🚀 go-pugleaf

"Bryan D. Buckman" <buckman@tamu.edu> wrote:

> On Tue, 10 Mar 1998 15:52:41 -0600, sacosta@tamu.edu (Sergio Acosta)
> wrote:
> 
> >buckman@tamu.edu (Bryan D. Buckman) wrote:
> >
> >/snip/
> >
> >-> I did read it.  I think it is either phenomenally malign or
> >-> phenomenally ignorant, I'm not sure which.  Socialized medicine may be
> >-> a bastardization, but it's based on the same faulty pemise:  tampering
> >-> with the value the free market places on a good or service.
> >
> >/snip/
> >
> >
> >Free market grouppies may want to read Robert Kuttner's "The limits of
> >Markets", found at http://epn.org/prospect/31/31kuttfs.html -which is an
> >adaptation from his book "Everything for Sale: The Virtues and Limits of
> >Markets"-  before you put all your eggs in one basket.
> 
> Kuttner's analysis of health care is particularly interesting to me,
> since I tend to favor the Chicago school of economics and its Public
> Choice offshoot in political science.  Kuttner says that market
> economics is insufficiently useful in analysing the health care market
> because health care doesn't have some of the free market principles
> such as free entry.  I agree.  But he goes on to say that this
> reflects a fault in free market theory, rather than a fault in the
> health care market.  I disagree.  I'll leave my eggs in the free
> market basket, although I think Kuttner makes some ineresting points.

	Moreover, health care is not driven by direct market forces;
	it's driven by forces filtered by insurance companies. Medical
	insurance is the primary reason we have such high medical
	costs - health care pricing isn't determined by what the people
	as a market can bear, but rather what the insurance industry
	as a market can bear. Since insurance simply passes off the 
	high costs (plus some added profit) to the consumers in the
	form of premiums, and the consumers in this case are mostly
	corporations, the public and public market strenth has almost
	no direct effect on medical care pricing.

	The insurance industry is using the "collective" effect of 
	thier customers (corporations) to hide the true costs of 
	medical care from the actual recipiants of that care. Of course,
	we all pay for it in the end (in lower salaries, mainly) but
	we don't notice it. We also pay *more* than if the money was
	put back into our salries as cash and health care was direct
	market driven. The profiteering going on in the "medical/
	insurance complex" is the single most significant factor in 
	high medical costs.

	When I worked for a company making nuclear pharmecuticals, we
	would produce a single dose of medicine (including costs for
	all labor rates, building, fleet of cars to deliver, etc.) for
	about $50 . We then sold this to the hospital for $250, who
	then sold it to the patient for $400 . All this price gouging
	was possible because the insurance industry gleefully paid 
	this $400 price, and then upped the premiums appropriately
	(with another 10% or so added for themselves). So, a product
	which should really cost the hospital perhaps $70 and the
	patient $100 is now a "skyrocketing health care cost" statistic.

	Insurance industries now make a lot of noise about "controlling
	costs", but don't really do much about it (or do the wrong things),
	and in any case it is too late. Too many people	are too wedded 
	to the status quo to permit any real reform.

	The time to fix all this was in the 1950's, when giving medical
	insurance as a "benifit" to get people to work for you became
	a big "fad" with companies. Making medical care direct market
	driven would be the best solution, but it would be very painful
	in the short term.

	-Matt