Posted tagged ‘Health Insurance’

Some Econ Homework

October 6, 2016

Government Medical “Insurance“, by Murray Rothbard, at misesca. This article, written in the 90’s, tells why prices go up when third-party payers step in between demanders and suppliers. Government decrees about health care insurance won’t stop economic forces from trying to correct the intervention by Government. Excerpt from the article: “In economic terms…..the demand curve for physicians and hospitals can rise without limit…..the suppliers can literally create their own demand through  unlimited service. In order to stanch the flow of taxes or subsidies…the government and other third-party insurers have felt obliged to restrict somewhat the flow of goodies: by increasing deductibles, or by putting caps on Medicare payments….this has been met by howls of anguish from medical customers who have come to think of unlimited third-party payments as some sort of divine right, and from physicians and hospitals who charge the government with “socialistic price controls” – for trying to stem its own largesse to the healthcare industry!”

The Market And The State, by Ludwig von Mises, at misesca. Mises tells us the different outcomes when people make voluntarily exchanges in the market vs. what happens when people are forced to make exchanges because of Government intervention into the market. Excerpt from the article: “The total enslavement of all members of society is not a merely accidental attendant phenomenon of the socialist management. It is rather the essential feature of the socialist system, the very effect of any thinkable kind of socialist conduct of business. It is precisely this that the socialist authors had in mind when they stigmatized capitalism as “anarchy of production” and asked for the transfer of all authority and power to “society.” Either a man is free to live according to his own plan or he is forced to submit unconditionally to the plan of the great god state”.

Keynes: The Crackpot Economist Of ZIRP, by Gary North, at misesca. Excerpt from the article: “….the universal phenomenon of the rate of interest  has been explained by Austrian School economics in terms of what Mises called time preference: the discount applied by acting men to future goods and services when compared with the same goods and services in the present…. Until you come to grips with the fact that the economics profession, central bankers, and hedge fund analysts are crackpots, you will not understand the modern economic world. When the marginal efficiency of anything is zero, it is a free good. It is not scarce. it commands no price..”

The Donald Nailed It: “We Are In A Big Fat Ugly Bubble“, at davidstockmanscontracorner.com. Excerpt from the article: “…the utterly unnatural interest rates engineered by the Fed have fueled an egregious inflation of the financial asset prices and that “some very bad things” are going to happen when the Fed’s market rigging operation is finally halted…….after 94 months on the zero bound the Fed has executed the most massive income and wealth transfer in American history. Upwards of $2.5 trillion has been extracted from the hides of main street savers and retirees over the eight year period (@ $300 billion per year). all of that and then some was gifted to the banks and Wall Street speculators….if the Congress were to enact anything remotely similar to the Fed’s savage and relentless attack on savers and wage-earners, they would be on the Receiving end of the torches and pitchforks that would descend on the Imperial City.”

The Great Debt Unwind Beneath The Surface: US Commercial Bankruptcies Soar, by Wolf Richter, at wolfstreet.com. Excerpt from the article: “Bankruptcies – and defaults, which precede them – are indicators of the “credit cycle.” The Fed’s policy of easy credit with record low-interest rates has encouraged businesses to borrow. And borrow they did. In Oct. 2008, as the prior credit bubble was beginning to implode, there were $1.59 trillion commercial and industrial loans outstanding at all US banks. Then the Financial Crisis hit, and loans outstanding plunged, many of them wiped out or restructured in bankruptcies. But then the Fed solved a credit problem with even more credit, and as of July 2016, there were $2.064 trillion of C&I loans outstanding, a 30% jump from the peak of the prior credit bubble that blew up so spectacularly…..Now the hangover is setting in from the Fed’s efforts to solve a debt problem with even more debt, to gain very little economic growth. And there is a leading indicator of big trouble already fermenting in the banks.”

What Makes Mises.org Different, by Ryan McMaken.  Mises.org (About Mises) is the place to go when you want to understand economics. It is your one stop shopping place for all things related to economics. Excerpt from the article: “In a typical month, mises.org receives more than a million page views, which is pretty remarkable for a site where writers regularly talk about things like the “subjective theory of value” and “fractional reserve banking….most of our traffic continues to be people looking for real, genuine economics. they want to gain a better understanding of prices, government intervention in the market, and especially business cycles…..When people look for answers beyond the mainstream, they usually find us.

Stumbling across mises.org  in 2008 is what started me on an intellectual journey that will never end. There are moments when I think it would be better to be blissfully ignorant about economic realities, and listening Hillary’s and Trump’s talk about “the economy” are some of those moments. Their economic pronouncements drive me crazy……. Is ignorance better than insanity?

 

Related ArticleHere Is Some Econ Homework, at austrianaddict.com.

Related ArticleYour economic Homework, at austrianaddict.com.

