Andy Lang
05-13-2002, 03:57 PM
Pretty good article by another actuary on the phony stuff done on TQM (Total Quality Management)perpetrated on the public by actuaries in management consulting firms like Towers Perrin--where it was bigtime.
It started way back in the insurance industry by insurance actuaries, and was helped immensely when firms, like Towers, began to merge with insurance consulting firms, as Towers did in the 80s and other firms later on.
http://www.aapsonline.org/brochures/tqm.htm
The notion that a normal distribution (bell-shaped curve)of medical costs can be held down by simply harassing and forcing the high cost providers down to the mean is patently absurd, and only succeeds to make the lower cost providers raise their prices, thus producing, over time, a cost spiral upwards.
Why? Because most of the higher ones leave the system, while the low cost ones stay, figure out they are undercharging what the market will bear and raise their fees.
You must assess the level of quality of the care given and take account of regional differences in costs, of course, but that is too expensive and hard for insurers to do, so they take the other way out.
I said this in fact back when I worked at the Group insurance department at the NY Life (1961-1965).
Nothing has changed save that the major management consulting firms, with the help of ex-patriot insurance actuaries from that insurance industry have been putting these dumb ideas in at large plan sponsors who are self-insuring their medical plans all over the country, thus driving medical costs up every year, causing the very thing they say they want to prevent and then when it happens find clever ways for that sponsor to tarnsfer more costs to their employees.
A senior actuary at Towers once said to me, that the only way we dont make money is when there is calm and peace and no volatility--the slightest change in any direction and we make money either way.
I said, 'You mean you are all for disorder, chaos and instability?'
He said 'Yes, so long as there is not too much, so that it scares the clients into not taking our services."
I said, 'Isn't that what Hitler and Stalin did to obtain and keep power?"
He said, "Yes, but we dont want armies and civil war, just a lot of fear and us telling and convincing the clients that we know how to solve their problems."
I said, "Well, I got into this consulting business because I am a very good problem solver--one of the best there ever was--and also to escape a corrupt insurance industry, but I didn't know I had to first create the problem I was supposed to solve and then not really solve it, just make it swing the opposite way."
He said, "Well, now you know the Truth."
Ergo, the seeds of my AndyBert Chronciles, the smart-ass Guru who sits on the highest mountain and who began this crazy world, the universe and all the other ones too, who set up the rules--only a handfull of very simple ones, like the negative or positive charge of electrons--but takes absolutely no responsibility for anything that happens thereafter, free will, you know.
I confess that he was also patterned after DogBert, the wise-ass management consultant of Dilbert fame.
AndyBert is the one who first said, 'You can't stand the Truth!' and Jack Nicolson then made it famous, after he went to the Mountaintop to seek wisdom as well.
AndyBert shakes his head at the goings on in America and Earth these days and says it has, with each passing decade, year, month, week, and day, a smaller and smaller likelhood of mankind surviving, but then adds, some of his worlds never do, but there are billions and billions more out there and he planned it that way.
'Besides,'He adds, 'the cockroaches and other insects and trillions of protozoan and viruses will likely survive man's depravations, just like I hoped they would, and then you can start all over--maybe, at least, if not too many weapons of mass destruction are unleashed."
I said, 'Speaking of vermin, how about John Ashcroft--will he survive, or Tom DeLay, or Phil Gramm, or...?"
But then he was gone--never one for wanting to discuss individual humans.
It started way back in the insurance industry by insurance actuaries, and was helped immensely when firms, like Towers, began to merge with insurance consulting firms, as Towers did in the 80s and other firms later on.
http://www.aapsonline.org/brochures/tqm.htm
The notion that a normal distribution (bell-shaped curve)of medical costs can be held down by simply harassing and forcing the high cost providers down to the mean is patently absurd, and only succeeds to make the lower cost providers raise their prices, thus producing, over time, a cost spiral upwards.
Why? Because most of the higher ones leave the system, while the low cost ones stay, figure out they are undercharging what the market will bear and raise their fees.
You must assess the level of quality of the care given and take account of regional differences in costs, of course, but that is too expensive and hard for insurers to do, so they take the other way out.
I said this in fact back when I worked at the Group insurance department at the NY Life (1961-1965).
Nothing has changed save that the major management consulting firms, with the help of ex-patriot insurance actuaries from that insurance industry have been putting these dumb ideas in at large plan sponsors who are self-insuring their medical plans all over the country, thus driving medical costs up every year, causing the very thing they say they want to prevent and then when it happens find clever ways for that sponsor to tarnsfer more costs to their employees.
A senior actuary at Towers once said to me, that the only way we dont make money is when there is calm and peace and no volatility--the slightest change in any direction and we make money either way.
I said, 'You mean you are all for disorder, chaos and instability?'
He said 'Yes, so long as there is not too much, so that it scares the clients into not taking our services."
I said, 'Isn't that what Hitler and Stalin did to obtain and keep power?"
He said, "Yes, but we dont want armies and civil war, just a lot of fear and us telling and convincing the clients that we know how to solve their problems."
I said, "Well, I got into this consulting business because I am a very good problem solver--one of the best there ever was--and also to escape a corrupt insurance industry, but I didn't know I had to first create the problem I was supposed to solve and then not really solve it, just make it swing the opposite way."
He said, "Well, now you know the Truth."
Ergo, the seeds of my AndyBert Chronciles, the smart-ass Guru who sits on the highest mountain and who began this crazy world, the universe and all the other ones too, who set up the rules--only a handfull of very simple ones, like the negative or positive charge of electrons--but takes absolutely no responsibility for anything that happens thereafter, free will, you know.
I confess that he was also patterned after DogBert, the wise-ass management consultant of Dilbert fame.
AndyBert is the one who first said, 'You can't stand the Truth!' and Jack Nicolson then made it famous, after he went to the Mountaintop to seek wisdom as well.
AndyBert shakes his head at the goings on in America and Earth these days and says it has, with each passing decade, year, month, week, and day, a smaller and smaller likelhood of mankind surviving, but then adds, some of his worlds never do, but there are billions and billions more out there and he planned it that way.
'Besides,'He adds, 'the cockroaches and other insects and trillions of protozoan and viruses will likely survive man's depravations, just like I hoped they would, and then you can start all over--maybe, at least, if not too many weapons of mass destruction are unleashed."
I said, 'Speaking of vermin, how about John Ashcroft--will he survive, or Tom DeLay, or Phil Gramm, or...?"
But then he was gone--never one for wanting to discuss individual humans.