Supply and demand curves react differently to an item depending on whether it is a good or a service. Typically, if I have a demand for a particular item, then if that item's price to me is zero, I will consume as much as I want of that item and even over consume that item.
I stipulate "have a demand for" because there are some things in this world for which there exists no demand. None, absolutely zero, you can't give it away. Say, dog poop, for example. I have quite the supply, but can't seem to find a demand for it. Hmmmm, I wonder why not...
Anyways, if a good is free to me, my only limitation on consumption or amassing great quantities of said item are physical limitations. Do I have enough space to store it? Is my stomach big enough to hold it? If I bought you the universe, where would you put it?
If a service is free to me, my limitation (other than can my body withstand the service) is time. In the case of medical care, I'm pretty much limited to one procedure at a time - messy things happen if you try to stick me in two MRI's at the same time.
Time is also the limiting factor on the supply side; in medicine, for example, the doctor can only see one patient at a time, the MRI can only scan one patient at a time, the phlebotomist can only draw one person's blood at a time. The exception to this is the Biomed Tech that can tell multiple people that they are wrong at the same time; we are special....
So, only so many doctor visits, procedures, scans, etc, can be done per hour/day. Even with 24/7 coverage, there is a time limit to the amount of medical service that can be provided. After 24/7 coverage, the only way to expand capacity is to add more doctors, equipment, medical staff, and hospital rooms.
And we are currently experiencing a doctor and nurse shortage in the United States. I've experienced this recently - my wife was going to have to wait three or four days for an appointment with a neurologist. Since she works for a doctor, she had her boss pull some strings and got seen that very day.
My point is that waiting for an appointment is the natural outcome of a service shortage. I see this at the VA I work at in the MRI department where patients have to wait a month or more for that "free" MRI.
See, the government will have two choices in providing health care for everyone: Deny it or extend the wait time. Expanding the medical work force isn't an option unless the government is planning on forcing people to become doctors - yeah, that's the guy I want diagnosing my illnesses.
Nope, you have to get in line; for an example of this, we only have to look north to Canada, where the average wait time for an MRI is 10.1 weeks. Lucky for those guys they have the United States, where they can get right in if they pay their own money.
Most of the complaints that I've read about wait times in the United States are related to seeing one particular practitioner or facility (Mayo Clinic, anyone?), whose reputation commands more of a demand. If a person were to shop around, they are sure to find a practitioner that can see them sooner with care that may or may not be as good as the preferred service.
And finally, with services that are perceived to "free" or "free to me", demand rises (as long as a demand exists in the first place.) I provide this blog free to anyone who wants to read it, but I still haven't seen a huge demand for it.
Let's look at an example. Recently, I went to the doctor because I had a sniffle. In the past, head colds like this one have descended into my chest and caused a month long cough. Since I'm going on vacation and A DOCTOR'S VISIT ONLY COSTS ME $20 (note the emphasis there), I decided to see the doc, get some drugs, and nip this thing in the bud.
An aside, no, I wasn't able to see MY doc, but I did get to see A doc in the same office the same day I called for an appointment.
So, let's say that the same Dr. appointment cost me $200 instead of twenty; how willing would I be to be seen for a little cold? Not very willing, I can tell you, even with my history.
See, that's the problem (and I'm part of it), right now, insurance artificially lowers the cost to me for my health care; if the cost drops to the floor, I have all the more reason to put a bigger demand on the medical care system because it doesn't (directly - well, at the moment of service) cost me anything.
I'd go for every single sniffle, bump, bruise, headache, hangnail, scrap, and malady - real or imagined. Ok, maybe I wouldn't, but you know there are people who will, and our already overtaxed health care system gets slammed with a huge increase in demand to which the government's response will be of necessity either No or Wait.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Monday, September 21, 2009
Friday, September 18, 2009
He who pays the piper calls the tune
Reference for the title.
So, the last two posts discussed the concepts of what is free (nothing is) and where the government gets the money to do all this "free" stuff.
Now comes the rub.
If you and I go out to dinner at a nice restaurant, and I say I'll pay, your first reaction is WOOT!, but your second reaction will tell a lot more about what kind of person you are, what kind of relationship you think you have with me, and what kind of manners you may have.
It will also tell you what kind of person I am, what kind of relationship I think I have with you, and what kind of manners I may have.
If you look over the menu and select a moderately priced meal without my prompting, we will find out together that your manners are appropriate, I'm not a freakin' tightwad, and we know each other well enough (or not well enough so that extra polite manners kick in) to not cause a confrontation.
If, however, you look over the menu and decide that tonight is the perfect time to have that caviar stuffed lobster with the $500 bottle of wine, we will probably have some disagreement.
Of course it's obvious why we might come to this point: I'm paying.
My options in the latter case include paying for the outrageous meal or not paying for the outrageous meal (or paying part). Since I'm a one or zero type of guy, we'll leave the "paying part" option off the table.
If I refuse to pay for that dish, either you pick something that I will pay for, or you pay for it yourself (or you don't eat). If you don't have the money or are prevented from paying for it yourself, your options are narrowed to picking something I'll pay for or not eating.
