Obamacare versus arithmetic, with a side trip into the nature of disengaged consumers

Charlie Martin, who has a real knack for simplifying fairly complex mathematical concepts, has a post today about the fact that, when it comes to Obamacare versus math, math wins every time.  I’d like to add my mite to that, which is that, when you have no dog in the fight, you don’t care how expensive the fight is.  As you’ve gotten used to, I’m going to make the journey from the specific (that would be me and my experiences) to the general (a wholesale condemnation of big government, which is the same as bad economics.)

I go to a different dentist from the rest of my family, because I started going to him 15 years ago, and never saw any need to change when they jumped ship to a different guy.  I like the man, I like his office staff, and I like the care I’ve been getting there.

Because we have dental insurance, I’ve never once written a check to my dentist’s office.  I get my teeth cleaned twice a year, like clockwork, and I have no idea how much it costs.

I went recently for a cleaning (you’d be dazzled by my smile) and, as always, didn’t pay.  My husband also went recently and, as always, didn’t pay.  The insurance statements for both our treatments came in on the same day.  These statements revealed that both dentists charge more than our coverage allows for a cleaning, and that both dentists accepted as payment in full the coverage maximum, even though it was less than their “official” charge.  One could say that this proves that insurance works, since the dentists’ willingness to cut their price to the insurance maximum shows that dental insurance controls costs.  Maybe….

What was just as interesting, though, was the fact that my dentist charges $36 more for a cleaning than my husband’s dentist does.  (If that dollar amounts sounds interesting to you, that’s also the recent decrease in food stamp money for a family of four over the course of a month.)  My husband was upset that my guy charges more.  I wasn’t:  (a) I’m not paying it and (b) the insurance company “stiffed” both guys, so it’s the dentists who should care.

The really important point, and the one that completely eluded my husband was that — and I’m repeating myself here — I didn’t care.  I get the services, but I don’t pay.  I have no incentive whatsoever to shop around for a cheaper, yet still good, dentist, and my dentist has no incentive to change his prices.  Either the insurance pays him his rate or it doesn’t.  If it does pay his rate, his high charging gamble paid off; if it doesn’t . . . well, he tried, so no harm no foul.

This is a marketplace distortion, where there is no connection between services rendered and money paid.  The problem isn’t greedy insurance companies; it’s disinterested consumers.  As for the insurance companies, they don’t negotiate either.  They just set caps and that’s the end of it.

I had the same situation years ago, when Kaiser paid for a jaw guard for me because I was grinding my teeth to dust.  I made two visits to the dentist, the first to get a mold for the jaw guard, and the second to get the jaw guard fitted.  The total time I spent there was about 40 minutes.  I saw the dentist for less than ten minutes, total.  I paid for the guard myself ($250 in lab costs).  Kaiser just paid for the dentist’s time and services.  I should add that this took place in the early 1990s, when money had more meaning.  The dentist charged Kaiser $800 for his time and service — and Kaiser paid every cent. I actually called Kaiser to complain.  I was pleased with my jaw guard, but this was still highway robbery. Kaiser was unmoved.  The dentist’s charge fitted into its chart, and that was the end of that.

That event, incidentally, was when I figured out that the problem with America’s healthcare market wasn’t rising medical costs or greedy insurance companies (although both are factors).  It was that the customer doesn’t pay, so the customer has no incentive to shop around or strike bargains.  Because the person getting the services couldn’t care less about the price (it’s other people’s money), there is no competition and there are no cost controls.

My realization about medical costs twenty years also started my turn towards conservativism.  That’s because I figured out that the more things that the government pays for, the worse the market distortion.  The government is not using its own money, it’s using your and my money.  We care about our money, but the government doesn’t.  If it overspends, it just uses its police power to demand more money from us.  That’s its nature, just like the scorpion’s nature.  The only way to control this is to make sure that government is responsible for paying for the smallest number of things possible.

What frustrates me is that people in my neck of the woods don’t get it.  I suspect we have one of the highest concentrations of MBAs in the world right here in Marin, and that we’ve probably got a fair percentage of American’s with STEM backgrounds too.  But try to explain market realities (engaged consumers, competition, and distortion) to them, and you can see the moment that logic flees and faith takes over.  Their eyes start whirling in their heads and they say “No, government is big enough to force price cuts.”  Worse than this economic lunacy is the fact that they don’t recognize that they are advocating tyranny by applauding government’s coercive power to force free citizens to offer services to the government for lower than market prices.  (In this regard, please note that Democrats now want to force doctors who, last I checked, weren’t slaves, to accept patients who will bankrupt them.)

