals than to control overall costs.) These statements require frameworks outside of economics to evaluate.
Anything Else?
Bernie's decision to cover things like routine dental and vision care may be suspect as these are not services that qualify as an insurable hazard. The classic definition of an insurable hazard is an event that has some form of uncertainty, as well as a high enough cost to make consumers of insurance willing to pay a premium for protection from that uncertainty. Services such as regular dental visits are neither uncertain nor high cost. However, they may politically popular, or lead to improved downstream health outcomes that reduce costs over the life course. It was worth mentioning given his proposal covering these types of services.

Seek first to understand, then to be understood

My goal here is to separate the strawmen from the real men and to clearly enumerate the most popular reasons people have for opposing EIP999. I am, however, a fallible human and it's possible that, in my effort to separate fallacies from facts, I introduced further fallacies.
I encourage you to browse Wikipedia's list of logical fallacies and point out any that might be distorting the way I'm viewing this debate.. But I know you don't need any encouragement to point out where & why I'm wrong ;)

1. Ignorance

I hate to say it, but the most common reason to oppose EIP999 comes from a misunderstanding of what's actually going on. I am not saying that anyone who opposes EIP999 is ignorant. As you'll see later, there are rational & well-thought out reasons to oppose EIP999. But the unfortunate reality is that many people who are participating in this debate do not fully understand what they're debating.
As ZergShotgunAndYou mentioned in his post "EIP 999 IS controversial":

It's a bailout pure and simple.

Face it, learning is hard. Maybe we only have a loose idea of what bailouts are. Maybe we don't have the technical background to understand the formal tech specs. Maybe we just like to repeat what other people tell us.
Most of us have day jobs or schoolwork that consumes most of our brain power and we don't have the time & energy to spend our evenings reading the yellow paper. That's fine, there's absolutely nothing wrong with ignorance. I'm ignorant about most things and happy to admit it.
But we ought to keep in mind that the Dunning-Kruger effect correlates confidence with incompetence.
The universe is under no obligation to be simple and if the EIP999 decision were simple, there wouldn't be a debate. I encourage you to be extremely wary of anyone who claims this situation is "pure and simple" (let alone a bailout).
To clarify a few commonly misunderstood points:

• EIP999 is proposing we re-instate the destroyed code (with the self-destruct button removed) that controls a collection of multi-sig wallets.
• A bailout is an act of giving financial assistance to a failing business or economy to save it from collapse.
• EIP999 is not giving financial assistance to anyone, it would allow people to regain access to their own money. Nor is EIP999 saving anything from collapse, Ethereum will keep chugging along regardless of whether EIP999 passes or not.
• Parity is not the one who had Eth locked by the contract's destruction. It's companies that used parity's wallets like Polkadot, ICONOMI, Musiconomi, etc.
• Gav Wood (gavofyork) is the founder of both Polkadot and Parity, therefore he obviously has financial incentive to restore these funds. This connection seems to be why people think Parity has something to gain financially from EIP999 passing.

Another apparent manifestation of ignorance is people whose economic knowledge stops at supply and demand. I've seen comments that are laser focused on this one aspect thinking "locked coins decreases supply, therefore my coins are worth more" but, in reality, the price of Eth is multi-dimensional. Supply & demand is a drop in the bucket compared to factors like confidence in the platform.

2. Religious purity

In his book Sapiens, Dr. Harari defines religion as:

a system of human laws and values, which is founded on a belief in a super human order.

Traditionally, this "super human order" has been one or many gods but not always. In Buddism for instance, the super human order is a natural law: suffering stems from desire.
Under this definition, capitalism, communism, and, of course, Ethereum are also religions where the super human order takes the shape of an invisible hand, equality, or the EVM. Particular religions rise and fall but the religious instinct to have faith in a super human order (or Truth with a capital T) lives on in all of us.
In addition to faith, we have another instinct for cleanliness that evolved to keep us safe from disease. These instincts come together in this EIP999 debate to produce a repulsion to violating the holy immutability of the blockchain.
But they also come together to help a staggering number of completely different humans cooperate so the last thing we want to do is get rid of these instincts. They are invaluable. Cryptocurrency won't work unless we can all agree on certain Truths and a large fraction of the space has decided that the irreversibility of mistakes is one of them.
Personally, I have unshakable faith in the Truth of Ethereum's censorship resistance and it should be noted that this can exist independently of faith in Irreversible Mistakes.

