Private enterprise bankrupting America?

[bb113]

I still think you are jumping to conclusions. Why do you think healthcare spending has been rising exponentially worldwide for the last 50 years?

[1714251179]

1714251179

[1714251179]

1714251179

[Hawker]

No - that's just you changing the subject.  Its a nice graph though.  You will notice that the US spends a lot more than anyone else.  Yet it has worse results.  You are wasting a ton of money and if that were fixed, the US deficit situation would be transformed.

[bb113]

I agree that the US spends more than everyone else. I have throughout this thread. What I am unconvinced about is that universal healthcare would fix this problem. I think it is more complicated than a single number can convey:

In the US, the average cost per person is $7k/year, but look at the distribution of that cost:


http://www.ahrq.gov/research/ria19/expendria.htm

Is it normal for 5% of the population to be responsible for 40% of healthcare expenditure? I was looking for a chart like this for canada or the UK but haven't found one.

Also, I think that "cutting healthcare spending in half would fix america's deficit" is jumping to conclusions. It is not like that money goes down a black hole. It is being transferred from one type of person to another. To know if there would be an effect on the deficit we would have to estimate the opportunity cost of the money being spent on healthcare, know how much wealth is being transferred out of the country, etc.

[Rassah]

Hawker, if I may ask, what kind of economics or business background do you have? I can't figure out if it's "none" or if you learned econ from someplace... "weird"... is the only way I can think of putting it. Basically a lot of what you are saying makes little to no sense when applied to the basic Supply/Demand on Price/Quantity chart.

[bb113]

Hawker, if I may ask, what kind of economics or business background do you have? I Can't figure out if it's "none" or if you learned econ from someplace... weird is the only way I can think of putting it. Basically a lot of what you are saying makes little to no sense when applied to the basic Supply/Demand on Price/Quantity chart.

Well the basic idea is that:

1) People will spend every last penny on healthcare

2) A large single payer/insurer will be able to negotiate better prices

Therefore, people will not make rational economic decisions when it comes to healthcare and government intervention is more efficient.

[FirstAscent]

Hawker, if I may ask, what kind of economics or business background do you have?

I call bullshit on your underhanded line of questioning which leads nowhere.

Irrelevant in every measure. Argue the points, not what you presume are the credentials or lack of credentials of the person you are arguing with. There rarely is no better expert than one who is passionate about a subject.

If you wish, I will personally engage you (with extreme confidence) in any of the following topics, even though I have no formal education in any of them:

- Computer graphics
- Philosophy of mind
- Climate change
- Filmmaking
- Environmentalism

[Hunterbunter]

I still think you are jumping to conclusions. Why do you think healthcare spending has been rising exponentially worldwide for the last 50 years?

Hasn't the money supply also been expanding exponentially worldwide for the last 50 years?

What's the rise in healthcare costs compared to say, GDP, over 50 years?

[bb113]

I still think you are jumping to conclusions. Why do you think healthcare spending has been rising exponentially worldwide for the last 50 years?

Hasn't the money supply also been expanding exponentially worldwide for the last 50 years?

What's the rise in healthcare costs compared to say, GDP, over 50 years?

I still think you are jumping to conclusions. Why do you think healthcare spending has been rising exponentially worldwide for the last 50 years?

Thats cost to PPP, you will see a similar pattern if adjusted to GDP or GNP. You will also find there are different estimates for each of those values from different organizations (sometimes disagreeing by alot). I don't know the details.

[Rassah]

Hawker, if I may ask, what kind of economics or business background do you have?

I call bullshit on your underhanded line of questioning which leads nowhere.

Irrelevant in every measure. Argue the points, not what you presume are the credentials or lack of credentials of the person you are arguing with. There rarely is no better expert than one who is passionate about a subject.

I am sure a conservative Christian or a Green Peace environmentalist is VERY compassionate about their respective subjects, but I guarantee you that does not translate to the Christian's understanding of theology, anthropology, and biblical history, and it does not translate to the Green Peace environmentalist's understanding of climate, economics, or technology related to the environment. Marx and economists of the Soviet Union were very passionate about economics as well. That didn't mean the were correct.

My reason for asking is because this isn't the only place I've discussed econ with Hawker, and I am genuinely confused as to what his understanding of economics is.  If you wish me to be specific, the particular parts of his post which case me to (once again) raise an eyebrow were:

"National mandated prices are the only rational option"  (paying a price that's higher or lower than it's cost or utility is not "rational")
"only country where the shortages ... you occur is the USA" (how can things in a free market experience shortages?)

