The KGB Oracle Forums General Public Discussion (SPECIAL ACCESS) KGB Political Debate Central Healthcare - For Sinij

Ok, so I chopped some of the quote to attempt to make it more readable. Much of what was chopped I think is inaccurate, but lets focus on the core issues:

Basically what you seem to be asserting in a nutshell, is that a combination of price controls and subsidies can solve all our health ills. (pun intended) Historically speaking, that type of economic management has led to a bread line - but lets go point by point.

Point#1 - most of your assertion that were valid regarding this were at the end, what you wrote for point#1 was mostly regarding your point#2. So lets move on to point #2

Point#2 - There are a few key things you bypass and ignore here. First of all, if a new treatment is not much better than the old treatment as you assert is a norm, then why is there a moral deficiency present when some people cannot afford the shiny new treatment?

Second, costs are actually in reality constrained by what Govt and Insurance (whose rates tend to follow Govt because Govt provides them with legal cover) is willing to pay - not what individuals are able to pay.

You also seem to ignore the fact that Supply and Demand is not an "aspect" of a "market economy". Supply and Demand is an absolute. A mistake many people make when doing an economic/social calculus and you appear to make - is confusing Demand for desire. Demand represents ability and willingness to pay as well as desire to pay. All your desire for price controls accomplishes is artificial limitation on demand. This creates economic distortions - more on this later.

Point#3 - This is an unfounded assertion, first and foremost. In fact, even current paradigm has large pharmaceuticals selling bulk, at reduced prices to even the undeveloped world after initial high-end USA market profit-taking. It would probably be fair to say that the rich will in many cases get *first access* to new products. This is true in some instances. Magic Johnson did not survive HIV in an era when it was a death sentence by being a poor nobody. But in most cases, long term strategy of not using developed IP and Mfg capacity simply because it is not as profitable per unit is not a viable business strategy. This is a recurring theme in your posts, but is more a worry than a real issue.

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Regarding your first paragraph of part 2, re: my objection to single payer. You absolutely did not address my concerns regarding price. When I talk about the pricing issue, you do not seem to understand what I am talking about - hence my snarky response to your cross-posting of this response in the other thread ( that, and the fact that you felt the snarky need to cross post to elicit a response, even though you took 2 days to respond.)

When I talk about pricing mechanisms, and pricing distortion I am referring to the question of - " How does a central entity properly determine and set price?". Because it cant. The market pricing process is a democratic process, where people literally vote on what a particular product or service is worth. Think of it as the original crowdsourcing. This process sends a signal to the world as to what something is worth, which lets potential suppliers determine if and whether supplying can be profitable and at what degree.

When this process gets disrupted by men with guns who arbitrarily set one unified price, then problems occur. Because the people setting the price, are almost never accurate in assessing the real value. A couple quick cases in point - the current drug shortages that worsen by the year, and the gas shortages in the Sandy aftermath. In the Sandy aftermath, "price gouging" was forbidden. So instead of gas and supplies being very expensive for a day, then prices dropping as new supply rolled in - there were extended shortages. Because the price people were "allowed" to charge did not reflect the extra costs, times and trouble that made shipping and distributing in extra supply worthwhile. So people either suffered without, or payed exorbitant prices from illegal black market.

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Delivery of treatment is not a fixed cost. Many factors go into this pricing, including skill/schooling level required to provide, location, etc. Your groupings of cost types was also arbitrary and ineffective for the type of cost breakdown you attempted. You need much higher degree of granularity there to make it meaningful.

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Point#4 - R&D is indeed a large cost. You are also correct in that some money goes to researching treatments as opposed to cures. However, the conclusion that follows from that.... has many untenable aspects.

First of all, there is generally no such thing as wasted health research. Often times breakthroughs come from unexpected places - people researching one thing, will find something that actually relates to a different problem.

Secondly, I demonstrated the correct model why single-payer countries could obtain bulk rates, because they were purchasing from a larger market. If they were trying to arbitrarily set a price, as opposed to buying at market rates then the efficiency would drop dramatically. They would either overpay and be less cost efficient, or underpay and face shortages of supply/quality.

Your assertion that single payer, were it to envelop the larger market - and attempt to set pricing by fiat - would not create shortages is a fallacy. This has been demonstrated by every other attempt at centralized price controls. The idea that a bureaucrat can determine proper value better than a market is pure fantasy. Already drug shortages are rampant in cases where the Federally mandated payout is not sufficient incentive for the drugs to be manufactured.

You argue that the Canada model where forced removal of patents to force companies to sell is a good model. Well, even as you admit your system would reduce R&D... in your world, exactly what new drugs or treatments would be available to be nationalized? If you know ahead of time that the Govt of the previously largest market is simply going to either rip you off, either by underpaying or nationalizing your efforts... what makes you think anything would be developed in the first place?

All the formerly market activity would now devolve into a political battle over what was "fair". There is no way an economy can operate in that environment.

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You talk about rationally distributing health care. The only rational method, is to get Govt out of the health care business entirely. Health care is not something that springs from nothingness, to be distributed by fiat. It is something that many people must work very hard to provide and those services are not worthless. If we want to continue to have health care available to anyone but the wealthy who fly to non confiscatory countries for medical tourism, we need to immediately reverse course.

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The Govt intervention in our system is the cause of our current mess. You talk like what we have now is a market system, but few things are further from the truth. Because we do NOT have a market system for health, and have not for some time- this is the cause of the present problems and spiraling costs.