If you want more information about government’s deleterious role in the marketplace, check out Wolf Howling, who calls Obamacare the “mother of all market distortions.”

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Comments

  1. says

    ObamaCare is a very successful act of invasion and taking over of the medical industry, professional doctors and nurses (unions), and insurance companies.
     
    As the insurance companies come more and more under the Regime’s umbrella of control and power, they will Obey Democrats at the same level of the Park Service. Meaning, things will look “friendly” and “okay” as the doctors are “made” to save “patients”, until the Order is given to discard X, Y, and Z because they spoke out against Demoncrats. Then the Order to “make it hurt” is Obeyed and Enforced, with predictable consequences. They will obey whether they want to or not. In fact, those that didn’t want to Obey, would have quit their jobs and medical practices, much as government civic officials quit the park service and government employment before the Age of Obama and Aquarios. As the balance in an organization slants more and more towards Demoncrat faith and loyalty, the naysayers either quit or are forced to Obey. Even in a “friendly” and relaxed place like Marin, social conformity is effective. Imagine what it will feel like when the storm troopers are breathing down your neck, using threats of “death panels” against your family to make you Obey.
     
    Also the insurance companies, as they become more and more in the sphere of control of government, is no longer a business and more like a government/propaganda apparatus. Like the GM nationalization, the wealth will be redistributed from stockholders and people who GM owed debt to, and transfered to Democrat union allies. There will be no competition allowed on a business sense. There will only be those who agree to ally with the Left, and those who will be destroyed by the Left’s terrorism as punishment for disobedience.
     
    Obama, as the current representative of the Leftist alliance’s centuries planned for evil, is doing an adequate and dare I say it, inspired job, in convincing Americas that evil exists. I don’t even have to lift a finger at this point.

  2. Old Buckeye says

    What you’re describing shows exactly why what we’ve called health insurance really isn’t insurance. If it were, you would think more about what it would cost you, just as you might with auto insurance after a wreck: Am I going to make a claim for this $175 fix when I have a $500 deductible? Will my rates go up if I make multiple claims (dentist visits) in a year? And because so many people do carry “insurance” by way of their employers, they never, ever feel the money coming out of their own pockets and hence, have no reason to consider actual costs.
    In your illustration of the doctor bills being negotiated down, and the dentists agreeing to the negotiated payment, it seems to me that whatever the dentist submits to the insurance company is arbitrarily inflated in the hope of getting as much as possible. If he offered a true market-driven service, he would set his prices according to what the market would bear. If he could build a clientele on $150 cleanings, then fine. If he lost patients unless the price was $100, then that would by necessity be his price, not the $500 he billed the insurance company, hoping to be reimbursed something north of $100.
    I wish the term health insurance could be stricken from our vocabulary and replaced by what it has been: a subsidy.

  3. says

     
    Interesting this…..because it was just last week that I received the Explanation of Benefits (EOB) from my Medigap insurer for a recent set of injections for my back.  Understand this isn’t some giant corporation with millions of customers for its insurance.  It’s my church’s Risk Management Services (RMS) that provides for employees (and retirees) of the church and its educational and other entities. 
     
    Anyhow, the envelope I received had TWO EOBs in it — the first one had four lines, with two different amounts, summed at the bottom of the little table.  I’m assuming that one charge was for the facilities used for the procedure and the other was for the doctor’s services, although there was no way for me to tell from the arcane codes they used.  The two additional lines were zeroes all the way across.  The second EOB had a single line and then the sum at the bottom, and both of these figures were precisely the same as the sums from the first EOB.
     
    My reaction was that someone had (inadvertently?) double-billed for the visit and procedures.  So, I called the RMS people and explained to the nice lady what I had.  She spent perhaps ten minutes attempting to justify two different billings before I finally talked her into the fact that it made NO sense that billing for two different things (on the same date) would produce precisely (to the penny) the same charges.  Only then did she promise that she would look into the matter and straighten it out.  What are the odds that a Medicare employee is going to A. notice, and B. do anything whatever, about this double billing?
     