And finally, how does this apply to government run health care? It's pretty simple: Since the government is the one who is paying, they get to decide what they'll pay for. And while most bureaucrats aren't evil or malicious, they will make logical evaluations on what to pay for and what they won't pay for.
I mean, it doesn't take a rocket scientist to see that paying for an MRI, CT, Nuke Med, hip replacement, cath lab work, and other high cost procedures for a terminal cancer patient that's 110 years old just isn't cost effective no matter how compassionate a person you are.
Under our current system, that 110 year old patient can pay for all those things and more if they have the money regardless of what their insurance company may or may not pay ; under a government health care system, where the government is the sole payer, then the patient has no say in what medical treatment they receive.
So, the last two posts discussed the concepts of what is free (nothing is) and where the government gets the money to do all this "free" stuff.
Now comes the rub.
If you and I go out to dinner at a nice restaurant, and I say I'll pay, your first reaction is WOOT!, but your second reaction will tell a lot more about what kind of person you are, what kind of relationship you think you have with me, and what kind of manners you may have.
It will also tell you what kind of person I am, what kind of relationship I think I have with you, and what kind of manners I may have.
If you look over the menu and select a moderately priced meal without my prompting, we will find out together that your manners are appropriate, I'm not a freakin' tightwad, and we know each other well enough (or not well enough so that extra polite manners kick in) to not cause a confrontation.
If, however, you look over the menu and decide that tonight is the perfect time to have that caviar stuffed lobster with the $500 bottle of wine, we will probably have some disagreement.
Of course it's obvious why we might come to this point: I'm paying.
My options in the latter case include paying for the outrageous meal or not paying for the outrageous meal (or paying part). Since I'm a one or zero type of guy, we'll leave the "paying part" option off the table.
If I refuse to pay for that dish, either you pick something that I will pay for, or you pay for it yourself (or you don't eat). If you don't have the money or are prevented from paying for it yourself, your options are narrowed to picking something I'll pay for or not eating.
And finally, how does this apply to government run health care? It's pretty simple: Since the government is the one who is paying, they get to decide what they'll pay for. And while most bureaucrats aren't evil or malicious, they will make logical evaluations on what to pay for and what they won't pay for.
I mean, it doesn't take a rocket scientist to see that paying for an MRI, CT, Nuke Med, hip replacement, cath lab work, and other high cost procedures for a terminal cancer patient that's 110 years old just isn't cost effective no matter how compassionate a person you are.
Under our current system, that 110 year old patient can pay for all those things and more if they have the money regardless of what their insurance company may or may not pay ; under a government health care system, where the government is the sole payer, then the patient has no say in what medical treatment they receive.
Thursday, September 17, 2009
Where does the Government get its money?
The common mantra that I hear today is that the government should such and such, or the government needs to pay for this or that, or the government needs to do something about some injustice.
The first question that comes to mind is with what money? And the answer is always the same:
My money.
See, the American government gets the vast majority of its money from its own citizens; let's look at how:
1. Taxes. Income tax, medicare tax, social security tax, capital gains tax, corporate tax, special blond haired winos tax, blah blah blah tax, and the list goes on and on. The individual taxes are easiest to see; all we have to do is look on our pay stub and see the deductions.
The corporate taxes are a bit messier to sort out, but rest assured, as long as night follows day, so the businesses will pay the tax and pass the expense on to the consumers. So, we end up paying those also.
2. Tariffs. Tariffs are taxes placed on goods imported into the country. While I don't know the percentage of the total income of the U.S. government that tariffs represent, I do know that, just like corporate taxes, tariffs are passed on to the consumer in the form of higher prices. So, we end up paying tariffs also.
3. Fines. Fines by regulatory agencies such as the IRS, EPA, FAA, FCC, and ATF can be levied against individuals or companies, and we've already discussed who pays corporate expenses. So, we end up paying fines also.
4. Limited public property sales/rental. I include this only to address the minuscule amount that is brought in by the sale of public property such as specific frequencies for transmission (bandwidth) and federal land to private entities as well as the leasing/renting of bandwidth, public land (including parks, grazing land, drilling land, mining land, blah blah blah land, you get the point), and the Lincoln bedroom - oh wait a minute, that was for campaign contributions...my bad. I don't believe that this is a significant source of income for the U.S. government, but in the end, we end up paying for this as well.
5. Borrowing. As everyone knows, borrowing is not income, but can be misconstrued or portrayed as income. But all the T-bills will eventually come due, and the people who bought them will expect their money....with interest. So, we end up paying for borrowing also.
Now, here's the rub, once the government takes our money, who ever is in power considers the money as "the government's" and not the individuals from whom it took it. And so accountability dies; that is, unless the American people start making a stink about it.
The first question that comes to mind is with what money? And the answer is always the same:
My money.
See, the American government gets the vast majority of its money from its own citizens; let's look at how:
1. Taxes. Income tax, medicare tax, social security tax, capital gains tax, corporate tax, special blond haired winos tax, blah blah blah tax, and the list goes on and on. The individual taxes are easiest to see; all we have to do is look on our pay stub and see the deductions.
