Health care conundrums

As I advance in age, I am exposed more and more to the health care industry, despite having enjoyed relatively good health until recently.  As a retired New York State employee, I am blessed with excellent health insurance that covers most doctor visits, medical tests and procedures, as well as prescription drugs, with only a relatively modest co-pay. Here are a few observations:

First, it appears that many of our health problems are what a friend of mine calls “diseases of affluence.”  More appropriately, they should be called “diseases of lifestyle,” since they affect people of all socioeconomic strata.  A lot of these are directly influenced by government policies.  For instance, our auto-centric physical infrastructure minimizes the opportunities for and pleasures of walking and cycling, and cannot help but contribute to obesity and other problems based on lack of physical activity.  Our government subsidies to cane sugar and corn (the main ingredient of high fructose corn syrup) help make junk food and sugared soft drinks attractively priced.  This is especially so for the poor, since the SNAP program (formerly known as Food Stamps) allows their purchase with SNAP benefits.  If we collectively spent more on complete streets that were friendly to pedestrians and cyclists, as well as cars, how much could we save on health care (not to mention on school transportation)?  How about if we stopped subsidizing sugar?  I think it would be worth a try.

For all the criticism leveled against it, the Affordable Care Act (“Obamacare”) has achieved something great — it has shifted the dialog from whether health care insurance should be extended to many of those who don’t have it to how the present system should be replaced or improved.  Neither Trump nor his minions are suggesting that those who obtained health insurance through Obamacare should lose it, meaning that they recognize that there is no going back on government’s commitment to growing numbers of its citizens.  Whether things actually get better or worse remains to be seen, but at least no one is talking a bout a pre-Obamacare “reset.”  To me, that is yuge.

A short visit to Rivers

This morning, I decided to try my luck in getting into the new Rivers casino in Schenectady.  I was able to drive right in, find a good parking spot in the garage, and get on a long line to get my player’s club card loaded with $20 free play for pre-registering on line.  The line moved relatively quickly, and after getting my card I  took a quick walking tour of the casino floor.

As the photos I had seen suggested, the clean modern design was well-executed, and reminded me a lot of the M Resort in southern Las Vegas, a nice property.  The gaming floor was very small, and there were very few video poker machines.  Even at that off hour, all the lower denomination machines were occupied, so it was difficult to ascertain the pay tables.  It was a pleasure not having to deal with smokers, and the ambient noise level – often a sore point with me – was reasonable.

I did see several dollar machines that were not occupied; the jacks or better games on those were of the short pay, 8/5 variety, which is not competitive with the offerings of the Connecticut casinos (9/6) or Turning Stone (8/6 or 9/5).  If you think shorting you one dollar on a flush and a full house doesn’t make much of a difference, you are wrong:

Properly played (using optimum strategy and playing at full coin), traditional “full pay” 9/6 video poker pays back an average of 99.5% of all moneys wagered.  This overall return takes a long time to achieve, since part of it is based on hitting a royal flush, which on average occurs only once in some 40,000 hands, but it’s a useful measure nonetheless, and the best one we have. The overall return  of the “short pay” 8/5 machine (again, based on optimum play at full coin, over a long period of time) is 97.3%, or some 2.2% less than full pay.

While 2.2% doesn’t sound like much, it can add up fast.  Let’s assume play on a dollar machine.  At max coin, that’s $5.00 a spin.  While experienced video poker players can achieve speeds of up to 1,000 hands per hour, and average 600-800 hands per hour, let’s assume a leisurely pace (which I recommend) of 400 hands per hour. That means the player is pushing $2,000 an hour through the machine, which amount is exposed to a house edge of 2.7%.  On average, the house therefore will retain $54 of that amount.  On a full pay machine, with a 0.5% house edge, the house will retain, on average only $10 — more than four times less.  The average hourly cost of playing a $1.00 short pay jacks or better video poker machine is $44 more than a full pay machine.  As we used to say in Brooklyn, “that ain’t nuttin'”.

The blackjack tables I saw on the main floor had $25 minimums, and appeared to use either 8-deck shoes or, on one table, a continuous shuffling machine.  Blackjack payouts were 3 to 2 at those tables.  None was occupied, so further information on playing conditions and rules was not available.  I did not see any of the 6 to 5 double and single deck tables mentioned on the web site, which is just as well.  Unfortunately, I did not have time to look at the other table games to see what the minimums were.  In any event, minimum usually change based on how busy the casino is.  A weekday morning is likely to see lower minimums than a weekend or evening.