    I then called the provider to talk to the billing person.  She wasn’t in the office, so I left a voice message explaining that it looked like two bills for the same procedure had (inadvertently) been sent out and asking her to call me to discuss it.  If I don’t get a call back, I’ll get in touch again.
     
    And, by the way, an earlier bill I got from the clinic included a charge for “conscious sedation”, which I had REFUSED, after a good deal of discussion of what they used (Versed) and could they provide me with the med they had used the first time (No) because I have a disturbing reaction to Versed.  I subtracted that portion of the bill relating to the sedation when I paid.
     
    I guess the point is that I doubt very much that there are large numbers of folks who go over the bills they get – mostly they just pay.  And if my church “insurance company” is so “careless” as to pay two identical bills without stopping to say “Wait a Minute”, just think about what employees for a huge corporate insurer are going to do….and consider that the carelessness of a government agency’s employees will be worse by orders of magnitude.

  4. jj says

    Absolutely correct, Ymar.  The only question remaining is: when is somebody going to get their hands around the throat of the legal industry?  Which costs us all (nobody escapes:everything you do or buy has a ‘lawyer tax’ built in), damages the society and the nation every single day, and routinely strips feathers from everybody else to line their own nests.  And then makes it legal to do so!  But perhaps the greatest coup is to make the average low-information voter (i.e. democrat moron) think that doctors are overpaid, a hazard to traffic, and should be controlled.  That is genuinely amazing. 

  5. says

     
    Really fascinating piece on NRO’s Corner recently, dealing with the difference in how the Left treats teachers v. doctors.  First two paragraphs:
     
    “Pay teachers more. Shrink class sizes. Upgrade classroom materials. These are the standard positions taken by teachers’ unions and their political allies on the left. The belief is that more school spending, especially on across-the-board pay raises for teachers, is essential to improving education.
    “These views are mistaken. Teachers are not underpaid, and total education spending — which has more than doubled in real terms since the 1970s, with little change in test scores — is wasteful and excessive. But that’s not the point I want to make here. What I really find striking is that the Left treats teachers in the opposite way that it treats doctors.”
     
    Read the whole thing: http://www.nationalreview.com/corner/362878/teachers-down-doctors-jason-richwine
     
    And don’t miss the comments!!  :-)
     

  6. says

    Earl, the Left has teacher’s unions, which fund part of the Leftist alliance’s war chest due to the (mandatory) union dues.
     
    While nurse and medical unions do exist, I’m not sure they provide the same level of war funding for the Left. Even if they do, that’s only for licensed workers, not licensed doctors with degrees. Doctors with degrees would be more closely associated with the school system. Perhaps they are depressing doctor costs in order to allow nurses to be able to prescribe medicine, like in Canada/Europe from what I’ve heard. The unions exist to provide benefits to their slave farms, in exchange for the sweat of the slaves, which will be funneled towards a war to keep humanity forever in shackles. I have yet to detect a similar organization for doctors and those who graduate from medical schools. While medical schools are not as Leftist as English and gender studies, they also don’t seem to fit in the same category as engineering or physics.
     
    Psychologists, though, are very Democrat in % and I suspect their rates will go up due to that factor. Surgeons and various other hard science related medical fields, probably will go down in quality and availability as people quit and refuse to be slaves.
     
    To put it simply, the more teachers are paid, the more Democrats can launder the money back into weapons research. The more doctors are paid, the more the money is funneled towards helping patients and humans, so the Left doesn’t particularly see a need to increase doctor compensation or malpractice protections.

