On this week's episode of Economic Update, Prof. Wolff provides updates on Olympic economics, mass transit, productivity truths, labor weakness and political parties, golden parachutes, Tim Cook's thin 'patriotism," PG&E's crimes, the rich vs unions in politics.
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It’s becoming clearer to me that the very existence of health insurance companies is what’s jacking up the costs of healthcare. We know that insurance companies are loaded with money and pay a significant portion of a patient’s healthcare costs to the doctors, hospitals, pharmacies, etc. Many have become bandits thanks to the ACA. By comparison only, we patients pay a small amount. Thus doctors, hospitals, pharmacies et al have a secondary but much larger revenue source to tap into, and therefore exploit that for their own profitable ends by upping their fees in what’s really a money grab. If an insurance company agrees to pay more than a provider would otherwise charge, the provider increases his prices. And while the insurance companies are more than capable of paying their share, the fact is that healthcare costs are so obscene that even the relatively “small” amount a patient pays is unaffordable. Anyone who’s had a sudden and major health crisis knows this. The resulting bills to the patient are increasingly staggering.
The main reason this phenomenon has become clearer to me isn’t because of wild theory on my part; I’ve had an ENT and a chiropractor tell me this. My chiropractor even told me flatly, “if BlueCross BlueShield or whoever agrees to pay me more than I’d normally charge, you bet I’m charging more.” So I don’t espouse to this belief carelessly. Would the theoretical elimination of insurance companies drive down healthcare costs? If this phenomenon is true, and I’ve had two providers confirm that it is, then it stands to reason the costs would eventually drop. But you’d also have to fight doctors/hospitals/pharmacies because they’re incredibly complicit in this. It’s not like they, unlike patients, are getting shafted in this.
IMO this phenomenon also explains the outrageous costs of college and university education. Institutions, like medical providers, have a secondary and much larger revenue source to tap into other than the student/parent; the student loan corporations. University administrators know that these loan corps have far more money at their disposal than the student/parent and exploit that to their ends, which largely end up in bloated salaries and incomes for university brass. No university president is worth eight figures. Professors are still stiffed with lack of quality pay and teaching materials, teacher assistants even more so, and students/parents are stiffed with a massive monthly bill soon after graduating. Same phenomenon, different industry.
As to the discussion on Social Security, which I never get tired of, more is better- please please remember that it is not only the EMPLOYEE who contributes from every pay check to their Social Security fund (aka-the payroll tax) but the EMPLOYER too contributes in an equal amount. And if it was a Coop I would assume the coop would pay as the employer does.