7 ms·

Has there ever been a price control experiment that hasn't resulted in even worse problems?

by outlace 7y ago

ceejayoz 7y ago
Virtually every other developed nations' healthcare systems?
GuthL 7y ago
Litterraly France.
- thrower123 7y ago
  This is how you get a Napoleon https://en.wikipedia.org/wiki/General_Maximum https://en.wikipedia.org/wiki/General_Maximum
gruez 7y ago
Other developed countries have price controls (more specifically, government negotiated prices) and it seems to be working well for them.
- tenebrisalietum 7y ago
  That's not really a price control, that's buyer control - collective bargaining reduces the number of buyers of X but not the amount of X demanded.
- snapetom 7y ago
  > government negotiated prices That's what we don't have in the US. You can certain make the case that we should, but that's a separate argument. Now we have a situation where we have a flat out price control, and it's going to have unintended consequences written all over it. All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally.
  - mattrp 7y ago
    Along similar lines, I read a study nearly twenty years ago and I wish I could find it for these very recurring government vs market debates. The study evaluated prices between single payer countries and found that it wasn’t the collective bargaining that reduced prices in those countries. They observed that there was no correlation between the size of the single payer and pricing. Rather, it was that the pharma adjusted price to minimize counterfeiting and black markets. In countries where black markets and counterfeiting risks were high, the price was lower. Ironically the decision to lower gave some single payers added incentive to participate in arbitrage. One country would be so low the country itself decided they could arbitrage their Higher priced neighbors by selling off their excess through undisclosed side deals. You see a variant of this example playing out between Canada and US. The article talked about individual black markets and state backed black markets that would emerge as a result of these single payer deals... which were supposed to be confidential but of course the black markets allowed pricing information to leak causing everyone to demand lower prices... everywhere except the US which essentially subsidized all of these below market deals that give the appearance that collective bargaining is superior. Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments.
    - snapetom 7y ago
      > pharma adjusted price to minimize counterfeiting and black markets I'd totally believe it. It occurs across all markets, with all actors. Market prices isn't simply supply and demand. It's many things like black markets. Another example is public bonds in the US. Why are their yields under what it should be from the interest rates? It's because the earnings are tax free. The market has already adjusted for that.
    - chimeracoder 7y ago
      > Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments. Medicare alone covers more patients than NHS England does. (Very few countries in Europe actually have single-payer healthcare; the four UK countries are the exception, not the rule).
- AdrianB1 7y ago
  Real case: Romania. We put a price control in place, thousands of drugs are no longer available. My brother works for a distributor (they import and distribute, so they don't have any control) and told me the government report on 1200 drugs that disappeared from pharmacies in the past 3-4 years are the important ones, in total there are over 5000 they can no longer import because the controlled price is lower than the bulk price they can buy for.
  - daenz 7y ago
    Well the next step is clearly to force manufacturers to produce and sell the goods in marketplaces that they cannot negotiate in. /s
baron816 7y ago
Price controls are usually really bad. But medicine is a different case for many reasons I don’t want to get into now. Lots of countries do control prices of medical care without restricting supply.
- bmelton 7y ago
  The obvious counter to that and (feel free to interject if I'm wrong) is that it's because other countries have instituted price controls on pharmaceuticals that companies have to make up their profits on the US market. My worry here is that the price control seems to act as a disincentive for selling in the price controlled market. So long as there are 49 other states where margins are greater, it seems like those orders will be fulfilled first.
RVuRnvbM2e 7y ago
You can read about the results of Australia's 70+ year experiment here: https://www.abc.net.au/news/health/2019-11-25/medicine-costs-australia-cheaper-than-overseas/11728422 https://www.abc.net.au/news/health/2019-11-25/medicine-costs...
aqme28 7y ago
Medicare?
baroomba 7y ago
Yes. Literally every other healthcare system in a state with an advanced economy. (I'd love to see a counter-example, I've gone looking and failed to find one) [EDIT] to the downvoters: no, seriously, please post an example of, say, an OECD member state other than the US that doesn't use either explicit or implicit (single primary buyer setting prices, that is, monopsony) price controls as a major part of their healthcare policy. I assume you know of at least one, and I'd really like to know if I'm wrong about this.
samlevine 7y ago
This one is actually kind of complicated. Healthcare costs are weird. In general marginal costs to make drugs you already know how to make are usually low, so you can and do see a lot of free riders on the expensive part (R&D). It would be surprising if Illinois can't just join them. That said, ideally if you're trying to contain costs by fiat you want these to be negotiated by governments and healthcare providers.
vmchale 7y ago
I don't think it's a price control.

