Reasons why the "invisible hand" doesn't work in the health care sector

[The Rabbi]

The OP doesnt have a clue.
The health care market does not function like other markets because the people buying health care and the people paying for it are not the same. It is the only area I know of where consumers do not shop on the basis of price. It is almost impossible to do that, in fact.

 

[Norman]

The OP doesnt have a clue.
The health care market does not function like other markets because the people buying health care and the people paying for it are not the same. It is the only area I know of where consumers do not shop on the basis of price. It is almost impossible to do that, in fact.

In-elasticity of demand is a not good reason for sure. Same could be said about food and there are no problems.

The reason you gave is much better for sure, but the health care prices are rising in products where shopping on the basis of price is possible.

The government involvement is for sure one factor, but the worst factor is probably the extreme licensing and the lack of doctors. Not enough personel are trained to carry out the task and thus growth of demand outplaces the growth in supply.

 

[dblack]

The OP doesnt have a clue.
The health care market does not function like other markets because the people buying health care and the people paying for it are not the same. It is the only area I know of where consumers do not shop on the basis of price. It is almost impossible to do that, in fact.

In-elasticity of demand is a not good reason for sure. Same could be said about food and there are no problems.

The reason you gave is much better for sure, but the health care prices are rising in products where shopping on the basis of price is possible.

The government involvement is for sure one factor, but the worst factor is probably the extreme licensing and the lack of doctors. Not enough personel are trained to carry out the task and thus growth of demand outplaces the growth in supply.

And the kicker is that, even when shopping for price is possible, there's very little incentive. People are either insured or can't afford it at all.

 

[The Rabbi]

The OP doesnt have a clue.
The health care market does not function like other markets because the people buying health care and the people paying for it are not the same. It is the only area I know of where consumers do not shop on the basis of price. It is almost impossible to do that, in fact.

In-elasticity of demand is a not good reason for sure. Same could be said about food and there are no problems.

The reason you gave is much better for sure, but the health care prices are rising in products where shopping on the basis of price is possible.

The government involvement is for sure one factor, but the worst factor is probably the extreme licensing and the lack of doctors. Not enough personel are trained to carry out the task and thus growth of demand outplaces the growth in supply.

Health prices are rising largely for the reason I mentioned: consumers are not price conscious because someone else, i.e. insurers, are paying for it. So no incentive to reduce costs.
Look at areas of medical care where there is no or little insurance, like plastic surgery and radial keratomy, and you find prices have declined because providers do compete on cost since consumers are paying out of their ow pockets.
An additional reason for rising costs is simply better quality of traatment.

 

[CultureCitizen]

The OP doesnt have a clue.
The health care market does not function like other markets because the people buying health care and the people paying for it are not the same. It is the only area I know of where consumers do not shop on the basis of price. It is almost impossible to do that, in fact.

Clueless ? In my last encounter with Baiamonte I named the four reasons :

"Baiamonte , througout the thread the reasons why this doesn't happen in the healthcare sectore have been discussed.
1. Very inelastic demand
2. High information asimetry
3. Inflation caused by the insurance companies.
And I will have to add:
4. Posible cost transfers caused by medicaid and medicare ( I have yet to find a link to proof this point )."

 

[The Rabbi]

The OP doesnt have a clue.
The health care market does not function like other markets because the people buying health care and the people paying for it are not the same. It is the only area I know of where consumers do not shop on the basis of price. It is almost impossible to do that, in fact.

Clueless ? In my last encounter with Baiamonte I named the four reasons :

"Baiamonte , througout the thread the reasons why this doesn't happen in the healthcare sectore have been discussed.
1. Very inelastic demand
2. High information asimetry
3. Inflation caused by the insurance companies.
And I will have to add:
4. Posible cost transfers caused by medicaid and medicare ( I have yet to find a link to proof this point )."

1) Untrue. Spending on medical stuff has been down this recession due to lower consumer demand. People will put off things until they can pay for them.
2) I have no idea what you're talking about
3) Insurance companies do not cause inflation. Gov't causes inflation
4) Transfers dont raise prices. I actually have no idea what you mean by this.

 

[CultureCitizen]

Insurance companies do not cause inflation. Gov't causes inflation

1.Yes , well , many people are already reaching the limit of what they can pay.

2. Information asymetry - The consumer is rather clueless about the illness, the treatment , and the relation between price and quality of the service than the providers.

3. Inflation in the healthcare sector. Understanding inflation as a general rise in the price level of a set of goods and services, and not just the monetary view.

 

[EdwardBaiamonte]

¿You forgot about credit cards uh?

no typical stupid illiterate liberal. Economists did not forget about credit cards or credit in general.
Milton Friedman - Wikiquote
en.wikiquote.org/wiki/Milton_Friedman
‎
2 Disputed; 3 Misattributed; 4 Quotes about Friedman; 5 External links. Quotes[ edit].Inflation is always and everywhere a monetary phenomenon. Unanimity is .

