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If only things were that simple.

At the end of the day, we have the Classic Liberal model - which is responsible for most of the growth of living standards and wealth creation in human history.

Then, we have every other system ever tried.

The statement "protecting quality of life" would seem to stem from a viewpoint that holds forth as a truth the concept that wealth simply exists and flows forth - and is something to be distributed fairly, where pesky things like profit motive simply get in the way.


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Its somewhat difficult to explain to you because your knowledge base regarding sociology makes explaining things simply difficult since I cannot take anything for granted.

I do find it extremely scary though, that your type of thinking is so widespread.


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If only that were true. In actuality I am quite conversant with Sociology, including many of the shortcomings of this relatively new and immature field. Especially its tendency to ignore the fact that causality in the real world is highly networked, and simplistic answers/observations are seldom useful.


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Originally Posted By: Derid


The statement "protecting quality of life"


The statement "protecting quality of life" refers to concept of Greater Good. Society does not exist to protect corporate profit taking and wealth creation, these exist as tools to improve overall standing of individuals participating in the society.


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Originally Posted By: sini
Originally Posted By: Derid


The statement "protecting quality of life"


The statement "protecting quality of life" refers to concept of Greater Good. Society does not exist to protect corporate profit taking and wealth creation, these exist as tools to improve overall standing of individuals participating in the society.


Yes, its just your model of what conditions actually create "greater good" is so misinformed that your conclusions inevitably miss the mark by a wide margin.


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No, it is rather simple test you should be familiar with - "Are we better off today than we were yesterday?" averaged over whole society.


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Originally Posted By: sini
----

Point #1: Right or privilege, it still has to be done.


Point #2: Health care demand is inelastic; as a result costs are contained only by ‘net worth’ calculations.


Point #3: Wealth inequality creates a situation where increased profit taking from well-off consumers makes pricing bottom out of the market a profitable and acceptable business decision.

------

You mentioned few key concepts as your objections to single-payer – economies of scale and market price. I addressed market price with Point #2. Let us examine economies of scale.


Delivery of treatment is a fixed cost, no matter if you amputating the leg with a rusty saw or delivering laser brain surgery you still have to pay for training, facility and personnel. Implements do change, but I put them into separate category.

R&D, with US doing something close to 60% of worldwide, is where most of expenses occur. Some of it is publicly funded, but lots of it is private. Covering costs of private research, design and clinical tests is the main source of raising healthcare costs.


Point #4: Health care costs, at least in private sector research and development, are not driven by improving patient outcomes or quality of life but by maximizing profits.



With Point #4 in mind, single-payer will definitely reduce private investment into R&D. I demonstrated that this is not money well-spent, but rather money that can generate return. Single-payer will not produce shortages; nobody will take “will not sell” decision, they will simply take a loss and reduce future R&D.

Do you know why single-payer countries can negotiate lower prices? Well, partially because of ‘collective’ aspect of it, but mostly because of a threat of revoking patents and manufacturing generics. For example, if you refuse to sell a drug to Canada, they have a right to revoke your patent and manufacture generics right away.

This is exactly why we need single-payer in US. To rationally distribute health care. To put controls on run-away healthcare spending. To address Points 1-4.



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.

-----

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.

--

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.

--

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.

---

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.

----



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.


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Originally Posted By: sini
No, it is rather simple test you should be familiar with - "Are we better off today than we were yesterday?" averaged over whole society.




So in your world, it is ok to wrong a minority if a majority benefit? Why not bring slavery back?


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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.

----

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.

----

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.

----

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

----

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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""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."

As an aside, you apparently have not looked into the grain industry lately. I see your point, but was a bad example.
--
Anyhow, on to the real point.

First of all, the inherent complexity in the market and consequences thereof is something you have backward. The pricing mechanism is *most* important in these complex scenarios. The more complex a supply chain, the more needed open mechanisms are to determining value.

While what you say regarding consumers not being fully informed is true - it does not *need* to be true. It is true in many cases, because the consumers have offloaded that responsibility to others. In the case of Insurance, they pay to have someone else make those decisions. In the case of Govt, the determination can be taken from them.

But there is no compelling blockade to consumers, in conjunction with their personal physician, learning to make rational choices based on simple metrics of known effectiveness vs price vs side effects, etc. Its important to remember that just because a situation exists currently, that it does not necessarily need to exist. In this case, it shouldnt.

---
""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.
""

You say evaluates a treatment against a budget. But how does the determining entity do that, without any pricing data? Secondly, who determines what constitutes a "best" outcome? One persons opinion of "best outcome" is not going to be the same as another. In your scenario, there is no larger market setting the price. Also as noted, R&D would be way down. This sounds an awful lot like a few people making life and death decisions for the many. What prevents these few from simply making decisions that are in their own best interests - as is the status quo of our Govt in most regards for about the past 12 years?

Also, you have not "demonstrated" that such a system contains cost. You have made that assertion, but have made no inroads in modeling such a scenario where that occurs. Large scale systems where this style of intervention has been implemented have failed without exception. Small scale (relative) systems where that type of intervention has been implemented have been shown to be a faulty model for basing predictions of the behavior or larger systems.

""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.""

Research and progress would certainly slow. Also expect "large sucking sound" as people in the field go somewhere where their activities are profitable.

---

Your argument seems based on two tenets now:

1) That it would "control costs" , while it might technically control the amount of dollars spent.. the human cost in terms of stagnation, waiting lists, shortages, etc would be very high.

2) Private R&D is so inefficient that it is not worth having. Try telling that to a diabetic, an allergy sufferer, a heart attack victim, etc

The only silver lining I see to your plans, is people would start trying very, very hard to keep healthy.

Also, a big part of the cost savings you are looking for could be found if importation of drugs was legal. The pharma industry tries to keep it illegal, so when they charge other countries less US citizens cannot import it for less money. If we just made the rest of the world also help support those R&D costs and not just afterthough profit-taking... our own costs would go down a lot.

Just another example of Govt screwing us. You say that we "can never get govt out of health even if it causes problems so lets embrace govt"... but provide no evidence than even if all your other assumptions were true, that govt would ever work in a way that favors us. It doesn't now, so what would change?


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