22 ms·

Except food also has inelastic demand (without it you starve and die), and has a pretty close to perfect market, and prices are not driven to infinity. Healthc

by bhupy 4y ago

Except food also has inelastic demand (without it you starve and die), and has a pretty close to perfect market, and prices are not driven to infinity. Healthcare in America is about as far away from "capitolism"(sic) as one could possibly get. Due to Federal mandates and tax incentives, health insurance is predominately provided by employers rather than the individual market (unlike Switzerland, Germany, or the Netherlands). What we're seeing in healthcare costs is analogous to what you might see happen to airline ticket costs if we all got our air tickets through our employers: the vast majority of us would fly business class, while the unemployed would be simply unable to pay for business class fares out of pocket. Employers (especially medium-to-large businesses) have a much higher purchasing power (and hence, willingness to pay) than individuals. If you take this behavior and combine it with the fact that health insurers' profit margins are capped by law, insurers pay more absolute dollars for treatments (which doctors happily accept), charge more to employers (who are generally less price conscious vs individuals), thus bring in more absolute revenue, and therefore more profit because a capped profit percentage of a higher revenue is higher than a capped percentage of lower revenue. It's somewhat counter-intuitive, but the policy combination of an employer mandate and insurance profit cap results in prices rising to infinity. The furthest thing possible from a "perfect capitol(sic) market".

ggrrhh_ta 4y ago
Air also has inelastic demand. It is just that it is too cheap (that doesn't mean that the producers make a good profit) to produce an enormous quantity of it (even though fresh food is perishable), so much, that even the US and the EU agree on agricultural quotas and/or increasing tariffs over a certain quota of imported quantity. For Switzerland & Germany the way the incentives work are different than in the US, but the market for compulsory health insurance is very strictly regulated and the cost distribution for healthcare is distributed across public and private entities (particularly for very expensive treatments, rare diseases, treatments involving machines of great complexity/cost [like for proton therapy]).

by bhupy 4y ago

ggrrhh_ta 4y ago

Air also has inelastic demand. It is just that it is too cheap (that doesn't mean that the producers make a good profit) to produce an enormous quantity of it (even though fresh food is perishable), so much, that even the US and the EU agree on agricultural quotas and/or increasing tariffs over a certain quota of imported quantity. For Switzerland & Germany the way the incentives work are different than in the US, but the market for compulsory health insurance is very strictly regulated and the cost distribution for healthcare is distributed across public and private entities (particularly for very expensive treatments, rare diseases, treatments involving machines of great complexity/cost [like for proton therapy]).