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 Capitalism and Healthcare 
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I heard this randomly the other day. It's the only argument that actually follows logic and reason.

Capitalism, and the laws of Supply and Demand, work amazing for goods and services that are Elastic. IE, if you jack the price up, nobody buys it. If you drop the price, everybody buys it.

Healthcare doesn't follow the laws of Supply and Demand. When you get in a car accident and are on the verge of death, you'll pay anything to live. When you have a heart attack, there is no cost to great to pay. When you need an epi-pen to avoid dying, cost is irrelevant. You can't rise prices high enough to drive down demand.

If prices rise too high, people will avoid preventative care. Which simply raises costs later.

On the flip side, lowering prices to the bottom, doesn't really increase demand. It does to a certain point, when people get free healthcare they go in for checkups.

Thoughts?

EDIT: Forgot to mention that healthcare is an inelastic good.


Tue Aug 07, 2018 7:50 pm
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In Supply and Demnd Economics, there is an aspect of 'the nature of supply', that you're omitting...


Tue Aug 07, 2018 7:55 pm
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NWGunner wrote:
In Supply and Demnd Economics, there is an aspect of 'the nature of supply', that you're omitting...

Can you summarize it in an ELI5 manner? The nature of supply I take it is referring to the availability of doctors? That as prices go up, wages go up, more people become doctors?

So the argument I made only addresses the demand side?

How do patents, trademarks etc for prescription drugs effect this?


Tue Aug 07, 2018 8:07 pm
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Kind of on the fly here, but a basic example would be welfare....

A lot of people could get free, or cheaper healthcare, if they were on welfare.

Many of us here could benefit from it....

That would be 'one nature of supply'...

But, you may have to reduce your income, or change, or lose jobs...

So, while the term is about the 'nature of supply', that could also change the nature of the demand....

Is one willing to change the point, or how, they demand....and at what cost?

There are a ton of other similar things that can change the nature of each, even before you investigate the substance, or nature, of what you're supplying.


Tue Aug 07, 2018 8:17 pm
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Health care does not follow the standard model of supply and demand, not even on a grand scale. It seems to be run more like a mafia than a supply and demand capitalistic business. (With a certain amount of license for differences.)
Between the government mandated treatments that they know they won't get paid for to the insurance companies practices, it's inevitable that health care providers make up their huge losses by jacking prices up insanely for those who are well-insured.
I bet that the hugely jacked up prices for the services and supplies that they don't get paid for (emergency room visits by the homeless and uninsured) really help at the tax write off time too.

Many people in dire health straits feel Like King Richard III : "A Horse! A Horse! My kingdom for a horse!"
Whatever the cost, they will pay, and even better if they get someone else to pay for it.

Macroeconomics... Loved that series. :thumbsup2:
It was an eyeopener looking through the list of elastic vs inelastic products and services.


Tue Aug 07, 2018 8:20 pm
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Competition?

It exists even in life and death emergencies. Ambulances will ask you which local hospital you want to go to. You can choose doctors, surgery types, etc...

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Tue Aug 07, 2018 9:01 pm
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snozzberries wrote:
Healthcare doesn't follow the laws of Supply and Demand. When you get in a car accident and are on the verge of death, you'll pay anything to live. When you have a heart attack, there is no cost to great to pay. When you need an epi-pen to avoid dying, cost is irrelevant.


It's not true at all. Would you for instance, choose to prolong your life, let's say 20 years (I don't know how old you are or whatever, but lets say you die now or pay for 20 years).

Would surviving be worth $10M a year to you, to your family? If you don't have that money on hand, would you get a loan? Would you be willing to drive your whole family into debt for generations so you could survive 20 years?

I've personally made these calculations. I know how much my life is worth, and it's far from infinity.


Tue Aug 07, 2018 9:07 pm
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The problem with healthcare is all the wallets that need to be stuffed along the way. If you see your doctor at their clinic you pay a clinic fee. However, you see them at the hospital you pay that clinic fee plus a hospital fee. On top of that different reasons for visiting can drive the price of your visit. No longer can private doctors dispense pharmaceuticals. The companies were losing money instead of having you go through a pharmacy.

