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Methodology - Health Care

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PostPosted: Sun Apr 03, 2016 4:44 pm    Post subject: Methodology - Health Care Reply with quote


Since economists cannot create a general equilibrium model of a large economy (hundreds of vectors in n-space simultaneously) to find what a particular policy effect or change will do, it’s best to gain as much knowledge as possible using partial equilibrium models, input-output models, optimization models, intertemporal models, etc. and tie them together for a crude understanding.



Single payer would increase utilization of health care, but spending on health care would probably decrease. We spend a much higher percentage of GDP on health care than other rich countries. Sanders’ projected savings of $6 trillion a decade seems realistic.



U.S. health care is expensive, because it’s very heavily regulated. And, because the U.S. has the best doctors, including specialists, nurses, hospitals, equipment, pharmaceutical industry, etc. in the world.

it would be much better to allow more competition to reduce prices, while also improving quantity & quality. So, we can afford a safety net, e.g. for catastrophic health care, than to create a VA-type system, which will likely be even worse, because of increased demand.


Actually, U.S. health care has better outcomes than other countries. U.S. life expectancy is higher when adjusted for differences in how infant mortality rates are measured, auto deaths, murders, etc.. it would be even higher, excluding life expectancy of blacks.

“Is the U.S. system inferior to those in other developed countries based on life expectancy and cancer survival rates? Not according to economists Robert L. Ohsfeldt (Texas A&M) and John E. Schneider (University of Iowa):

For unadjusted life expectancy, the U.S. ranks #14 out of 16 countries, but for the adjusted standardized life expectancy the U.S. ranks #1 (adjusted for the effects of premature death resulting from non-health-related fatal injuries).

The U.S. has the best record for five-year survival rates for six different cancers. In some cases the differences are huge: 81.2% in the U.S. for prostate cancer vs. 41% in Denmark and 47.4% in Italy; 61.7% in the U.S. for colon cancer vs. 39.2% in Denmark; 12% in the U.S. for lung cancer vs. 5.6% in Denmark.

Also interesting is the fact that there is often a significant difference between white and black cancer survival rates in the U.S., e.g. prostate cancer – 82.7% for whites vs. 69.2% for blacks. But even in that case, the five-year survival rate for blacks (69.2%) is still higher than for all European countries except Switzerland.”


Government made administration costs of health care expensive. So, of course, government can lower administration costs through single payer.

Yet, according to you, it’s the insurance companies fault, the health care workers fault, the health care corporations fault, etc..


It’s conventional wisdom the AMA is a powerful lobby. However, here’s what a doctor said a few years ago in response to Greg Mankiew.

1. There is no medical cartel. The American Medical Association, the largest physician organization, represents fewer than one-fourth of all physicians. It has a lobbying group that has only modest influence on the government.

2. Medical licensure is controlled by each state, not the federal government.

3. The numbers of medical schools and the size of their classes are not controlled by practicing physicians. The numbers are controlled by the federal government. The class sizes are indirectly controlled by the federal government because the schools are dependent on federal funding, and the feds decide how many students they will support at each school. The federal government thinks we have too many physicians, not too few. It thinks that we should eliminate almost all specialists in favor of family practice doctors. The field of medicine is so vast that it is hard to keep up with a single subspecialty. The belief that care will be better with 600,000 Marcus Welbys is worse than naive. If the US believes that we need many more doctors, all the federal government has to do is help fund the expansion of our existing schools and the creation of new schools.

4. US doctors earn more than in other countries because the vast majority of our pre-med and medical students don’t get funding from the government. The average medical school graduate has accumulated over $120,000 in debt. She will spend the next 3-7 years as a low-paid resident or fellow, but will have to pay the interest on the loans throughout this training. When a doctor finishes training and joins a practice, she has no patients yet and no revenue stream. She has to acquire patients, pay student loans, and often pay a buy-in fee to the group. Is she supposed to do all this on $75,000 a year?

Never has an article angered me as much as this one. Greg Mankiew obviously didn’t talk with physicians and medical educators. He just took some raw facts on numbers of schools, numbers of students, and numbers of applicants and started screaming about a price-gouging medical cartel.

My comment: U.S. doctors work many more hours than European doctors. American doctors pay for malpractice insurance, which is expensive, because of so many lawyers.


Keynes tried to save the economy from Sanders’s socialism, Hillary’s micromanagement, and Republican do-nothing:

“Keynes intended government to play a much larger role in the economy. His vision was one of reformed capitalism, managed capitalism — capitalism saved both from socialism and from itself.

Fiscal policy would enable wise managers to stabilize the economy without resorting to actual controls. The bulk of decision making would remain with the decentralized market rather than with the central planner.

…fiscal policy — spending, deficits, and tax. These tools could be used to manage aggregate demand and thus ensure full employment.

As a corollary, the government would cut back its spending during times of recovery and expansion. This last precept, however, was all too often forgotten or overlooked.”


Yes, according to the BLS, U.S. physicians average 52 hours a week and 44% work 55 to 99 hours a week, which is the highest percentage of all occupations in that category.

And, reducing standards to practice medicine in the U.S. would increase the supply of doctors.

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