Obamacare

[Mandalore]

Just saying, but it's so very difficult to talk about long term cycles in economics simply because the true modern economy has existed for just a tiny bit over a century. And it's hard to even consider how immensely different the economy is now than even fifteen years ago.

So far throughout history economies have generally grown...and the only post industrial nation that naturally would be in decline is Japan and they're showing the world what artificial growth does to a country over a decade.

We'll have a much more compete idea of long trends in free markets once a dynastic cycle has passed.

[CommanderOtto]

heyy bryant!

3.5(added by edit). Given you description of healthcare, shouldn't food also be an inelastic market with costs that are driven up?

not really.. Food is easy to produce in comparison to making other products, and it is one of the most efficient markets. Wheat is always a good example of what resembles perfect competition. Prices are efficient, no restrictions to the market, and all products are the same. If wheat is efficiently priced, then that means anything made with that will also be cheaper. Besides, you can make food with several other types of commodities that are efficiently priced as well. It also does not require vast amounts of money or expertise to produce wheat or soy... healthcare services, on the other hand, are much more expensive and complex in every level. It is good to note that healthcare services are not the same everywhere (like wheat) and so it is much harder to price, it is inefficient, difficult to produce and it is not sold in a markets like the commodity exchange. Only certain derivatives based on insurance are sold in international exchanges.

7. "It is either taxation or inflation". This is wrong, there is also spending less.

True, but I said that because I don't think anyone really believes the government will suddenly and massively reduce spending. We both know that Obama is not going to touch the subject and the only other person who could really push for that is the next president. If nothing happens and things go on as they are, then it is taxes or inflation.

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[CommanderOtto]

and in defense of my first post talking to Dread:

Unless you fuel-inject it with "Obamacare". Increase the amount of money in health insurers pockets by mandating the healthy uninsured purchase health insurance, mandate all services be covered and no one can be denied. Don't fix the underlying problems of a market sector badly managed and make the problem worse because your political doctrine claims it will work.

Dread, I don't know what made you think I support obamacare. For now, it seems it sucks, but that yet remains to be seen. My whole effort here is to explain to you why some things don't work. What I say is based on my knowledge in economics and 4 years of study. I am not putting any political doctrine here.

I have class now so I can't respond everything.... but although healthcare has some level of elasticity, it is VERY inelastic. Are you going to say oil is elastic too?

I'm saying if you read the history link i buried in my post, you'll find that the market has changed over a 50 year period (which is a short time for the world's second oldest profession -medicine man) and has reached a point of clear retraction so severe it may collapse. Since 2000, so many people have given up trying to keep up with rising health insurance costs the insurance market is on the brink of collapse. If liberal idiots weren't so keen on fixing the sneeze instead of the disease we'd see a return of fee for service options and affordable prices. Charity cases would receive charity and preventative / personal health maintenance would be highly valued.

Ok I saw it. But when we are talking about oligopoly, we are talking about Microeconomics. Right now, in this period of time, healthcare is inelastic... it's not something I am making up and it isn't my opinion. You made special emphasis and said how I was DEAD WRONG. The problem with economics is that again, what might sound right to the general population, could be wrong in economics.

and well. you were talking about why it is an oligopoly. Yes, you were right in explaining that patents in pharmaceutical companies do create barriers to entry, but the main reason for which healthcare is an oligopoly is because it does require TONS of capital and expertise... you even said it yourself. It is a very difficult industry for "newcomers" because not every doctor has the cash to make a brand new building worth millions of dollars and it is not easy for small pharmaceutical companies to have the money to create new drugs or medical devices... years of testing, years paying teams of research, years waiting for approval of FDA. It's an industry that requires TONS of money. And again, your idea doesn't explain why these inventions are more expensive here in the U.S than in other countries. If i'm correct, Nexium is patented and it is only produced by one company. Then, here in the U.S it is extremely expensive, when in south america it is ridiculously cheap, and they have patent law as well... and healthcare is an oligopoly both here and there.