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The Reality Of Obamacare

October 28, 2013

“SOCIALISM BY INSTALLMENTS”

Ludwig von Mises said, “The middle-of-the-road policy is not an economic system that can last. It is a method for the realization of socialism by installments.” The middle ground between free markets and socialism is chaotic, with the only stable ground being free markets, on the one end, and socialism on the other. The free market being stability in wealth, and the latter being stability in poverty. Our current and impending healthcare debacle is an example of what Mises is saying in the quote.

We haven’t had anything close to a free market healthcare system since government put a freeze on wages during WWII. The unintended consequence of this action was employers started giving health insurance as a benefit, in order to attract labor for employment, because they couldn’t pay higher wages. Up to this point individuals payed for their health insurance out of the wages they earned. The individual was insuring himself against financial ruin in case their was a catastrophic situation with his health. He paid for all other health care problems out of his earnings. Over the years the unintended consequences of  increased Government regulations has moved our healthcare system into the chaotic middle ground we are experiencing.   Obamacare has and will make our health care system more chaotic. It was designed as the next step toward a single payer health care system. Single payer is simply the Government controlling all decisions about the production and consumption of healthcare (aka socialism).

THE ECONOMICS OF HEALTHCARE AND HEALTH INSURANCE

Understanding health care becomes easier when you know a few things about it. 1) Health care is a good of service produced and exchanged in the free market, and is therefore not a free good. 2) Health insurance is a good or service produced and exchanged in the free market, and therefore not a free good. 3) Health insurance is not health care. Health insurance is just one of many arrangements, an individual can make to pay for healthcare. Health care is the good that health insurance pays for. 4) Even if someone thinks having health insurance or health care is a right, it doesn’t change the fact that both are economic goods, that have to be produced before they can be exchanged and consumed.

Scarcity is what dictates if something is an economic good. If a particular thing is available naturally, like the air we breath, it isn’t scarce and therefore doesn’t have to be produced before it is consumed. Scarce goods have to be rationed because the demand for the good is greater than our ability to produce it. Prices ration scarce goods in a free market. The price of a good is the result of every individual making decisions on what they produce, exchange and consume. Each decision every individual makes, even if it has nothing to do with a particular good, has an effect on the production and consumption of that particular good. The reason it has an effect is because the scarce means of production have alternative uses. For example a barrel of oil doesn’t just produce gasoline, oil is used to produce dyes, rubber, resins, adhesives, asphalt, solvents, lubricants, nylon, polyester, acrylic, pharmaceuticals, and plastics. The means (resources, labor, time, capital) used to produce healthcare can be used for other purposes. If the compensation for their use in healthcare doesn’t cover the cost of production, they will be employed in uses that are more profitable. This scarce good (healthcare) will be made scarcer still. In our new socialized healthcare system, Government will have to ration healthcare because the artificially set prices will be meaningless for the purpose of rationing.

IT GETS WORSE

The health care website “glitch” isn’t even a cup of water in the ocean of problems that awaits us as this ever-expanding law begins implementation. The Government health insurance exchange is not health insurance. The exchange is playing the role of a broker trying to help individuals find “affordable” health insurance  from participating insurance companies. What happens when the 2500 plus pages of regulations gets unleashed on what’s left of the market system? 1)  Businesses have started to protect themselves against the future cost of the law in a number of ways: Keeping their number of employees under 50. Larger companies are cutting employers hours to under thirty per week. They’re getting rid of employer paid health care plans altogether because it’s cheaper to pay the fine (tax) instead of paying the insurance premiums. They’re making their employees pay more toward their insurance. 2) Insurance companies have been protecting their bottom line by increasing premiums in anticipation of higher costs. Some insurance companies have decided not to supply health insurance because it won’t continue to be a viable business model down the road. 3) Healthcare providers from doctors to medical device manufacturers have started to change how they do business because they know they will not be compensated enough to cover the cost of producing their good or service.

CONCLUSION

The cost of our “new” healthcare system is already going up. We changed the whole system because there were supposedly 30 million Americans without health insurance, although these uninsured people could go to the emergency room to receive healthcare. The prices charged by hospitals and the prices charged by insurance companies are what cover the cost of treating these uninsured people, just like the cost of shoplifting is factored into the prices you pay at a store. This old way of paying for the uninsured is less expensive than the cost of insuring them under Obamacare.

Obamacare incentivizes an increase in the demand for a scarce good, and a decrease in the supply of this same good. The scarce good becomes more scarce as supply and demand move in opposite directions. Government decisions will have to ration healthcare, but as the years pass the ultimate rationing mechanism for our socialized healthcare system will be waiting in line and death. Fortunately for us we have a culture of freedom. We will figure out a way around the government obstacles that have been placed in the way of us getting what we want, even if it’s an illegal black market for healthcare. Freedom is in the DNA passed on by our founding fathers, and I think we’re in the process of rediscovering it.

Ten Things to Expect From Obamacare, by Elizabeth Lee Vliet M.D., at caseyresearch.com.

SOME HEALTHCARE HUMOR

More cartoons here from theburningplatform.com.

139127 600 HealthCaregov cartoons

139206 600 Web Site cartoons