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

On Tue, 11 Sep 2007 02:07:11 -0500, professorchaos
<professorchaos@xxxxxxxxxxxxxx> wrote:

royls@xxxxxxxxx wrote:
On Mon, 3 Sep 2007 22:58:43 -0500, "Peter Olcott"
<NoSpam@xxxxxxxxxxxxx> wrote:


If no one had
any health insurance, and instead put the same amount of
money away into health savings accounts that could later be
converted into retirement savings accounts, then and only
then would the market forces be in full force driving prices
downward.

No, that is just flat false. Insurers already have every reason to
want to reduce the prices they pay (which might be why they often try
to avoid paying at all), just as individual consumers would: they want
to make more profits. They are just unable to do so because of
government restrictions on supply.

Roy again shows a lack of understand for demand and supply. He wishes to
believe in this case that supply only determines price.

Lie. Inevitably.

What Roy ignores here is how
insurance affects demand and causes the NUMBER of services paid for to
rise. When I go to the doctor I pay $15. The insurance company pays the
other $25. My cost is only $15 so I will go to the doctor more often for
less serious things than if I had to $40. This pushes up demand and
causes prices to rise.

Insurers negotiate to keep the cost down and lower prices somewhat from
market prices but the part of the rise is due to the increase in demand.

Of course, John is too stupid to understand that health insurance just
shifts the costs around. The same demand that an insurance co-pay
stimulates is offset by the lack of demand from those who don't have
incurance, because it is too expensive. OC, giving health insurance
tax advantages does have the effect of increasing demand, as it shifts
the burden of paying for health care off those who receive it and onto
the general taxpayer. But the tax advantage of health insurance is
quite distinct from the effect of insurance per se (i.e., considered
merely as a way of transferring risk) on demand for health care goods
and services.

-- Roy L
.

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