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Michael Cannon’s Twitter post reminded me of an Enthoven WSJ commentary from 20 years ago that NCPA turned into a brief analysis. It said, buying power is not the same as bargaining power. Bargaining power is the ability to say no and decline to make a deal. Unless Medicare is willing to say no and walk away, it can’t force down prices. Then the debate is: should Medicare have the right to say “no” and walk away without a deal (and not cover a drug)? On the one hand price controls cap what Merck can charge. On the other hand, most buyers have the right to say they aren’t willing to pay the price and walk away.
John,
I was about to send you a paper about health care that had exactly the same data as the one you sent to your readers. What a shock, since every single number, every single fact was exactly the same as in my paper.
However, the title was different. My paper was HEALTH CARE TO PRODUCE ONE OUT OF EVERY FIVE DOLLARS OF NATIONAL INCOME.
Wouldn’t it be better if we didn’t need to produce healthcare? Wouldn’t it be better if we didn’t need to produce food , clothing, shelter, and on and on? Those are considered goods, but healthcare is a bad by lefties even if they think that they are pure and without political sin.
As editor of Health Care News, you might say something like,
” The healthcare press almost always has headlines like ” Health care will soon consume one in five dollars of National Income.”
And then decries how our healthcare system, because it is not a federal government monopoly, is at fault for this tragedy.
The vast majority of healthcare journalists are without any knowledge of economics. Writing about money, budgets, or financial matters does not make a writer, no matter how skilled a writer, an economist. That is why as in this case, they do not understand fundamental ideas like supply and demand or business and national income accounting.
One of the many things that differentiates Health Care News from other sources of health care information, is our understanding of the economics and the economic foundations of health care. Because of this, we always remind our readers that there is only one sustainable system to finance healthcare delivery. That one system is based on the idea the patients and their physicians must make every decision about care–not government bureaucrats, not corporate executives, not insurance company actuaries, and certainly not politicians–no matter how well-intentioned. The only system known to humankind to achieve healthcare sustainability is based on Medical Savings Accounts.
Understanding that Healthcare is a produced result of the economic system just like food, clothing, and shelter, is the first step in being able to think about changes in policy to improve our world.