Extra notes: by the way, in an oligopoly, R&D would bring costs down due to the Nash Equilibrium. Not up. That's why the automobile industry, which is also an oligopoly, can produce cars so efficiently and cheap. I can tell you, if there is any country that makes good quality cars and cheap, that is the U.S. Following that line of thought, Healthcare should be similar, but once again it isnt, which takes us back to my four main reasons for the exponentially rising costs.

So basically, if you want to think of solutions in healthcare (and that don't involve the government taking over all of it), then you have to focus on changing something from the 4 main points:

1. You can't shop for the best price if you are having a heart attack.
2. People don't care what is the price of something if it means it can save their life. Life is priceless (that means, almost no limits in the price in the supply and demand curves).
3. There is a vicious circle that pushes prices up. Hospitals know they can charge high prices from health insurance companies because they have the cash. Health insurance companies then raise the premiums. People pay higher premiums because one illness will ruin you financially in this country. Then the health insurance has more cash and the hospital can charge a higher price next month.
4. healthcare is inelastic.

I understand why you think that is political doctrine... I mean, I type healthcare in google and I keep coming up with all sorts of political crap, even in respectable newspapers. But these points here, they really are problems that need to be addressed somehow.

[Duel of Fates]

Ever wonder why it is inelastic? Government interference? Just saying.

[CommanderOtto]

Ever wonder why it is inelastic? Government interference? Just saying.

No, it is inelastic in all countries. It's not a problem only in the U.S.... but the U.S has become a prominent example of how prices have increased. As I said previously, a hospital can raise the price, and sometimes free markets can reduce it a little... after all, it is an oligopoly and there is a small level of competition. But in general, overall, the prices will just continue to rise because it hospitals, doctors and pharmaceutical companies can charge higher and not see a big decrease in people "buying" surgeries, medicine, or medical devices.

[Duel of Fates]

Thanx. Learn something every day.

[CommanderOtto]

Thanx. Learn something every day.

[ProfessorDreadNaught]

Ever wonder why it is inelastic? Government interference? Just saying.

No, it is inelastic in all countries. It's not a problem only in the U.S.... but the U.S has become a prominent example of how prices have increased. As I said previously, a hospital can raise the price, and sometimes free markets can reduce it a little... after all, it is an oligopoly and there is a small level of competition. But in general, overall, the prices will just continue to rise because it hospitals, doctors and pharmaceutical companies can charge higher and not see a big decrease in people "buying" surgeries, medicine, or medical devices.

This is what I'm talking about!!!! In a free market your premise is flawed and therefore your conclusion erroneous.

Since 2000 the number of individuals and business purchasing health insurance has been dramatically declining all while health care costs have continued to rise. A perfect storm of aging and less healthy policy holders, fewer healthy low-risk new policy holders, declining enrollment by existing customers, ever increasing government mandates for claim coverage and spiraling out of control costs is where the health insurance industry finds itself. This points to an inevitable collapse of the health insurance industry and the markets that depend on them. (How does a hospital afford the payments on that new MRI if no one can afford to use it?)

Unless you prop up the system artificially. Say, by mandating that everybody buy it...that the government collects tax money and pumps it into newly created state and federal insurance marketplaces.

Why would insurance companies back a social policy designed to bankrupt them (no limit insurance, no denial of policy coverage) unless they are already going bankrupt?

MOTIVATION & EXPLOITATION

[CommanderOtto]

Ever wonder why it is inelastic? Government interference? Just saying.

No, it is inelastic in all countries. It's not a problem only in the U.S.... but the U.S has become a prominent example of how prices have increased. As I said previously, a hospital can raise the price, and sometimes free markets can reduce it a little... after all, it is an oligopoly and there is a small level of competition. But in general, overall, the prices will just continue to rise because it hospitals, doctors and pharmaceutical companies can charge higher and not see a big decrease in people "buying" surgeries, medicine, or medical devices.

