I am not going to agree with your assertions on “market price”. What you describe is ideal-case scenario with unlimited access, perfect information and no outside influences. Buying and selling a sack of grain operates under these rules – there is plenty of grain, there are plenty of buyers, they are generally informed of the price and buyers are not forced to buy sack of grain 2.0 by outside entities regardless of its advantages over regular grain. Reality of health care “markets” is that it is a quagmire of patents, cross-licensing, multi-national regulations and exclusive provider contracts. You can argue that some or most of this is effects of government interference, but I have to point that you can’t possibly eliminate such interference and still have a system that produces safe products and protects investment into R&D.

To demonstrate the effects of above lets follow example of Oxycontin. First developed in 1916 by Bayer, and was still covered by various patents up until 2005! when latest version of the patent was thrown out by Court of Appeals. This is almost NINETY years of patent protection! How is it possible? Mostly it is patent games, generally you patent generic formula that produces low yield, then you patent ‘improvements’ or how you really went about manufacturing it to extend your patent coverage, then you dust off your safety data and publish all risks and patent reformulation that addresses or mitigates them. End result? Generics are kept out of the market for unreasonably long time, and in cases where one could manufacture generics regulation/policy are bought to mandate use of the newer product. Last but not least, you have education bias and kickback collusion schemes where doctors continue prescribing expensive drugs when generic alternatives exist. This example is pharmaceuticals, but it parallels in all other areas.

So why do we not just go with ‘old’ but cheaper versions? As I explained above, in too many circumstances we are prevented from doing so. Also in many instances insurance providers make this decision on your behalf, they cover latest-and-greatest, charge appropriately and ignore much-cheaper generic alternatives. Last but not least, there is demand for latest-and-greatest and since purchasing decision if largely removed from the consumer (insurance decides that for you) at no point is “let’s go with a cheaper generic” is seriously considered.

Point A: Consumer is largely removed from pricing decisions; as such the health care is biased toward latest-and-greatest, even when marginal improvements don’t warrant the additional costs.

Point B: Simplifying complex multi-party interactions to supply & demand leads you to wrong conclusions.

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How does a central entity, as in single-payer, determine the price? It does it indirectly – it evaluates all possible treatments against its budget and determines the best use of that budget according to best possible outcomes. This results in a system that rationally assigns available dollars toward producing best possible outcome for the entire population, not an individual. If you price your treatment too high, it doesn’t get purchased. Occasionally, if treatment is deemed to be a question of national security (e.g. there is an epidemic, and you hold a patent for vaccine), there are no alternatives, and you are entirely unreasonable in your pricing, then government revokes its protection of your intellectual property in its jurisdiction. At no other point “men with guns” enter this negotiation, but there are plenty of accountants with spreadsheets that do.

As I demonstrated before, such system tends to contain costs and provide universal coverage. Again, single payer is not guaranteed to produce the best outcome for each individual, just the best overall outcome. I am also not opposed to two-tier system, but only as long as individual making purchasing decisions with their own money.

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As to reduction of R&D under single-payer system. Government also sponsors a substantial portion of medical R&D, US have some of the most productive R&D programs covered with NIST grants. Even if all private research stopped, and it wouldn’t even with the worst case scenario, research and progress will still continue. Alternative that we are living in is having 50+ years old products withheld from the population and complete inability to control costs.

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Lets not muddy this discussion with talking about price gouging. The other thread is still there, feel free to bump.

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Since we are now largely talking about healthcare, can you please duplicate your responses to healthcare thread so I have easier time finding them if/when I need to come back to it?

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