So, given the precedent you set earlier, I am now free to think that
you are arguing for actually trying free markets before we institute
And I find more than adequately supported. (g).
The VA can because it is a SYSTEM. The ACA is not a single entity. In
essence you are suggesting that Congress should come in and give
insurance companies this big cost reduction?
I used to make this suggestion, too. Until I couldn't find any
indication (other that the gut feeling that it should) that it actually
happens. And God knows I tried. If there is some newer information (I
gave up around 2000), it would be most appreciated.
America is at that awkward stage. It's too late
to work within the system, but too early to shoot
[lots of stuff snipped]
Bobby, I suspect that there are few if any times that the "free market"
as defined and described by Adam Smith work well on anything other than
a few anecdotal micro-economic examples. In most cases, vested
interests have their fingers on the scale and everything seems to be for
sale to the highest bidder.
Ever see sustained free market pricing among a group of 3 or more gas
stations within eyesight of each other? Why is so much merchandise
marketed to the public by multiple retailers at the absolutely identical
price (before local sales taxes are considered), even on the web? Most
items are price controlled if not outright price-fixed to the advantage
of a variety of all the interested parties except for the end purchaser.
When did the price of gasoline go down substantially and stay there for
very long due to valid market dynamics? Only after the conclusion of an
artificially created shortage and price spike in the early 1970s.
(Another example: The artificially created electricity price spike in
California a few years ago.)
In my experience, very few items undergo substantial relatively long
term price reductions, absent a catastrophic economic deflation. The
primary exceptions that comes to my mind are the ticker prices of some
securities/commodities and the currency exchange values of some
country's currencies. The more common situation is that for some
items, the price may go up over time more slowly or stabilize, and
eventually in year-equivalent dollars becomes cheaper. Or, due to
improvements, you get more for your money and therefore better value.
We're in analytic territory as fraught with complexity and multifactoral
influences as our discussion of health care reform.
I don't deny that competition can, and sometimes does impact pricing,
but rarely is the market free from influences that corrupt a pure
demand/supply equation. The market only "works" as we wish it would if
both the suppliers and the demanders have equal power. If the product
is essential for the demander, the demander has no power and must find a
way to afford the product. Therefore, the supplier can charge whatever
he/she can get away with, even if it means the demander must become
destitute to obtain it. Think chemotherapeutic drugs.
I believe that in most cases, the power balance between the supplier and
the demander is highly skewed and therefore invoking competition as a
justification for exorbitant pricing is a smokescreen. In our society,
money provided by wealthy suppliers to lobbyists, in conjunction with
laws that encourage private funding of elections almost guarantees that
the policy positions favorable to the average Joe citizen will be
under-represented in the office of "Joe's" elected representatives and
Joe is truly being disenfranchised even though he/she may vote.
Gotta close this now. Real life calls.
Health care is an area where it's almost impossible to "even up" the power
differences between buyers and sellers. How can you shop for the "best
price" when you're in the ER with severe chest pains and SoB?
Or worse. The ACA is unlike the universal health care plans of any of the
industrialized nations that I know of. Charitably speaking, it was
structured that way to protect special interests, not to provide the best
health care possible to American citizens at the lowest prices possible.
Uncharitably speaking, it was structured that way in hopes that it would
I believe that eventually a single payer system like Medicare, but with no
age limitations will evolve from the ACA. (Say, isn't giving seniors nearly
free health care age discrimination against the young?) The problem is that
creating a single payer plan just wasn't politically possible at the time
the law was passed. It may be in the future, though.
The problem, as I am sure you know, is "adverse-selection." If insurers
charged everyone the same flat rate, buying coverage would be far more
attractive financially for people with chronic illnesses than for healthy
people. That would cause healthy policyholders to drop out of the insured
pool which would fill up with sick people and thus force insurers to raise
That begins a deadly feedback loop because higher rates make insurance even
less attractive for healthy people, causing even more of them to drop out.