3. Fairness

The Truth of Irreversible Mistakes was likely hammered into many people's head when they accidentally sent some Eth to an improperly initialized parity seed or had their funds compromised by malware. They realized they have absolutely no recourse and saw the Truth: mistakes are irreversible.
After something like this happens to you, it's not hard to image taking the stance "If I can't have my mistakes fixed, then nobody should be able to."
Most mistakes do not have a universal way to undo them: - Did malware really steal your funds or are you the scammer trying to steal someone else's funds? - When that address sent funds to 0x000, was it a mistake or was it the ENS contract doing a controlled burn? - Who really owned the funds that were sent to the default address generated by an empty parity seed if they came from an exchange-controlled address?
By a quirk of fate, these mistakes require case-by-case attention and can therefore not be cleanly reversed by one single change to the EVM state.
As Crypto_Economist42 mentioned in his post "Why should the Parity Multisig Wallet be bailed out when all the other contract mistakes and Ether losses aren't?":

That just isn't fair

I 100% agree, it's not fair at all.

4. Reputation Damage

This one comes from an understanding of point 2. We have to realize that, if a lot of people have deep faith in the Truth of Irreversible Mistakes, then proceeding with EIP999 exposes the ecosystem to the undue risk of a contentious fork, even if the change itself would be a net benefit.
In his article Avoid Evil Twins, Alex points out that the state of Ethereum now is very different than it was during the fork following the DAO recovery. TL;DR a persistent chain split would likely cause the Ethereum ecosystem to collapse.
I don't have hard evidence to back this up, but combining the investments made into Ethereum with the catastrophic downside of a persistent split leads me to conclude that one of the forked coins will not be stable and quickly die off.
Will the gold held by DigixDAO be honored on this chain or that one? They will have to make a firm decision and one team's decision will massively influence other teams to make the same decision as the community quickly coalesces onto one chain or the other.
Therefore, I've chosen to label the danger of a split as "reputation damage" rather than "death by evil twin".
Not to say reputation damage can't be catastrophic, it definitely could be and is something worth worrying about.

5. Slippery Slope

Scott Alexander provides a fantastic introduction to the concept of a Schelling Fence:

Slippery slopes legitimately exist wherever a policy not only affects the world directly, but affects people's willingness or ability to oppose future policies. Slippery slopes can sometimes be avoided by establishing a "Schelling fence" - a Schelling point that the various interest groups involved - or yourself across different values and times - make a credible precommitment to defend

So as we consider changing the state of the EVM outside of it's coded rules, we have to decide where to draw the line. Censorship: definitely bad. Fixing the DAO hack: turned out alright.
This little bug fix is so simple and will restore so much Eth to so many people, this has got to be justified right? But this is just one more step towards mutating the state for less justified reasons, and preventing that is one of the biggest things that excite people about cryptocurrencies.
More importantly, if we make this change then we'll be in a new mindset in which mutating the state is just a little bit more normal. We might be just a little bit more likely to make unjustified changes in the future and that's a bad path to be on.
It makes sense to say we've got to draw a line in the sand. We've got to set a credible Schelling fence that we can defend and say "absolutely no more". The most obvious Shelling point for mutating the "immutable" blockchain is zero but we passed that so "only 1" is the next most justified and defensible position.

6. Moral Hazard

According to Investopedia, Moral hazard is the idea that a party protected in some way from risk will act differently than if they didn't have that protection. The textbook example: if I get health insurance then I'm more likely to behave recklessly and possibly injure myself.
It's hard to find sources for this but it sounds like the Parity contracts were only audited in-house and you can't help but wonder whether this would even be an issue if they had also hired a 3rd party auditor.
If we fix this team's mistake then we're validating not-best-practices. We'd be making a point that if developers deploy bugs then the entire community will go through this drama-filled process of hard forking to change the EVM state.
The end result: sloppy developers who are more likely to deploy bugs. A horrible outcome.

