Comment by koolba
6 days ago
> It isn't as simple as supply and demand.
It really is that simple.
Giving people insurance without actually increasing the supply of doctors or clinics increases the number of people willing and able to seek treatment. It does nothing for lowering costs of said treatment. Per basic economics, that’s shifting the demand curve (i.e., increasing demand).
With no changes to supply that leads to higher prices. So every time the government makes a new program or expands anny existing one that provides insurance coverage, costs for everyone will go up.
In contrast, my proposal for explicitly bringing in doctors and creating clinics increases supply. People who would have gone to see a doctor elsewhere may now choose to go to this new free clinic.
The demand curve itself would not change, though with the lower cost due to the supply curve shift you would have a larger overall market.
This is clearly oversimplified. There’s some second order effects where if primary care market increases, you’ll need more X-rays and CAT scans. So there could be an increase in those prices. But that’s could be solved in the same way too.
I think you’re still missing the point - it’s NOT classic supply and demand because the mechanism by which that works is prices, and in many healthcare markets including the US — the buyer isn’t the payer, and shortages lead to rationing (via wait times) rather than increased prices, so often increasing supply doesn’t change prices even as it increases aggregate costs (because there’s still excess demand and rationing).
For this argument to work you have to believe that decreasing the price of service delivery wouldn't decrease the price of health insurance. Provider costs dominate US national health expenditure, like it's not even close; it's not a full order of magnitude difference but it's close to one.
> For this argument to work you have to believe that decreasing the price of service delivery wouldn't decrease the price of health insurance.
I think we are talking past each other. My argument is not that lower prices for medical services wouldn’t lead to lower insurance costs. My argument is specifically that increasing supply doesn’t necessarily lead to lower prices for medical services. It would be quite a finding if US cities with more doctors per capita have cheaper medical services but if anything the opposite is true
But part of the provider cost is driven by the availability of money to pay, which is part of the reason why drug costs are so much higher than in the US. For example, the doctor has no strong incentive to prescribe less costly drugs since they don't pay. The patient don't know any better and aren't the payers either. The insurance has some control over what they will pay for and how much but except for some cutting edge treatments, it is very hard for them to say no. This is part of the reason why insulin in the US is so expensive and why drug companies advertise to doctors and patients, etc.
I think in countries where the health care costs aren't as astronomically high as the US there is some form of government intervention to distort the market. And the original post is more or less arguing for a market distortion that doesn't rely on simple price signals to bring costs under control. But that is very different than what has happened in Denver's housing market.
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