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> 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 req

by 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?
      - gradstudent 12y ago
        Please refer to my points re subsides, loans and limits. These are not insurmountable problems. Many other countries have figured how to make universal health achievable. IMO it is time America did the same.
        msandford 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? >> 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? > Please refer to my points re subsides, loans and limits. These are not insurmountable problems. So first you say that market forces will still be in play because the government could always go elsewhere. Then when provided with an example of a situation where market forces cannot come into play, you suggest that legislation can fix it. That is EXACTLY what tptacek was the problem, the loss of MARKET incentives and information. > I'm not sure I follow. Price signals are based on demand. No, no they're not. They're based on supply AND demand. This is literally econ 101. http://en.wikipedia.org/wiki/Supply_and_demand http://en.wikipedia.org/wiki/Supply_and_demand Normally demand goes down as price goes up because more and more entities get priced out of the market. With the government as the sole (or very nearly sole) buyer demand is constant because the government quite literally has a mandate to supply healthcare to the citizens. That means that suppliers have no incentive (short of avoiding legislative action aimed at them which they can cheaply and easily dodge through lobbying) to bring prices down. It's in their interests (read profit motive) to supply as much as they can at as high of a price as they can. This is the problem that people are talking about. > 1. If the government is guaranteeing it'll pay, why give them a price break? Why indeed? The threat of legislative action? See my comments above re: lobbying. Got a way around that? Most of the population of the US would be VERY interested to hear how you circumvent it. So far the only halfway viable strategy is what Lawrence Lessig is doing with mayday.us and that's a long way from making it a solved problem. 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? Again, see comments re: lobbying. Unless there is no possible way to circumvent the lobbying problem you're simply proposing that we replace one broken system which you dislike -- and rightly so, it's not that great -- with another broken system which you like. Sure you like it better but others do not. We're at the point of arguing about opinions. "But other countries do it just fine!" you say. Okay sure, but which other countries with single payer systems have the kind of demographics that we do here in the US? Answer: none. They're all relatively small countries (relative to 310mm people) with rather homogeneous demographics (again at least compared to the US). It MIGHT work OK and it MIGHT not be more broken than the system we have now but those aren't guarantees.

by dlss 12y ago

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?
    - gradstudent 12y ago
      Please refer to my points re subsides, loans and limits. These are not insurmountable problems. Many other countries have figured how to make universal health achievable. IMO it is time America did the same.
      - msandford 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? >> 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? > Please refer to my points re subsides, loans and limits. These are not insurmountable problems. So first you say that market forces will still be in play because the government could always go elsewhere. Then when provided with an example of a situation where market forces cannot come into play, you suggest that legislation can fix it. That is EXACTLY what tptacek was the problem, the loss of MARKET incentives and information. > I'm not sure I follow. Price signals are based on demand. No, no they're not. They're based on supply AND demand. This is literally econ 101. http://en.wikipedia.org/wiki/Supply_and_demand http://en.wikipedia.org/wiki/Supply_and_demand Normally demand goes down as price goes up because more and more entities get priced out of the market. With the government as the sole (or very nearly sole) buyer demand is constant because the government quite literally has a mandate to supply healthcare to the citizens. That means that suppliers have no incentive (short of avoiding legislative action aimed at them which they can cheaply and easily dodge through lobbying) to bring prices down. It's in their interests (read profit motive) to supply as much as they can at as high of a price as they can. This is the problem that people are talking about. > 1. If the government is guaranteeing it'll pay, why give them a price break? Why indeed? The threat of legislative action? See my comments above re: lobbying. Got a way around that? Most of the population of the US would be VERY interested to hear how you circumvent it. So far the only halfway viable strategy is what Lawrence Lessig is doing with mayday.us and that's a long way from making it a solved problem. 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? Again, see comments re: lobbying. Unless there is no possible way to circumvent the lobbying problem you're simply proposing that we replace one broken system which you dislike -- and rightly so, it's not that great -- with another broken system which you like. Sure you like it better but others do not. We're at the point of arguing about opinions. "But other countries do it just fine!" you say. Okay sure, but which other countries with single payer systems have the kind of demographics that we do here in the US? Answer: none. They're all relatively small countries (relative to 310mm people) with rather homogeneous demographics (again at least compared to the US). It MIGHT work OK and it MIGHT not be more broken than the system we have now but those aren't guarantees.