Has there ever been a price control experiment that hasn't resulted in even worse problems?

ceejayoz 7y ago

Virtually every other developed nations' healthcare systems?

GuthL 7y ago

Litterraly France.

thrower123 7y ago
This is how you get a Napoleon https://en.wikipedia.org/wiki/General_Maximum https://en.wikipedia.org/wiki/General_Maximum

gruez 7y ago

Other developed countries have price controls (more specifically, government negotiated prices) and it seems to be working well for them.

tenebrisalietum 7y ago
That's not really a price control, that's buyer control - collective bargaining reduces the number of buyers of X but not the amount of X demanded.
snapetom 7y ago
> government negotiated prices That's what we don't have in the US. You can certain make the case that we should, but that's a separate argument. Now we have a situation where we have a flat out price control, and it's going to have unintended consequences written all over it. All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally.
- mattrp 7y ago
  Along similar lines, I read a study nearly twenty years ago and I wish I could find it for these very recurring government vs market debates. The study evaluated prices between single payer countries and found that it wasn’t the collective bargaining that reduced prices in those countries. They observed that there was no correlation between the size of the single payer and pricing. Rather, it was that the pharma adjusted price to minimize counterfeiting and black markets. In countries where black markets and counterfeiting risks were high, the price was lower. Ironically the decision to lower gave some single payers added incentive to participate in arbitrage. One country would be so low the country itself decided they could arbitrage their Higher priced neighbors by selling off their excess through undisclosed side deals. You see a variant of this example playing out between Canada and US. The article talked about individual black markets and state backed black markets that would emerge as a result of these single payer deals... which were supposed to be confidential but of course the black markets allowed pricing information to leak causing everyone to demand lower prices... everywhere except the US which essentially subsidized all of these below market deals that give the appearance that collective bargaining is superior. Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments.
  - snapetom 7y ago
    > pharma adjusted price to minimize counterfeiting and black markets I'd totally believe it. It occurs across all markets, with all actors. Market prices isn't simply supply and demand. It's many things like black markets. Another example is public bonds in the US. Why are their yields under what it should be from the interest rates? It's because the earnings are tax free. The market has already adjusted for that.
  - chimeracoder 7y ago
    > Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments. Medicare alone covers more patients than NHS England does. (Very few countries in Europe actually have single-payer healthcare; the four UK countries are the exception, not the rule).
AdrianB1 7y ago
Real case: Romania. We put a price control in place, thousands of drugs are no longer available. My brother works for a distributor (they import and distribute, so they don't have any control) and told me the government report on 1200 drugs that disappeared from pharmacies in the past 3-4 years are the important ones, in total there are over 5000 they can no longer import because the controlled price is lower than the bulk price they can buy for.
- daenz 7y ago
  Well the next step is clearly to force manufacturers to produce and sell the goods in marketplaces that they cannot negotiate in. /s

baron816 7y ago

Price controls are usually really bad. But medicine is a different case for many reasons I don’t want to get into now. Lots of countries do control prices of medical care without restricting supply.

bmelton 7y ago
The obvious counter to that and (feel free to interject if I'm wrong) is that it's because other countries have instituted price controls on pharmaceuticals that companies have to make up their profits on the US market. My worry here is that the price control seems to act as a disincentive for selling in the price controlled market. So long as there are 49 other states where margins are greater, it seems like those orders will be fulfilled first.

RVuRnvbM2e 7y ago

You can read about the results of Australia's 70+ year experiment here: https://www.abc.net.au/news/health/2019-11-25/medicine-costs-australia-cheaper-than-overseas/11728422 https://www.abc.net.au/news/health/2019-11-25/medicine-costs...

aqme28 7y ago

Medicare?

baroomba 7y ago

Yes. Literally every other healthcare system in a state with an advanced economy. (I'd love to see a counter-example, I've gone looking and failed to find one) [EDIT] to the downvoters: no, seriously, please post an example of, say, an OECD member state other than the US that doesn't use either explicit or implicit (single primary buyer setting prices, that is, monopsony) price controls as a major part of their healthcare policy. I assume you know of at least one, and I'd really like to know if I'm wrong about this.

samlevine 7y ago

This one is actually kind of complicated. Healthcare costs are weird. In general marginal costs to make drugs you already know how to make are usually low, so you can and do see a lot of free riders on the expensive part (R&D). It would be surprising if Illinois can't just join them. That said, ideally if you're trying to contain costs by fiat you want these to be negotiated by governments and healthcare providers.

vmchale 7y ago

I don't think it's a price control.