Personal Opinion

We all know those famous words, both a warning and the genesis of a new era:

The times 03/Jan/2009 Chancellor on brink of second bailout for banks

In the cryptocurrency community, the term "bailout" is about as emotionally loaded as the idea of Satan is to a Christian. Attaching this completely unrelated term to EIP999 is effectively a smear campaign and I'm dismayed by how well it seems to have worked.
As the title suggests, I am not faithful to the Truth of Irreversible Mistakes nor to the Truth of Fairness. But the reputation damage, slippery slope, and moral hazard have all given me pause.
For the more mainstream investors who aren't faithful to the Truth of Irreversible Mistakes, fixing bugs like this might actually increase Ethereum's reputation. It's likely that it will give institutional investors more peace of mind while investing large sums of money into the space. A hard fork here says loud and clear that if institutional investors follow best practices, then stupid little bugs are unlikely to cause catastrophic loss of funds.
Selfishly, I like the idea of sending that message to institutional investors and I have high hopes for what it might do to the price of Eth long-term.
As far as the slippery slope, I say we define our Schelling fence at absolutely zero non-bugfix changes. A Schelling point of absolute zero is so much easier to justify than "just this one time" so, in my mind, I choose to divide state changes into categories: bugfixes and non-bugfixes.
Slippery slopes only exist within a category so putting bug fixes and censorship in separate categories lets me sleep well at night knowing that we have a well-defined and easily justified Schelling fence in place that ensure fixing bugs will never devolve into censoring transactions, etc.
And the moral hazard? Whatever, the Parity devs have likely learned their lesson. I don't find this argument particularly compelling. Besides, under the 1949 Geneva Conventions, collective punishment is a war crime.
I am planning on voting Yes on EIP999 a few hours before the vote ends but I'd like to wait and see if any of the thoughts you share in the comments change my mind. I do my best to maintain strong beliefs, loosely held and am open to changing my mind on this topic. Did I leave out any compelling arguments against EIP999? Did I strawman any of the provided arguments? I look forward to hearing your thoughts.

Incentive disclosure

None of my money was lost by the multi-sig contract's untimely suicide so I have nothing to directly gain from unfreezing the locked funds. However, I have heavily invested my time & money into Ethereum and have a strong incentive to see it succeed long term.
Also, My Ethereum address is 0x1057Bea69c9ADD11c6e3dE296866AFf98366CFE3 and I have a financial incentive to write a thought-provoking post with a click-bait title that might draw a crowd and inspire people to tip me. ;) I'm a recent college grad who walked away from stable employment to coast on savings while I hack with Ethereum full-time so any tips will be extra appreciated.
Twitter @bohendo
Github @bohendo

By: Thomas Magstadt - May 19, 2020
Read the article here: https://www.nationofchange.org/2020/05/19/capitalism-contagion-and-moral-hazard-a-cure-worse-than-the-disease/
Moral hazard. It’s an odd-sounding term for a concept well-known to “worldly philosophes” (a.k.a., economists), but few others. More recently it has become a veritable catchphrase for critics of “crony capitalism” (a.k.a. corporate capitalism). Chalk it up to the deadliest, most disruptive, pandemic in modern history.
The Covid-19 pandemic has upset the global economic apple cart in ways few could have imagined, ways natural calamities (hurricanes, earthquakes, droughts) and human-induced shocks (terrorist attacks, recessions) in the past, for all the damage, dislocation, and human suffering they occasioned, did not. Lockdowns, stay-at-home orders, school closings, social distancing, people dying in agony surrounded by aliens in full Hazmat gear, and the ubiquitous facemasks that render us all faceless. Such scenes have turned bustling cities into something resembling a sci-fi film depicting life on Planet Earth after the Apocalypse.

The Contagion

The Economist, a paragon of classical liberalism which has been singing the praises of free enterprise since the 1840s, predicts that among the long-term consequences of the coronavirus crisis will be the 90% economy:
In many things 90% is just fine; in an economy it is miserable, and China shows why. The country started to end its lockdown in February. Factories are busy and the streets are no longer empty. The result is the 90% economy. It is better than a severe lockdown, but it is far from normal.
“Far from normal” means different things to different people, especially in an age of deep class divisions, rising inequality, and culture wars. What it means for frontline workers in medicine and law-enforcement, for example, is farther from normal than for the self-isolating, social-distancing, mask-wearing majority. What it means for furloughed wage-earners and for tens of millions who have filed unemployment claims is the crushing burden of unpayable bills, families in free fall, and financial ruin.
Will most workers in the private sector still have jobs when local economies reopen? A Goldman Sachs survey found that two-thirds of small-business owners expected to run out of cash in less than three months. In the U.K., the number of commercial tenants in arrears on rent due has risen by nearly a third. Unsurprisingly, the hardest-hit parts of the 90% economy in the U.S. and Europe:
Even now in Europe’s five largest economies, over 30m workers, a fifth of the labor force, are in special schemes where the state pays their wages. These can be generous, but nobody knows how long they will last.
Meanwhile, “far from normal” is different altogether if you happen to be Jeff Bezos, the CEO of Amazon and the world’s richest capitalist, who reportedly raked in $24 billion in profits during the first few months of the pandemic. That is far from normal, too, but it points to a fact of political life under crony capitalism that Republicans in leadership positions never talk about—namely that for not a few billionaires with deep pockets who shell out millions in campaign contributions to elect legislative lapdogs, the pandemic has already opened the door to profiteering on an epic scale. And if the past is prologue, we ain’t seen nothin’ yet.

