While barely meeting your civil criteria, I un-intelligently post my observation – this is probably the dumbest thing that has ever been posted on the Mises blog.
Free-market flailing about.
Pointless.
Drivel.
I’m probably over the line here, but…..

With a few minor tweeks

Joebhed,
While barely meeting your civil criteria, I intelligently post my observation – your post is probably the dumbest thing that has ever been posted on the Mises blog.
Anti-capitalist mentality flailing about.
Pointless.
Drivel.
I’m probably over the line here, but…..

Great article, Chris, I enjoyed reading it. I have a couple of questions for the Mises blog community in general…

I’m enrolled in an introductory Economics and Public Policy course as part of my MBA curriculum here in Maryland. We’ve touched on parts of anti-trust legislation a few times during this short (7 week) course, and the restrictions on the course prevent a significant elaboration on the topic.

The argument I keep hearing in favor of anti-trust legislation is that government intervenes in order to “preserve perfect competition.” My question is, is there such a thing as perfect competition? I’m inclined to think no…based on market complexity alone (scarcity of resources, consumer preference, etc.)

The larger question I have is, is anti-trust legislation essentially a government war against profit? In my mind, Wal-Mart is entitled to keep every dollar it earns because consumers chose to spend their money on Wal-Mart products. When the government steps in, ostensibly to preserve “perfect competition” isn’t the government instead preventing market efficiencies from playing out – thereby robbing consumers of lower prices?

If my suspicions are correct, anti-trust legislation is foolish and misguided…especially in industries where finite resources are used.

Anyway, I hope someone can shed some light on this for me. Thanks in advance!

The problem with healthcare is not the care, it is the insurance. All healthcare cost is inflated to offset the low pay rates the insurance companies have set. For example, a broken foot can be repaired for $19,000, the insurance company will pay only $5,000. So when the uninsured person goes in, they can have it done for $8,000. Basically, the uninsured is paying for the shortfall the hospital is collecting from the insurance company. If there was no insurance involved, the cost for the proceedure would be closer to $6,500.

The other problem with insurance is that people abuse the system in order to get their fair share. This increases demand and prices follow.

What Wal Mart is doing is bringing their price down close to the market cost. They can do that because of their access to the market through their network of stores. There isn’t another medical outlet that has as much traffic going by their clinics. Plus the buying power of Wal Mart is second to none.

My solution would be to eliminate direct pay healthcare insurance. You go to the doctor, you pay the bill. If you have insurance, you can submit your bill to the insurance company to be paid. When people have to pay for something out of their own pocket, they tend to use it less and only when it is truly needed.

Maybe if people have to pay for their healthcare directly, they may take better care of themselves and their family. A $60 investment in walking shoes and 3 miles a day would go a long way in reducing the total cost of healthcare.

We have just become a society of people that don’t take care of ourselves because our insurance will cover it.

Joebhed, how about you mention what is wrong with it?

Wal Mart is doing precisely what Milton Friedman said would be the result if we would eliminate lisencing laws for physcians.

In his book, Capitalism and Freedom, from 1960 he described what he believed would result if there were no licensing requirements for medical professionals. Instead, he wrote that “department stores” of medical care would result where these stores would find certified doctors (instead of licensed by the state)

I know that Milton Friedman doesn’t get too many accolades around here, but it was his writing on this subject that especially interested me and turned me into a libertarian before I knew what a libertarian was.

When I lived in Philadelphia 40 years ago, one could go to a Sears Optician and hand them your eyeglasses which they could use to read off the prescription and create new lenses. Years later when I moved to CA, I was surprised to find this was illegal. On a few trips to Holland and Germany, I found that I didn’t even need a prescription to buy any power of lenses.

In fact, there is no profession called optometrist in those countries. There’s only opticians and eye doctors (ophthalmologists in the US). I once took a pair of sunglass clip ons to an Amsterdam optician who replaced them with clear prescription lenses according to my own prescription. It is also legal for the optician to give you a refraction in those countries. That eliminated 50% of the cost.

Now that’s what I call capitalism and freedom. It was euphoric – and not just because I could also buy legal weed there too.

Now, where I live in a corner of Socialist LA, we had a K-Mart close their doors – and I hoped that a Wal Mart would replace it. Years later, with the building still shut, the local population has fought Wal Mart from buying it and now are fighting Home Depot from opening this building even after they purchased it and paid millions for permits. The building sits idle still after more than 5 years.

