Thursday, January 31, 2013
Thursday, January 17, 2013
Which brings me to the Certificates Of Need. A CON is a certificate that hospitals must submit for approval by the state government before they can purchase large-scale new equipment or expand physical operations, or build a new hospital at all. To be approved to expand operations, the hospital must demonstrate that its expansion will not impede the profitabilty of existing hospitals in the area or infringe on their market share.
Think about that, and imagine if that kind of rule were put in place in any other industry. Imagine if Verizon had to submit a form to the Federal government before developing a new cellphone and prove that it would not reduce AT&T's profits. Or Ford was prevented from building a new plant because it would harm GM's market share. We'd have a limited supply of cars and cellphones at higher prices. When you prohibit the expansion of production, that shifts the supply curve to the left. When you shift the supply curve to the left you get less output at higher prices. That's healthcare. It's not cellphones and cars because firms that provide these products are not LEGALLY PREVENTED from expanding plant and equipment; indeed it's encouraged. So prices continaully come down as quality and quantity grow. But not so with healthcare, so we instead get an endless series of schemes to expand "coverage" and reduce costs, when healthcare firms are legally prohibited from organically doing both on their own.
"Whoa, CONS are COOL."
Friday, January 11, 2013
P.S. as luck would have it David Glasner just made a new post with exactly this theme, but of course a lot better. Here's an exerpt and a link:
"First, it can’t be emphasized too strongly that low real interest rates are not caused by Fed “intervention” in the market. The Fed can buy up all the Treasuries it wants to, but doing so could not force down interest rates if those low interest rates were inconsistent with expected rates of return on investment and the marginal rate of time preference of households."