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> Finally a respected economist who calls a spade a spade. There is no such thing as "shortage" of anything. Just pay more, and you'll get it.
This is economic
> Finally a respected economist who calls a spade a spade. There is no such thing as "shortage" of anything. Just pay more, and you'll get it.
This is economics 101 - supply and demand. What everyone learns in their first course in economics. But most economists are paid to espouse a political perspective, so most choose to ignore it. Paraphrasing sinclair : When your salary depends on you not knowing something, you magically don't know something.
> - train people more. You hire them at lower qualifications, and educate them in house
When you prevent out sourcing, h1b visas, hiring illegals, etc, it forces local companies to invest in the local population. And it's not just at the company level. The reason we have a public education system, highways, public transportation is because the private sector needed literate workers and the ability to transport workers and goods. So companies put pressure on the government to provide education for the masses, build highways, public transportation, etc. Amazing what can be accomplished when private+public interests are aligned. When they aren't aligned, you get the rust belt, increasing wealth inequality and continued societal breakdown ( opioid crisis, late family creation, distrust between people and distrust of government, etc ).
Isn't it incredible how many "hot button" political issues go right back to this basic economic law? Healthcare, tuition, minimum wage, housing, etc. Econ 101. Supply and demand. But so many people hate the idea of supply and demand. They try and tweak around it and legislate like it doesn't exist, and things get more and more distorted.
The law of supply and demand relies on efficient markets. Heathcare, to name one, really doesn't apply.
No it doesn't. And you've made my point perfectly.
Health care can never be a free market because decisions to buy are always made under duress. Pay for health care or die. That nobody is actively holding a gun to your head doesn't matter a great deal.
Labour can be similar, depending on how the economy is organised. If you need a job in order to eat, then you can't freely reject a job offer. Only for fairly wealthy people is the labour a free market. Unless you get a good social security system (welfare, UBI, etc). Then people may be able to walk away from a bad job offer.
Low unemployment is also making the labour market behave more like a free market; there are other jobs available, and employers can't rely anymore on job seekers being desperate for a job.
It doesn't matter what kind of market we're talking about. Supply and demand never goes away.
HN needs some kind of flair to distinguish people who understand supply and demand 101. Anyone who doesn't get it should be banned from talking about politics and economics.
This is a great example of someone who wants to pretend that the market doesn’t exist, like the previous poster said. You can draw this argument to its logical conclusion and argue that any good that somebody needs is “not a free market”.
The food market is obviously not free because you need to eat. The car market is not free because a lot of people need to drive to work. The plumbing market is not free because sanitation is essential.
I won’t comment on the relative effectiveness of free vs centrally planned economies, just pointing out the logical fallacy above.
Though to the exetent that efficient markets can be extended to these sectors, Healthcare relies on so many efficient markets in general, with the few exceptions in facilities which are a) in most places not possible to build without approval and b) hard for some subset of patients to choose between effectively.
Do you mean that when there's intervention on a market people stop looking into benefiting from it? What do you understand by supply and demand?
That should read "Positive Economics 101", ie. the status quo-legitimising ideology economics students are spoon-fed as if it was some kind of car manual. Postivism is rampant in economics departments where it obscures deeper questions such as the labour theory of value (Marx) and the role of government in creating demand (Keynes). Adam Smith's Invisible Hand is the fiddle that capitalists such as Donald Trump play while Rome burns.
> That should read "Positive Economics 101", ie. the status quo-legitimising ideology economics students are spoon-fed as if it was some kind of car manual.
Do you have any links to books or articles that go into this idea in more depth? It definitely feels true, especially in how oversimplified economic theories are presented to laymen.
I'm pretty sure the labor theory of value was more central to Adam Smith's work than the Invisible Hand.
I guess I am one of those. My main problem with supply and demand is that it is often threated as if it were the "natural order" and not something we created.
The law of supply and demand assumes purely rational actors in every situation, it also assumes commodities are comparable/identical and are largely mobile and transferable.
This doesn't apply to things like healthcare as others have mentioned, but also education (people are told their whole lives that they need to go to a good college, so people often make the poor financial choice to attend the better school), and in many cases housing (not wanting or able to leave the community they have only known, so they are willing to rent burden themselves in order to live somewhere).
Add on the fact that many of these things aren't as standard and transferable and you notice why these are the major markets that experience serious distortions in both a free market and a highly regulated one.