Currently doctors have to pay for the right to receive Medicare patients. Often at a huge loss for the doctor office. This is why you are seeing less and less dr offices taking Medicare patients. If a hospital sees them they pass those costs along to others through higher costs.

The biggest problem is insurance companies. If you are healthy great they love getting your money at ever climbing rates. Everyone along the way associated with medicine and medical practices love footing the bill to insurance companies too...and at a huge profit. Insurance costs would go down if they weren't having to pay out so much for drugs, medical supplies, and office visits that are overinflated. Look at what they tried to do with epipens, raised the price way up to $600. They since dropped that price, but they are about $200, and they expire way too soon. My wife is a medical biller for a dr. If anyone comes into their office with an L & I back injury they are prescribed a back brace. The office buys them for $100, but charges L&I $1400...and they pay. Non L&I visit for the same issue will have insurance companies fight that cost, but still end up paying most of that cost in the end for a healthy profit for the dr office. That cost, among thousands of other costs, gets passed along to everyone through annual rate costs.

I like what one dr office in the midwest was doing. They ran like Costco. Pay a monthly membership and go as often or little as you like. They provided most basic care but would contract out at much lower rates to specialists in the area that they didn't already have in house. On the whole very few people were frequent flyers, which kept prices lower for patients and business lucrative for the office. I think the monthly membership was around the $500 mark, whis is less than some insurance costs.

If medicine wasn't such a lucrative thing at every step of the way our consumer costs would be way down.


Tue Aug 07, 2018 10:20 pm
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Wetpaperbag wrote:
The problem with healthcare is all the wallets that need to be stuffed along the way. If you see your doctor at their clinic you pay a clinic fee. However, you see them at the hospital you pay that clinic fee plus a hospital fee. On top of that different reasons for visiting can drive the price of your visit. No longer can private doctors dispense pharmaceuticals. The companies were losing money instead of having you go through a pharmacy.

Currently doctors have to pay for the right to receive Medicare patients. Often at a huge loss for the doctor office. This is why you are seeing less and less dr offices taking Medicare patients. If a hospital sees them they pass those costs along to others through higher costs.

The biggest problem is insurance companies. If you are healthy great they love getting your money at ever climbing rates. Everyone along the way associated with medicine and medical practices love footing the bill to insurance companies too...and at a huge profit. Insurance costs would go down if they weren't having to pay out so much for drugs, medical supplies, and office visits that are overinflated. Look at what they tried to do with epipens, raised the price way up to $600. They since dropped that price, but they are about $200, and they expire way too soon. My wife is a medical biller for a dr. If anyone comes into their office with an L & I back injury they are prescribed a back brace. The office buys them for $100, but charges L&I $1400...and they pay. Non L&I visit for the same issue will have insurance companies fight that cost, but still end up paying most of that cost in the end for a healthy profit for the dr office. That cost, among thousands of other costs, gets passed along to everyone through annual rate costs.

I like what one dr office in the midwest was doing. They ran like Costco. Pay a monthly membership and go as often or little as you like. They provided most basic care but would contract out at much lower rates to specialists in the area that they didn't already have in house. On the whole very few people were frequent flyers, which kept prices lower for patients and business lucrative for the office. I think the monthly membership was around the $500 mark, whis is less than some insurance costs.

If medicine wasn't such a lucrative thing at every step of the way our consumer costs would be way down.


If the profit margins are there, why do you think competition isn't eating into that margin? A market that seems set for disruption.


Wed Aug 08, 2018 12:31 am
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The problem with healthcare is that people are involved. Seriously.

Naturally, all the providers and suppliers want to make as much money as possible. The consumers wants to use as much of the service as possible with as little direct cost to themselves as possible. Think of medical services like the free sample tables at Costco. Its a micro-slice of frozen crap - and people charge the line like they've starving to death and its the last piece of food on the planet. People get in fights over it.