Welcome to Econ 101 class one day one

 

[The Rabbi]

Insurance companies do not cause inflation. Gov't causes inflation

1.Yes , well , many people are already reaching the limit of what they can pay.

2. Information asymetry - The consumer is rather clueless about the illness, the treatment , and the relation between price and quality of the service than the providers.

3. Inflation in the healthcare sector. Understanding inflation as a general rise in the price level of a set of goods and services, and not just the monetary view.

1) Unfounded and unsupported. The facts are that people cut medical spending in the recession.
2) Consumers certainly can look at two prices and decide which is lower. They do not have the opportunity nor the incentive to do so.
3) Inflation is inflation. And it is caused by the government, not by doctors.

 

[dblack]

3) Insurance companies do not cause inflation. Gov't causes inflation

The point, which you have re-iterated, is that over-reliance on insurance for financing our health care has been at the core of health care inflation. It pervert's consumer incentives and drives hight prices. We can debate whether that over-reliance was cause by unscrupulous business practices or state regulatory policy, but it's still the same problem.

Of course, now that that government is mandating insurance, they're clearly part of the problem.

 

[The Rabbi]

3) Insurance companies do not cause inflation. Gov't causes inflation

The point, which you have re-iterated, is that over-reliance on insurance for financing our health care has been at the core of health care inflation. It pervert's consumer incentives and drives hight prices. We can debate whether that over-reliance was cause by unscrupulous business practices or state regulatory policy, but it's still the same problem.

Of course, now that that government is mandating insurance, they're clearly part of the problem.

Like most disasters the reliance had multiple causes, bt of course starting with government price controls. In this case wage controls during WW2 led companies to offer health insurance to perspective employees to get around the wage cap. And the practice grew from there.

 

[CultureCitizen]

1) Unfounded and unsupported. The facts are that people cut medical spending in the recession.
2) Consumers certainly can look at two prices and decide which is lower. They do not have the opportunity nor the incentive to do so.
3) Inflation is inflation. And it is caused by the government, not by doctors.

1. Well , not according to the sources I've seen
Why U.S. Health Care Is Obscenely Expensive In 12 Charts

But , I am willing to discuss your point of view if you have other sources ( it allways pays off to have different souces treating the same item from different points of view )

2. Well, kind of hard when you are having a critical ailment, it is very had to think with a cold head in such situations, and I must add that most of the healthcare costs occur with people which are over 65. Mostly lack of knowlede and a threatening situation don't help.

3.Nope. Economics 101.
Inflation occurs when most prices are rising by some degree across the whole economy.
This is caused by four possible factors, each of which is related to basic economic principles of changes in supply and demand:

Increase in the money supply.
Decrease in the demand for money.
Decrease in the aggregate supply of goods and services.
Increase in the aggregate demand for goods and services.

The government can only control the first factory : money supply. I think insucrance plans by companies would fall into the forurth category

Cost-Push Inflation Versus Demand-Pull Inflation

 

[The Rabbi]

1) Unfounded and unsupported. The facts are that people cut medical spending in the recession.
2) Consumers certainly can look at two prices and decide which is lower. They do not have the opportunity nor the incentive to do so.
3) Inflation is inflation. And it is caused by the government, not by doctors.

1. Well , not according to the sources I've seen
Why U.S. Health Care Is Obscenely Expensive In 12 Charts

But , I am willing to discuss your point of view if you have other sources ( it allways pays off to have different souces treating the same item from different points of view )

2. Well, kind of hard when you are having a critical ailment, it is very had to think with a cold head in such situations, and I must add that most of the healthcare costs occur with people which are over 65. Mostly lack of knowlede and a threatening situation don't help.

3.Nope. Economics 101.
Inflation occurs when most prices are rising by some degree across the whole economy.
This is caused by four possible factors, each of which is related to basic economic principles of changes in supply and demand:

Increase in the money supply.
Decrease in the demand for money.
Decrease in the aggregate supply of goods and services.
Increase in the aggregate demand for goods and services.

The government can only control the first factory : money supply. I think insucrance plans by companies would fall into the forurth category

Cost-Push Inflation Versus Demand-Pull Inflation

I;ll only address the first part because you are dishonest. I maintained that people have some ability to control their outlays for medical needs, as witnessed by reduced spending (actually reduced increases in spending) during the Obama recession. That is a fact.
Healthcare spending in the US grows at slowest rate since 1960 TheHill
You respond with a chart about increases in health care spending over 50 years. You understand your chart is not responsive to my point, right? And perhaps you understand that many things have caused health care spending to increase. Like better healthcare. The range of treatments and procedures available today far exceed what was available in 1960. Diagnostics alone are so far superior there is no comparison. That actualy costs money, so of course it will be more expensive.