This is what I'm talking about!!!! In a free market your premise is flawed and therefore your conclusion erroneous.

Since 2000 the number of individuals and business purchasing health insurance has been dramatically declining all while health care costs have continued to rise. A perfect storm of aging and less healthy policy holders, fewer healthy low-risk new policy holders, declining enrollment by existing customers, ever increasing government mandates for claim coverage and spiraling out of control costs is where the health insurance industry finds itself. This points to an inevitable collapse of the health insurance industry and the markets that depend on them. (How does a hospital afford the payments on that new MRI if no one can afford to use it?)

Unless you prop up the system artificially. Say, by mandating that everybody buy it...that the government collects tax money and pumps it into newly created state and federal insurance marketplaces.

Why would insurance companies back a social policy designed to bankrupt them (no limit insurance, no denial of policy coverage) unless they are already going bankrupt?

MOTIVATION & EXPLOITATION

no no no.....man, you don't understand. If you are going to say someone's wrong, you better know what you are talking about. you just don't understand the laws and concepts of economics behind the thing (or the basics of the insurance industry). If the quantity of people buying "healthcare" dropped to the point that price increases bring revenue loss, then it would be ELASTIC and we wouldn't have a problem. You are saying that we have reached a "limit" to prices because of changes in population... but if that were true, prices would be falling by now and healthcare reform wouldn't even have existed in the first place. Yes, an increase in prices means less people can afford it, but in inelastic markets, less people buying during prices increases brings more revenue. That's the whole basic idea behind Elasticity of Demand. That's why you are not an economist.

And by the way, the insurance companies aren't going to go bankrupt... if anything, they will make money just as they have been doing all along and prices will continue to go up.If there is no limit to insurance and no denial of policy coverage, then they just charge a higher premium (or deductible) to cover the cost. So basically, you are saying that if things were left as they were before the healthcare reform, that prices would fall? I told you, before and after obamacare the prices will go up. Some economists say it will go down after obamacare, but honestly, I don't believe that. But not doing healthcare reform will not solve the problem either. Before the insurance companies were going to make a lot of money, even without obamacare. After obamacare they continue to win just the same. They were not going to go bankrupt before healthcare reform.I don't know who told you that.

Why are prices going to continue to rise? AGAIN, the main 4 points I mentioned, which I wrote in a simplified version so you could understand. The nature of healthcare markets is not something you can change with "free market' principles. They already had free market principles in their market for a long time, and of course, basic economic principle explains why that doesn't always work to bring prices down. I don't know how else I can explain that to you.

EDIT: I even drew a nice little graph just for you...with point number 3 of why "free market" principles don't fix the prices like people want. The nature of the industry distorts everything. You have one price, but after the cycle of insurance companies paying for the bills, the price increases. It's not something you can argue about, it's the laws of supply and demand you are fighting against, not me lol. I still fail to understand what's your point or why you are so adamant about proving me wrong. You don't even need math to see how the law of supply and demand works.



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Look, I hate to put all of this info here... but stop telling me i'm wrong. Newspaper info is never going to explain to you what Ph.D's have to study for one full semester to understand. If you want to present a solution, as I explained previously, you have to understand how things really work. Repeating what journalists say is not going to help you. Open the link and you will see how complex the subject really is.

http://www3.nd.edu/~wevans1/health_econ/reading_list.htm

Once you look at that, then you can see that the topic is difficult. Imagine congress talking about quantum physics? Well, basically, we are in a situation like that. Unfortunately, if there was an easy solution, several organizations with economists would have presented it to congress already. The truth is, there is still a lot of controversy among economists as to what should be done... that's why I can't really tell for sure if Obamacare is going to be good or not. But again, solutions have to be based on the market principles we have to study for years (not on vague ideas).

[LordFred]

All Taxation is theft - Josiah Warren