Re: Reid admits to the end game of Obamacare...-[W:22]
That's quite a response but let me ask two clarifying questions. 1. How does supply and demand work and why do attempt to find just the right balance when using it?
Huh. I'll admit "why do attempt to find just the right balance when using it" doesn't precisely make sense to me, I'm going to reply as though you had asked how supply and demand apply to the purchase of healthcare.
Supply and Demand are what we call the alignment of relative needs - I
need an apple, you
need money in your pocket for a ticket to go see the new superman movie, so we trade my money for your apple, but neither of us really
need to each others' specific item in order to survive. I might purchase another apple, or a donut, or wait for dinner, and you sell your apple to someone else, or decide to wait and rent the movie later when its' cheaper. Before you make the object, you do not
need a specific provider's specific service for the
vast majority of healthcare services - yes when you are bleeding arterially the guy on the spot is the guy you need right there right then, but if you have a cold you can go to a number of doctors for that, and don't need any of them at all, if you wish instead to self-medicate with chicken soup and time. You get colds (and their equivalents) far more often than you receive life-threatning lacerations, and most people do not face life-threatning lacerations at all.
At some point I will offer you less money for the apple than you are willing to part with it, for whatever reason, and at some point your apples will become either too few or of too low quality to be worth my cash. The interaction of a multitude of apple sellers and buyers in a community create rough common prices which you will not sell an apple below because you can sell it to the next fellow for more, and I will not purchase above because I can purchase from the vender down the street for less. The use of supply and demand puts both suppliers and demanders in competition in this way; as suppliers rush to be able to profitably supply greater quantity and quality at lower price so as to edge out that bastard down the street, while demanders seek out best return for purchase and over time the price of good and service provision is driven down by human ingenuity even as the available quantity of higher quality increases. Automobiles are an excellent example - the typical family now has two, whereas a half century they had one. As major items, they represent a serious purchase threshold for a family, and yet even though more are purchased now, the quality of one of today's cars in terms of comfort, safety, and amenities far outstrips the model available in 1963. Computers, show the effect even more strongly, as they are (now) smaller items which have lower purchase thresholds, have shorter "lifespans" and thus can "evolve" much more rapidly. Consider the automobile of 2000 against the automobile of 2013 and then compare the cell phones of 2000 to 2013: and behold the ability of the competition of suppliers and demanders to cause goods and services to evolve over a good or services' existance.
The point being here is that the vast majority of healthcare services are
not high threshold long-term purchases such as automobiles, but rather shorter term simpler purchases, such as checkups, prescription fulfillments, broken-bone-setting, preliminary testing, and the like. And so if we utilized a system in which suppliers and demanders competed for each other, we would see (to varying degrees within the medical proffession) evolution where quantity and quality rose while price decreased.
But by and large we do not have that - because of government interference in how we are all paid, most of us receive "insurance" which is not insurance at all (insurance being the hedging against catastrophic risk), but rather a form of "group prepayment" via third party actors - our employers. Because we can receive greater amounts of this medical prepayment for same cost to
us than we could in cash (we pay taxes on our cash, we do not pay taxes on our third-party-directed health "insurance" cum prepayment plans), we overpurchase insurance, leading to an incentive structure where incentives are aligned for all demanders to seek, instead of to limit the cost while improving the quality of their purchase, simply to seek to purchase as much as possible, and ensure thus that they are receiving more in benefit than they have paid for - everyone is trying to beggar their neighbors, and so prices each year spiral higher and higher.
Similarly, suppliers face no competition except occaisional negotiation with a few near-monopoly purchasers, the prices at which they offer the same good or service can vary wildly depending on who is purchasing, and it makes no difference to the seller. So the incentives for evolution (improving quantity and quality while decreasing cost) are badly damaged on both ends.
The theory of supply and demand should thus tell us that if we found a way to realign those incentives, we should start to see some improvements (or, at least, a reduction in the spiraling rate of cost). So, let us put the theory to the test: does the application of some form of price-sensitive competition between suppliers and demanders work? Well, bluntly, yes.
Indiana offered HSA's, - which have patients save money in tax-free accounts (where it grows and remains theirs forever and ever unless theys pend it) - matched with high deductible plans to it's employees. Employees began to respond to price signals, and medical costs per patient were reduced by 33% and expenditures to the state were reduced by 11%.
Safeway has instituted a program that gave financial incentives to people who engaged in healthy behavior by allowing price signals in the
insurance side of the market to work (Indiana worked on the medical side), and saw it's per-captia health care costs remain flat from 2005-2009; when most companies saw theirs jump by 38%.