So, it’s not always the fools in government that make things worse, it’s the fools next door that hate capitalism.

this is vienna austria. where it all began
mozart, menger, mises, hayek etc.
this theorem proofs mathematically that the austrian school of economics is right.
send this theorem to all your friends and let it loose in the internet
regards peter helbich

Matt,

You are on the right track with your questions. You should check out Antitrust: The Case for Repeal by Dominick Armentano. It’s in the bookstore.

You can think of a demand curve as a sort of summation of consumer choices. That is, given all the subjective value scales that exist in a certain population, we can expect that people will decide to buy q units of a good at price p, and the higher the price the fewer units of the good people will decide to buy. A demand curve is just a graphic way of illustrating that basic concept. We must remember, though, that a specific demand curve relating actual units of a good sold to particular prices paid can only exist as a historical phenomenon. Theory cannot predict a specific demand curve, since the curve is based on preferences that will only be manifested in decisions that haven’t yet been made. Any such prediction is a speculative, entrepreneurial act. The neoclassicals sort of skip over that part.

I’m pretty much a neophyte in game theory, but my understanding is that in those repeated games, cooperation only happens when enforcement is present. That is, when other players can change their strategy to punish the noncompliant player. And, of course, the punishment has to overcome the incentive to “cheat”. Thus, a cartel is only sustainable in the presence of overwhelming enforcement power. Which is why we essentially don’t see cartels in the absence of government enforcement.

Regards,
Ken Zahringer

It’s not just Wal-Mart, Urgent Care centers are popping up all over the place (at least here in Arizona).

From http://www.urgentcare.org:

Q. What is Urgent Care?
A. Urgent Care Centers are walk-in ambulatory care centers, generally open seven (7) days each week often 13 or more hours each day. No appointment is required for a patient to receive care. These centers have a broad array of diagnostic and therapeutic services, often including x-ray, laboratory testing, on-site pharmacy, procedure rooms for laceration and fracture care, exam rooms, and specialized corporate services for employee

Q. Is Urgent Care really needed?
A. The vast majority of injuries and illnesses in America occur as acute, non-life-threatening episodes in the lives of otherwise healthy people. Prior to the availability of urgent care centers across the USA, patients had few options for obtaining immediate care for these conditions. They could make an expensive and inappropriate visit to a hospital emergency department or they would need to wait several days to fit into the appointment schedule of the primary care physician.

Today patients in many communities have the option of being seen rapidly and economically in an urgent care center. This frees the emergency department to focus on true emergencies, and it also takes away the frustration of the primary care physician, who is often too busy to fit patients into the schedule without prior notice.

Health insurance is a commodity. Of course, there will be some flaws, and not everyone will favor the proposed system. But Obama has to prove it yet.

Actually, when you include all of the tax deductions for health care, the government’s share is closer to 60% than it is 45%.

http://www.house.gov/jct/x-66-08.pdf

http://www.cms.hhs.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage

Greg, Ken, thanks for your help and insights. I realize it is nobody’s job here to do my homework for me…but sometimes I get frustrated while sitting in class because I’m skeptical of the theories presented and there’s never enough time to ask enough questions.

Greg, it sounds as though you are referring to economies of scale and/or scope, which is the means by which Wal-Mart is able to keep costs down. If my understanding from class is correct, anti-trust laws – and the Justice Department in general – were designed to closely monitor vertical and horizontal integration in order to preserve “perfect competition.” If Wal-Mart were prevented from consolidating its supply chain by the Justice Department, it stands to reason consumer costs would increase. If I am correct, it is difficult to see how anyone can support anti-trust legislation.

Thanks again for your examples and insight – I appreciate your help!

How easy could it be for Walmart to be integrated into government owned? Or controlled? To what degree?

You mean as with the other big corporations?

Walmart’s business model of volume purchases and aggressive negotiations has kept it outside the Beltway so far.

What other ventures are they into as a govt subcontractor?

Probably not many. Their business model is for mass retail sales and not specific government needs. I can tell you that, in Mexico, the government ran a few supermarket stores that offered cheap products of very questionable value – still, in most cases, able to compete in certain populated areas that were not yet touched by the big private chains (of which there were about 4, all Mexican owned). They quickly folded after Mexico opened their borders to imports. It is not like the government can manage a business anywhere near as good as a private company.

calvin mast,

Government will always be the largest cartel of them all, and the one cartel which no-one will ever be allowed to compete with.

