Miles Kimball summarizes the economics of American health care; in particular, he reviews how, even before the Affordable Care Act, “There [were] at least five big departures of our health care system from a classical free market”:
1) Health care consumers almost cannot, by definition, be well-informed. Or, at any rate, there are informational asymmetries between health care providers and patients.
2) People have empathy. Strangers getting sick and not receiving health care makes the typical person feel poorly.
3) Regulatory practices artificially restrict the supply of medical providers in the country–there are a very limited number of medical school spots, and, given the acceptance rates and number of qualified applicants, there are almost certainly qualified individuals that can’t get into med school. Furthermore, scope of practice regulations limit the number of procedures that (even qualified) PA’s and nurses can perform (which is especially troubling in rural areas with fewer doctors).
4) Third-party payment systems remove consumers from the cost of medical care. Combine this with the traditional fee-for-service model that doctors employ, and there are few incentives to hold down costs at the point-of-delivery.
5) Patents drive up the cost of new medical technology by allowing pharma companies and the creators of new medical technology to charge monopoly prices.
In other words, why we can expect governing by brinksmanship to continue:
My biggest worry moving forward over the next couple weeks is how the shutdown battle gets framed in the media–right now, the typical framing seems to portray the shutdown as a showdown between the Democrats favoring a status quo policy position and GOP demands for the preferred policy position of the hour–Obamacare delay; grand bargain, whatever it happens to be. However, framing it as a binary choice, as such, inevitably makes it seem as if the status quo is the Democratic Party’s policy preference; naturally, as we approach the debt ceiling, this will create enormous pressure on so-called ‘moderates’ (including pretty much all of the professional punditry) to call for compromise by supporting a position halfway in-between the status quo and the Republican demands (whatever those end up being). So, whether this ends up in calls for a partial delay of the Affordable Care Act; further calls to cut government spending; entitlement reform–whatever the GOP ends up demanding for raising the debt ceiling, you can be sure there will be a large number of people calling for the Democrats to ‘compromise.’
There’s been a theme recently running through some liberal economic blogs about how the GOP ‘fears’ the successful implementation of the Affordable Care Act, which is why their efforts to defund the law through [effective] economic hostage-taking have become so desperate. Paul Krugman was the first person I saw that expressed the idea—though Ezra Klein followed up today with a similar piece. The logic goes as follows:
I find Germany to be an absolutely fascinating country, and I think this map is an absolutely stunning visualization of the [lack of?] German unification–via Business Insider:
Matt Yglesias is skeptical that living standards have stagnated, in spite of the fact that median income levels are actually lower now than they were in 1989:
Or, it was yesterday when they posted their press release…the big news is that Fed has decided not to taper their $85 Billion in monthly asset purchases known as Quantitative Easing. This was a pretty big surprise, as most of the market had priced in a September start to QE tapering, with most of the estimates seeming to converge around a $10B/reduction in the pace of purchases.
Just a quick update from my post yesterday on Obama’s economic legacy: looks like I’m not the only one that thinks our lackluster economic performance over the last five years has been entirely the result of GOP opposition.