Whole Foods instituted HSA's, and let's the employees choose what they want the company to fund. This institutes price pressure on the medical side (WF covers the high-deductible plan 100%), and their CEO points out that as a result Whole Foods' per-capita costs are much lower than typical insurance programs, while maintaining employee satisfaction.
Medicare Part D utilized market pressure on the insurance side, and saw expenditures come in at 40%
UNDER estimates - the only such government program in history to do so. It's a huge budget buster because we didn't pay for any of it, but it's actually much, much, less of a budget buster than we thought it was going to be, which at least demonstrates to us a way to improve our other budget busting programs.
Wendy's instituted HSA's, and saw the number of their employees who got preventative and annual checkup care climb even as they saw claims decrease by 14% (in one year).
Wal-Mart's low cost clinics and prescriptions save us oodles of cash. Wal-Mart reports that "half of their clinic patients report that they are uninsured" and that "if it were not for [Wal-Marts'] clinics they would haven't gotten care - or they would have gone to an emergency room".
Dr Robert Berry runs a practice called PATMOS (payment at time of service). he doesn't take insurance at all - but simply posts the prices of his services. By removing the cost of dealing with mutliple insurance agencies, medicare, and medicaid, the prices he is able to list are one half to
ONE THIRD of industry standard.
2. Should war, national security, law enforcement, fire departments, protection of government officials not be "done well"? They certainly aren't for-profit now are they?
Do you think that our government does war, national security, law enforcement, etc. efficiently and well? Because I am in the military, and if you know of a place where we do war effeciently, I would love to find it so that I can request a transfer - outside of a few very special units where incentives are largely built around personal honor and dedication to your fellows, it broadly doesn't exist, and those units are also very, very, very expensive.
The enforcement of contracts, the monopoly of violence, the prevention of publicly dangerous pollution, etc. are proper places for government action because they are places where incentives do not align themselves to individual interaction - the goods are not "consumable", that is, the purchase of "national security" does not mean that there is less national security for you to buy. To take our example above, imagine if instead of buying an apple from you, whoever bought apples at all had to buy apples for everyone; that the only unit of apple available was "the entire crop, distributed to all". What would happen? Well screw you guys, I want an apple, but I don't have the willingness to come out of pocket for everyone else's apple cider - I'm going to wait for someone to get hungry enough to cross the (now incredibly high) price threshold. Viola, now we have two dynamics at work: 1, the immense cost threshold means that evolution will occur only very slowly if at all and 2. that will only even happen if anyone ever
does make a purchase, which is unlikely, as I will now go seek other ways to slake my hunger before I expend my entire labor providing free apples for all those free riders. The police, the army, the navy, the EPA etc; these services are aligned like that because the security they provide is a non-consumable good. Thus these are issues of the commons which
require government to use its' powers of coercion to force everyone (or, at least, enough) to buy in, or their needs will never be met. It is the acceptance of a less-efficient means of accomplishing a goal for the simple enough reason that that is the only way we are going to be able to accomplish it, minus uber-wealthy benevolent benefactors, who have an unfortunate tendency to then become semi-or-not-so-benevolent autocrats. We fought a war over that once, a couple of centuries back, and decided that if we were going to have little autocrats, we would at least make them pretend to like us long enough to win a popularity contest, first, however, so that option is out.
Health care, however,
is a consumable good. When plaster is used to make a cast for me, it is going on my arm, not everyone's arms. The time I spend with a doctor is time he will never get back to use on someone else; ditto my hospital bed, my prescribed injection of analatheamaitlistamawhatchammacallit-isweartheymakethosenamesup, etc. and so forth. Healthcare thus
can evolve, it
can be aligned with suppliers and demanders competing with each other (as partially shown above), it
can get better.
I understand and start from the position that we have a
moral (if not, I would agree, a
Constitutional or
legal obligation as a society to ensure that folks are not denied reasonable life-saving care (if your particular treatment requires that we invest our national GDP into building you a time machine to extract blood from dinosaurs, well, sorry), which is why I am fine with the idea of government enabling those who are
truly in need accessing it. But if we are going to do so, then we need to do it in such a way that
enables healthcare evolution, rather than retards it, in such a way that allows the poorest among us
actual access to health
care instead of useless access to health
insurance with payment schedules that deny them actual goods or services. We need to actually
help people while allowing evolution to function rather than trying to insist that we be allowed to live like kings over our fellow man by directing his billions of decisions from a central point.
There's a topic here folks and it's not each other. Let's just focus on the topic only please. Thank you. 