Moral Hazard

America’s billionaires grew their wealth by $282,000,000,000 in just 23 days during the lockdown. That’s $12,300,000,000 a day. Meanwhile, millions of Americans are out of work and struggling to pay the bills. This is a tale of two pandemics.
—Robert Reich Tweet, May 2, 2020
In a recent article entitled “How to think about moral hazard during a pandemic,” The Economist proffered this definition: “Moral hazard describes situations in which the costs of risky behavior are not entirely borne by those responsible for that behavior, so encouraging excessive risk-taking in the future.”. The moral dimension arises from the fact that moral hazard invariably involves money—money managers, money markets, and, above all, moneyed interests—and the greater the amounts the greater the hazard.
If you’re thinking something along the lines of “No wonder economics is called the dismal science” you’re not alone. Think of the checks and balances that form the cornerstone of the U.S. Constitution. It’s an idea that became a lofty principle aimed at safeguarding the separation of powers. Now think about moral hazard. In the absence of checks and balances and a separation of powers, what is to prevent a few uber-rich individuals from buying votes in Congress on everything from taxes, trade, and tariffs to health care and immigration?
It’s not rocket science. The answer is obvious: Moral hazard in a capitalist system dominated by a corporate elite arises out of political-economic power relationships that are fundamentally unbalanced and unchecked. “Rarely,” says The Economist, “has the scope for moral hazard seemed as massive as now.”
As readers of a recent piece in Forbes magazine learned, the CARES Act provides a glaring example of just how massive the moral hazard is at this time in history.
A $1.7 million stimulus check?
While wealthy Americans are not eligible for the comparatively measly $1,200 stimulus checks that are now being disbursed to many Americans, they are on pace to do even better. 43,000 taxpayers, who earn more than $1 million annually, are each set to receive a $1.7 million windfall, on average, thanks to a provision buried in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
A headline in ProPublica provides another example:

The Bailout Is Working — for the Rich

The economy is in free fall but Wall Street is thriving, and stocks of big private equity firms are soaring dramatically higher. That tells you who investors think is the real beneficiary of the federal government’s massive rescue efforts.
In this trenchant piece, Pulitzer Prize-winning journalist Jesse Eisinger calls the federal government’s attempt to pull the economy back from the brink “both a spectacular success and a catastrophic failure.“ In early May, a time of “unfathomable pain across the country not seen since the Great Depression,” the stock market was buoyant. “Junk bonds, historically dodgy during an economic swoon, have roared back,” Eisinger noted.
Shares of major private equity firms like the Apollo Group and Blackstone soared.
The reason: Asset holders like Apollo and Blackstone — disproportionately the wealthiest and most influential — have been insured by the world’s most powerful central bank. This largess is boundless and without conditions. “Even if a second wave of outbreaks were to occur,” JPMorgan economists wrote in a celebratory note on Friday, “the Fed has explicitly indicated that there is no dollar limit and no danger of running out of ammunition.”
Bottom line: “It’s a bailout of capital.”
Capitalism: Cure or Curse?
In politics and the natural order, the key word is “balance”. It’s also true of economics. The Greeks understood the supreme value of balance in all things and gave it a name—the Golden Mean.
There was arguably a time in American economic history when a proper balance was struck between the free market and state intervention. The Great Depression was the occasion and the New Deal was the robust policy response that restarted a badly stalled economy and lifted the hopes of the huddled masses.
That was then and this is now. Then America had Franklyn Delano Roosevelt in the White House; now we have Donald Trump. Then the Republican Party nominated the moderate and decent Alf Landon as it’s presidential candidate. Now Mitch McConnell is the grim face of Republicans in the Senate who only represents the corporate interests of an elite class of capitalist extremists and libertarian lunatics who conflate any state intervention aimed at protecting competition, consumers, and a balanced economy with socialism. Here, for example, is Leora Levy, a wealthy onetime commodity trader and Trump’s pick to be the next U.S. Ambassador to Chile, on Twitter: “AMERICA WILL NEVER BE A SOCIALIST COUNTRY!!!” she posted. “WE ARE BORN FREE AND WILL STAY FREE!!!” (@labbielady 2/5/19)
Today’s extreme capitalists (a.k.a. far-right conservatives) extol the virtues of deregulation and stigmatize any public-spending designed to help people who need help as “socialism” and a “giveaway” while insisting that billion-dollar bailouts for banks, massive tax cuts for the rich, subsidies for agro-industry, coal mining, and big oil are necessary for economic expansion and job creation.
The Founders buying into the idea of a “commercial republic” is a mirror image of Adam in the book of Genesis taking a bite of the apple. The original sin that gave rise to the unbalanced, oligopolistic capitalism so evident in America today can be traced to the late 17th Century when John Locke (“the Father of Classical Liberalism”) set forth his seminal ideas on social contract theory, natural rights, and private property.
A century later, Adam Smith rhapsodized about the invisible hand of the marketplace in The Wealth of Nations, a work destined to become the holy gospel for the apostles of modern market economy—and for it’s apologists. What began as an economic theory has been perverted and turned into a secular religion—an extreme version of capitalism neither Locke nor Smith envisioned but Karl Marx predicted in his three-volume work, Das Kapital.
Jump ahead to 1945, the end of a cataclysmic era bracketed by two world wars, the stock market crash, depression, and the Holocaust. The turbulent interwar years produced two major totalitarian threats, one on the left and one on the right. They also produced original thinkers like Karl Polanyi, author of The Great Transformation.
Polanyi lived in social-democratic “Red Vienna” during the turbulent 1920s and 1930s. Nikil Saval writing in The Nation explains how Polyani at first embraced Marxism as “a hopeful counterpoint to the Dickensian poorhouse on one extreme and fascism on the other” and later not only broke with Marxists but also broke new ground as an economic historian. Polyani showed how the gold standard rendered the efficient and humane management of a market economy impossible and, at the same time. “Under the gold standard,” he wrote, “. . . the leaders of the financial market [are] in the position to obstruct any domestic move in the economic sphere which [they happen] to dislike.” As Saval notes,
For Polanyi, the problem with this social arrangement was not only that it impeded the democratic process but that is also allowed the interests of the market to assert their primacy over those of society.
The aforementioned article first appeared in December 2016. That’s significant because the author did not have the kind of window on the cruel and corrupting side of capitalism the Covid-19 pandemic has given the world.
Clearly Wall Street traders, bankers, and hedge-fund managers have no answers to the medical challenges this pandemic poses. What is equally clear that the elite business class is not to be trusted with answers to the economic challenges we face.
Indeed, many highly influential business and banking elites back the deceitful, hate-mongering, name-calling narcissist in the White House. Skeptics are urged to read Evan Osnos’s trenchant “How Greenwich Republicans Learned to Love Trump” (The New Yorker, May 3, 2020):
The story of Trump’s rise is often told as a hostile takeover. In truth, it is something closer to a joint venture, in which members of America’s élite accepted the terms of Trumpism as the price of power.
Osnos, who grew up in Greenwich, notes that “the latest Forbes ranking of the world’s billionaires lists fifteen of them in the ‘Greater Greenwich Area,’ led by Ray Dalio, the founder of the hedge fund Bridgewater, who is worth an estimated eighteen billion dollars.”
Nor did the rise of a politically engaged, jet-setting billionaire class happen overnight, Osnos argues. In fact, “a generation of unwitting patrons paved the way” long before Trump stepped onto the political stage.
From Greenwich and places like it, they launched a set of financial, philanthropic, and political projects that have changed American ideas about government, taxes, and the legitimacy of the liberal state.
No wonder the government of the richest nation in the world was among the least well-prepared or –equipped to deal with a pandemic! It’s not because market economies are inherently corrupt and chaotic or because free-enterprise is a bad idea in theory. What Churchill said about democracy—that’s it’s the worst form of government, except for all the others—can also be said of capitalism. It’s the worst way to operate an economy, except for all the others.
Capitalism is inherently neither cure nor curse. The problem is a state-sponsored, pseudo-capitalist ideology that bestows massive bailouts and tax benefits for the superrich. A system that rewards greed and manic wealth accumulation at the expense of everything worth protecting and preserving in an otherwise decent society—even to the point of denying people a living wage or coronavirus victims access to affordable health care.
The problem is not capitalism with a small “c” but Capitalism capitalized, the kind of extreme capitalism that seeks to kill competition rather than protect it, that rewards the use of junk bonds to finance hostile takeovers, and that turns the myth of the free market into a commodity to be sold to a public conditioned to believe that state regulation and intervention are thinly veiled “socialism”.
As both history and the current Covid-19 pandemic amply demonstrate, an active state is both an economic and social necessity. Competition, not deregulation, is the key to a market economy that works for the many rather than the few. Experience in this unprecedented health crisis is conclusive: Absent an impartial referee there is nothing to prevent a mythical free market from decaying into crony capitalism and causing irreparable damage to society, economy, and a badly battered political system. The role of the state in normal times is to keep markets functional and fair; in a crisis, this economic principle becomes a moral imperative.

