Re: What is the root cause of the rising cost of health care ?


"sinister" <sinister@xxxxxxxxxxxxxx> wrote in message
news:HKednYnlO9UY70TbnZ2dnUVZ_s6mnZ2d@xxxxxxxxxxxxxx

"Peter Olcott" <NoSpam@xxxxxxxxxxxxx> wrote in message
news:LN3Ci.132437$kK1.54192@xxxxxxxxxxxxxxx

<royls@xxxxxxxxx> wrote in message
news:46d832c6.206890@xxxxxxxxxxxxxxxxx
On Wed, 29 Aug 2007 19:00:56 -0500, "Peter Olcott"
<NoSpam@xxxxxxxxxxxxx> wrote:

<royls@xxxxxxxxx> wrote in message
news:46d44732.3542639@xxxxxxxxxxxxxxxxx
On Mon, 27 Aug 2007 18:16:40 -0500, "Peter Olcott"
<NoSpam@xxxxxxxxxxxxx> wrote:

You completely ignored my example about Nexium didn't
you?

Yes, because it did not mean what you thought it
meant.

Nexium is much more expensive than Prilosec, yet
because
of
the subsidy of health insurance Nexium is cheaper for
me
than Prilosec, so I choose Nexium.

That has nothing to do with demand being unconstrained
by
price. It's

Sure it does. My demand for Nexium only exists because I
don't have to actually pay the price myself directly.

No. Your demand for Nexium or an equivalent product
exists because
you need it. Inelastic demand is a characteristic of
medical goods
and services, but that is not what makes them expensive,
as the low
price of Prilosec proves (and if Prilosec is equivalent,
I don't know
why your insurance would make Nexium cheaper). What you
are missing
is _why_ Nexium is much more expensive than Prilosec.
What allows the
manufacturer to charge so much more for it?


The fact that it is cheaper than alternatives for people
with insurance is what allows manufacturers to charge the
much higher price. If health insurance did not exist, and

LOL!

That might be a contributory factor, but it's dwarfed by
the restriction in supply created by patent protection.

The next best alternative to Nexium is Prilosec. The patent
on Prilosec has expired to it is now in the public domain. I
don't buy Prilosec because (with the subsidy of health
insurance) Nexium is cheaper.


How can you be posting to a group named sci.econ and not
be aware of such a simple fact?

As I just pointed out the simple fact does not apply. The
alternative to the patent protected Nexium no longer has
patent protection. It is not the patent protection that
causes the high price, it is the fact that expensive Nexium
is cheaper than its alternative for people with health
insurance.

The root cause of the rising cost of heath care is that the
subsidy of health insurance causes very wasteful allocation
of scarce resources when the rational health care consumer
and the rational health care provider both seek to maximize
their own benefit.


<snip>



.

Relevant Pages