And many other claims in other topics, such setting a floor price for things (such as wages) does not translate to shortages for things (unemployment), that there is no such thing as competition in the market, and without price support, everything would cost close to 0 (or employers would pay EVERYONE only enough to keep them alive), etc. etc. etc. This even extended into a long debate about copyright industry needing government protection for price support, otherwise prices for all intellectual property will become $0. All of his points are exactly the same here; just replace "wages" with "drug prices" and "unions v.s. employers" with "government mandates v.s. free market insurance."

I am not asking for credentials, degrees, or certificates. I am only interested in where his understanding of economics comes from, because his ideas seem so diametrically opposed to reality that I don't even know where to begin to debate with him. I mean, is he a Keynesian socialist, a Marxist, someone who learned about basic economics and got confused about something somewhere, someone who is just guessing based on things learned by discussing this in forums, or is it just a language barrier issue? I don't know if discussions with him should be based on the assumption that this very basic and underlying tenant is true http://en.wikipedia.org/wiki/Supply_and_demand, or if he uses some totally different system I'm not familiar with.

[FirstAscent]

Hawker, if I may ask, what kind of economics or business background do you have?

I call bullshit on your underhanded line of questioning which leads nowhere.

Irrelevant in every measure. Argue the points, not what you presume are the credentials or lack of credentials of the person you are arguing with. There rarely is no better expert than one who is passionate about a subject.

I am sure a conservative Christian or a Green Peace environmentalist is VERY compassionate about their respective subjects, but I guarantee you that does not translate to the Christian's understanding of theology, anthropology, and biblical history, and it does not translate to the Green Peace environmentalist's understanding of climate, economics, or technology related to the environment.

Again, completely irrelevant. Just because someone supposedly knows a lot about a subject does not mean that they don't. It might very well be the case that a particular Green Peace environmentalist does know a great deal about the subject matter at hand - or not.

My reason for asking is because this isn't the only place I've discussed econ with Hawker, and I am genuinely confused as to what his understanding of economics is.

His understanding would be exactly as he has portrayed it, possibly more so, but certainly not less. Same goes for your often ignorant understanding of free markets. It really doesn't matter what your background is. What matters are your ideas. Anytime you wish to be educated on that subject, let me know.

"National mandated prices are the only rational option"  

Sometimes overstating something is the only means by which to draw attention to the diametrically opposite and obtuse views of the audience.

I am only interested in where his understanding of economics comes from, because his ideas seem so diametrically opposed to reality that I don't even know where to begin to debate with him.

Usually, that's a signal that you should start listening, at the very least. See my above statement.

Oh, and I'm dead serious about engaging in a discussion about free markets with you. Correct me if I'm wrong, but I seem to recall that your belief in them is so fervent, it borders on religion.

[Rassah]

My reason for asking is because this isn't the only place I've discussed econ with Hawker, and I am genuinely confused as to what his understanding of economics is.

His understanding would be exactly as he has portrayed it, possibly more so, but certainly not less. Same goes for your often ignorant understanding of free markets. It really doesn't matter what your background is. What matters are your ideas. Anytime you wish to be educated on that subject, let me know.

I would love to be educated on the subject, but I can't even start my education when I come to the table with the understanding that some abstract like a ¶ means the number 2, and someone else describes their idea from their understanding that a ¶ means the number 3. Until I understand what the other person's premise that they are building their ideas on comes from, I can't understand what it is they are actually trying to say.

"National mandated prices are the only rational option"  

Sometimes overstating something is the only means by which to draw attention to the diametrically opposite and obtuse views of the audience.

If the purpose of the statement is to "overstate something" just to draw attention, as opposed to making factual claim, that only confuses things further.

I am only interested in where his understanding of economics comes from, because his ideas seem so diametrically opposed to reality that I don't even know where to begin to debate with him.

Usually, that's a signal that you should start listening, at the very least. See my above statement.

Oh, and I'm dead serious about engaging in a discussion about free markets with you. Correct me if I'm wrong, but I seem to recall that your belief in them is so fervent, it borders on religion.

