Comments on: Why Competition Will Not Reduce The Price Of Medicare

By: Adam

Adam — Fri, 30 Nov 2012 22:16:06 +0000

I wouldn’t mind panyig my health care contributions with after tax dollars, and thus eliminating the government subsidization of my health care benefits. But taxing the entire thing as income is excessive. I think we should level the playing field, not sow it with land mines. My wife and I together pay about $ 160/month for awesome insurance, and we have a flexible reimbursement account that allows us to set aside $ 100/month pre-tax for expenses like co-pays and over the counter drugs. That means we wind up saving around 23% for the year as opposed to panyig with after tax dollars. People without employer based health insurance don’t have that option, making it a government subsidy. So get rid of that aspect, but if my entire plan were taxed as income I couldn’t afford it. And I know a lot of other people who couldn’t as well. That’s a cure worse than the problem.

By: DavidN

DavidN — Sat, 22 Sep 2012 08:58:53 +0000

Great post. Helps an non-American understand the economics behind US healthcare debate a lot better.

By: Competition Will Not Reduce The Price Of Medicare | FavStocks

Competition Will Not Reduce The Price Of Medicare | FavStocks — Fri, 21 Sep 2012 08:06:22 +0000

[...] emphasize this point once again. Competition "won’t give us cheap healthcare": Why Competition Will Not Reduce The Price Of Medicare, Cheap Talk: Mitt Romney and Paul Ryan have proposed a plan to allow private firms to compete with Medicare to [...]

By: MDaly

MDaly — Wed, 19 Sep 2012 15:17:07 +0000

great analogy actually.

By: Joe Jones

Joe Jones — Wed, 19 Sep 2012 09:42:08 +0000

Let me paraphrase the article: Because government control over healthcare occurs at the federal, state and local level loosening the federal controls will not lower the price of medicare.

The article is too narrow – both in subject and in scope.

By: nylund

nylund — Wed, 19 Sep 2012 06:11:06 +0000

Here’s an imperfect analogy with HDTV’s that adds a future cost with bad selection issues. Imagine a law was passed saying that if your HDTV was stolen, the manufacturer has to replace it for free. It won’t take long before HDTV makers realize that theft is correlated with poor neighborhoods where residents don’t have money. Their incentive will be to raise the prices of their TV to discourage those most likely to have their TV stolen from buying their TV’s in the first place. Anyone who tries to undercut them will end up selling to the high-theft-risk market and eventually lose money. The TV manufacturers will compete on quality, not price, to get those high end buyers. In equilibrium, only high quality, high priced TV’s will be left. It’ll be great for those who can afford them, but bad for those who can’t, and it surely won’t lower prices.

You could further complete this analogy by adding a “minimum quality” standard to the TV’s (which would then remove the incentive to create really crappy, essentially disposable TV’s that the manufacturer may still be willing to sell to high-theft-risk buyers).

By: Why Competition Will Not Reduce The Price Of Medicare « Cheap Talk « mawillits

Wed, 19 Sep 2012 05:17:04 +0000

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By: mulp

mulp — Tue, 18 Sep 2012 21:50:48 +0000

In what universe has lower prices for HDTV reduced the spending on HDTVs?

Lower HDTV prices has not lowered prices on tube TVs but tube TV spending has cratered and must be near zero.

Competition by HDTV suppliers who seem to be outside the US has destroyed the tube TV suppliers who largely originated in the US.

Perhaps Asian economists understand microeconomics, while US economists must undergo a mind wipe to remove microeconomic theory from their brains to be politically correct.

Competition in a free market will increase the total production and consumption of goods if the competitors are successful. They will be do so by doing everything possible to divert spending on consumption from one set of goods and services to their goods and services to increase the total spending in their market segment.

Further, economists argue that competition increases the total production and consumption and spending and costs because competition and free markets are not zero sum.

Why can’t economists get economics right in America any more? Conservative dogma rejecting reality??

By: ezra abrams

ezra abrams — Tue, 18 Sep 2012 21:47:29 +0000

the second paragraph is poorly written; the “simple example” sentance should be the lead for the paragraph

By: 10 Tuesday PM Reads | The Big Picture

10 Tuesday PM Reads | The Big Picture — Tue, 18 Sep 2012 20:31:05 +0000

[...] and Why They Matter (The Atlantic) see also Why Competition Will Not Reduce The Price Of Medicare (Cheap Talk) • iPhone 5 two-fer: …..-Hands on: Apple’s new EarPods headphones (Mac World) [...]