Last spring, GH05TY posted a "Sponsor Eating List" in the /NASCAR Discord server, in which it describes the edibility of the sponsors of each team. As it is the offseason, I thought it would be fun to tackle the same project and create a more comprehensive list with updates for 2018, though some sponsors from 2017 may carry over if their plans for 2018 (including leaving the sport) have not been announced.
I got the sponsors from Jayski's 2018 Team Chart.
1. Jamie McMurray
Cessna: In the late 1970s, Michel Lotito ate a Cessna 150. According to him, he ate the metal by "break[ing] it into small pieces before attempting to eat it. He then drank mineral oil and continued to drink water while swallowing the metal bits. This acted as a lubricant to help the metal slide down his throat." However, I would not advise eating a plane.
Edible?: Unless you have a really strong stomach lining, I would say no
GearWrench: You probably shouldn't be eating metal tools. Wrenches will probably pose a choking hazard.
Edible?: No
McDonald's: Fast food is definitely edible.
Edible?: Yes
2. Brad Keselowski
Alliance Truck Parts: Truck battery juice will certainly kill you. Eating a truck bumper or wiper blades can't end well.
Edible?: No
AutoTrader: Cars are for sale, not for eating.
Edible?: No
Miller Lite: If you're 21 years old, then Miller Lite is definitely consumable. While underage consumption is not explicitly prohibited, I wouldn't recommend it.
Edible?: Yes
Discount Tire: I don't think tire rubber, let alone rubber in general, should be in your stomach.
Edible?: No
Snap-On: This is not Snapple. Eating screwdrivers is not a good idea.
Edible?: No
Wurth: Eating screws? Not Wurth it.
Edible?: No
3. Austin Dillon
American Ethanol: I mean, corn is consumable, while ethanol is drinking alcohol. On the other hand, American Ethanol promotes E15 ethanol, which contains non-drinkable gasoline.
Edible?: No
AAA: Luckily, AAA provides life insurance for when you do something as boneheaded as attempting to eat cars.
Edible?: No
Dow Chemical: Like how pesticides can harm the environment, consuming fertilizer can harm humans.
Edible?: No
4. Kevin Harvick
Busch Beer: If you're 21, then yes.
Edible?: Yes
Jimmy John's: It's a sandwich shop. Last time I checked, sandwiches are perfectly safe to eat.
Edible?: Yes
Mobil 1: It doesn't matter if you're 6 feet or 3 inches tall. I would not recommend drinking motor oil.
Edible?: No
6. Trevor Bayne
AdvoCare: Questionable pyramid scheme tactics aside, you can definitely consume the dietary supplements if you need them. Eating them becomes easier when you get the AdvoBars.
Edible?: Yes
Liberty National Life Insurance: I don't think you can eat an insurance company? You might need them if you consume the product below, though.
Edible?: No
Performance Plus: Do not drink motor oil.
Edible?: No
9. Chase Elliott
Hooters: Mitchell Trubisky once tweeted, "I love to kiss tittiess". Well, Hooters has that and food.
Edible?: Yes
Kelley Blue Book: Unless you can eat a plane, you should not eat a car.
Edible?: No
Mountain Dew: Dank and drinkable.
Edible?: Yes
NAPA Auto Parts: Unless you want to turn into Michael Waltrip, I would advise against eating auto parts.
Edible?: No
SunEnergy1: Solar panels are typically made of silicon, which can be found in certain vegetables and grains like lentils, wheat, and rice. However, solar panels are not a vegetable.
Edible?: No
10. Aric Almirola
Smithfield: Bacon is good. Marinated pork is good.
Edible?: Yes
11. Denny Hamlin
FedEx: FedEx packages are made of cardboard, and while they contain fiber, the adhesives used to bind them should not be consumed. Whatever is in the box may vary.
Edible?: Depends on what's in the box. Just don't eat the box itself
Sport Clips: Hair isn't really a health concern. The FDA's Food Code doesn't even have any sanitation rules limiting how many strands of hair may be found in your food. However, if your hair has lice or has been in any dirty place, it might not be a good idea to eat, and eating too much will just clog your stomach.
Edible?: Sort of?
12. Ryan Blaney