 

[CultureCitizen]

You respond with a chart about increases in health care spending over 50 years. You understand your chart is not responsive to my point, right? And perhaps you understand that many things have caused health care spending to increase. Like better healthcare. The range of treatments and procedures available today far exceed what was available in 1960. Diagnostics alone are so far superior there is no comparison. That actualy costs money, so of course it will be more expensive.

I've already had this discussion before, with a hard core republican, mind you.
So then I presented another chart presenting the information comparing it to the gdp, and another comparing it with the healthcare expenditure in other countries.

Then the argument shifted : Oh , that's because the US has illegal , inmigrants, oh , that's because Americans are fatter, oh , thats's because the Americans use more drugs and alcohol, oh , that's because American Healthcare is the best in the world.

Pure denial. The main factor is that insured people don't do shopping, and that the insurance schema has poured billions of dollars into healthcare causing healthcare inflation ( pour billions into housing and you get housing inflation). Information asymetry plays also a very important role, and it was studied Keneth Arrow, a Nobel Prize winner.

Asymmetric Information Problem Solved Health Policy Blog NCPA.org

Now , unless you can point me to someone who states the oposite and has some credentials, I will disregard your argument.

 

[The Rabbi]

You respond with a chart about increases in health care spending over 50 years. You understand your chart is not responsive to my point, right? And perhaps you understand that many things have caused health care spending to increase. Like better healthcare. The range of treatments and procedures available today far exceed what was available in 1960. Diagnostics alone are so far superior there is no comparison. That actualy costs money, so of course it will be more expensive.

I've already had this discussion before, with a hard core republican, mind you.
So then I presented another chart presenting the information comparing it to the gdp, and another comparing it with the healthcare expenditure in other countries.

Then the argument shifted : Oh , that's because the US has illegal , inmigrants, oh , that's because Americans are fatter, oh , thats's because the Americans use more drugs and alcohol, oh , that's because American Healthcare is the best in the world.

Pure denial. The main factor is that insured people don't do shopping, and that the insurance schema has poured billions of dollars into healthcare causing healthcare inflation ( pour billions into housing and you get housing inflation). Information asymetry plays also a very important role, and it was studied Keneth Arrow, a Nobel Prize winner.

Asymmetric Information Problem Solved Health Policy Blog NCPA.org

Now , unless you can point me to someone who states the oposite and has some credentials, I will disregard your argument.

I have no idea what point you're trying to make. Comparing the US with Europe is absurd as we are not Europeans, do not eat like Europeans and do not have lifestyles like Europeans.

 

[dblack]

You respond with a chart about increases in health care spending over 50 years. You understand your chart is not responsive to my point, right? And perhaps you understand that many things have caused health care spending to increase. Like better healthcare. The range of treatments and procedures available today far exceed what was available in 1960. Diagnostics alone are so far superior there is no comparison. That actualy costs money, so of course it will be more expensive.

I've already had this discussion before, with a hard core republican, mind you.
So then I presented another chart presenting the information comparing it to the gdp, and another comparing it with the healthcare expenditure in other countries.

Then the argument shifted : Oh , that's because the US has illegal , inmigrants, oh , that's because Americans are fatter, oh , thats's because the Americans use more drugs and alcohol, oh , that's because American Healthcare is the best in the world.

Pure denial. The main factor is that insured people don't do shopping, and that the insurance schema has poured billions of dollars into healthcare causing healthcare inflation ( pour billions into housing and you get housing inflation). Information asymetry plays also a very important role, and it was studied Keneth Arrow, a Nobel Prize winner.

Asymmetric Information Problem Solved Health Policy Blog NCPA.org

Now , unless you can point me to someone who states the oposite and has some credentials, I will disregard your argument.

This will probably help a little. But it ignores the elephant in the room - the lack of incentive for patients to seek out these second opinions in the first place, or why they'd bother with a cheaper remedy even if it is recommended by the third party. For the liberally insured, the incentive, once you've bumped past any deductible, is to go for broke, to choose the most expensive alternative you can get with the assumption that it will be better. This is why doctors are able to get away with this crap. Asymmetric information faces us in many consumer markets, but where we have incentive to save money, we seek out the necessary advice. Insured health care consumers have no reason to.

 

[EdwardBaiamonte]

Insured health care consumers have no reason to.

yes exactly this is how we know that capitalist heatlh care would reduce prices by 80% and add 5-20 years to our life expectancy. Try to imagine what would happen if everyone was spending their own money and providers had to compete on basis of price and quality.

Now do you understand?

 

[dblack]

Ed, please.

 

[EdwardBaiamonte]

Ed, please.

typical liberal without IQ for substance!!

yes exactly this is how we know that capitalist heatlh care would reduce prices by 80% and add 5-20 years to our life expectancy. Try to imagine what would happen if everyone was spending their own money and providers had to compete on basis of price and quality.

Now do you understand?