  7. Caped Crusader says

    Bookworm, I think perhaps you do not understand how the game is played quite as well as you think you do. Let me add the perspective of one who for 45 years ran a solo medical-surgical office from the time 95% of patients paid their bill on the way out of the office, until the time less than 1% paid anything other than a small copay, if anything. The prices charged and the expectation of what any provider expects is beyond comprehension and grows more so by the year. The doctor in becoming a “participating member” of any prepaid entity, be it private or governmental, agrees to accept whatever the insurer chooses to pay as full payment. Balance billing in not allowed in most instances, there being rare exceptions. It is identical to the mafia coming around to collect protection money, so you will not be harmed. You either play ball or you go under. You always have the choice of not joining the “team”, but as multiple studies have shown, even the patients that love you, only love you $2.00 worth, and since they have already paid, they are going to an “approved” provider listed in their little book or on the website.Therefore, the provider has really no choice other than to play ball with the health care mafia. They can choose not to join, but will have no patients. Doctors are having the noose tightened progressively each year with ever increasing demands coupled with ever decreasing payments. The demands of very costly computer systems, more complex rules, and ever increasing legal hoops one must jump through means the era of the individual provider or small office is over. Everyone now is transitioning to large groups where the cost per person will be less. Every time I go to the hospital or doctor you are presented with a new set of forms you must fill out because the computer system has changed, along with reams of paper telling you of all the precautions that are being taken to guard your privacy, which is complete bullshit, but required  by federal law. On my wife’s  last visit her doctor informed her, that according to the computer info, she had terminal cancer, although she is in good health, this was entered in error by someone untraceable. So much for the beauty of instant digital records. Since in some cases it is no longer possible to stay afloat some are going to concierge practices, accepting only patients willing to pay a reasonable fee for their services. You will see more of this until the government stops it by law.
     
    I have known many fine surgeons who have given up practice, preferring to work for hospitals, etc. where they will receive a salary and regular hours rather than the hectic life of a general or traumatic surgeon. There is developing an acute shortage of general surgeons due to the reimbursement and long hours and unpredictable life. I recently saw a program on a health channel tracing the life of a brilliant young woman surgical Johns Hopkins resident during a 60 hour shift where she would likely have no rest during these hours. At the end of the show she stated she was quitting because she realized working 60 hour shifts for several years, earning less than minimum wage was not the life she could stand, and no normal person would choose to do it. You have no need to fear though when the shortage becomes acute the government will import doctors from places such as Afghanistan. Highly trained doctors seldom begin earning a decent income before the age of 35, due to the many years of training required, and if not allowed to earn a good income there will be an ever fewer highly qualified persons entering; so the deficit will be made up by poorly qualified and motivated individuals.

     
    As anyone watching TV these days can attest rather than Betty Furness (showing my age) you the reasons you should buy the latest refrigerator/freezer, you are constantly bombarded by slip and fall lawyers begging you to sue some drug company, nursing home, etc. Obviously a great source of shakedown income. As soon as their buddies in Congress have complete control, their stupid, greedy necks will be on the chopping block when it is the government paying all the bills.

  8. jj says

    Oh no, Crusader.  Their stupid, greedy necks will never be on any block, chopping or otherwise.  See, they are their buddies in congress.  Far too many of those in congress are lawyers, and the ABA makes certain they’re the biggest contributors every cycle.  All the rest of us will go down, but the lawyers will be fine.  The nation and its government are, after all, their deck.  For the last fifty years (probably longer) they’ve been diligent in making sure it’s stacked.

  9. Mike Devx says

    Caped Crusader, I think you are dead on accurate in your #7 comment.  I urge everyone to read it carefully.
     
    A Virginia Democrat representative has just filed a bill that demands that every doctor accept all necessary Medicare and Medicaid patients.  Think about that.  My PCP (doctor) is already full up; she races from appointment to appointment already.  If she were forced to accept fifty new patients by mandate, she would have to cut fifty current patients.  Or “work for free” for the government, which may actually be the point of this bill.
     
    I have seen statistics that state we already have a shortage of about 90,000 doctors in the USA.  I will say I don’t know how accurate such stats are.  But… what if they are accurate?  Ope of Caped Crusader’s points is that it takes a long time to gain the skills and become licensed to practice medicine, and at great cost.  Then our system forces doctors to carry expensive malpractice insurance.  Even before ObamaCare, the onerous regulations make the practice of medicine in some ways a nightmare.
     
    We’re already hearing about those “greedy evil insurers” who are refusing to create new health care policies for about two million of their existing customers – never mind that the Obama regulations, written AFTER the passage of ObamaCare, deliberately created the problem.  No, no… it’s the “greedy evil insurers!”  How long before we start to hear stories about the “evil, greedy doctors”?  Everyone who doesn’t fall into line will be greedy and evil, in one way or another.  This has always been a favorite tactic of the Statist left, even before the race card assumed its prominence as a tactic.  “Greedy and evil” will always have it’s place as a tool of coercion.
     