Fitzgerald Glider Kits: Contrary to popular belief, this does not mean a kit will glide down your stomach if you try to eat a truck.
Edible?: No
Menards: Menards is for saving big money, not losing it in a medical bill for trying to eat home improvement tools.
Edible?: No
PPG: If you try to drink paint, you will die.
Edible?: No
REV Group: REV Group sells specialty vehicles like ambulances and RVs. Unless your name is Michel Lotito, do not eat them.
Edible?: No
13. Ty Dillon
GEICO: Most geckos don't carry toxins, but I wouldn't eat them if I were you.
Edible?: No
Twisted Tea: It's not called "Twisted" for no reason, so it's not your regular iced tea. It contains alcohol, so unless you're 21, no go.
Edible?: Yes
14. Clint Bowyer
Haas Automation: CNC machines are for numerical control. If you eat a CNC machine, your days will be numbered.
Edible?: No
Mobil 1: See Harvick.
Rush Truck Centers: Unless your name is Michel Lotito, you should not each a truck. Otherwise, you will need to be rushed to the emergency room.
Edible?: No
17. Ricky Stenhouse Jr.
Fastenal: No, this is not Tylenol. Do not eat fasteners.
Edible?: No
Fifth Third Bank: If you eat money, that won't bode well for your financial future.
Edible?: No
Sunny D: Orange juice is good.
Edible?: Yes
18. Kyle Busch
Interstate Batteries: The moment you try to eat a battery, the alkaline will corrode the insides of your mouth. Not fun.
Edible?: No
M&M's/Snickers/Skittles: M&M's are good. Snickers are good. Skittles are good. Mars candies are good.
Edible?: Yes
Pedigree: Unless you're either a dog or Todd Gilliland, Pedigree is not as good.
Edible?: For humans, no
19. Daniel Suárez
Arris: Even if your crappy Internet makes you want to throw your modem against the wall and break it into tiny pieces, do not eat said tiny pieces.
Edible?: No
PEAK Auto: Antifreeze may taste like sugar, but that does not mean you should drink it.
Edible?: No
Stanley: Tape measures are not the same as Hubba Bubba Bubble Tape. Do not consume. The same applies to eating hammers.
Edible? No
20. Erik Jones
Circle K: Circle K, being a convenience store, sells coffee. Yes, you can drink the coffee.
Edible?: Yes
DeWalt: Don't try to eat a saw. It's a drill, not a dill.
Edible?: No
Tide Pods: Contrary to the meme in recent times and their resemblance to fruit snacks, do not eat the laundry pods.
Edible?: No
21. Paul Menard
Menards: See Blaney.
Motorcraft/Quick Lane: Motor oil is not healthy to drink.
Edible?: No
22. Joey Logano
AAA: See A. Dillon.
AutoTrader: See Keselowski.
Shell Pennzoil: If you pull up to a Shell gas station, make sure the fuel goes into your car and not your body.
Edible?: No
24. William Byron
Axalta Coating Systems: Like PPG, drinking paint will only result in poisoning.
Edible?: No
Liberty University: If you want to piss off a college faculty by eating pieces of their school, go ahead.
Edible?: No
UniFirst: Work uniforms are for wearing, not eating.
Edible?: No
31. Ryan Newman
Bass Pro Shops/Cabela's: Bass tastes good. Fishing rods, hunting rifles, and boats, on the other hand, do not. Use them to catch your meal, not have them be your meal.
Caterpillar: A caterpillar is edible. A Caterpillar is not.
Edible?: No
Liberty National: You'll certainly be needing health insurance if you try to eat insurance papers.
Edible?: No
Grainger: Don't eat tape. Don't eat batteries. Don't eat janitorial buckets. Don't eat swivel chairs. Don't eat staplers. Don't eat lubricants.
Edible?: No
32. Matt DiBenedetto
Can-Am: Side-by-Sides and UTVs are muddy. Do not eat.
Edible?: No
Keen Parts/CorvetteParts.net: I'm not keen on having people eat car parts, including Corvette parts.
Edible?: No
Reddit: Upvotes might be tasty. Downvotes, on the other hand, are a little too salty for my liking.
Edible?: No
34. Michael McDowell
CSX Transportation: Brake for trains, don't break by eating trains.
Edible?: No
Love's Travel Stops: Do not attempt to drink the gasoline provided at a Love's station. Instead, eat something at the restaurants attached to the stops.
Edible?: No
37. Chris Buescher
JTG Daugherty has about 80 primary sponsors with 95% of them food-related, so you can expect at least one of them to be edible, right?