The corporate taxes are a bit messier to sort out, but rest assured, as long as night follows day, so the businesses will pay the tax and pass the expense on to the consumers. So, we end up paying those also.
2. Tariffs. Tariffs are taxes placed on goods imported into the country. While I don't know the percentage of the total income of the U.S. government that tariffs represent, I do know that, just like corporate taxes, tariffs are passed on to the consumer in the form of higher prices. So, we end up paying tariffs also.
3. Fines. Fines by regulatory agencies such as the IRS, EPA, FAA, FCC, and ATF can be levied against individuals or companies, and we've already discussed who pays corporate expenses. So, we end up paying fines also.
4. Limited public property sales/rental. I include this only to address the minuscule amount that is brought in by the sale of public property such as specific frequencies for transmission (bandwidth) and federal land to private entities as well as the leasing/renting of bandwidth, public land (including parks, grazing land, drilling land, mining land, blah blah blah land, you get the point), and the Lincoln bedroom - oh wait a minute, that was for campaign contributions...my bad. I don't believe that this is a significant source of income for the U.S. government, but in the end, we end up paying for this as well.
5. Borrowing. As everyone knows, borrowing is not income, but can be misconstrued or portrayed as income. But all the T-bills will eventually come due, and the people who bought them will expect their money....with interest. So, we end up paying for borrowing also.
Now, here's the rub, once the government takes our money, who ever is in power considers the money as "the government's" and not the individuals from whom it took it. And so accountability dies; that is, unless the American people start making a stink about it.
Wednesday, September 16, 2009
Free vs. Free to Me
"There ain't no such thing as a free lunch" - Unknown
The single most aggravating aspect of this entire U.S. Healthcare debate is the portrayal of the resulting system as "free" healthcare.
It would serve Americans well to remember that, what appears to be, "free to me" is not the same as "free." Somebody has to pay.
If the doctor doesn't charge anything for the care, then the doctor himself is paying for his part.
If the hospital doesn't charge anyone for the supplies, the utilites to run the joint, and the personnel involved, then the hospital (read its owners/shareholders) pays for the treatment.
If the government pays the doctor, hospital, medical personnel, ambulance, blah blah blah, then the care still isn't free; the American tax payers (and consumers) foot the bill. In short, you and I pay for it.
It's not free.
The single most aggravating aspect of this entire U.S. Healthcare debate is the portrayal of the resulting system as "free" healthcare.
It would serve Americans well to remember that, what appears to be, "free to me" is not the same as "free." Somebody has to pay.
If the doctor doesn't charge anything for the care, then the doctor himself is paying for his part.
If the hospital doesn't charge anyone for the supplies, the utilites to run the joint, and the personnel involved, then the hospital (read its owners/shareholders) pays for the treatment.
If the government pays the doctor, hospital, medical personnel, ambulance, blah blah blah, then the care still isn't free; the American tax payers (and consumers) foot the bill. In short, you and I pay for it.
It's not free.
Tuesday, September 15, 2009
Fair Warning
I'm working on a series of posts that will automatically post while I'm on vacation. The main topic that I'll be addressing is the health care debate here in the United States.
Now, I'm no economist, scholar, intellectual, or Wall Street guru; I do, however, have a bit of common sense, a logical mind, and a witty.....erm, verbose....uh, thing-a-majig...aura stuff... aw, never mind. Anyways, I can (and do, sometimes) think, and I apply some of those thinkings (as opposed to musings) to the current debate.
One of the reasons I'm doing this is because I'm frustrated with the spin that I see in both the media and the government. I will attempt to boil down each of the parts of this mess to what is actually going on or we can expect to go on. Remember, the best indicator of what will happen is what has happened in the past. People will never stop acting like, well, people; we are all selfish by nature.
I will label all of these posts with the Economics label, so you can search or skip depending on your interest. I'm looking to the comments/arguments/discussion that these posts may spawn; the current administration doesn't seem too interested in debate, but rather,to paraphrase the president, "The time for debate is over".
So, hopefully, I'll get this series written, and we can have a good and proper meeting of the minds. Or not.
Now, I'm no economist, scholar, intellectual, or Wall Street guru; I do, however, have a bit of common sense, a logical mind, and a witty.....erm, verbose....uh, thing-a-majig...aura stuff... aw, never mind. Anyways, I can (and do, sometimes) think, and I apply some of those thinkings (as opposed to musings) to the current debate.
One of the reasons I'm doing this is because I'm frustrated with the spin that I see in both the media and the government. I will attempt to boil down each of the parts of this mess to what is actually going on or we can expect to go on. Remember, the best indicator of what will happen is what has happened in the past. People will never stop acting like, well, people; we are all selfish by nature.
I will label all of these posts with the Economics label, so you can search or skip depending on your interest. I'm looking to the comments/arguments/discussion that these posts may spawn; the current administration doesn't seem too interested in debate, but rather,to paraphrase the president, "The time for debate is over".
So, hopefully, I'll get this series written, and we can have a good and proper meeting of the minds. Or not.
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