Price ceilings only shift the burden of achieving average cost equilibrium around to different people within the system.
The author does touch on reduced amounts of competition as a factor in increasing costs. There was more competition in the 1990s, leading to lower costs and lower cost growth. Competition can be expected to lower costs, but to some extent it might not be sustainable. There are issues with supply in health care markets, for example. If there are insufficient numbers of providers, the equilibrium point is going to be higher. If demand is higher -- whether the effects of an aging population or aggressive pharma marketing campaigns to get more people on more pills -- that also drives the equilibrium higher. It is at the equilibrium point where the best solutions lie. The article dances around this to a point -- it gets to the part where it is explained how price ceilings do not shift the equilibrium point and are therefore unlikely to be successful in the long run. The next step in that line of thinking is that the...
Only by shifting the equilibrium price downward will health care costs be lowered in a sustainable manner. The author is right in concluding that there is no consistent evidence to support the merits of price ceilings, noting the complex issues involved, but does not go far enough.
Overall, the article provides a cursory discussion of health care pricing. The complexity of the issues demands a deeper understanding of the concepts of opportunity cost, price ceilings and equilibrium pricing. It is also worth remembering that the hybrid private/public system that the U.S. has is more or less unique in the world, so drawing conclusions from the experiences of other countries is inherently difficult. It is best, perhaps, not to look at Europe or Canada for evidence but for different experiences and programs in the U.S.
Macroeconomics -- Review of Age-Old Economic Concepts through the Eyes of Current Events in the Newspapers of Today It has been a unique privilege to embark upon the study of economics during this period in our nation's economic history. One might be tempted to say this is a strange statement, at first. Would it not be better to begin to study economics during a boom period, such as the nation enjoyed
Health care economics can be understood in terms of a number of different economic concepts. One of the most basic economic concepts is supply and demand. Essentially, supply is how much of something available that there is in a market, and demand is how much that people want. The concept reflects the idea that where there are no constraints, supply and demand will be roughly the same. In the real
Economics Most particularly, I discuss the economic concept of demand and supply and the determinants of both supply and demand. Further, I also discuss in significant detail the meaning of economic indicators as well as monetary and fiscal policy. Demand and Supply Supply and demand are considered some of economics' most fundamental concepts. Indeed, they underlie almost every transaction in a market economy. In basic terms, demand according to Boyes and Melvin (2012),
Two alternative solutions are available. The first sees that the U.S. federal authority uses the budget allocated to support the development of the national industries, without raising barriers to imports. The second possible solution is for the United States to strive to increase its exports by focusing more on international operations. Criteria / goals The evaluation criteria for the proposed solutions revolve around the benefits they generate, as well as the
These decisions necessarily entail that some potentially productive opportunities are sacrificed in order to make what is estimated as the most productive choice. Supply and demand refer to specific products and services, the ability to provide these, and the level at which they are desired by the target market. Buyers desire a product or services, and therefore demand a certain quantity of these at a certain price. The relationship between
Unfortunately most growth oriented economic policies such as "supply-side" economic policies tend to exacerbate inequality. A greater role of the government in the economy such as increased taxation on the rich can reduce inequality. Inflation and unemployment are usually inversely proportional in most economies, i.e., increase of money supply through deficit financing reduces unemployment but increases inflation while tight monetary policies reduce inflation but increase unemployment. According to a