Bush's Beans: Beans, beans, they're good for your heart. The more you eat, the more you fart.
Edible?: Yes
Cottonelle/Kleenex/Scott Products: Yes, there have been stories of people like models eating toilet paper and tissues to stay thin, but that does not mean you should do it.
Edible?: No
Kingsford Charcoal: Use the charcoal to grill some burgers, don't eat the charcoal itself. If you do so, your bowels might be obstructed.
Edible?: No
Kroger: Being a supermarket, Kroger sells food and many other products
Edible?: For the most part, yes
Natural Light: Can't say I'm a beer connoisseur as I'm not 21 yet, but public opinion of this doesn't seem to be too positive. Regardless, you can drink it.
Edible?: Yes
Velveeta: Velveeta is some sort of, to quote Wikipedia, "processed cheese product that tastes like an American cheese, with a softer and smoother texture than cheese." While processed goods aren't the healthiest form of food, it's certainly edible.
Edible?: Yes
38. David Ragan
Camping World: RVs and camping equipment are not for eating.
Edible?: No
Jacob Companies: Neither is concrete.
Edible?: No
Juice Battery: This is not fruit juice we're talking about. This is a battery. See Interstate Batteries for why eating a battery is a bad idea.
Edible?: No
41. Kurt Busch
Haas Automation: See Bowyer.
Monster Energy: Yes, you can drink the Cup Series' title sponsor. Also comes in multiple flavors.
Edible?: Yes
State Water Heaters: On the other hand, you can't eat a water heater. I wouldn't recommend drinking the water inside the heaters either.
Edible?: No
42. Kyle Larson
Credit One: If you try to eat a bank, you'll probably be waving the white flag sponsored by Credit One Bank... of surrender as police officers try to arrest you for vandalism.
Edible?: No
First Data: Likewise, if you try to eat a credit card, that will not be healthy.
Edible?: No
43. Darrell Wallace Jr.
Air Force: Remember my comment on Cessna? The same applies if you're trying to eat an F-35. The LGM-30 Minuteman ICBM is 78,000 pounds, so good luck eating that. As a matter of fact, it's going to be hard to even acquire these in the first place since you're probably going to incur the wrath of the Department of Defense for trying to take its equipment for culinary purposes.
Edible?: No
Click n' Close: I guess you can eat mortgage papers? However, Click n' Close does it digitally, so you might have a hard time trying to eat your computer monitor.
Edible?: No
STP: Motor oil is not for drinking. Don't let the characters in Cars drinking Dinoco fool you.
Edible?: No
47. A.J. Allmendinger
Most of Allmendinger's sponsors like Kroger appear in Buescher's section.
Clorox: I'm not even going to bother with this one.
Edible?: Please don't
48. Jimmie Johnson
Lowe's: You should not eat Kobalt tools. You should also not eat mirrors, fridges, nor PVC pipes. You also should not eat the garden's plants. Unless you're Italian, do not eat confetti. Trust me, I'm a scientist.
Edible?: No
72. Cole Whitt
Rinnai: Like State Water Heaters, the water inside a Rinnai heater is not for drinking.
Edible?: No
RTIC Coolers: Don't eat the coolers themselves, but you can use them to cool actual drinking water.
Edible?: Yes to whatever is inside, no to the coolers themselves
78. Martin Truex Jr.
5-hour Energy: Need five hours of energy? 5-hour Energy is drinkable.
Edible?: Yes
Auto-Owners Insurance: If you try to eat a car, you're going to be needing life insurance, not auto insurance.
Edible?: No
Bass Pro Shops: See Newman.
Edible?: No
Furniture Row: I know they're no longer a primary sponsor, but I would like to urge everyone to not eat their couches and mattresses.
Edible?: No
88. Alex Bowman
Axalta Coating Systems: See Byron.
Edible?: No
Nationwide: If you try to drink Axalta paint, Nationwide will likely not be on your side.
Edible?: No
95. Kasey Kahne
WRL General Contractors: Eating a construction worker will result in deconstruction of your life as cannibalism is morally wrong.
Edible?: No
Procore: Again, do not eat a construction worker.
Edible?: No