Usually that's a signal to start listening. Sometimes that's a signal that I'm listening to a raving lunatic. That's what I want to find out.
My belief in mathematics and laws of physics is so fervent it borders on religion, too. I don't have a "belief in the free markets." I only have a basic understanding of how markets work based on certain specific laws of supply and demand, just as I have an understanding of algebra based on the specific laws of addition, subtraction, multiplication, and division.
In this case, I would love for you or him to educate me as to how, according to his claims, the following example is incorrect:

The free market price of a pill, if left to be exchanged freely, is £0.35. At that price, companies are able to make 250 pills, and only 250 people are able to afford them.
Government comes in and demands the price be lowered to £0.25. At that price, it is much less profitable for companies to make the pills, so they drop their production to only 150 pills, using the rest of their resources on other more profitable things. On the other hand, at that reduced £0.25 price 350 people can now afford the pills.
According to this model, although the price has dropped from £0.35 to £0.25, making it so that many more people can now afford the pills, the actual production of the pills will be decreased, too, and the shortage of pills will be the Demanded Amount - the Supplied Amount, or 350-150=200. Overall, fewer people will be able to get the pills, too (just 150 people as opposed to 250 if open to the market).

This is the 2+2=4 of economics. Econ101 day 1. Hawker has repeatedly asserted that this is not the case, that there will not be a shortage of pills, that there will not be a shortage of jobs, and that this law somehow does not apply. I want to know WHY. Why is this basic model wrong? I can't discuss mathematics when I base my understanding of everything on 1+1=2, and someone else understands it as 1+1=10. If I was asking where the econ background came from, it's only because that may shed light on why he believes it is wrong, or on the simple fact that he may not eve be aware of or understand it.

[FirstAscent]

This is the 2+2=4 of economics. Econ101 day 1.

Of course. That's not what is at issue. I have no interest in disputing the mathematics. What I dispute is the desire and belief that the application of 2+2=4 to economics is better than the application of (2 + 2) * 1.012 - 0.2 = 3.848.

Nobody disputes the supply and demand curves. What you're missing is there are an infinite number of ways to shift the demand curve left or right and an infinite number of ways to shift the supply curve up and down.

Free markets, unmodified, in all their raw form, are not as wonderful as you think. They usually exploit, to the detriment of our future, because the market participants are individuals maximizing their own present reality.

Free markets should be constrained and regulated. Are they being constrained or regulated right now? Yes. Are they being constrained and regulated in the best possible way? Probably not. Are zero constraints and regulations the most desirable? Absolutely not.

In the case of your pill, a solution is to allow the government to tax things which cause people to need the pill, thus reducing demand for the pill (shifting the demand curve left), and then use that tax revenue to subsidize production of the pill, while moving the supply curve until it gets enough pills into the hands of those who need it.

With regard to the environment, taxes should be applied to things we want less of, and then the revenue should be used to subsidize that which we need more of which does not harm the environment.

Things we want less of (which are unsustainable and should be taxed):

- Natural resource depletion
- Wilderness destruction
- Pollution
- Inefficient products

Things we want more of (and should be subsidized):

- Super efficient products

[Hawker]

I agree that the US spends more than everyone else. I have throughout this thread. What I am unconvinced about is that universal healthcare would fix this problem.
..snip...

Ah. if by 'universal healthcare' you mean state delivery, we are probably in agreement then. My objection to the US system is that it gives patent monopolies to the manufacturers and then any effort to enforce sensible prices is somehow called 'socialism'.  Many countries with fine health systems do the delivery privately.  The important thing is that it has to be close to free at the point of delivery and that drug costs are negotiated nationally so the drug company has to choose between abandoning a market and a profitable contract.

[Hawker]

...snip...
This is the 2+2=4 of economics. Econ101 day 1. Hawker has repeatedly asserted that this is not the case, that there will not be a shortage of pills, that there will not be a shortage of jobs, and that this law somehow does not apply. I want to know WHY. Why is this basic model wrong? I can't discuss mathematics when I base my understanding of everything on 1+1=2, and someone else understands it as 1+1=10. If I was asking where the econ background came from, it's only because that may shed light on why he believes it is wrong, or on the simple fact that he may not eve be aware of or understand it.

The odd thing here is that you are faced with reality in the form of a comparison of what Americans pay and what other countries pay. 

And your response is that this reality doesn't match Econ101. 

Really?

[bb113]

Free markets should be constrained and regulated. Are they being constrained or regulated right now? Yes. Are they being constrained and regulated in the best possible way? Probably not. Are zero constraints and regulations the most desirable? Absolutely not.

Does anybody know the best possible way? No. Does the US government mess up everything they try to regulate? Sure looks like it. Even if the intervention starts out OK, one unintended consequence inevitably piles on another until it is eventually worse than the "free market" result would have been. At least that is what I observe, if you have examples otherwise please educate me.

I agree that the US spends more than everyone else. I have throughout this thread. What I am unconvinced about is that universal healthcare would fix this problem.
..snip...

