Insurance skews the market it is associated with. By the time consumption of the actual product is needed, a person does not consider the premiums they have paid because they are a sunk cost. All a person looks at is his or her out-of-pocket cost, which will be less for an insured person. The total price of the service hasn’t changed, but your QD has increased, Therefore, insured persons increase society’s demand for a service above its natural level, which puts upward pressure on price.

Single oayer is the only viable solution…but try telling that to free-market fundamentalists & they will go absolutely nuts…

if these idiots don’t go absolutely nuts, they’ll stubbornly hold on to their favored ideology without regard for the real-life consequences & implications of that ideology. nevermind the fact that a social service such as a single-payer health care system would help a free-market economy function better, these idiots want the whole system to live up to their ideas

@iatemytwin57 What drives prices up in the long run is not individuals, but the expansion of the money supply. As the money supply expands, prices will increase most dramatically in those areas where the greatest amount of money is being spent. That’s why college and healthcare are the two areas that have seen the most dramatic price increases over the last few decades. Inflation is not an increase in prices, it’s an increase in the money supply that leads to higher prices!

“What they WANT to buy”. No, by what they NEED to buy. By what they cannot NOT buy.

@averitas Nobody pays the other 20%. There is a 20% savings because systems like Medicare are an effective monopsony, and therefore they can charge health care providers what they want to.

It’s like Microsoft, and how it can charge customers effectively whatever it wants to because it is a monopoly and therefore it sets the price. Medicare is a monopoly (because it is a buyer of goods, we call it a “monopsony”) and as a result it can charge whatever price it wants to.

@iatemytwin57 Now, if we go to the other end and assume that there are only a few (or perhaps only 1 ) HI company, then this would put downward pressure on the amount doctors are paid (as they only have 1 HI company to collect money from, so they are forced to take whatever amount that HI company gives them). However, because the HI company is an effective monopoly, it can keep charging higher premiums from households.

So either way, households get high premiums.

@iatemytwin57 In the health insurance industry, it is actually impossible to maintain a competitive industry as there are huge barriers to entry. In effect, what you get are market failures, and that just means higher premiums for people.

However, the difference between the two (and I’ll use Medicare as an example) is that by paying health care costs through a public system, you pay less than what you would have paid had you paid through a private system.

So you either pay a dollar through a private system for a health service, or 80 cents through Medicare for that same service. Again, this is because by having a single public system, you effectively form a Monopsony, allowing the buyers (taxpayers) to set the price. More later!

Whoa, lots of different issues have been brought up; I should have checked back sooner.

In response averitas, in general when it comes to the private vs. public debate, the only real argument that can be made for a private health system is in regards to innovation.

If you compare the number of MRI’s in the US and Canada, there is no question that the US has more MRI’s per capita then Canada. As an investor in health care, you are more likely to invest in the US over a country like Canada.

@gigamage And who pays the other 20%?

There is 70 Billion in fraud in Medicare each year. There is 48 Billion in waste, due to the fee per service per year in medicare. Some hospitals loose money on Medicare so they will no longer service Medicare patients (Mayo Clinic in AZ lost 800 Million on medicare patients). Medicaid is subject to the same failures as Medicare and in some cases is paying with IOUs.

Much of the money lost by hospitals is shifted to the private buyer. Expect it to get worse with Obamacare.

It is more complex than you state. Medicare pays 80% and is subsidized by taxpayers with much of the cost shifted to those who are privately insured. So, actually costs more. And, is bankrupt. Canadian h/c is less because less services are provided and b/c US citizens foot the bill for R&D on new drugs that Canadian govt refuses to pay. Drug Cos. sell to Canada at lower price than to US b/c it is a large market. Canada should have to pay the same price as us.

The pricing system would lower health care costs dramatically. Problem is, whenever you have a third part paying (government, Private health insurance, whatever) there will be no limit to the services desired nor consideration of the cost/benefit ratio. It is only when the payer is the one receiving the service or product that true market forces come into play. See Friedman’s talk regarding the “4 ways to spend money”.