> But most economists are paid to espouse a political perspective
I don't think this is true unless you really contort what the definition of an economist is. Most economists either aren't working on issues that are particularly political at the moment or aren't in a position of influence if they are. Economists have political opinions, sure, but I don't see much evidence that this has a strong effect on their views about how the economy functions.
> This is economics 101 - supply and demand. What everyone learns in their first course in economics. But most economists are paid to espouse a political perspective, so most choose to ignore it.
While I agree that employers should raise wages, I disagree that things are that simple or that economists are generally being paid to lie to people about it.
It's a question of how much the supply of the thing we are talking about will go up when people are willing to pay more for it. If you choose the example of housing in San Francisco, it is clear that it takes more than just people being willing to pay more for something in order for the supply to increase.
If prices go up enough, more people in San Francisco will decide to sell, same as anywhere else. That itself doesn't increase the actual number of houses in San Francisco, but it does increase the number available to buy in the market, exactly as supply and demand would predict.
Barring physical constraints and local laws, that would also likely spur more building to increase actual units. That isn't likely to happen to any large degree because there are physical constraints and laws, and that's probably what you were thinking of.
Companies didn't put pressure on the government. Progressive citizens did. These government programs happened despite massive corporate resistance. In fact these programs emerged right along the same time as the massive monopolies were being broken up by government and laissez-faire economics was being abandoned by the Supreme Court (before ultimately being rejected by the entire government).
You get the rust belt because there has been a massive change of the American economy from manufacturing to high end service (finance, law, management, design). People can and should move to where opportunity is, America is and always should by a dynamic country of immigrants that move to where the economic opportunity is at the moment.
I'm not pretending the market doesn't exist, I just explain some of its limitations. I admit I could have explained this better. The thing that matters is choice. Without it, there's no free market. Healthcare is not a free market for urgent issues because you can't afford to shop around. Especially if an ambulance is involved, you just get taken to the nearest hospital. Depending on where you live, you may not be able to shop around much for non-emergency issues either.
With jobs, people with ample financial reserves can afford to shop around, but people who live paycheck to paycheck can't.
With food, well, it depends on how many different places sell food. Fortunately, there's usually no shortage of shops selling food. The market for expensive food is absolutely free, because I can say no and eat something cheap instead. But the market for cheap food does indeed not behave like a normal free market, as any economist can tell you: when prices for the cheapest foods go up, people will actually buy more, because they won't be able to afford more expensive food. And if one company had a monopoly on all food and set prices for all food high, it would not be a free market anymore, though that's true for any monopoly. Still, if it were a monopoly on something non-essential, people could still say no.
A free market requires competition. When no competition is possible, there's no free market. When there's an army of unemployed people desperately hunting for jobs, companies can afford to be picky and underpay them; there's no meaningful competition to hire those people, who can't afford to say no, because the only alternative for them is to be unemployed. This can lead to a situation where even people with a job have trouble making ends meet.
You are being willfully ignorant and have a poor grasp of what a "free market" is.
Healthcare isn't a "free market" because of massive information asymmetry (detailed prices for services, consumer education needed to evaluate information), high barrier to competition, and of course the literal product being your life.
Whereas cars are much closer to a free market. Sure, you might need to drive to work, or you can take a bus or other public transportation, ride a bike, walk, move closer or to another area somewhere this is easier to do, find a job that lets you work from home, etc.
If you choose to buy a car you can gather tons of information, pick a product to fit your specific budget, and end up with something that works everywhere. You can sell the product in the future. Contrast this with healthcare where you can't generally evaluate the information, have minimal to no pricing choices (especially in certain time sensitive situations), etc.
Even a good you're compelled to buy can be obtained through a free market. Cars are the perfect example because contrary to your understanding, they are actually a basic requirement for a huge number of people. In addition, the vast majority of healthcare expenditures are not emergency, and aren't complicated so there's no reason why people can't obtain a diagnosis from one place and then seek out the best place to actually receive the treatment.
The problem lies in executing that "seek out the best place to actually receive the treatment". Its hard when healthcare givers do not give a quote or outright misleads. Readers who are not familiar with the American way might find that hard to believe.
How does the free market account for the cost of researching options?
