House Repeals Obamacare

[Cow Poke]

yeah I don't know how this whole system got started or screwed up so bad to begin with.

Greed.

[Mountain Man]

The system used to work just fine when you could get treatment from your local doctor in exchange for a dozen eggs.

Or have I been watching too much Little House on the Prairie?

[Sparko]

The system used to work just fine when you could get treatment from your local doctor in exchange for a dozen eggs.

Or have I been watching too much Little House on the Prairie?

somewhere along the line the drug companies, hospitals and doctors decided they could hold our lives hostage and charge us whatever they wanted because people will pay anything for their health and well being.

[Joel]

somewhere along the line the drug companies, hospitals and doctors decided they could hold our lives hostage and charge us whatever they wanted because people will pay anything for their health and well being.

What we've had for many decades is drug and medical-device patents that provide monopolies enforced by law. And slow and expensive FDA approval requirements (another government enforced monopoly). And a cartel of doctors and hospitals who intentionally reduce supply, enforced by law.

Now even in the case of a monopoly, prices are determined by supply and demand. (A monopoly increases price by reducing supply.)
And if demand is as inelastic as you suggest, then even a small increase in supply would result in greatly lower prices. And thus we could conclude that the government-backed restrictions of supply and competition are causing current prices to be much higher than otherwise.

[Sparko]

What we've had for many decades is drug and medical-device patents that provide monopolies enforced by law. And slow and expensive FDA approval requirements (another government enforced monopoly). And a cartel of doctors and hospitals who intentionally reduce supply, enforced by law.

Now even in the case of a monopoly, prices are determined by supply and demand. (A monopoly increases price by reducing supply.)
And if demand is as inelastic as you suggest, then even a small increase in supply would result in greatly lower prices. And thus we could conclude that the government-backed restrictions of supply and competition are causing current prices to be much higher than otherwise.

I said similar earlier. While drug companies do deserve to be compensated for their research, I think it goes too far. The system allows them to monopolize a needed drug for far too long and instead of charging reasonable prices, they charge completely outrageous prices for as long as they can. The current system of FDA approvals and testing and patents allows the companies to take advantage of the system to make outrageous profits by holding people's lives hostage.

Like Martin Shkreli, as an extreme case.

[One Bad Pig]

somewhere along the line the drug companies, hospitals and doctors decided they could hold our lives hostage and charge us whatever they wanted because people will pay anything for their health and well being.

A lot of it is because the payments come more from insurance companies or the government than the people obtaining care. Malpractice lawsuits have done their fair share to jack up the price, too - malpractice insurance is expensive, and doctors err on the side of over-testing. And because insurance will pay for it, people don't object too much. If medical costs came straight out of peoples' pockets, they'd be more motivated to a) limit what they're going to pay for and b) shop around to look for the better deal.

[Sparko]

A lot of it is because the payments come more from insurance companies or the government than the people obtaining care. Malpractice lawsuits have done their fair share to jack up the price, too - malpractice insurance is expensive, and doctors err on the side of over-testing. And because insurance will pay for it, people don't object too much. If medical costs came straight out of peoples' pockets, they'd be more motivated to a) limit what they're going to pay for and b) shop around to look for the better deal.

and since people are not paying for it and it is their lives they are talking about, and people usually perceive more expensive as "better" they have no incentive to shop around for cheaper. Especially if cheaper means "dying"

[One Bad Pig]

and since people are not paying for it and it is their lives they are talking about, and people usually perceive more expensive as "better" they have no incentive to shop around for cheaper. Especially if cheaper means "dying"

That's a big "if" in most cases. There is some incentive to shop around for cheaper, but most people have no idea that it's even a possibility.

[Joel]

This article has a graph indicating that the health care cost crisis began around 1965. It shows that prior to 1965, health care prices tracked with inflation, and began rising faster than inflation after 1965.
https://mises.org/blog/how-governmen...e-so-expensive

The article suggests a relation to Medicare/Medicaid, which were passed at that time, which has driven the increase in demand. And then goes into a more detailed history of the health-care industry.

"Nobel Prize-winning economist Milton Friedman wrote that medical price inflation since 1965 has been caused by the rising demand for health-care coupled with restricted supply (Friedman 1992)."


"But the U.S. failed to allow physician supply to respond to meet consumer demand. From 1965 through 1972 the number of newly-licensed U.S. physicians graduated each year from medical schools in the United States and Canada increased from 7455 to 7815 or by only 360 physicians! From 1972 through 1980, this amount gradually doubled but the medical schools became even more restrictive"

A graph is included, showing the increase in medical students accepted ended around 1980. Number of medical students accepted (not applicants) remained flat after 1980. In other graphs I note that the steepest growth in demand and prices has been since about 1980.

So sure, hold supply flat while demand continues to grow (even driven higher by government's direct spending and other intervention), and you have the recipe for a price crisis.

[Meh Gerbil]

This article has a graph indicating that the health care cost crisis began around 1965. It shows that prior to 1965, health care prices tracked with inflation, and began rising faster than inflation after 1965.
https://mises.org/blog/how-governmen...e-so-expensive

The article suggests a relation to Medicare/Medicaid, which were passed at that time, which has driven the increase in demand. And then goes into a more detailed history of the health-care industry.

"Nobel Prize-winning economist Milton Friedman wrote that medical price inflation since 1965 has been caused by the rising demand for health-care coupled with restricted supply (Friedman 1992)."


"But the U.S. failed to allow physician supply to respond to meet consumer demand. From 1965 through 1972 the number of newly-licensed U.S. physicians graduated each year from medical schools in the United States and Canada increased from 7455 to 7815 or by only 360 physicians! From 1972 through 1980, this amount gradually doubled but the medical schools became even more restrictive"

A graph is included, showing the increase in medical students accepted ended around 1980. Number of medical students accepted (not applicants) remained flat after 1980. In other graphs I note that the steepest growth in demand and prices has been since about 1980.

So sure, hold supply flat while demand continues to grow (even driven higher by government's direct spending and other intervention), and you have the recipe for a price crisis.

Some of us have maintained for some time now that the cost wasn't subject to free market forces as it should be - we've not given the free market a chance to fix it.
If a monopoly is allowed to exist no amount of money (or government subsidy) will fix it.