Healthcare works on the same model. You've paid for it through insurance, or direct charges, or get it free - so you use as much of it as possible. Regardless of your needs (not you specifically, but people as a whole). Whereas, if the impossible happens - that people act rationally - costs would go down. Get everyone to stop smoking and drinking, and start exercising and eating right - and then require direct payment for services (the idea behind co-pays) and costs will go down.


Sun Aug 12, 2018 6:22 am
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Here is my take, for what it is worth

Healthcare is not a right, let's get that out of the way. You want someone to treat you when you are sick, you pay what is costs or you treat yourself (not a bad option which I will comment on later).

We all know health insurance is expensive, but few are asking why? The answer is two fold, one is that we regulate insurance companies and sometimes even limit the competition which drives up rates....

The second reason is that health care costs a shit ton of money and no one ( or not enough people) are looking into why. Why does it cost $200 for an aspirin and $3000 for a night in a Hospital (probably an exaggeration, but you get the idea)??

You could hire a private physician and nurse and rent out the nicest hotel in town for what it costs to stay in a hospital.

The costs need to be contained, but how do you do that when government regulation which is decided upon by government officials whose pockets are being lined by the people who own the hospitals? Every time the government changes a policy or regulation it rarely causes prices to go down....it usually causes them to go up.

I know it sounds scary, but deregulation seems to be a good answer, obviously we would still need some laws in place, but how many? We also need some tort reform, no suing for $80 million because the doctor cut off the wrong foot, unless you were the top soccer player or LeBron James $500K should be more in line.

back to treating yourself. My wife is a big believer in homeopathic and eastern medicine. I once went to one of her doctors (years ago when I had no insurance) and he told me the story of how homeopathic medicine got "restarted" in the west. During the Holocaust, there was a Jewish doctor in one of the prison camps who attempted to treat the ailing prisoners who suffered from dozens of different ailments. This doctor was able to cure people using only rest and water. Proving that the body has the ability to heal itself. You just need to give it time and nutrients to do so.

I also have a story of a cancer patient being treated by some people on the dark web, apparently there is a very good cure for cancer out there that our medical field doesn't want us to know about.

The answer is that there is no easy answer, but perhaps a reset back to zero (while applying some lessons learned) might be the only way to get costs back into reality.

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Sun Aug 12, 2018 8:05 am
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The reason that our healthcare system is so messed up now and has little competition is because of government intervention in the economy. One of the main problems is that many people get health insurance from their jobs, and it did not always used to be like this. Getting insurance from your job is something that started in the 40s because the government put in wage controls and had greater control over the economy during the war. So in order to attract more workers businesses had to start offering other benefits like health insurance instead of increased wages. They also ruled that employer based health care is tax free, so that really incentivized it and caused employer based health care to take off. This takes the free market out of it because the free market only works by having competition, and if people know that someone else (the insurance company) is paying for something they do not care what the cost is. As a result they don't shop around to find the best price. If your car insurance had to pay for your gas every time you filled up, would you look for the best prices or just fill up wherever? Gas prices as a result would become astronomical. Government intervention in the economy always creates distortions and unintended side effects, so giving them even more power to "fix it" makes no sense at all. Check out economist Bob Murphy's book on health care in the us if you want to know the history of it, it's very interesting https://www.amazon.com/Primal-Prescription-Surviving-Sick-Sinkhole/dp/1939563097


Sun Aug 12, 2018 5:54 pm
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waskiro wrote:
The reason that our healthcare system is so messed up now and has little competition is because of government intervention in the economy.


BAM. Exactly.

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Sun Aug 12, 2018 5:58 pm
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Medical Insurance is evil.

It's based on fear.

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Sun Aug 12, 2018 6:04 pm
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All insurance is based on fear. Or risk management, depending on how,you look at it


Sun Aug 12, 2018 6:10 pm
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