    In agreeing to become a part of the Democrat machine, public school teachers have lost most of their public professional respect. They are little more than cogs in the vast government machine, merely providing a government service.  Tell me really, is there any difference between a public school teacher and a post office employee?
     
    I believe the leftist alliance behind ObamaCare views doctors the same way, and they will seek to turn doctors into a government service too.  Doctors today belong to a profession that still commands public respect, but that will end once they are turned into just another set of government service providers.  The AMA does a somewhat decent job of protecting us from bad doctors; the goal is that if you’re licensed under the AMA, you’re a dependable doctor.  But under ObamaCare, how long before we see “government-licensed doctors”, not even under the AMA?  They’re just licensed to be a part of the government-provided health care system, and you, as an ObamaCare  patient, had better just shut up and just take your medicine.  (And what do you think you’ll be able to actually DO about it, anyway?)
     
    I wonder if we will ever accept as a basic truism that, for your entire profession to be put under government control, means that you will become a government service provider.  And any respect you and your profession may once have had will disappear as a result.  The only freedom you will have remaining is the freedom to leave, to leave the miserable conditions they’ve created, to pursue your happiness elsewhere; and they will still hate you even for that.
     

  10. Caped Crusader says

    Mike, one big misconception you have is the relationship between doctors and the AMA. Over the span of the 56 years I have been involved with medicine, I have seen a situation in which nearly all practicing doctors were members til today when fewer than 17% belongs, when I last heard over 5 years ago. The AMA is held in total contempt by nearly all today, and they have been all for Obamacare. I am a lifetime member having become so long ago when they were respected, or I would not belong. And when the oldtimers such as myself die off it will become a vacant organization. The AMA also has nothing to do with the licensing or approval of doctors, and never has; being always a voluntary organization, supposedly representing the best interest of doctors AND patients, and publishing an array of medical journals, thereby reaping the advertising profits from drug companies vying for the attention of doctors.
     
    State medical boards and various specialty boards deal with the approval and certification of doctors to practice medicine. As to a shortage of doctors, I have my doubts about that. When I went to medical school in the 1950’s there were 85 medical schools; presently there are 170, almost exactly matching the population growth. There were no medical schools in most of the western mountain and desert states if you can believe that. Florida was just starting their first and there were people in my class from states like AZ, FL, NE, WY, ID. the states would actually pay my state to educate their doctors since they had no schools. There is no such problem today as many of these states have seen a boom in inward western and southern migration. It was a big joke in the 50’s that the FL board kept flunking W.A.D. Anderson, M.D. (the big daddy author of pathology textbooks, known as Big and Little Anderson) recruited by Miami as they were starting their school. Seems he could not pass the tough FL boars devised to keep old doctors from retiring to FL and working only part time, since they wanted only full time, due to population boom. Somehow no one had not informed them he was to be passed regardless of the test.
     
    There would not be a shortage if the doctor was allowed to practice medicine rather than being a cipher for the government 70% of their time.

  11. says

     
    The newest thing is requiring the physician to enter orders and do charting personally on the computer.  These used to be dictated quickly, and the data entry was done by the ward secretaries.
     
    No more….now the guy with 8-10 years of specialized training after college gets to sit and type in the data…and a bunch of them never really learned to type.  Furthermore, they are being made the “beta-testers” of the giant computer programs, since the feds have required it if the hospitals are to be reimbursed.
     
    Is it any wonder there’s a “doctor shortage”?  Expect it to get worse.

  12. says

     
    I’ve just run across a story (H/T Instapundit) that perfectly expresses what government-controlled medical care will be like:  http://www.theatlantic.com/health/archive/2013/11/in-between-the-fda-and-pharma-people-wait-for-treatments/281076/
     
    “Polycsytic kidney disease causes cysts to grow, continually, throughout my kidneys. It will eventually clog them, and they’ll stop working. PKD affects 600,000 Americans and costs taxpayers more than $2 billion per year. It also occupies an estimated 5,000 spaces on the kidney transplant waiting list. In late August, the U.S. Food and Drug Administration announced that it would not approve tolvaptan—the only PKD treatment that has been shown to work.”
     
    Go and read Why……  Then, get angry….and get busy.

  13. Caped Crusader says

    Earl #10    Stop it, you’re cracking me up!!
     