The adverse-selection problem explains why almost no countries except for
the US leave the providing of health care to unregulated private insurance
markets. For that reason alone I don't believe the ACA as written will be
sustainable. People will demand a single payer structured like Medicare
after they've been burned badly enough by the state insurance exchanges.
When NY passed a law intending to solve the adverse selection problem in the
90's, rates for individual policies skyrocketed making New Yorkers'
insurance among the most expensive in the nation. Now, under the ACA and the
larger pool of insured that it represents, residents who had been paying
$1,000 a month for individual policies *should* now be able to purchase
similar coverage on the ACA exchanges for slightly more than $300 a month.
They can offer these lower rates because the requirement in the ACA that
everyone buy insurance or face penalties ensures a higher proportion of
healthy people in the insured pool.
I once asked a Congressman how they justified taking money from so many
special interests and the reply was: "By taking money from *everyone* that
means in the long term we're favoring no one." Not sure if I believe it,
but I am sure plenty of Congressmen do.
And how many of the hospital interactions are like this, let alone how
many healthcare interactions? For most you can if you want to and have
the time and insurance companies are rolling out websites, etc. for you
Nearly free? You obviously haven't priced the MCare premiums plus the
supplements to take care of the many things that MCare doesn't/
Actually that happens now, look up death sprirals. I have long
suggested that all individual policies should be put together in one
group. I am not opposed to all regulation.
Given the general contacerouness of the American population, I would
be surprised if that happened. Even many more moderately left leaning
might take this as a sign that the government can't do the job. We can
And the areas of the country where the state government did not meddle
in areas they did not understand and screw things up will have their
premiums go up. (I mean this tried to address adverse selection and
managed to make it much more of a problem than it was) BTW: There is
fairly decent evidence from MA that great numbers of the young and
healthy will see paying the fine (if found out) a better deal than
"Even I realized that money was to politicians what the
ecalyptus tree is to koala bears: food, water, shelter and something to
America is at that awkward stage. It's too late
to work within the system, but too early to shoot
I have often wondered whether the frequent occurrence of a big increase
followed by a not-so-big decrease may be an intentional psychological
ploy--to ensure that there is less attention paid to the fact that the
net effect is a higher price.
Why compete when you collude? All sellers win that way. Buyers, not so
Sounds like a good explanation of the "stickiness" of prices increases.
Some of the biggest fights that broke out among the economists that helped
build the nuclear survivability model DoD used to maintain concerned what
would happen to various commodity prices after a nuclear attack. We had a
strong, differing opinion from each of the economist on the team, something
I came to learn was pretty common with a team of economists.
So we had to design the model to run using several possible scenarios.
There was a profiteering model that assumed a black market would arise for
critical commodities that even the government would have a hard time
competing with and might need to purchase with gold. (Sadly, my pick based
on historical experience - profiteering and war go hand in hand.) There was
an altruistic model that assumed people would all pull together and there
would be no profiteering and a neutral model that said things would
generally be the same in the post attack world.
Plenty of goods and services have experienced long term price reductions.
How about the cost of communicating, the cost of transportation and the cost
of food. I've come to count on my next computer or electronic device being
less expensive than my old one based upon $/unit of performance, not
necessarily dollars out-of-pocket. Markets don't like that.
My wife's chemo was $13,000 per dose. And the insurance company
declined because it was not officially endorsed for cancer. My appeal
was that "if the standard treatment doesn't work, we can't just do
nothing." The manufacturer wrote off the whole price though.
As for "supposedly non-profit"--it was claimed recently (yeah, hearsay,
I don't know whether it is true) that we are not allowed to use our
non-profit status to "unfairly compete" with the for-profit nearby.
But we can't make a lot of money because we are non-profit.
So we have frequent free health screenings and lots of charity write-offs.
My doctor retired. His office sent a note that said that I could have a
photocopy of my file for the last three years for $50 in the form of a pdf
computer file. OK. It came and was as advertised; but I couldn't read the
doctor's writing. I'll take the computer notes please.
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