In sum, Rivers turned out to offer the mid-level video poker player about what I expected. If it offers the same 8/5 games to quarter players, it is more competitive at that level.  Its main advantage is convenience; unless it extends really good offers and comps to its players, its games are not as good as one can find elsewhere.  And that convenience may be somewhat mitigated by the fact that one arriving at a busier time may not be able to find an available video poker machine or other desired game.  I also have read that, although the casino has a capacity of some 7,000, there are indoor and outdoor spaces for less than 2,000 cars, so parking also may be problem.  When I left a little before noon, the valet already was full, and people were circling the garage looking for spaces.

 

Before you go to Rivers

I.

Its February 8 opening imminent, the Rivers Casino’s public relations operation is flooding the area with advertising and press releases.  The photos I’ve seen of the casino portray a modern, tastefully appointed property that reminds me of some of the nicer off-Strip properties in Las Vegas, such as the M Resort and Red Rock Station.  The restaurants look inviting.  But is it a place where you will want to spend your hard-earned money?

Casinos operate on the principle that they pay out less than the true odds on their games.  An illustration will explain this:  A fair coin, over a large number of tosses, will result in an equal number of heads and tails.  In a game in which you bet on the outcome, the true odds would be even.  Thus, if you bet a dollar on each toss, and lose your bet on heads, but win a dollar on tails, you are paid true odds, and the casino (and the player), in the long run, would break even on the game, which is not a sustainable business model.  Instead, for your dollar bet you may be paid 85 or 90 cents when you win (the casino keeping your dollar if you lose), the difference between the payoff amount and the dollar that would represent fair odds going to overhead and profit.  The difference between true odds and actual payouts can be roughly expressed as the “house edge.”

So, if virtually assured a long term loss, why would anyone gamble?  There are many answers to that question.  However, for the sake of simplicity, let’s choose the most common one – one gambles because of the possibility of “getting lucky.”  While the coin toss will result in equal numbers of heads and tails over a long run, the results are “streaky” — they may come in bunches of heads and bunches of tails, some fairly long.  This volatility can make players winners in the short run.  A well run casino recognizes the necessity of volatility and the winners it produces, and often advertises those who hit large slot jackpots, hoping to persuade others to try their luck.    Because the casino is dealing with a large number of players over a long time, volatility is not nearly as much a factor for it, and it will profit despite the short term winners if its business model is sound.

The more often one gambles, and the more one bets, the more one moves from the short term to the long term.  Volatility recedes in influence, and the house edge asserts itself more consistently.  This is why the educational materials addressed to problem gamblers and potential problem gamblers emphasize that “chasing losses” by continuing to bet seldom works and most often leads to more losses.

II.

A great truth almost never addressed by casinos, their regulators or the general news media is that not all casinos are alike.  In addition to offering different games and amenities, casinos have a wide latitude in adjusting their house edge on many games.  On some games, the player can calculate the house edge.  As I have written, video poker is one of those games. Similarly, the house edge in blackjack can be computed.  Other games, notably slot machines other than video poker, do not readily yield their payoff percentages or volatility.  As I previously wrote, the video poker offered by other casinos run by the company that manages the Rivers has relatively high house edges, and I expect the same here, given the high taxes and fees the Rivers must pay the State.  A recent check of the Rivers web site reveals that its single and double-deck blackjack games will pay 6:5 on a blackjack, which sends the house edge for those games into the unplayable stratosphere (the casino also will offer “shoe games” using more decks that will pay the traditional 3:2 for blackjacks; depending on the other factors, those games may or may not have a reasonable house edge).

If you have guests arriving for dinner in a few minutes, and suddenly find yourself out of something you need to finish the meal, you will go to the nearest store and pay whatever the cost, so that you can return in time to have the meal ready when your guests arrive.  That’s the principle behind convenience stores.  However, for your weekly shopping, particularly if you have a large family, you are likely to be more price conscious, even if it means a longer drive to a larger store.

From the presently available evidence, I predict the Rivers will be on the convenience store end of the spectrum.  If you are a casual, low stakes gambler, and the location is convenient, the comps and offers generous (which remains to be seen) and the atmosphere enjoyable, you can enjoy a day or night out at a reasonable cost if you limit the amount you bring, prepare to lose it, and leave the ATM card at home.  However, if you are a more regular gambler, you may wish to take it easy until you have an idea of how you may be expected to do compared to at the venues you presently frequent.