Posts Tagged ‘Healthcare’

Our government leadership appears to lack a basic understanding of economics.  I think it is fair to say that the root of economics is based on the understanding that prices of goods are driven by the demand for those goods and the amount of supply of those goods.  When do you get that house you’ve always wanted cheap?  When everyone wants to sell their house (big supply) and no one is in the market to buy one (low demand).  That’s obvious, right?

Well, not to our authoritative leadership.  From a very limited understanding of the current Healthcare Bill being pushed by Mr. Obama and Ms. Pelosi, it’s desire is to forcefully increase the number of participants (universal coverage) and dramatically reduce the profit potential of those that provide the services (which actually reduces the number of participants).  The net effect is an increase in demand for healthcare and, at the same time, a reduction in the supply of it.  Under every scenario, this will increase the cost of healthcare.  And if we have less money to spend (because we need to collectively divert more of our money to satisfy whimsical regulation), we will end up with less healthcare, not more.

If the end point they desire is more healthcare (i.e. universal coverage), you need to make it cheaper, not more expensive.  What does economics teach us about lowering the price of a product?  Have more of it.  And how do you do that?  Make it cheaper to produce by lessening the cost for someone to practice medicine through lower malpractice insurance (i.e. stop John Edwards from chasing ambulances), lower the complexity of getting paid (talk to a hospital administrator and ask how many people it takes to get paid by Medicare and Medicaid.  It is a joke, just not funny), make it easier to have competing hospitals, lower the costs of gaining approval for drugs…  The list is there.  Lawmakers just need to accept the fact that their past actions caused the problems, not solved them.  As well intentioned as they were, our government is the biggest reason for any healthcare inflation we may have faced.

A common thread within our government is the belief that the ends justify the means.  This is never true.  Never.  You can not achieve a stable and self-sufficient end if the means are diametrically opposed to it.

Call your representative and ask them if they understand basic economics.  And then ask them how the proposed healthcare bill fits with the basic laws of supply and demand.

Read this article…  And then read it again…  And then write the main points on your palm or arm so that when someone tries to convince you that we “need” healthcare reform as presented by our federal government, you have the talking points right in front of you.   Please, please, please read this article.  I have not read anything else that so clearly and logically refutes the arguments being made by our authoritarian leaders.

Two excerpts worth highlighting:

- “A universal plan will reduce the cost of health care.”

Think a moment. Suppose you are in an apple market with 100 buyers and 100 sellers every day and apples sell for $1 a pound. Suddenly one day 120 buyers show up. Will the price of the apples go up or down?

and:

- “We need a public plan to keep the private plans honest.”

The 1,500 or so private plans don’t produce enough competition? Making it 1,501 will do the trick? But then why stop there? Eating is even more important than health care, so shouldn’t we have government-run supermarkets “to keep the private ones honest”? After all, supermarkets clearly put profits ahead of feeding people. And we can’t run around naked, so we should have government-run clothing stores to keep the private ones honest. And shelter is just as important, so we should start public housing to keep private builders honest. Oops, we already have that. And that is exactly the point. Think of everything you know about public housing, the image the term conjures up in your mind. If you like public housing you will love public health care.

There is so much amp’ed up discussion concerning the uninsured that I thought it might be nice to actually look at the numbers.  For everyone’s reference, you can find the numbers at the US Census website.  For you lazy people, here is the link to the actual 2007 report that looks at this issue.

Before we get too far into the numbers, I think we should step back and look at a little history.  We currently have many government officials clucking like headless chickens of the upcoming catastrophe in healthcare and the growing base of uninsured.  According to the Census Bureau, for at least the last 20 years, they have estimated that 15% of the US population is without health insurance.  About 14% in 1988, 16% in 1993, 16% in 1998, 15% in 2003, and 15% in 2007.  Hmmm, it really looks like an out-of-control freight train, huh?

They also are freaking out about more and more having issues affording insurance because of the runaway costs.  This is kinda true.  In the 1970′s, healthcare represented 7% of US GDP.  It was expected to reach over 20% of GDP by 2000.  It made it to 15%.  Close, but no cigar.  Now, some will say that if we were to adopt a more European system (i.e. government run) we wouldn’t have the spiraling out of control cost increases.  Sorry, but the numbers don’t jive with that reasoning.  Austria, France, Switzerland, Norway, Luxembourg, Belgium, Iceland, and Japan all experienced about the same growth as a percent of GDP as the US.  It appears that the type of healthcare system has little impact on the amount spent.  I would bet the introduction of Viagra has a bigger impact than private versus public structures.

Now, let’s get to the number stated by the politicians as the number of suffering individuals desperately striving for healthcare insurance yet continued to be suppressed by the evil doings of the private sector.  45.6 million people are estimated to be in the US without health insurance or about 15% of the population.  But many academics estimate that the census over counts by 2.5 million due to some poor assumptions they make with regards to how questions are answered.  Adjust for that and you get 42.1 million.  Within the census, they count the number of non-citizens without insurance at 10 million.  That makes the number closer to 32 million.  About 17.6 million make more than $50,000 in adjusted gross income, indicating to me that they have chosen to use their money in another way (their prerogative).  We are now at 14.4 million or 5% of the population.  Another 1 million are American Indians, taking us to 13.4 million.

Included in that 13.4 million are some individuals that are between jobs and decided to “roll the dice” rather than take cobra.  That number was estimated to be another 2-4 million (some amount of that could have been counted already in the above adjustments).  Let’s take 1.5 million out, leaving us with 12 million.  That’s less than 4% of the population.  4%.  Really, 4%.

And we elected individuals that think it wise to change the system for all 100% in order to help 4%.  I think it was Jefferson that said, “there is no rule without exceptions; but it is false reasoning which converts exceptions into the general rule.”