Ah. if by 'universal healthcare' you mean state delivery, we are probably in agreement then. My objection to the US system is that it gives patent monopolies to the manufacturers and then any effort to enforce sensible prices is somehow called 'socialism'.  Many countries with fine health systems do the delivery privately.  The important thing is that it has to be close to free at the point of delivery and that drug costs are negotiated nationally so the drug company has to choose between abandoning a market and a profitable contract.

So, Government intervention has messed things up in the first place, getting us to the point where now we need further intervention on top to try to remedy the situation. US Drug patents make no sense. You have a 20 year window to take advantage and probably 10 years of this is spent in trials, so the rational thing for these companies to do is add something innocuous like an ester group on to mess with solubility and get the patent extended. Of course, the trials could have been done with the esterified prodrug originally (most of the time a drug can be improved this way), but it makes more sense for the pharm company to save it for later. Generic drugs are no more expensive in the US than elsewhere, but the pharm companies spend a ton on marketing to get patients and doctors "used" to the name-brand so they don't switch over even after it is off patent.

I'd like to say we could get rid of drug patents all together, but I can't see how this could be compatible with making the recipe public. So, drug recipes would have to be trade secrets, and even then wouldn't usually be that difficult to reverse engineer. Unless someone devises a way around that problem, perhaps a nationwide insurer is the best solution to drug distribution. Before concluding that, however, I would also be interested in how the government regulates the insurance industry, forcing them to cover certain conditions, etc and what effects that may be having.

Anyway drugs are still only like 10% of total healthcare spending. I want to return to this, which indicates the problem is more complicated:


http://www.ahrq.gov/research/ria19/expendria.pdf

This chart says that $1 trillion per year is spent on the healthcare of 15 million people in the US, then $1 trillion is spent on the other 300 million combined. It is clear we should focus on what is going on with this top 5%.

[Hawker]

As you say, the issue is more complicated that drug suppliers.  The US has a work permit system for everything from barbers to real estate agents.  It costs less than 2% to sell a house in the UK and its about 6% in the US because of the work permits needed to be a broker.

Not sure why you are worried about 5% of people getting most of the expenditure.  One would assume that they are dying and most of the health money ever spent on you is normally spent in the last year of your life.

Anyway, my central point remains the same.  People post that the US is on an unsustainable course.  At any point, the US can transform its economy by controlling health costs.  Its not easy as the country seems to be dominated by a rentier class but it can be done. The sad thing is that the arguments against controlling costs are always the "free market will provide all we need" blather. 

[Rassah]

In the case of your pill, a solution is to allow the government to tax things which cause people to need the pill, thus reducing demand for the pill (shifting the demand curve left), and then use that tax revenue to subsidize production of the pill, while moving the supply curve until it gets enough pills into the hands of those who need it.

Thank you! That makes a whole hell of a lot more sense than "set a price ceiling and don't worry about deficits" or "read the article." My confidence is restored.

[Hawker]

In the case of your pill, a solution is to allow the government to tax things which cause people to need the pill, thus reducing demand for the pill (shifting the demand curve left), and then use that tax revenue to subsidize production of the pill, while moving the supply curve until it gets enough pills into the hands of those who need it.

Thank you! That makes a whole hell of a lot more sense than "set a price ceiling and don't worry about deficits" or "read the article." My confidence is restored.

I don't get it.  Once a person needs a drug, they need it.  You can't change the demand unless you kill them. 

[SgtSpike]

In the case of your pill, a solution is to allow the government to tax things which cause people to need the pill, thus reducing demand for the pill (shifting the demand curve left), and then use that tax revenue to subsidize production of the pill, while moving the supply curve until it gets enough pills into the hands of those who need it.

Thank you! That makes a whole hell of a lot more sense than "set a price ceiling and don't worry about deficits" or "read the article." My confidence is restored.

I don't get it.  Once a person needs a drug, they need it.  You can't change the demand unless you kill them. 

I think that's the whole issue.  At what point do you let a person die because their healthcare is costing too much?

[Rassah]

Once a person needs a drug, they need it.  You can't change the demand unless you kill them.  

I guess in this case demand only goes up to a point where a person can afford it, or at a point where they believe their life is worth more that their family's savings.

By the way, since I used to sell insurance and understand that it is VERY much influenced by economies of scale, I'm all for a single, or just few, monopolies owning all medical insurance. The more people in an insurance pool, the cheaper it is per person (may be another reason why it costs less in other government provided healthcare countries) . I'm just not yet convinced as to whether that insurance should be government owned, a government regulated single monopoly (like power companies), or totally free market monopoly.