Competition isn’t quantifiable, and certainly can’t be gaged merely by the number of firms. The key question is how difficult it is for firms which do not yet exist to compete with existing ones (which often have the political clout). In this sense, we may have much to worry about many corporations, but only because of the power of government as opposed to the market.

Gil,
Yours is really a poor analogy!

While retail competition in medicine may be a solution at the very low end, the reality is that the excessive cost in the medical system isn’t found at this level of healthcare. A visit to an actual pediatrician usually results in a payment to the pediatrician of not a lot more than Wal-mart is charging, and you may actually see a physician (as opposed to all of the “extenders” available in these retail clinics. You will also be connected to larger networks in case your stuffy nose is more than just a stuffy nose.

There are three real issues in healthcare that have caused prices to spike. #1 is medicare and the late 60s/early 70s money dump that drove up demand and spawned the use of technology at all costs with no though to consequence. This lead to a system in which we now have 90 year old nursing home patients with dementia and zero long term survival chances sitting in the ICU at over $4,000.00 a day (excluding tests and other interventions) because they are entitled to it by government mandate and any attempt to remove intervention against the will of surrogates can be seen as abandonment.

#2 is regulation. JCAHO rides into hospitals and inserts all sorts of random regulations with no real grounding in reality. These can be everything from rules on drinks at the nurses station to who has to go over all of the patients meds, to what kind of flooring the room has to have. The Stark laws which supposedly limit self referrals make it impossible for physician practices to grow and compete. We will soon get to a point where drawing blood in one’s own office will be seen as a self-referral. Stark laws have been used to attack surgicenters, in office imaging, and all sorts of other advances that allow patients to receive healthcare without going through the inefficiencies created by using the hospital and other third party payers.

#3 is the legal system. Instead of like other industries in which people compete on quality, healthcare sets a floor which is known as the “community standard,” which is not defined. When someone sues a physician, his adherence to the “community standard,” comes into question. Because no one knows what the standard is before the case (including the physician) there is no real way to know whether the physician has really violated it. Experts will then be called in on both sides. One will say that the practice violated the non-stated standard. One will say that it did not. Failure to not perform up to this retrospective standard can result in millions of dollars in judgements. If you are in OB/GYN in my state as an example, you can expect one of these legal get togethers every 2 years. Physicians are scared to death of lawsuits due to this, and the amount of money spent to ward them off is astronomical. We could seriously drop the cost of medicine by a solid 20-30% off the bat by simply ordering fewer low yield tests “just in case, so they can say we did everything.”

The American Academy of Pediatrics cannot change a lot of the practices of its members, because it is not allowed. Some of the arguments are legitimate, in the sense that it is good for children to have one person with a complete set of records who knows them. I of course disagree with a position that makes competition illegal. A free market in healthcare would be lovely, but what we have now is a system in which physicians are not allowed to compete, are bound by stifling rules and regulations, are forced to see people for free, and practice in an ill-defined manner in which avoiding lawsuits is king. What Wal-mart has really implemented here is price transparency, which many local and federal regulations make very difficult at your doctor’s office.

That interview was so amazing

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such a really wonderful information for me

One of the problems you didn’t mention with the US system is that doctors don’t and insurance companies will not publish prices. In the absence of complete, understandable, and easy-to-find information, it is impossible to make a decision taking cost into account. So the cost becomes inelastic.

As an example, I have lost a tooth and need an implant. The internet says the average price is 1500-3000 dollars and I live far from the cities so my prices should be lower. It costs me $100 per dentist to get a quote, and so far they are telling me $5000 — totally unaffordable but what is my choice? Continuing visiting dentists at a hundred dollars a pop, plus, of course my time and the pressure of having to say “no” while sitting in the dentist’s chair. Even dental schools, traditionally less expensive, require me to live physically closer than I do. My “deluxe dental” insurance will pay half, less if I don’t go to a “preferred” dentist.

If this were free market and dentists were openly competing for business, I could afford it. The way it is creates the hardship.

There are many social and political issues which surround the access of health care in the US. But I think health care in the US is better than in the Philippines.

Diet solution, what do you men by that?

There are many social and political issues which surround the access of health care in the US. But I think health care in the US is better than in the Philippines.
Resvibrant