I am sure I could find a better deal on many medical purchases, but the cost to find them is significant. Purchasing the default/readily-available option is often the best bet because of the hours or days required to find a better solution. Spending a few hours to save $100 or a few days to save $1000 is a clear loss to me.
> ...then seek out the best place to actually receive the treatment.
How do they seek out the "best place" if they don't have complete information on what it will cost? It would be like buying cars with no price-tags or MRSPs - yes, there will be good/prestigious dealerships with excellent staff who can tell you the technical details about the car that's right for you, but you won't know how much it will cost you until each component manufacturer sends you their separate itemized bills for months after taking possession of the car, and you can't take the car back (5x tires, 2x wipers, 1x engine, dealership charges, factory charges, line-assembly person 30 minutes @union rates, 1x battery, 348x bolts,1x suspension platform, transmission, etc). That is not a free market.
In the real world you can't usually separate diagnosis from treatment. The initial diagnosis may change depending on how the patient responds. And it's not always feasible to communicate the important nuances of a particular diagnosis from one doctor to another. Bungled transitions in care are one of the leading causes of harmful medical errors. Care continuity is important for patient safety.
Most products are extremely complicated. Food and its effects are extraordinarily complicated, but general knowledge about what foods to eat to stay healthy diffuses through an emergent and bottom-up process, through channels like Wikipedia and word-of-mouth.
Cars are another extremely complicated product. Society has self-organized to create reputable sources of information on the quality of different models.
We don't need government restrictions and monopolization of spending to manage the complexity of the economy. Healthcare faces severe problems because of governemnt intervention, not despite of it.
Your comment actually presents an idea that many choose to ignore, that healthcare is actually two markets in one.
For routine primary care like regular checkups or an appointment for some symptom bothering you, you absolutely are not under duress. You won't die because you took 5 minutes to choose a doctor on ZocDoc. With more transparency in costs of service, this could definitely become a market, ie "for $XX per month, get unlimited visits to our partner doctors' offices".
For emergency situations, surgeries, and things that require expensive ongoing care like cancer, you're correct in that you're under duress and can't really shop around. This is the market in which the usage of insurance makes sense, as it's a rare occurrence that would be catastrophic to pay for out of pocket for the majority of people.
I think we can do a great deal to lower cost of healthcare to Americans if we think of it in this two market approach, and handle each accordingly.
Even getting routine care, I've had 0% success gaining any transparency at all. Maybe it works for generic GP services, but for imaging or other testing, I've tried and completely failed. "Contact our billing department and they may be able to tell you" is the best answer I get.
I'm ready to vote for forced transparency at all levels. I'm tired of this opaque negotiated pricing with insurance companies that manages to maximize my out-of-pocket costs.
Transparency and high deductibles for everyone would instantly lower costs dramatically. I have to take testosterone, and you have two primary options. One is a gel that you rub on every day that's really hard to dose correctly due to absorbency issues, and the other is a weekly injection. I wasn't even offered the second option until I asked for it. The gel was $400 a month and the injection is around $20 a month. I generally hit my deductible a month or two in to the year for various reasons and the difference in copays isn't enough for me to care, generally. Medical insurance needs to be insurance again.
The way I've usually seen this split is "emergent" vs. "non-emergent" (as in "emergency).
You are correct that non-emergent care is a WAY bigger market than emergent. Most people completely ignore this. Chronic conditions like diabetes and Crohn's, end-of-life care (hospice, assisted living), dialysis, smoking cessation and weight loss, blood transfusions, most flavors of oncology (cancer treatment), knee replacements, etc.
We need way more cost discipline in non-emergent situations. Changing the perception that all care is emergent might be the single biggest thing we could do to lower healthcare costs. It would let people see that there should indeed be a market in everything from X-rays to MRIs and we could finally have a sensible conversation about cost.
A problem with this split is preventive care. You want to incentivize prevention, otherwise non-emergency issues can become way more costly emergencies. And just like that are both tied together, again...
There is a huge additional set of decisions that are not made under duress, but are made in an information vacuum. Two recent examples from my own health history:
My optometrist wants me to try a new kind of contact lens. She cannot (or will not) tell me what they will cost. She can't tell me what they would cost me personally because she just doesn't know - all they can do is send a bill to my insurance company and find out how much they pass on to me. Which is essentially asking me to write a blank check. Nor can she tell me the sticker price on these contacts so that I can at least know the upper bound, because she simply does not have (easy?) access to that information - the billing department does. Probably I'll stick with the same brand I've been using for years, because at least there I can safely assume they'll cost about the same now as they did last year.
