6 ms·

> If there's a single federal buyer paying for 90+% of the market (look how much of the market for seniors Medicare covers), it's hard to see how the price sign

> If there's a single federal buyer paying for 90+% of the market (look how much of the market for seniors Medicare covers), it's hard to see how the price signals continue to work the same way. I'm not sure I follow. Price signals are based on demand. The same demand is still there in the sense that customers still interact with private health providers. The only thing that changes is payment is now handled by a single government system. Uncle Sam guarantees you access and his guys sort out the payment with the private provider, later. > The (slow, error-prone) political process is engaged in every buying decision. I'm not sure I agree with your premise for a start (i.e. publicly ran organisations are necessarily slow and error prone) but setting that aside, why is bulk billing between government financiers and the private health providers not an option? The government knows how much demand they have for XYZ product or service so they can negotiate based on volume. Have I missed something?

dlss 12y ago
> Price signals are based on demand. The same demand is still there in the sense that customers still interact with private health providers. Price signals require both a supply side and a demand side. Government funded healthcare likely increases demand, since it reduces cost on an elastic good. However, it also reduces supply, since it reduces payment. (There's a good discussion of this at http://www.cato.org/blog/price-controls-rise-latin-america http://www.cato.org/blog/price-controls-rise-latin-america) To put it another way... if we passed a law saying that all programmers could charge at most $30/hr [edit: which is a good wage compared to other non-degree requiring jobs] we would have increased programmer demand (since now more businesses can afford programmers) and would also have less total programmers since many would switch careers to meet their financial needs. Something similar would happen in the medical industry with a single large federal buyer. > The government knows how much demand they have for XYZ product or service so they can negotiate based on volume. Have I missed something? This is also missing the supply side. When you take money from one group and give it to another it is very very important to look at what happens to the group you've taken from in addition to the group you've given to. The real value in healthcare hasn't been created yet. It's in the drugs of the future. Changing the incentive structure for health startups changes how many people found healthcare startups. A system with basically a single buyer is a reverse monopoly (ie http://en.wikipedia.org/wiki/Monopsony http://en.wikipedia.org/wiki/Monopsony). If you find you're building a product for essentially a single customer... you should probably found a different company. They're not going to voluntarily pay you anywhere near what you'd make in a real market.
- gradstudent 12y ago
  > Price signals require both a supply side and a demand side. Government funded healthcare likely increases demand, since it reduces cost on an elastic good. However, it also reduces supply, since it reduces payment. I'm not arguing for the government to fix the cost of drugs or health services. I'm arguing for the government to guarantee access to a minimum set of healthcare products and services and then negotiate price with the providers based on uptake. From a consumer perspective, this is much better. Far better than buying said products and services directly from a monolithic private entity. From a supplier perspective, this is less good and there may be some incentive to artificially limit supply. But that's why we have governments in the first place: to take over in cases where the market is unable or unwilling to function in a way that is beneficial to society as a whole. If private hospitals decide to limit the number of e.g. heart procedures per year then government needs to step in and either regulate or take other measures to ensure the delivery of essential services.
  - dlss 12y ago
    1. If the government is guaranteeing it'll pay, why give them a price break? 2. If the reason is passing laws saying you have to give them a price break (as you imply in paragraph 2), how is that not price fixing?
    - gradstudent 12y ago
      > If the government is guaranteeing it'll pay, why give them a price break? Because you want to stay in business and there are other healthcare providers the government could use instead? Including those providers that are publicly funded? In the case of expensive drugs, there are a myriad things the government could do including taxpayer subsidies, government health loans and placing limits on the length of the period a private company can exercise monopoly control over substances deemed necessary for universal health.
      - msandford 12y ago
        > Because you want to stay in business and there are other healthcare providers the government could use instead? Okay, now suppose that you have a patent on a particular drug or device or procedure and as a result are the monopoly provider of it. Where does the government go to get the lower cost alternative? Where is the downward pressure on your prices?

dlss 12y ago

> Price signals are based on demand. The same demand is still there in the sense that customers still interact with private health providers. Price signals require both a supply side and a demand side. Government funded healthcare likely increases demand, since it reduces cost on an elastic good. However, it also reduces supply, since it reduces payment. (There's a good discussion of this at http://www.cato.org/blog/price-controls-rise-latin-america http://www.cato.org/blog/price-controls-rise-latin-america) To put it another way... if we passed a law saying that all programmers could charge at most $30/hr [edit: which is a good wage compared to other non-degree requiring jobs] we would have increased programmer demand (since now more businesses can afford programmers) and would also have less total programmers since many would switch careers to meet their financial needs. Something similar would happen in the medical industry with a single large federal buyer. > The government knows how much demand they have for XYZ product or service so they can negotiate based on volume. Have I missed something? This is also missing the supply side. When you take money from one group and give it to another it is very very important to look at what happens to the group you've taken from in addition to the group you've given to. The real value in healthcare hasn't been created yet. It's in the drugs of the future. Changing the incentive structure for health startups changes how many people found healthcare startups. A system with basically a single buyer is a reverse monopoly (ie http://en.wikipedia.org/wiki/Monopsony http://en.wikipedia.org/wiki/Monopsony). If you find you're building a product for essentially a single customer... you should probably found a different company. They're not going to voluntarily pay you anywhere near what you'd make in a real market.

gradstudent 12y ago
> Price signals require both a supply side and a demand side. Government funded healthcare likely increases demand, since it reduces cost on an elastic good. However, it also reduces supply, since it reduces payment. I'm not arguing for the government to fix the cost of drugs or health services. I'm arguing for the government to guarantee access to a minimum set of healthcare products and services and then negotiate price with the providers based on uptake. From a consumer perspective, this is much better. Far better than buying said products and services directly from a monolithic private entity. From a supplier perspective, this is less good and there may be some incentive to artificially limit supply. But that's why we have governments in the first place: to take over in cases where the market is unable or unwilling to function in a way that is beneficial to society as a whole. If private hospitals decide to limit the number of e.g. heart procedures per year then government needs to step in and either regulate or take other measures to ensure the delivery of essential services.
- dlss 12y ago
  1. If the government is guaranteeing it'll pay, why give them a price break? 2. If the reason is passing laws saying you have to give them a price break (as you imply in paragraph 2), how is that not price fixing?
  - gradstudent 12y ago
    > If the government is guaranteeing it'll pay, why give them a price break? Because you want to stay in business and there are other healthcare providers the government could use instead? Including those providers that are publicly funded? In the case of expensive drugs, there are a myriad things the government could do including taxpayer subsidies, government health loans and placing limits on the length of the period a private company can exercise monopoly control over substances deemed necessary for universal health.
    - msandford 12y ago
      > Because you want to stay in business and there are other healthcare providers the government could use instead? Okay, now suppose that you have a patent on a particular drug or device or procedure and as a result are the monopoly provider of it. Where does the government go to get the lower cost alternative? Where is the downward pressure on your prices?