     
    Earl #12  This is the reason the doctor seldom looks at the patient anymore, staring constantly at the computer screen as they enter info. You could be sitting there with a carbuncle the size of a watermelon on the end of your nose and they may not see it or ask you about it. So much for physical diagnosis. There’s an old saying in medicine, More is missed by not looking, than by not knowing”. If you notice now your blood pressure and chest iand abdomen is examined through your clothing these days, no one taking the time to have your clothing removed, which was medical heresy until recently.

  14. says

     
    C.C.: I’ve noticed that a lot of the nurses, and even docs, will put the sphygmomanometer cuff right over the shirt sleeve, if I don’t object.  That CAN’T be right!!  I roll that baby up — how hard is it anyhow?  And the same with the stethoscope — some docs will put it under my shirt, but others listen THROUGH the fabric. 
     
    What’s this about?  How much time can it save to do this?  What ARE they teaching them in the med schools these days?!?
     
    Here’s a story out of Canada that serves two purposes — puts the lie to the canard that Canadian health care is so much better than American….and also is a warning as to what’s coming to this country if we don’t get active and stop it:  http://globalnews.ca/news/927721/milton-mother-devastated-after-ohip-fails-to-cover-cancer-treatment/
     
    “Fletcher was told by her doctors the cancer drug Bevacizumab, which goes under the trade name Avastin, could potentially extend her life by a year or even longer. But six months of treatment costs roughly $48,000 and is not covered by the Ontario Health Insurance Plan (OHIP) in cases of brain cancer….If she lived in British Columbia, Saskatchewan or Manitoba the entire cost of the treatments would be covered by provincial health insurance.”
     

  15. lee says

    Several years ago, I did some research for my boss (a MD doing laboratory research) on the history of of a vaccine developed for rotavirus, which causes diarrhea in infants, and in the us, caused ~2.7 million cases of severe gastroenteritis in children, with ~60,000 hospitalizations, and around 37 deaths each year. This was before a vaccine finally went on the market. The history of the vaccine is tragic though. It is suspected to cause the deaths of almost 450,000 annually world wide.
     
    A vaccine was developedin the 1990’s, and went through clinical trials, with no apparent serious sideffects, and was approved for general use. However, after it went on the market, some suspected that it caused an increase in intussuception in infants, estiamted to be approx. one of every 12,000 vaccinated infants. (I am getting this number from Wikipedia; I don’t have the report I gave my boss; that’s been a few years now.) It was withdrawn from the market, and it was several years later when a MEXICAN PHARMACEUTICAL COMPANY developed a vaccine that one was finally available on the market. The thing about statistics and risk management of the earlier vaccine is that (and this I am recalling from my suprevisor’s conclusions) the incidence of intussuception was STILL STATISTICALLY SIGNFICANTLY LESS than the number of severe/complications from rotavirus, and the number of deaths from intussuception was STATISTICALLY SIGNFICANTLY LESS than the deaths from rotavirus. There was a trade-off; sure, and it was a serious trade-off, but FEWER CHILDREN WERE GOING TO DIE. Didn’t matter, the pharmaceutical company yanked it from the market to avoid crippling litgation.
     
    If the idiots in Washington REALLY wanted to decrease the costs of heathcare, and make it MORE AFFORDABLE, the first thing they’d address is TORT REFORM. The costs of litigation and malpractice insurance (thank you, John Edwards) is insane. That would have helped FAR MORE THAN THE ABOMBINABLE HEALTH CARE ACT.

  16. says

     
    lee: I can’t see a problem with releasing a vaccine such as the one you describe, PROVIDED that the facts are revealed to those who receive it.
     
    Transparency is key…it’s not for the “experts” to decide what’s “worth it” in terms of lives saved and lost and then do what is “best for us” without explaining the situation.
     
    The fact is that the kids who died of intussuception were not the same ones as those who would have died of the rotavirus….and it is the parents who have the responsibility for weighing the issues and making the decision for their kids.
     
    I agree completely with your point about tort reform…our system is set up to benefit one group – and that’s the tort bar.

Trackbacks

  1. […] Keith Koffler says what we all knew: Obamacare is structured to destroy the employer-provided health insurance system. I actually don’t have a problem seeing that go. It was a relic of WWII and it always perverted the health care market by removing people too far from the out-of-pocket costs of their health care. […]

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