Similar story for my doctor offering me a flu shot while I was getting a checkup. She couldn't tell me the price, she didn't know the price, she couldn't get access to the price, etc. I usually go to the pharmacy, where they bill $30 and insurance covers it all. So I figured, "How bad can it be? And it'll save me some time," and let her give me the flu shot. Big mistake - the doctor's office billed $300, insurance (quite reasonably, TBH) only agreed to cover a portion of it, and I got stuck with a $200 bill.
There's two problems there. One is the lack of price transparency. The other, though, is the prevailing attitude - in both cases, the doctor's opinion, which I think is most everyone else's opinion, too, was, "Who cares what it costs? If the insurance covers it, it's basically free to you." Which just ain't true, especially for routine care stuff like this. The insurance company isn't getting their funds from some magical fountain of money. From a "see the forest not the trees" perspective, they will have to pass every cent of these costs (and more) on to me.
Both of these problems are solvable.
Re: the flu shot story — that’s called balance billing and it is illegal if the provider was in network and the procedure was covered.
https://www.healthinsurance.org/glossary/balance-billing/ https://www.healthinsurance.org/glossary/balance-billing/
At least for dentistry that is changing: I had a filling recently, due to a cavity identified at a prior checkup.
At the end of the checkup, a front-office staffer went on to Delta Dental’s web site, pulled up my record, and requested a treatment estimate. The answer was returned within a minute.
A few days later, I got a copy of the estimate in the mail for my records. I didn’t have any other dental events (which might’ve affected the estimate), so on the day of the filling, I paid the amount as part of the office visit. A few days later, I got the Explanation of Benefits for the procedure, confirming the amount paid was correct.
If I had chosen to, then I would’ve gotten all that over the web instead of on paper.
As far as I’m concerned, the dentist’s office is where I want them to be, in terms of billing processes. My eye doctor is able to do something similar, looking up lens & frame benefits etc. on computer, no I don’t have to be billed after the fact.
The flu shot cost is really terrible, up here in Canada my doctor asked if I wanted a flu shot last time I went in and there was no cost passed onto me directly. There are pharmacies that dispense flu shots for money but it's also pretty easy to qualify for a discounted shot if you need one and people not having the flu makes all of society run better.
Charging 200$ for you to be healthy and able to work the full season while also avoiding being a carrier of a disease is absolutely terrible.
I don't know what order your experiences happened in, but one thought in the first is wrong because of the second: There is no upper bound.
It's something I've seen in other comments here in the past, too.
> My optometrist wants me to try a new kind of contact lens.
My optometrist wanted me to as well. When I wasn't sure, he was nice enough to offer a prescription for both, so I could make the choice later.
That obviously doesn't work in every case of unknown cost, and doesn't really change your point, but I thought it was worth pointing out as a nice tip for anyone in the same situation in the future.
Appeal the flu shot claim. Most insurers cover vaccinations at zero cost to members. Your doctor may have coded the claim incorrectly.
I want to know why the doctor charges $300 for a procedure that a pharmacy offers for only $30. Is there any reason for it besides just wanting to extract more money?
Yeah, that kind of extreme lack of transparency makes a free market utterly impossible. Particularly if you ask explicitly, they should be able to tell you a price, or you should be able to tell them up front that you'll only pay the part that's covered by the insurance.
Springing costs on you that you never agreed to and aren't covered, should be illegal. you're literally being forced into a transaction you never agreed to.
Where is your evidence that H1B candidates are paid less? That is false based on my experience hiring. Further, H1B sponsorship costs money and commitment to the applicant and government, so hiring an H1B is actually more expensive than domestic candidates. Not only that, but in the H1B process you have to show that there isn’t an equivalent domestic candidate and you, as a company, made an effort to find such a candidate.
You are also ignoring the contributions such immigrants make to the broader economy by inventing, building, and hell, just using their salaries to buy things. We are stronger when we take the labor of or competition and put it to efficient use.
If you’re really concerned about wage increases for employees you need to focus on the imbalance of power we have as employers. I make hiring decisions every month, and I can tell you, as much as this is the best job market in a generation, and employees have the best bargaining position they’ve had in a long time, our company has way more power than any one employee.